Wednesday, April 27, 2011

Up, up and away: the sequel

So the news out of companies remains mixed - good results/very weak outlooks - and that is normally a recipe for disaster in stocks, but the thinking seems to be "well, if Amazon is struggling the Fed won't cut the cord so the dollar will keep falling and every asset is going higher !!!" Gas might be $5 a gallon by this summer but hey, the Dow will be at 13,000 so quit your whining - that's Wall St. talking not me :)

Usually, when everyone has the same opinion the market tends to throw us for a loop but right now it's all green, all the time.

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I came across a really nice chart in the Miami Herald of all places last week. It speaks to the theme that I've highlighted before. The government views all jobs as the same. A job added at McDonald's offsets a job lost Boeing. Obviously, this is ridiculous but that's the way the government views the world.

The Miami Herald took a look at the sectors adding jobs over the last month in South Florida and their average weekly earnings and compared it to the sectors losing jobs and their average weekly earnings. It's a pretty compelling picture of the US economy.

Sectors adding jobs:

Restaurants, General Merchandise Stores (Walmart), Food Stores, Retail, and Office Support. The average weekly wage of these sectors was about $450 per week. Good luck living in South Florida on that wage.

Healthcare, Hospitals and Local governments also added a significant number of jobs and their salaries were much higher (averaging around $1,000 per week), but these jobs are largely due to government stimulus and escalating Medicare/Medicaid payments that are in the cross hairs of budget cutters. Those jobs are definitely at risk over the next 5 years.

Finally we get to the industries cutting jobs in the past month in South Florida - Construction, Manufacturing (avg salary about $950/week), Banking, Wholesale, Finance, Insurance, Professional Services, Information Technology and the Federal Government (avg salary about $1,250/week) and finally management with an average salary of about $2,000/week.

Step back and look at that for a second. We're adding jobs at McDonald's, Walmart, hospitals (think there is a connection there as we eat ourselves into an early grave with food from Walmart, McDonald's?) while losing management, technology, finance, banking, construction, and manufacturing jobs. Anyone that sees a great future in that set of data is either being dishonest or is not very bright.

In total, the Herald found that about 8,700 jobs had been created with which added about $3.4 million of net payroll to the economy meaning the average wage of the new jobs was below $400 per week.

But the stock market is flying so don't tell Timmy Geithner and the Ben Bernanke that they have no clothes or it all might fall apart.

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