If any of the provinces of the British empire cannot be made to contribute towards the support of the whole empire, it is surely time that Great Britain should free herself from the expense of defending those provinces in time of war, and of supporting any part of their civil or military establishments in time of peace, and endeavor to accommodate her future views and designs to the real mediocrity of her circumstances.-Adam Smith
I've written a lot about the global economic story, but the next leg in the stock market has to be supported by the domestic economy.
> The good news is expectations are low.
> The bad news is expectations are low.
We entered the Age of Mediocrity in the aftermath of the Great Recession, when the media set the bar low, Wall Street set the bar low, and given a chance to fight or flee too many Americans set the bar low, too. I have to admit, once the market began to celebrate mediocrity it was an easy game, but one I didn't think could last. I've been waiting for the rally baton to be passed from mediocrity (and the fringe benefits like wild money printing that is often part and parcel) to flashes of brilliance and eventually to the robust economy hiding beneath the surface like my six pack hides behind my sheath of hard fat.
A really glaring problem is skills, or lack of skills. It's one thing to brag about building 600 community colleges as a homage to people you don't think have the goods to go to a four year school, but how do we fill those millions of open jobs in science, technology, education, and math? You can grade on the curve and add bonus points for all kinds of things but once someone is settled behind a microscope they better have a clue. It's not just STEM jobs but welders and other high-skilled positions that involve brain and brawn that are going begging.
In fact, the most recent survey on homebuilder sentiment tumbled for the third consecutive month to a read of 42 from 44 against a consensus estimate of 45. Part of the problem is a lack of skilled workers. I have no clue where all those folks went to, but it is apparent they're scarce these days just as demand is rebounding. Keep in mind, homebuilder sentiment has to reach a reading of 50 before we can say happy days are here again-the last time that happened was April 2006. On the topic of homebuilding, I was disappointed that single family home starts actually declined in March.
Right now it's cheaper to buy than rent in the top 100 metropolitan areas of the United States and yet people continue to rent apartments in these megalopolises designed to exert better control over people to the point of influence in all aspects of their lives.
It's also easier to usurp rights from renters crowded on top of each other. After a nice bounce, the single family home drifted as homebuilders focused on apartment living.
Not Just Educational Skills
Yesterday the Empire State survey came in below consensus but for me the bigger news was the employer questionnaire that speaks to hiring and employment challenges. In the past year a few problem areas improved but most are worse off than in August 2011. Some of these are not man-bites-dog headlines but other problem areas are shocking.
People have no social skills and that's not going to get better judging from what I've seen at malls, movie theaters and house parties. All the kids communicate via social media even when sitting next to each other at a movie or party. It's weird to see teenage boys and girls not even dance with each other. But it extends to communicating with people outside your immediate circle of friends.
And I can personally attest to the idea that young people think it's absurd to have rigid times to be in the office and making it happen.
After the bell there were several earnings reports and a few stood out in a positive manner. United Rentals saw margins surge and announced it will increase sales employment by 10%. CSX beat the street by a nickel then hiked its dividend by 7% to $0.15 and announced a $1.0 billion buy back.
BAC missed on bottom line as banks continue uneven to weak earnings results.
TXT missed by a penny in part to slower corporate jet sells- I wonder why.
Equity futures have been under pressure all morning long, in part as a result of sluggish economic news out of (stop me if you've heard this before) Europe. UK unemployment increased to 7.9% as 70,000 joined were forced to hit the bricks. Throughout the continent auto sales declined 10% led by a decline of 16% in France.