"Labor is going to go down, as digital utilization goes up - like the sun comes up in the morning - it is going to continue to go up.""As it happens, it's going to benefit larger organizations like Panera, who already have the technology in place."
-Ron Shaich
CEO Panera Bread
The Panera CEO was referring to "Panera 2.0," a kiosk system that was selectively rolled out in April 2014, ostensibly to speed up service, but in reality, to cut the cost of labor. Shaich is a progressive who donated $35,800 to the Obama Victory Fund in the last election. He also posted a video touting "2.0" as "delivery for guests…is the guts of everything we do, not the stock market, not the numbers and all that stuff." However, in the call this week, he pointed to the cost of Obamacare and a higher minimum wage.
The company already pays more than the minimum wage, but they had to increase them as the minimum wage has been forcibly increased throughout the nation. While these touchy-feely CEOs talk about stakeholders rather than shareholders or share prices in terms of what's important, no one can be in business losing money.
We are beginning to see a major impact to bottom lines from major companies already struggling with slack demand and a very strong dollar.
The moral of the story is that it is never a good time for the government to mandate how businesses spend and invest their money, but this is the absolute worst time for higher wages and ever-increasing Obamacare demands to exert more from corporations.
At this point, it's really tough to say that the overreach of government results in unintended consequences. The bottom line is there's power in misery; being able to create it, but also to get the nod to correct it is actually an amazing act.
The Market
The major indices climbed off the canvas during the session with the S&P 500 actually peeking into the plus column for a moment. Yet beneath the surface, there was a ton of carnage. While winners continue to gallop and fewer stocks hit 52-week lows, it has been pure hell for losers.
| Breadth Movers | Advancers | Decliners |
NYSE | 38% | 59% |
NASDAQ | 33% | 63% |
| Breadth Volume | Up Volume | Down Volume |
NYSE | 35% | 64% |
NASDAQ | 33% | 69% |
| Breadth 52-week extremes | New Highs | New Lows |
NYSE | 84 | 39 |
NASDAQ | 102 | 82 |
Moreover, I am in a few of those stocks that have gotten hammered, and I continue to think there is so much near-term overreactions that it's amazing. Yet everyday stocks scroll past on the tape at all-time highs that I wrote off years ago. While the bears try to suggest there is too much enthusiasm, the fact of the matter is that the selling of individual names while everyone piles into the winners is a different kind of exuberance.