Seeking Alpha

Companies may not be hiring but they are spending: manufacturing and trade sales rose over 12%...

Companies may not be hiring but they are spending: manufacturing and trade sales rose over 12% Y/Y in June, S&P 500 firms have upped dividends by almost $29B this year, and M&A's are increasing. The trends show "companies are more confident in the economic recovery" than some might think.
Comments (23)
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Of course companies are spending, they are attempting to wring the last bits of productivity out o their manufacturing processes before they add to their payrolls.
    21 Aug 2011, 05:57 AM Reply Like
  • Dave Faulkmore
    , contributor
    Comments (84) | Send Message
     
    M&As in Japan are basically a means to hide a bankruptcy.

     

    Upping dividends while your stock is nosediving? While not hiring. Signs of an economic recovery??

     

    Krugman is that you?
    21 Aug 2011, 06:30 AM Reply Like
  • Papaswamp
    , contributor
    Comments (2178) | Send Message
     
    Wages decreased and work hours increased. Many companies are hoarding cash (and easily liquid investments). This signals that they expect more difficult times. Rise in dividends and spending coincides with a decrease in the value of the dollar ( was at 83 this time last year) and rise in inflation (PPI shows clear costs increase).

     

    The 'if you say it enough times they will believe it' method isn't working. Reality for main street…and eventually wall street will show what is really going on.

     

    US debt now at $14.62 Tril. …or 97.4% debt to GDP. Smart companies see the brick wall coming. Though I'm not a fan of equities…companies with very low debt and high cash reserves will be the survivors when cuts come and we have a real correction in the market. GDP will go negative (if it hasn't already).
    21 Aug 2011, 07:02 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4010) | Send Message
     
    Reminds me of the stagflation days when the mantra was, "Spend it while you still have it."
    21 Aug 2011, 10:12 AM Reply Like
  • bukdow
    , contributor
    Comments (834) | Send Message
     
    Companies should be taxed or given "negative interest" on the money they are sitting on. If you want people to spend and buy your crap, give them jobs.
    21 Aug 2011, 10:23 AM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4503) | Send Message
     
    They already are. Its called devaluation. Its the same reason why people spend their money now the second they get it in order to protect against further erosion of capital. Businesses are actively acquiring other businesses for the same reason. This is why the big cash hoarders like Apple are being irresponsible by allowing the devaluation to continue year over year over year. The quest for a ROC. Some companies get it. Others don't have a clue.
    21 Aug 2011, 10:54 AM Reply Like
  • bukdow
    , contributor
    Comments (834) | Send Message
     
    MA is not the same as increasing head-count. If we want the government to stop propping up the economy, then the private sector had better step up. They definitely have the means and you don't have to be a super genius to perceive the need.
    21 Aug 2011, 01:17 PM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4503) | Send Message
     
    But you can't force them to hire. The reason why capital is being used incestuously, not in an organic expansionary sense, is because govt. has removed any trace of clarity. Ergo, the govt. can't force organic expansion. All the govt. can do is stop intervening, perhaps reform & simplify the tax code and then get out of the way.

     

    The private sector will not 'step up' because its Russian Roulette out there. No one knows if this is the one trigger pull that ventilates your skull. Allow me to explain.

     

    2009, bad as it was, had huge implications, but far worse was the upcoming annual uncertainty. Regarding Bernanke, will he or won't he? Every time he speaks, there's a ton of volatility. Then you had an entire year of jack jawing on Zerocare. What a waste. Then you had another year held hostage by the regime on whether or not the Bush tax cuts would expire or stay. Businesses can't plan. Then, you had another year of jack jawing on the debt ceiling. And now we'll have another year of more jack jawing with the Debt Commission that is increasingly looking like its full of clowns and may result in even further downgrades on American credit. Instead of just dealing with these things, they just continue to get pushed out further and further. No resolution. Businesses can't plan. Businesses need at least 5 years of certainty to know which way things are going and we aren't getting that. This administration has been so derelict that something as basic as a budget hasn't even been forthcoming. This creates a huge lack of confidence knowing that govt. is run more and more by what appears to be gangsters.

     

    And Zerocare as well as Dodd/Frank, both unmitigated disasters, just keep rolling out more and more questions than answers. No one knows what are in the bills STILL!!! You need, lawyers, priests, shamans to piece this stuff out for us. Businesses are on strike! They will not hire. They will hoard capital. They will remain conservative and avert risk in this climate. You can't just say 'HIRE' and snap your fingers and it happens. That's not how business works.

     

    Government has fancied itself the most important player in the game and like Allen Iverson just makes the rest of the team suck. No passing, no practice and no teamwork. Every play the ball just gets hogged and the offense is funneled through him. You have one player on the court and 4 other guys standing around watching. All the other team has to do is double team that guy and shut him down. Game over.

     

    In economics you have to get the passing game going again. There are no 'stars'. Everything works together seamlessly. Ball motion. Velocity. It kills the other team's defense. They can't defend against selfless play.

     

    That's what a free market is. Selfless, non-directed, open, uncoerced, mostly unmanaged. It manages itself.

     

    We don't have people in power who believe that anymore.
    21 Aug 2011, 08:15 PM Reply Like
  • bukdow
    , contributor
    Comments (834) | Send Message
     
    Junker,
    I appreciate your post and grant its merit. However, on one important level, I do believe it is as easy as saying, "Companies need to start hiring. Now". All of the issues that you cite and others have citied are due to massive unemployment. Not only that, but a lack of gainful employment. The private sector needs to start investing in this country. And they can do that by increasing head-count. Period. People will buy more houses, refrigerators, cars, etc. when they feel they have secure, gainful employment. This will then directly benefit the economy as a whole. At this point in the game, we don't need a fancy aerial attack that is over-explained and over analyzed to the point ineffectiveness. We need to pound it out on the ground and get to the endzone. It is time for the private sector to open their playbooks and pocketbooks for the benefit of the country and themselves.
    22 Aug 2011, 10:32 AM Reply Like
  • Papaswamp
    , contributor
    Comments (2178) | Send Message
     
    All the gainful employment went overseas. There is no demand and the majority of products the US consumer does purchase is made overseas. We have too many workers and not enough living wage jobs…it's that simple.
    22 Aug 2011, 11:33 AM Reply Like
  • bukdow
    , contributor
    Comments (834) | Send Message
     
    Well, then what is to be done? What can be done if there is no prospect for gainful employment in this country and thus no demand? If that is indeed the case, then the US is no longer the country it used to be.

     

    Who is to blame? Well, it has to be the companies that knee-capped the American citizen by shipping their ability to have a middle-class existence with the ability to thrive with hard work and dedication overseas. Blaming Republicans or Democrats, at this point, is ridiculous. No amount of "business friendly" policies is going to reverse the positive aspects of globalization for "American" corporations. It sounds like capitalism is the problem. Isn't pursuing the benefits of globalization (lower labor and resource costs to the benefit of the bottom line and shareholders) exactly what any capitalist would do?
    22 Aug 2011, 12:35 PM Reply Like
  • Papaswamp
    , contributor
    Comments (2178) | Send Message
     
    @bukdow This has been a long term problem. Starting with NAFTA, MFN China, 9-11 and the tech bubble popping. This was the perfect storm that finished off the US. The housing bubble staved off the obvious decline.
    Look at the employment participation rate from 2000 to now (you will have to type in dates to go back further).
    data.bls.gov/timeserie...

     

    What makes it more attractive to manufacture overseas than the US? Cheap labor and limited to zero restrictions (environmental, labor, business), extremely low taxes and trade deals very favorable to those countries.

     

    The blame can be spread over a wide swath of people. From politicians (both parties) that cut trade deals favorable to foreign countries, pander to special interests, etc.. The US govt. that has bailed out foreign banks. The US banking (or global) that has rigged the system, only gives a depositor 0.2% return on cash in the bank yet may leverage that 10 times and charge another 5-28% interest to the borrower. Banks became greedy and got caught…but instead of true free market capitalism that would let those fail…they were rewarded. Bailed out and people at the helm still received bonuses. Who bailed them out?…future taxpayers not yet born. The people have become the slaves of a system that preys on their weakness…the desire for 'stuff'.

     

    Last and not least the ones to blame the most..the general populace (ourselves) for the desire for cheap, disposable items that are made overseas. For re-electing the same people time and time again. For NOT paying attention to the rising debt and not holding govt accountable. For wondering how we got here when we were only interested in having things regardless of the amount of debt. It is a crisis of a lack of American nationalism/ American morality that got us here.

     

    This is how America used to work…this is how we should work.
    www.usatoday.com/weath...

     

    Instead we cry out where is the government?! Where is our help? Where is the free ride?

     

    What would happen is the population said…we will only purchase American made products (manufactured in the US..including components)? From toys to televisions…..sunglasses to sneakers. What about food? energy?….instead we take the cheap and easy way…..this is the result.
    22 Aug 2011, 01:31 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3591) | Send Message
     
    The population CAN'T do that, because they can't afford it. Therein lies the problem.
    22 Aug 2011, 08:52 PM Reply Like
  • Papaswamp
    , contributor
    Comments (2178) | Send Message
     
    @ JBin TN…sure they can…they merely have to learn to be frugal…a skill long lost in this country, but some are finding their way back.
    22 Aug 2011, 09:19 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3591) | Send Message
     
    Being frugal is why they/"we" buy Made In China. And with many things, there is simply no alternative to buying MIC stuff (and if there is, it's Made In Bangladesh stuff).
    22 Aug 2011, 09:47 PM Reply Like
  • Dave Faulkmore
    , contributor
    Comments (84) | Send Message
     
    What has to happen is prices come down. New reality is most people can't afford much right now. Prices aren't falling quick enough.

     

    US is capitalistic for us. Socialistic for the bankers and elites.

     

    Time for throwing up trade barriers. Or Americans start buying locally.

     

    The former ends badly as history has shown. But when your populace starts to riot then that's the card politicians play.
    22 Aug 2011, 10:01 PM Reply Like
  • Papaswamp
    , contributor
    Comments (2178) | Send Message
     
    @JBinTN…if the US was frugal we wouldn't have massive defaults and de-leveraging. I agree there aren't alternatives…but the way to create it is to demand US only. It won't be easy…but it sure beats a slow death of the US.
    22 Aug 2011, 10:54 PM Reply Like
  • Dave Faulkmore
    , contributor
    Comments (84) | Send Message
     
    i'm cool with going US Made only AFTER the reboot.

     

    For now, the cost of living is way against the serfs.

     

    Reboot now!!
    22 Aug 2011, 11:07 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3591) | Send Message
     
    I'm all for buying USA-made stuff, but as Dave points out in his reply, prices for the "good stuff" have to come down.

     

    Anecdotes are fun, so here's one from today.... I bought two Made in USA drill chucks today (1/4" and 5/16"), and they were $4.00 and $7.00 respectively. Had I trotted down to Harbor Freight and gotten the Taiwanese versions, I could have gotten a 11-piece set (in a case!) for $12.99! My Made in USA tools aren't going to last any longer, and the Made in Taiwan tools will accomplish the same tasks.

     

    Today I bought American out of convenience (and necessity) - but what justifies such a difference in price? American labor? Well, quite honestly I have my hands full supporting me and mine - not much room to worry about supporting American workers who produce the same stuff, albeit at higher prices, than their Taiwanese counterparts.
    23 Aug 2011, 05:00 PM Reply Like
  • nightfly
    , contributor
    Comments (1017) | Send Message
     
    One word: "lagging". These types of decisions were made months ago. Let's see how the 4th and 1st quarter investments go.
    21 Aug 2011, 12:57 PM Reply Like
  • Hendershott
    , contributor
    Comments (1503) | Send Message
     
    Wealth and power move from labor to capital, read Roubini's latest comment on Marx.
    21 Aug 2011, 08:33 PM Reply Like
  • Papaswamp
    , contributor
    Comments (2178) | Send Message
     
    Due to health officials shutting down neighborhood lemonade stands, a group decided to set up a stand on the Capital lawn…police come in and shut them down….$0.10 lemonade a nono?

     

    silverunderground.com/.../
    22 Aug 2011, 09:27 PM Reply Like
  • Dave Faulkmore
    , contributor
    Comments (84) | Send Message
     
    1000s of people should open up lemonade stands on the capital lawn. Not for earning money. For changing the law. If everyone does it, it isn't illegal. By definition.
    22 Aug 2011, 10:19 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|