American Working Man: Endangered Species By Charles Payne

Jun. 10, 2016 3:25 PM ET
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Long/Short Equity, Portfolio Strategy

Contributor Since 2009

Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political, and general opinions by several prestigious news organizations. Currently, Mr. Payne is a contributor to the Fox News Network and Fox Business Network. He also hosts his own radio show on KFIAM 640 every Saturday from 2-4pm PST. Mr. Payne recently released his first book entitled Be Smart Act Fast Get Rich. Our all-star analytical team is called first when the media needs to know. We are regularly featured on several well respected finance-oriented radio and television programs such as Fox, CNBC, BNN, WSJ to name a few and widely recognized in the media as a leaders in the analyst community. In addition, Wall Street Strategies is part of Thomson-Reuters Consensus Estimates. Brian Sozzi is an equity research analyst specializing in the softline/hardline goods sectors of the retail industry for Wall Street Strategies Inc. Mr. Sozzi graduated Summa Cum Laude from Dowling College, receiving his Bachelors of Business Administration with a concentration in Finance and Accounting. Routinely sought after as a trusted point of reference for opinions and insight on the global economy and retail sector stock evaluation, Mr. Sozzi is a frequent on air contributor to CNBC, Fox Business Network, and Bloomberg, and is cited regularly by online/print publications that include Forbes, Bloomberg, The Wall Street Journal, Thestreet.com, CBS Marketwatch, Reuters, Seekingalpha, Associated Press, Crain’s NY Business, Fortune, Barron’s, AOL Finance, and the Financial Times. In 2009, Mr. Sozzi became recognized by Starmine as a top-ranked equity research analyst for stocks under coverage in such categories as EPS Estimate Accuracy and Industry Excess Return. Carlos Guillen is an Equity Research Analyst providing coverage of the technology sector for Wall Street Strategies, Inc. Mr. Guillen has had experience working in both the sell side and the buy side. Prior to working as an analyst, he was a Design Engineer for Lambda Electronics. Mr. Guillen holds an M.B.A. from NYU’s Stern School of Business, and he has a B.S. in Electrical Engineering from Manhattan College. David Urani is a research analyst with concentrations on the homebuilding, staffing, medical devices, and logistical services industries. Along with providing institutional clients with up-to-date reports of individual stocks within his industry coverage, David assists the rest of the Wall Street Strategies research desk with timely analysis of vital economic data. A graduate of the A.B. Freeman School of Business at Tulane University, David earned a Bachelor of Science in Management while majoring in finance. With prior training experience running small businesses, he has an eye for key fundamentals that keep Companies running efficiently. David’s insight has been featured in several outside sources, including the Fox Business Network, MarketWatch, and SeekingAlpha. Carlos Guillen is an Equity Research Analyst providing coverage of the technology sector for Wall Street Strategies, Inc. Mr. Guillen has had experience working in both the sell side and the buy side. Prior to working as an analyst, he was a Design Engineer for Lambda Electronics. Mr. Guillen holds an M.B.A. from NYU’s Stern School of Business, and he has a B.S. in Electrical Engineering from Manhattan College.

Consumers have put the chill on credit card usage in April after a monstrous surge in March. Still, the pace of credit card usage is increasing and swiftly heading back to all-time high levels. This trend is setting off alarms for many, especially when it's coupled with delinquency rates edging higher. Yet at the current pace, it would be unlikely that we'd eclipse the old record until the very end of the year.

However, I say that it's too early to hit the panic button for a number of reasons.

People are more disciplined with their spending. Consider the debt-to-disposable income; it peaked at 23.4% in April 2004, and tumbled all the way down to 17.7% in December 2012 as consumers were still licking their economic wounds. At the current 18.9% ratio, it's a long way from being outrageous or a red flag unless you're at the Fed or the incumbent political party looking for consumers to step up to the plate.

Debt to Disposable Income

23.4%

April 2004

17.7%

December 2012

18.9%

May 2016

The lingering fear that's kept consumers from going nuts with their credit card has also cast a dark shadow over the rally. Everyone is either a critic or a skeptic; some are even betting against it, including the infamous trader George Soros; the man who once crushed the British Pound is now looking for stocks to get hammered.

He joins a long list of high-profile bears, but the good news is that these folks often make bets that take years to work out and sometimes those bets flop.

Even though the market finished off the lows of the session, the only winning sectors were utilities and consumer staples.

Defensive Cover

Today

YTD

Utilities XLU

+0.86%

+16.2%

Consumer staples

+0.39%

+6.7%

There is no need to panic even if the Lords of Wall Street are trying to get you to head for the hills.

The Vanishing American Man

He's a hardhat, hammer swiggin', won't hear him whine
Kick some butt, wrap it up, crack a beer, high five
God fearing son of pride and strength
That's exactly what he's turned into

He'll fight tooth and nail for his family
Give the shirt right off his back for a friend in need

-American Man by Trace Adkins

These headlines have become common over the years…

The Slow Disappearance of the American Working Man

Bloomberg, Aug 25, 2011

America's jobless men: Decline of the working man

The Economist, Apr 28, 2011

The Vanishing Male Worker: How America Fell Behind

New York Times, Dec 12, 2014

The Mysterious Rise of the Non-Working Man

The Atlantic, Dec 15, 2014

Well, the 'Decline of the American Working Man' has moved into hyperdrive.

Despite all the hype about women getting the short end of the stick in the economy, the fact is that the American male worker has seen his paycheck stall in the past 40 years; more and more men are giving up on being the breadwinner or working at all.

Men have earned less adjusted for inflation now than the average income in 1973, whereas women have seen a 30% increase in their average wage.

Consequently, the multi-decade trend of men dropping out of the workforce has gotten worse since the Great Recession, particularly among white men.

Decline in Participation:

  • Men -5.7%
  • Women - 4.5%
  • White Men 6.0%

There is no doubt this trend has political ramifications, but the big question is whether this issue can even be fixed?

Moreover, I must admit that it doesn't look great at the moment.

Today's Session

Negative talk and continued failure at key resistance is triggering more selling this morning. It's not the stuff of panic, but it is worrisome.

For the S&P 500, it's important that 2,100 holds. If that doesn't happen, look for the index to drift to its 50-day moving average of 2,068; from there, it must hold above 2,050.

S&P 500

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