Jack Welch is winning
October 8, 2012 in Uncategorized
“Possibly the one tweet that made more headlines on Friday more than many other tweets that I have seen come and go came from none other than former GE CEO Jack Welch. It went like this: “Unbelievable jobs numbers..these Chicago guys will do anything..can’t debate so change numbers”. Read it again. His suggestion is that the government manipulated the rate in order to get Barack Obama re-elected because he failed in the debate two nights prior to that. Secretary of Labor, Hilda Solis who was interviewed on both Bloomberg and CNBC (well, the interviews that I saw anyhow) said that she was insulted by these ludicrous suggestions.”
Jozi, Jozi 26o 12′ 16″ S, 28o 2′ 44″ E. Stocks rallied on Friday, but it was not the kind of rally that we would have wanted. I would have preferred a risk on rally rather than one fuelled by the currency falling to the worst levels in three years. Resources cracked on the pace, up over two and a half percent to propel the all share index to a record close on Friday. I shudder a little at the thought of imported inflation coming. The banks were beaten up as a result of more downgrades, not good. Fairly late on Friday the news filtered through, as per this weekend BusinessDay report that Strikes rage on after Amplats fires 12,000 workers.
The last paragraph unfortunately is the truth, job losses as a result of marginal mining operations being shut for good. And this is from the unions, who have been involved in labour and mining for one quarter of a century. Meanwhile we are into the third week of the truck drivers strike. Before you hyperventilate however, Paul said that if you had looked back over the last decade you see the strike season come and go. Perhaps this might be the worst one in a while, but this does unfortunately happen in South Africa.
There has been a lot written about the strikes as of late, this is insightful: Strikes about more than wages – NGO. I agree, they are about more than wages. The private sector however cannot be seen to be solving the issues where government has not always held up their promises, too many to make, not enough resources. Although sometimes I get the sense that perhaps the purse strings are looser when something is of national importance. If you know what I mean.
I saw a WSJ article from Friday that suggested that there was some light at the end of the tunnel. A Platinum Lining in Anglo Unrest. As the article suggests, the recent labour unrest has brought forward their plans to restructure their mines. The plans were always there, the market was expecting something by the end of the year. But the recent events have fast tracked that. Not good for job growth and you have no idea what the public response will be.
Digest these links.
How was this picture here that I saw tweeted on Friday: And now a new SWG poll from Italy: Democratic Party (centre-left) 25%, 5-Star Movement 19.6%. So what you say? Nothing too interesting about a close call in Italy, and in particular a place where there has been strange politics for decades. For no other reason that the two top parties in Italian polls nowadays have less than 5 years of experience. And the five star movement is only three odd years old. When there is a crisis that impacts peoples pockets, they normally throw out the old. In with the new, let us see what they can do.
Remember last week when I was telling you who my favourite Euro journalists were? The Business Insider had this piece: There Was An Amazing Exchange Between Mario Draghi And CNBC’s Silvia Wadhwa. People are still struggling with the conditionality issues around a Spanish bail-out. Expect more clarity this week as the European finance ministers meet in Luxembourg. This is to put the ESM into force. Excellent, so you see, Europe is not finished and last I checked Greece are still in the Euro Zone. Angela Merkel visits Greece this week, that should be fun. Oh, and the Greek Prime Minister suggested that whilst ths chattering classes thought it might be in their interests to leave the zone, staying in the zone would protect their under pressure savings and pensions. An exit would erode life savings by around 60 to 70 percent. How then would that be good for the ordinary Greek person?
China. The Chinese growth story has been questioned for a little while now. I often see reference to Japan and their bubble built in equities and back in 1990 Japan was of course going to be bigger than the US, in terms of economic output. Well, we all know what happened thereafter, the US economy powered away and the Japanese economy has been treading water for two decades. It is with this backdrop that I have been following Michael Pettis over the years, here is his latest piece: How to be a China bull. He of course is more sceptical than he was in the past. The biggest difference that I can see from these predictions that China will overtake the US, is quite simply the base is set that much lower. If ever there was a measure of what economic policies were better for the people, take the case of South and North Korea. I hope for complete Korean emancipation in our time for the sake of the people of the North. According to Wiki 14 thousand plus folks have made it from the North to the South. Oh, and the reason why there are loads of Zimbabweans here and not back home is also because things are not awesome there.
New York, New York. 40o 43′ 0″ N, 74o 0′ 0″ W Non-farm payrolls were the exciting part of Friday afternoon, they came in more or less in-line with expectations for the number of jobs created. The revisions for the two months prior were however much more than anticipated, and this was welcomed with both arms by the market. For once nobody cared too much about the actual number, all of the talking point was actually about the unemployment rate, which had fallen dramatically to 7.8 percent. The conspiracy theorists were everywhere, mostly staunch Republicans as far as I could see, who somehow thought that the labor department was fudging these numbers for the benefit of the incumbent in the White House. And it got more bizarre than just folks scratching their heads.
Possibly the one tweet that made more headlines on Friday more than many other tweets that I have seen come and go came from none other than former GE CEO Jack Welch. It went like this: “Unbelievable jobs numbers..these Chicago guys will do anything..can’t debate so change numbers”. Read it again. His suggestion is that the government manipulated the rate in order to get Barack Obama re-elected because he failed in the debate two nights prior to that. Secretary of Labor, Hilda Solis who was interviewed on both Bloomberg and CNBC (well, the interviews that I saw anyhow) said that she was insulted by these ludicrous suggestions.
Not too long after that, when the twitter dust had settled, something that only takes about twenty minutes, there was this interesting piece: Twitter laughs at Jack Welch’s suggestion that the US jobs report was manipulated. It started to become more and more crazy talk, the more you looked at the rebuttals, ironically just after the debate I guess. To give some background context, Welch is a serious Romney backer, so you can see where he is coming from. Ex Obama administrator insider and funny man economist (heavy hitter still) Austan Goolsbee suggested that Jack had lost his mind. Momentary madness, fury and the twitter thingie, be careful of social media I guess when venting without the facts.
Whilst all the conspiracy theorists were doing their thing, there was actually some serious number crunching going on. Over the weekend I saw this post which is possibly nails it all, titled Employment: Somewhat Better (also more graphs). The Employment-Population ratio rising to the best levels since the beginning of 2009, part time workers rising significantly together with the folks unemployed more than 26 weeks falling is a sign that “things” are going in the right direction. And so much for big government, those jobs are fewer. More private sector jobs, fewer government jobs, longer working weeks and folks getting paid slightly more seems like good news to me. There is still that irritating line from the White House, we can do more. But seeing as we are only a little way away from the US elections, this is perhaps the best news that the incumbent could get.
And to leave you with news that you could not really fudge, Prof. Mark J Perry dissected the employment report to find a monster jobs growth sector in the US economy. A graph tells you that as a result of fracking, the jobs situation in the US has improved markedly. Not to mention energy independence. See the industry that has emerged as the U.S. economy’s No. 1 job-creating sector. And add into the mix that the US is producing more (and cleaner) fossil fuels than at any time in the last 15 years and I guess you have to say that all bodes well for the sector. Meanwhile we twiddle our thumbs with these (potential) gas reserves that we have here in the Karoo. I hope those folks all get around on bicycles there.
Having a last word was Jack himself, who was spending the whole day in meetings, according to his secretary. But he spent Friday evening in the media. Where nobody was watching, only the kind of people who would agree with Jack I guess. Check it out: Jack Welch Still Pretty Sure the Job Numbers Were Skewed. So Jack is still sticking to his guns, but has no evidence. Winning. That is the “newish” book that Jack authored. Probably winning like Charlie Sheen here, in his own mind. Never mind, we are all entitled to our own opinions.
Currencies and commodities corner. Dr. Copper is last at 370 US cents per pound lower on the session. The oil price is also lower, last at 88.46 Dollars per barrel, it has been very volatile over the last few days. The platinum price is lower at 1675 Dollars per fine ounce, the gold price is also slightly lower at 1767 Dollars per fine ounce. The Rand is getting trounced again. 8.81 to the US Dollar, 14.24 to the Pound Sterling and 11.48 to the Euro. We have started lower, mostly due to catch up with a lower close on Wall Street on Friday afternoon.
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