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Monday, April 15, 2024

Thrilling Thursday – US Companies Create 1.4M Jobs! (Overseas)

 US Corporations are hiring – they are just not hiring you!  

The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute's senior international economist.  "There's a huge difference between what is good for American companies versus what is good for the American economy," says Scott.

American jobs have been moving overseas for more than two decades. In recent years, though, those jobs have become more sophisticated — think semiconductors and software, not toys and clothes.  And now many of the products being made overseas aren't coming back to the United States. Demand has grown dramatically this year in emerging markets like India, China and Brazil.  Coca-Cola CEO Muhtar Kent often points out that a billion consumers will enter the middle class during the coming decade, mostly in Africa, China and India. He is aggressively targeting those markets. Of Coke's 93,000 global employees, less than 13 percent were in the U.S. in 2009, down from 19 percent five years ago. (see my interview with Kent here). 

We're anticipating the usual 400,000 jobs lost for the week at 8:30 this morning and I sure didn't see too many "Help Wanted" signs at the malls this year, or anywhere else now that I think about it.  We also have the Chicago PMI at 9:45, Pending Home Sales at 10:00, Natural Gas Inventories at 10:30 followed by both Oil Inventories at 11 along with the Kansas City Fed's Manufacturing Index.  Later today (3pm) we get the very inflationary USDA Agriculture Prices where we can short FCOJ like this as the panic that drove prices up this week seems a bit overdone.  

Of course, I've been saying the entire commodity rally is overdone as I don't see how firing 1.4M Americans who made $35,000 and replacing them with 1.4M Chinese workers who make $2,500 means the price of oil should go up.  Only the fact that the US Government is going deeper and deeper into debt to help those 1.4M laid off Americans buy their next tank of gas is keeping demand level – without that support, buses would be MUCH more popular in the US, as they already are in China as $2,500 does not really buy you too many tanks of gas, does it?  

So we kill $49Bn worth of jobs in the US and spend $3.5Bn in China to have the work done over there and US Corporations make $45.5Bn more profit than they did by employing those lazy, demanding US workers and they no longer have to contribute to Social Security or pay for Health Care or Workman's Comp or Unemployment or any of the hassles that go with employing Americans nor will they have to pay taxes on that extra $45.5Bn as it's now money earned overseas!  So it's a real win-win for China and Big Business and a massive lose-lose for America and the American People (except, of course, for those of us who own Corporations).  Isn't that fantastic – this is Capitalism at it's finest!  Thank goodness the voters saw the wisdom if this in the last election or much of this "progress" could have been undone by do-gooder legislatures trying to "protect" the American workers.  

CHINAINC_1Our friends at GE/CNBC can't sell our country out fast enough as they finalize plans for a 50-50 joint venture with a Chinese military-jet maker to produce avionics, the electronic brains of aircraft. The deal with Aviation Industry Corp. of China would give GE access to a Chinese government project aimed at challenging Boeing Co. and Airbus in the civilian-aircraft market.  This is 100 years of US R&D into aviation research that helped build one of the World's greatest companies (BA) and now we are handing over, not just our jobs, but our hard-fought technology over to the Chinese because GE thinks it can squeeze a few more dollars of profit over there.  

Sure, I know there's nothing LEGALLY wrong with GE growing in America, employing Americans, buying up small American competitors and buying up all the patents from small American companies to consolidate it under one mighty Conglomerate and then there's nothing LEGALLY wrong with taking, as I said, the culmination of 100 years of American labor and selling it out to the Chinese but don't we have ANY values at all anymore other than making a quick buck?  Sure it's OK for GE (from a Republican point of view) but how about for a company that is pretty much owned by America, like GM?  

General Motors Co. established a joint venture this year with SAIC Motor Corp., its longtime partner in China, to produce and sell their no-frills Wuling-brand microvans in India, and eventually in Southeast Asia and other emerging markets as well.  The two deals show China Inc.'s growing international ambitions, as well as its increasing leverage over foreign partners. To make the GE deal happen, GE Chief Executive Jeffrey Immelt made an extraordinary concession, agreeing to fold into the venture all of GE's existing world-wide business in nonmilitary avionics. GM, in its deal, contributed technology, its manufacturing facilities in India and use of its Chevrolet brand name in that market.

Don't worry – I'm not going to ask you to do anything.  I learned from the last election that the American people have no desire whatsoever to change what is happening to this country.  I don't expect anything other than a tiny moment of outrage and then it's on to the next distraction for you while the top 1% remove another 1% of the value of this nation and convert it into foreign assets they can control as they prepare to leave the sinking ship that is/was the United States of America.  

So – how about those markets?  Yeah, up again yesterday – go America – woo, woo!!!  Actually, we shorted yesterday's pop in Member Chat because we are coming to the end of the low-volume week where the Gang of 12 has pulled out all the stops to pop the markets over technical levels and they haven't come across all that impressive.  As I noted yesterday (and have been noting for months) it's all about the dollar and the dollar dropped all the way to 80 yesterday and US indexes barely held even for the Day while the Nikkei took a dive last night (down 1.12%) after seeing how crappy the US markets looked priced in Yen.

That's something we discussed in yesterday's morning post and we followed that up in Member Chat in the afternoon when Jromeha asked: "Phil, do you like shorting the nikkei futures (NKD) right now? Seems like they should head a bit lower tonight with the Yen rocketing up?" to which I replied (3:37): "NKD/Jrom – They are already down 60 from midnight but if the Yen crosses below 81.5 (now 81.66) then I think playing them below the 10,350 line (with tight stops of course) is worth a toss."

The Yen failed the 81.50 line at just about 7pm last night and the Nikkei futures plummeted from 10,350 to 10,220, which is a nice 130-point drop, which is very nice at $50 per point per contract!  See, I'm not wasting my time with all this global jibber jabber – if you follow along long enough it becomes pretty obvious how to turn all this information into profitable trades when the opportunity presents itself….

In the morning Alert we jumped on the DIA weekly (we love those!) $115.75 puts at .32 but they were going nowhere in the afternoon and we went for the roll to the $116.75 puts for another .60 and they finished the day at $1.05 for a net .13 gain so we're 3 for 3 on the week so far in playing the weeklies but we decided to hold those overnight so very scary, especially as the 8:30 jobs report just came out with better than expected job losses of "just' 388,000 jobs but, the week ended 12/25 so I think we have to account for the fact that even the most heartless bastards are unlikely to fire people on Christmas Even and Christmas Day – just the 388,000 regular bastards who fire people Christmas Week!  

We also remained short on oil (also as I told you in yesterday's post) and finally caught a break with a $1.50 drop in oil futures this morning back to test the $90 line ahead of the 11 am inventory report.  The very unreliable API Report showed a net build for the first time in 5 weeks last night with 3Mb of oil added to stockpiles against a 3Mb draw in gasoline and a 1.4Mb build in distillates so we'll be looking for a net build of over 1.5Mb at 11 am to finally crack us back below that $90 mark again but, coming into the Holiday Weekend, that may be a lot to ask.   

We are macro short on oil for the same reason we are macro short on many commodities ( and where is Beeks with that crop report?) and FCX at $120 (still doable this morning).  Once again rice prices are flying on the CME with a 22% increase since August and THAT is the way to starve millions of people – as we learned in 2008, when rising rice prices were the straw that finally broke the commodity bubble's back.  My favorite Chinese restaurant STILL gives us those tiny rice boxes when they deliver these days – a real, lasting, tragic consequence of runaway commodity pricing…  

Woops, I have a lot more to say but it's 9:30 already – time to go to work!  Zero Hedge points out that both Hugh Hendry and Ashton Kutcher are preparing for the worst in 2011 and that's an awful lot of twits following those two so we'd better pay attention!  John Hussman believes we are in a "Fed-Induced Speculative Blow-Off" and Brett Arends gives us 10 very good reasons to worry about the markets – very worth reading.

Let's be careful out there!



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