Watching the Tape: A random walk through recent economic, market and business headlines, October 7, 2015

“It’s a fixer-upper of a planet but we could make it work.” — Elon Musk, SpaceX, regarding Mars

Last week was a week of discovery. Early in the week, scientists announced discovery of water on Mars.

Later in the week archaeologists unveiled the discovery of secret doors in the tomb of ancient Egypt’s King Tut. Archaeologists believe these doors may lead to the burial place of Queen Nefertiti, whose tomb has never been found.

Tut’s tomb contains secret doors

In the midst of these iconic discoveries, shoemaker Crocs, Inc announced weaker sales due to “significant headwinds” in the global economy. Crocs recently reduced its workforce by 20%. Reporting this story, a major business daily wrote that Crocs sales are an “important economic indicator”. Really?

The economy may have holes.

If that’s true, we submit that last week’s discoveries have a connection that may bode well for Crocs, and thereby the world economy. To wit:

• The crocodile was a symbol of power during Nefertiti’s reign. When those doors are opened, crocs are likely to get a lot of press.
• Saltwater on Mars means the universe has a giant new beach on which to wear plastic shoes.

Sketchy theory? Some would say it’s a Croc. But we’ll say this: if analysts are forecasting the economy based on Croc’s sales, we’re in bigger trouble than we thought.

Comment: Maybe you have to walk a mile in their shoes.

Last week’s jobs data showed that Crocs is not the only company facing significant headwinds. The U.S. economy added only 142,000 jobs in September, the slowest pace since February of 2014.

Points of interest in the report:

• The greatest job gains came in the fields of healthcare, information technology and the restaurant business. All three of these industries still face a shortage of qualified employees.
• The greatest job losses came in the petroleum and mining industries. The downside of cheaper gas.
• The average workweek declined by 0.1 hour to 34.5 hours. According to an ABC poll, only 26% of Americans feel like they’re working too much.
• The average hourly salary in the U.S. is $25.09 per hour. Plus benefits.

The Wall Street Journal graphed last week’s job numbers. An important aspect of the jobs report is the breakdown of reasons people aren’t working.

• 37.8% of the unemployed fall in the category of “permanently lost job”.
• 11.3% are temporarily laid off.
• 9.8% quit their jobs.
• 30.6% re-entered the labor force.
• 10.6% are new entries to the labor force.

Comment: “New entries” are job-seekers just out of school. “Re-entered the labor force” are people who stopped looking for work for at least a month, and are now looking again.

Does education matter? The chart below shows that it does.

Comment: College graduates still have the edge…and often the debt.

The unemployment rate is comparatively low, just above 5%. Those who distrust government statistics point out that a lot of unemployed people aren’t included in that 5% number. The next graph categorizes those “other” people in terms of psychology and sociology: discouraged workers and others marginally attached to the labor force. What do those terms even mean?

Discouraged workers are people of legal employment age who for whatever reason have given up looking for work. They are not included in the core unemployment rate.

Marginally attached to the workforce are those people who wanted a job sometime in the prior 12 months, but aren’t looking anymore. They are not included in the core unemployment rate either.

Wait a minute…now we get it! Take a look at the above unemployment chart, then look at the profile of a Crocs shoe. Coincidence?

Comment: Speaks for itself.

Meanwhile, beachfront property on Mars is available…cheap.

You can purchase an acre of land on Mars starting at $29.99 through the Lunar Embassy (www.BuyMars.com).

The company offers a variety of land packages, which include a deed, a map to your property, custom framing, and Mars landowner covenants and restrictions.

$199.99 will get you ten acres. “Don’t be fooled by phony companies with no claim”, says Lunar Embassy.

Comment: guaranteed beachfront

Watching the Tape is a compilation of news, observations and views written and edited by Bill Kibler, Senior VP, FinTrust Investment Advisors, bkibler@fintrustadvisors.com. Information is provided by sources believed to be reliable, but FinTrust is not responsible for accuracy. The information herein is not a recommendation to buy or sell any security. Past results are no indication of future performance.