President Obama dismisses 3% of small businesses directly hit with his ideal tax rates; however, he can't dismiss the fact that they generate 50% of all small business profits, and 40% of hiring. (We heard how GM, with only 60,000 American employees, saved the entire auto industry, but can't get honest about collateral damage that will be done choking off successful small businesses.) I consider a business with 500 or less employees to be small, but let's take a look at those with 50 or less, and see the economic impact via job hiring over the past year. Overall, these businesses generated 713,000 jobs according to ADP. Where would the unemployment number be without them?
Where would Barack Obama be without them?
Yet, there hasn't been a seat at the table for these guys over the past four years, and it's happening all over again.
Heck, I thought Barack Obama's dislike of Joe the Plumber was personal, but there seems to be disdain for all small businesses. I'm not sure why this is, but I wonder if its resentment against those that dare to be rich, dare to be independent, dare to embrace the profit-motive.
The latest dog and pony show begins with labor leaders. Give me a break! Only 8% of private sector workers are in unions, so why do they get such a large voice in the matter? Unions already get waivers on Obamacare and will have agencies like NLRB pounding businesses to force unionization. There is simply no reason unions should be in the fiscal cliff Kool-Aid.
Then there are the academics. Oh lord... please give me a break!
Take a look at the Jobs Council and see how little sway small businesses have with this administration.
Positive Signs For Global Economy
I continue to say the world is chasing down America while we fiddle away with how to harm successful people out of some kind of rage and notion of social justice. For American businesses, this is great news, as they are large enough and have the right products to be real players. I can only hope my hunch that the administration will come sooner or later for those fat profits overseas doesn't come true. There were two signs yesterday, the world (outside of America and the West), while enduring a hiccup here and there; will continue its torrid pace.Sherwin Williams (SHW)
is paying $2.3 billion in cash for Comex the largest paint maker in Mexico. Comex makes two-thirds of its profits in Latin America, although it has strong presence in Canada as well. Precision Cast Part (PCP)
is buying Titanium Metals (TIE) for $2.9 billion to help keep up with demand for metals used in building commercial aircraft. Earlier this year, Boeing raised its projection on demand for such aircraft over the next twenty years to 34,000 worth close to $5.0 trillion. The size of the world's fleet will double driven primarily by countries many Americans never heard of.
These two deals also have another thing in common that I find very bullish. Both are all-cash deals. SHW is issuing 5, 10 and 30 year bonds while PCP is taking out a $3.0 billion bridge loan. The message from both is borrowing is cheaper than using shares. That means they think shares are worth more than dollars, even with interest. Also, shares of both acquiring companies soared yesterday. I think both are long term buys, although would love a pullback to make them cheaper. I really like PCP a lot. Moody's Mood
Am I insane or do I really see heaven in your eyes?
Bright as stars that shine up above you in the clear blue skies
How I worry about you
Just can't live my life without you
Baby come here, don't have no fear
Oh, is there a wonder why
I'm really feeling in the mood for love?
Fields, McHugh & Moody
Moody's is warning of a credit ratings downgrade if Washington doesn't get its act together. It's not surprising that Moody's is taking such a harsh stance against Congress and the White House punting the fiscal cliff into 2013. In addition to the fiscal cliff, there's the debt ceiling which promises to be very contentious. On that note, there is talk of actually using Mitt Romney's plan to broaden the base - wouldn't that be something. Moody may not be insane, just in love, but in Washington there is no doubt those guys are nuts.
We'll see what happens, but right now I think markets and public opinion have to move into the red to force the issue.
The more we hear about the fiscal cliff, and as it seeps into common vernacular, the more pressure we'll see on the market. In some ways, it creates opportunity when great stocks drift with the broad market. There will be angst for sure. I don't see how Moody's or Main Street could get a warm and fuzzy on this one. One more Note on Small Business
This morning, the NFIB released its small business optimism index, which inched up slightly, but the headline came from the "uncertainty" component. The reading, which measures how uncertain businesses are about conditions in the next six months, surged to an all-time high reading of 23%. Keep in mind that the pre-recession high for this component was 15%, way back under President Carter.
For all the talk of saving the middle class, President Obama is using the same old script that dismisses the middle class. With the fiscal cliff looming, and gathering more attention from the public, we are about to get the same dog and pony show that kicked off the first term. "Leaders" from business, labor, and academia will be invited to the White House to chime in on solutions. This is a farce. I suspect it's an attempt to be seen working across the aisle, but the gathering is no different than the so-called Jobs Council that rarely met, and did nothing to create jobs.