Setting Sights Higher

Charles Payne
Posted: May 02, 2014 12:01 AM
Setting Sights Higher

Lots of news came out yesterday from GDP to ADP to the Federal Reserve, and yet I think by far, the biggest news was the failure of a bill to force a higher minimum wage on businesses.

This bill is the worst on so many levels; from violating free markets, to enabling and encouraging mediocrity, to pushing people living on fixed incomes, to snuffing out the individual exceptionalism that often needs a baptism by the fire of adversity. It is about fairness, allowing the entrepreneur to cobble together his life savings, and to borrow from family and friends to take a shot and not have it hijacked by politicians buying votes by killing the dreams of prosperity.

I have to be careful when I discuss this, because from a political point of view, and in many ways, this is a non sequitur for the 73.4 million of the 75 million workers that do not work for minimum wage. Yes, I think a large percentage of people stuck in jobs working for minimum wage have done things that have put them in that position, or that has kept them in that position. Simultaneously, I also think there have been others, in similar circumstances that have chosen a different route - a more difficult one that requires more sacrifice and commitment.

A higher minimum wage is an affront to those same people who have bought into the notion of self-help and the American Dream.

Yes, I have to be careful because it is not easy to work and earn the minimum, especially when it is so enticing and more economically rewarding to live off the public dole. I think most people working minimum wage jobs could change their lot in life, but why make the effort if lawmakers are trying to give you a 39% raise? Even the average worker has seen their actual incomes decline over the past few years, (the last time the federal minimum wage was increased was in 2007, maybe the last time middle-class wages actually increased).

The left will say the GOP is heartless and hate women as they shake their collective fists at capitalism. The irony is if their policies worked, there would not be a hint of debate over the minimum wage. Fewer people would have to choose between flipping burgers and chilling out on welfare, food stamps, and an avalanche of additional benefits both federal and local, which would make up for those that have fallen through the cracks in this mean old world.

On the other hand, those who have deliberately fallen through the cracks are drawn by a lack of discipline and work ethic, by that shiny object called 'pity', and by vote buying. This is often what seals the deal.

Fed Meeting

The Fed tapered again, making it four times in a row, even as the GDP number came in at 0.1% growth. Their statement completely cut out any reference to an unemployment rate as a trigger for hiking rates, and they went on to make additional observations.

Fed Cheat Sheet



Housing Spending:

Rising more quickly

Business Fix Investment:

Edge down

Housing Recovery:

Remained slow

Fiscal Policy:

Is restraining economic growth, although diminishing


Running below long-run objectives

However, I find it very interesting that the direct shots across the bow are with respect to fiscal policy. The Fed used to hint that the mess was coming from the White House, but these comments were a more direct hit, and in many ways acknowledgment that their crazy quantitative easing ploy was too dangerous and unsuccessful. Now the Fed must unwind this thing, even as it works to assure investors that a rate hike is a long way off.

I think it will be a 2016 event, but I know some smart people who say it will be a 2020 event.

In the meantime, that tepid GDP report had hot spots like soaring healthcare costs and soaring energy prices, which are examples of the poor and even devious fiscal policy in place. We must all be punished for the greater good, whatever that is.

Have no fear, President Obama blamed it on the weather, but said it was great news for the healthcare law.

Corporate News

I have more faith in what I hear from corporate America, and once again, I have seen some positive signs about our future. I am not talking about a 4, 5, or 6% GDP growth or a jobs explosion, but instead a rebound that lifts the economy from the depths of the abyss.

Trinity Industries (TRN) posted record revenue and earnings for the first quarter, and seems positioned for serious growth going ahead. Extrapolating from this news, I am feeling good for the overall economy based on the following:

  • Rail car orders: 9,625
  • Backlog: 42,630 worth $5.2 billion
  • Construction product revenue: $21.7 million, up from $7.7 million, a year earlier

Moreover, investors have to read income statements before acting with the herd, because there is a propensity to punish even clear winners. In the case of Trinity (which saw a strong spike in wind turbine business; $210.6 million from $154.7 million), I think its saying that the second half is going to be much better than the first, and although America will only be firing on a fraction of its cylinders, there will be some firing. In the long run, a combination of a second half momentum, and the GOP taking the Senate, could be huge for the stock market because this would save the country.

Honestly, wouldn't it be better to debate how to create a wave of maximum wages in this country, instead of this bogus debate over the minimum wage?