The Good and Bad

Several stories crossed my screen, so I decided to pair good and bad news items on related topics.

Good: Ford and Volkswagen are co-investing in developing electric vehicles sharing development costs.

Bad: In spite of the significant decline in bee populations, the Trump administration has approved a bee-harmlng pesticide.

Good: The American economy is now into its 121st consecutive month of growth with nine straight years of 2 million plus jobs created.

Bad: The 2019 economy has softened some from 2018 due to trade/ tariff concerns, slowing global markets, waning impact of the 2017 tax law, growing US debt, and increased uncertainty which impedes investment and it should slow even more as predicted by economists.

Good: The interest in space travel and exploration involves an increasing number of countries – Japan and China have gone to the moon, eg. That spawns more interest in science which is terrific.

Bad: With the heavy cost of space travel, why don’t countries share the burden as Ford and Volkswagen are doing above? There is a lot of dupication of effort requiring money that could be invested here on earth to address water, food and climate issues.

Good: In spite of the US announcing a withdrawal from the Paris Climate Change Accord, other countries, states, cities, investment groups, companies and innovators continue to execute ideas that are addressing the issue.

Bad: The US federal governmenf needs to do more, not less to abet these efforts. Yet, another concern is getting little notoriety – the global water crisis, which is made even worse by climate change. Another city in India of 5 million people is in dire straights as its reservoir has almost dried up.

We should celebrate the good, but address the bad. We seem to be ignoring too many signals. It is hard to move forward, if we only look in the rearview. mirror. Food, water, climate, debt are signaling needs that must be addressed.

 

 

 

Why don’t more business people and investors vote for a Democrat Presidential Candidate?

Before some scoff at this question, let’s look at some data. We investors and business people are supposed to maximize shareholder and business value are we not? If that is the key goal, would we not want to vote for the party, who on average, increases the value the most? So, we should vote for the Republican candidate for President, as this party has touted they are the party of business and jobs – right?

Well, I hate to burst the bubble of some and surprise even Democrats, but the party who occupies the White House when the stock market performs the best, on average, is when a Democrat is in charge. And, on average, it is not even close.

Per a 2012 study performed by Colin Cieszynski, a Senior Market Analyst for CMC Markets, Canada, when the stock market performance since 1900 is reviewed, there are some surprising results.* Under 734 months of Republican White Houses and 617 months of Democrat White Houses (43 months of President Obama’s term were included), the following results are in evidence:

  • the average monthly rate of return under Democrat leadership is 0.73% per month, while the average monthly rate of return under Republican leadership is 0.38% per month, about half as much as under Democrats.
  • yet, the average risk as measured by monthly standard deviation is less under Democrat leadership, which is the opposite of what you would expect given the above return at 5.22% versus 5.56% under the Republican leadership.

However, let’s not stop there. Under which White Houses, on average, are the most non-farm payroll based jobs created? Again, I hate to burst the bubble of Republicans, but it is under Democrat White Houses. And, as before it is not even close. Using the Bureau of Labor Statistics after 1941 and estimates before dating back to 1921, there have been 12 Republican White Houses and going on 12 Democrat White Houses, with one year to go.** With the counter still running on President Obama’s administration, the following results are in evidence:

  • there have been over 82,000,000 jobs created under Democrat White Houses through January, 2016.
  • there have been just under 36,000,000 jobs created under Republican White Houses through January, 2016.
  • ratioing the two jobs created numbers results in a ratio of almost 2.3 to 1 in jobs created under Democrat leadership than under Republican leadership.

I fully recognize the President position gets too much credit and too much blame for the economy. Yet, they do provide headwinds and tailwinds. I also recognize that individual leaders are different under both parties. Under Bill Clinton, more jobs were created than under any other President and he was the second best President behind Republican Calvin Coolidge during the roaring twenties on average monthly return. Ronald Reagan was the third best job creator, but fell to sixth in average monthly return. FDR rated second in jobs created and fifth in average monthly return.

My point is we should be asking questions as to why this is the case, especially since it runs counter to campaign and party rhetoric. My thesis is we tend to invest in the economy more through infrastructure investment under Democrat White Houses. Not only do these investments improve assets or build new ones, they create jobs as well.  It should be noted that both Clinton and Reagan were big on trade agreements, as well, which fueled growth. While his job growth numbers were low since we were at full employment in the 1950s, Dwight Eisenhower continued investing in infrastructure building off FDR’s new deal and the stock market performed at the eighth best level on an average monthly return basis.

So, what about President Obama? As of January, 2016, there had been just under 9 million net new jobs (counting the lost jobs due to the recession when he took office), which will likely grow to net 11 million or more by the end of his last term. That would place him in 4th or 5th place in net jobs created since 1921. And, through his first 43 months office as measured in the CMC Markets study, he was in 5th place in average monthly return. I have not seen updated numbers, but he would still have a pretty good ranking, since the stock market has doubled while he has been President.

So, back to my question. If the goal is to make money, then on average the party that is the better enabler is the Democrats based on these economic measures. Please review the attached sources for any questions you might have.

*http://blog.cmcmarkets.com.au/asset-class/companies/what-does-the-us-presidential-election-mean-for-markets/

**https://en.wikipedia.org/wiki/Jobs_created_during_U.S._presidential_terms

America is one big pothole – stupid is as stupid does

In January, 2014, I wrote the blog “America is one big pothole” after seeing former Pennsylvania Governor Ed Rendell and former Secretary of Transportation Ray LaHood, on PBS Newshour. They have joined together for a bipartisan effort to promote much needed investment in our crumbling infrastructure – roads, bridges, railways, ports, etc. and have been in front of Congress to discuss these needs. Fifteen months later, not much has been done about the growing problems, and at the end of this month, our stop-gap funding of the Highway Trust Fund will expire one more time.

The Amtrak accident has caused people to recognize the need, but to be honest politicians do not need anymore wake-up calls. They are fully informed of the problems, but choose not to do anything about it. Their lack of stewardship is not a surprise, but in this case, people have died and will die from their failure to act. The interesting sidebar to this is any investment in infrastructure will create jobs and, as you may recall, that was supposed to be the number one mission of this and previous Congresses. These jobs will dwarf the jobs that could be created with a Keystone Pipeline, for example, and certainly deserve more attention than many of the items discussed in the chamber of Congress.

As reported on a repeat episode on “60 Minutes” last night, this is one issue that the leaders of the US Chamber of Commerce and AFL-CIO labor union agree on. Both were in front of Congress last fall to plead with them to invest in our crumbling infrastructure. Yet, the leaders of these Congressional Committees refused to be interviewed and will not act. And, fifteen months after the following post and six months following these pleas by the US Chamber and AFL-CIO leaders, not much has happened.

The Speaker of the House has reacted with criticism over linking the Amtrak train derailment with a lack infrastructure investing. He even stated the question as “stupid.” I recognize, as do many, that this accident is likely due to excessive speed. But, one of the investments would have added a breaking system that may have kicked in. One thing is for certain, a question about failing to invest in our infrastructure is not “stupid.” What is “stupid” is failing to act when the information to do so is so compelling and business and labor are pleading for action.

Just a quick example from the “60 Minutes” episode re-aired last night. A key railway bridge has 500 trains per day crossing it, the most heavily used railway bridge in the western hemisphere. This bridge is on the most traveled rail line in the country from Boston to New York to Philadelphia. If this bridge goes, it will not be an accident. It will be an accident waiting to happen that could be prevented.

There are other arguments noted in the attached post. Please join with me and write your Congressional representatives and ask them to act. In fact, we should tell them to act as their lack of stewardship is beyond poor. Using the Speaker’s word, their failure is “stupid” and we will be the ones who pay for their stupidity.

https://musingsofanoldfart.wordpress.com/2014/01/10/america-is-one-big-pothole/