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  Jim Kingsland

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  General News, Jim Kingsland Market Commentary

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  11/16/12

  So which is better: a cold shower in a warm room, or a hot shower in a cold room? During the Sandy post black out I had no choice, but option two. The hot water heater here does not require electricity to warm water. It uses an old fashioned pilot light system enabling us to take hot showers even if the room temperature was running in the high 40s and low 50s. It’s amazing how quickly the house got cold with the furnace offline. It has actually spooked me a bit. A generator is on the buy list before the end of the year (but I digress).

  So here’s another of those either or questions. Which is better: a job with reduced wages and benefits, or no job at all and government unemployment benefits? At Hostess, the brilliant rank in file voted to strike and true to its word the company said it could not continue operations during a union strike and has opted for the nuclear option of liquidating bankruptcy.

  The maker of the Twinkies and Wonder Bread is shutting its doors and destroying 18,000 jobs in the process. Quite honestly, I am not sympathetic to the union. The company warned that this shutdown scenario could occur and still the union members voted to strike anyway. They are all adults, just adults with poor skills at assessing risk and reward. They must have thought the company would blink. Newsflash: companies are not the government. They must make a worthwhile profit to stay alive. They are not charities.

   Any sane, thinking person should have voted for keeping their job, even if wages were going to be lower versus having no job. (I went through that choice at Bloomberg after 11 years on the job and stayed for a while longer until I decided enough was enough and left). Now, like a bunch of lemmings, those people are going to collectively drown through losing their benefits and full time jobs in a time when full time jobs with benefits are not easy to come by. SMH (shake my head).

  I almost ordered 40 boxes of Twinkies online at Shoprite.com this morning just to have a remaining mini hoard of Twinkies. But then I reasoned, ‘do I really need to eat that stuff? Does my family need to eat it?’ Hostess is yet another specimen for the nostalgia file. I wonder if someone might come along and buy the recipe and buy the Twinkie Brand? Maybe there will be a happy outcome, at least for the sugar addicts.

  –

  More Union Antics

  The union fun and games continue. California Wal Marts will be the target of an organized Black Friday strike. Unions have tried unsuccessfully since the days of founder Mr. Sam to organize at Wal Mart and have failed. How much do these people expect Wal Mart to pay them to scan items and fill their smiley face bags with merchandise? These people are lucky to have some sort of employment.

  Again, this is a matter of practicalities. Wal Mart will merely respond by firing a bunch of employees who take part in the protest over poor wages and working conditions. Really, is Wal Mart that horrible a place to work? Do they employ child laborers, are scores of workers dying at Wal Marts on a routine basis?  Newsflash again: Wal Mart is not like some factory in 1899 where you went to work for 16 hours and wondered if you would make it out alive, or without some type of disfiguring injury.

  I am not here as a shill for big business, but if one is going to take a job at Wal Mart to begin with, one is going to get what they bargained for. Everyone who works there ought to know that anyone Wal Mart fires has several people waiting to step in to take the job and work. I have no doubt that it must be a not so ideal fate to work at Wal Mart as an associate (perhaps management affords some better opportunities). But again, it comes with the territory and is allowed to fester and live on because it is what the shoppers want when they go to a Wal Mart to seek out the “Always Low Prices.’

  There are really giant macro problems at work here – the first of which is the overall general oppression of the average American worker. It is not just a Wal Mart, or Hostess problem. Real wages peaked in the early 1960’s thanks to an ever increasing cost of living and wages that have not kept pace. Why does the cost of living continue to rise in perpetuity? It is because of our debt biased financial Ponzi system that is now running long in the tooth. So Ben Bernanke comes along and tries to flood the system with money, but actually is opposed by the deleveraging going on now which among other things does not help the plight of working Americas, especially those at the low end of the totem pole. Unions are certainly not the answer as union meddling has killed a company and 18k jobs and will fail to gain traction at Wal Mart as long as customers seek out cheap stuff.   

  –

  Wall Street Blues

  Maybe Wall Street should adopt the Always Low Prices phraseology. Stocks have continued to slip and slide.  Oversold bounce today? I’ve been watching out for it, BUT imho opinion the market is washed out and vulnerable to a larger decline of at least another 5%. The Dow is down 5% since the O win which is unusual after an incumbent wins, but then again the uncertainty of the fiscal cliff and the weak world economy (Europe officialy in recession) it’s not a surprise that stocks have fallen. Stock futures were positive before the bell, but the market has since opened a touch lower. Happy talk from DC on the Cliff would serve as a temporary juicer for the market. But what are the odds? The DC politicians have had over a year to work on avoiding the cliff. With 14 working days left in Congress this year I wonder what the lame duck Congress can accomplish with Obama. Probably nothing meaningful, which will mean more trouble for the market along with the requisite out of nowhere occasional rally.

  The metals complex is marking time with gold in the $1710. Markets are in a wait and see mode. Today marks the first day that these DC politicians sit down to hash out how to avoid going over the Fiscal Cliff. Good luck guys and gals.

  From the ‘makes you wonder’ file: Banks told by Fed to test for 12% unemployment – MarketWatch http://on.mktw.net/ZSBoIy via @MarketWatch

  Export grain prices soar as US shippers fear Mississippi closure http://reut.rs/Qh3gWe via @reuters

  Have a Weekend!

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