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"Cutting spending is like slowing down a supertanker- it takes time" -Jerome Cahuzac
Budget Minister, France

As Americans celebrated the birth of the greatest nation in the world, France moved further away from its great days with a bunch of new taxes on the rich, large banks, and energy companies. The taxes will rake in €7.2 billion with €2.3 billion in one-off levies on the wealthy (€1.3 billion net worth) and €1.3 billion on certain corporations. Still, France has a massive debt problem, chronic unemployment, and little prospects of growing its economy anytime soon. The fact is that France put its economy in neutral a long time ago, content with mediocrity and living off its past glory and constant arrogance.

There is very little home-grown wealth, and now the government will milk dry the remaining fortunes as if it were part of a public domain.

At least these latest tax hikes were focused on people with net worth of €1.3 million, in America the onslaught of new taxes hits household earning $250,000 annually. France says it will freeze €1.5 billion in spending, but admits it must do much more. I guess it's easier, and it's like riding a speed boat to confiscate the wealth of others, rather than slowing that supertanker of spending and destructive taxes. Goaded on by the President of United States, and misunderstanding on how wealth is created, this could be America's future.

Auto Sales

June auto sales came in better than anticipated and gave hope that this year's sales will be the best since 2007. Two things that stood out the most were how light trucks continued to make the difference and that GM and Ford continued to lose market share. Interestingly, as Toyota and Honda scooped up market share, both also raised their prices.

Today's Session

Tuesday's session was fantastic even if it was half a day and had light volume. There has been a shift in pent up anxiety from worrying about the next leg lower to concern about missing a tradable bounce. So much depends on money-printing on both sides of the Atlantic and seeing some signs of life, especially now that the Supreme Court has given the okay to creating the biggest supertanker in history.

Speaking of printing money, for the first time since 2008, China cut its rates for one-year loans and deposits. It's a gambit that could hurt banks but encourage more competition and might get money off the sidelines and into the domestic mix. Interestingly the ECB rates cut didn't move the needle for the market as it was highly anticipated.

ADP Says Jobs!!!

The ADP report out this morning points to significantly more jobs than expected from tomorrow's jobs report. The 176,000 is well above the 95,000 expected. Of course we need 350,000 a month to whittle away at all the jobs lost since the great recession began. Be that as it may, look for official estimates on tomorrow's number to shift higher and bring the general consensus above 100,000. I'm not sure if this changes what the Fed might be planning as it still is a terrible number. Moreover, can the street find a way to celebrate mediocrity at this stage of the recovery?

This makes the next 24-hours even more of a nail-biter.

Comments

NO and I am beginning to not trust CNBC and their euberance. Everything is coming up roses according to them and their pro Abama reporting.... I don't like what I am seeing in the Mid East.....it could blow up in our faces and I have to wonder if the Pentagon is really ready as long as Obama is Commander in Chief...what a laugh..... tom wayne on 7/5/2012 10:02:51 AM

The employment (NOT unemployment) rate has stabilized and will grow slowly. Employers have increased efficiency and productivity by selectively eliminting their non-producers and integrating efficient production machinery. Lean and mean is the trick. Z on 7/5/2012 10:35:14 AM

Yes, but so what? The bump won't be much, and we will need to create 300-400K jobs-rate steadily, month after month, year after year to break out of this bad economy. Tomorrow won't even be close. George Stelzenmuller on 7/5/2012 10:46:54 AM

Auto sales are a good indicator, and the latest seem to reflect a drop of over a million from the annual rate in May. That, combined with the manufacturing slowdown, suggests a worse jobs picture coming. The ADP numbers look like a blip to me. The July numbers should be much more significant. Dennis Howard on 7/5/2012 11:26:04 AM

I expect long term jobs to stay flat or fall until we have more visibility regarding the outcome in November. If the numbers show that the Obama tax supertanker will get repealed by Republicans taking full control (gain Senate and White House), then we should see a steady climb in hiring. If it appears that Democrats will retain either, then there will be a fundamental shift toward more temporary or contract employees that can be dropped quickly and are not subject to the uncertainty of how an unchecked bureacracy will implement socialized medicine. Certainly, in the long run, companies will not spend anything more on health insurance. They will just continue to degrade employee premiums, deductibles, and co-pays. Before I retired, the corporation I worked for changed the medical coverage so that total premiums (company and employee combined) decreased by ~4%/year for 2 years in a row. They also decreased company share of premiums by ~8% each of those years, thus increasing employee premiums by ~12% each year. This they did while giving raises to the workers which were less than inflation, and raise to upper management that were huge. The bottom line is that given a couple years, Obama-dont-care costs will be circumvented by the big corporations and paid for by the small businesses and individuals. And that cost dumped on the small businesses will prevent any big improvement in employment for years unless it is repealed. And until we know the extent of the damage, there will be little favorable move in the jobs numbers. Bob G on 7/5/2012 11:57:27 AM

No, but if they do beat expectations, the numbers will again be adjusted down through the subsequent less visible routine revision. Patricia Flynn on 7/5/2012 3:20:44 PM

Charles, really enjoy watching you on Fox. I saw you today (July 7) on Cavuto and just wanted to let you know there are MILLIONS of us out here who also believe that obama is destroying our economy on purpose. There are two choices-he and his regime are either total morons-or they know that what they're doing can never improve our economy. I don't think they're total morons. Just wanted to let you know that. A lot of people, including Neil-refuse to admit what we know. This is intentional because the far left hates capitalism and the free market. And they want to PROVE that it doesn't work. God bless you-stay strong. Keep fighting the good fight. Dianna Chaney on 7/7/2012 12:58:09 PM

Flat, at best R. Hoffman on 7/8/2012 11:40:53 AM

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