Manufacturing Renaissance- Hardly
Market Commentary
By Charles Payne, CEO & Principal Analyst

Trade data out this week points to the serious problem for manufacturing and for the notion that there has been a manufacturing renaissance. I realize President Obama said the world is buying American products because they're the best, but he didn't say it's smarter and cheaper to make a lot of things overseas. President Obama also didn't mention he wants to punish the innovators, makers, and sellers of those great American products by hijacking their profits. Operatives for the administration are sending signals of plans to attack corporate profits generated abroad before they are repatriated in order to build a so-called infrastructure bank.

Read: a pot of money for political donors and unions.

The thing is the dollar would have to crumble a lot more and a lot faster, as it probably eventually will to make many products shipped from America more competitive in local economies around the world. This means American companies are at a disadvantage. When the global economy slows, Americans continue to buy imports, but our trading partners seem to put buying our stuff on hold. Case in point, in July we imported a record $37.9 billion worth of stuff from China, establishing a $29.4 billion deficit. Then there's the European Union where our deficit exploded to $12.0 billion from $8.4 billion in June. Yes, these folks are broke, and it's only going to get worse with punishing tax hikes.

(Their banks will get healthier but not their job market-sound familiar?)

When I hear politicians talk about companies sending jobs abroad, and at the same time not having the guts to force China to stop manipulating its currency, I want to laugh. But, I have to cry because this platform will be used to punish the most successful American companies. For the record, there has always been a global economy. The great news is these days we are positioned to take advantage of this global economy but mostly by producing products near the customers. But, I fear a second term for this administration would seek to punish American companies under the guise of the greater good and the notion they didn't built their foreign fortunes.

It would be wiser to allow American businesses to bring profits home at much lower rates instead of sky-high US rates that go on top of rates already paid in the origin of sales. Many people would be surprised to learn that companies in the S&P 500 pay more taxes abroad than in America. That's why there is almost $1.5 trillion in US corporate profits outside America. It must look delicious for those looking to punish success and fund socialism.

How to Create Jobs

When President Bush offered American Corporations lower taxes rates to bring profits home, it seemed to spark a massive spike of jobs in America. I think the same would happen again. In fact, America is the only industrialized nation that taxes overseas profits. Coupled with the highest tax rates in the world, and I could see how any business would seek loopholes in the name of survival. Is there a person out there that hasn't tried to find ways to lower their own tax rate? Heck, the loopholes are so great, so enticing that Warren Buffett must take advantage.

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