The preacher man says it's the end of time
And the Mississippi River she's a goin' dry
The interest is up and the Stock Markets down
And you only get mugged if you go down town

-Hank Williams, Jr.

This week, the market is beginning to take on the lyrics from one of Hank Williams, Jr.’s biggest hits.  The question isn’t about country boys surviving; it is about the October bounce not going dry.  One of the problems, however, is that interest rates are going up; many think that means the stock market is going down.  There’s cause and effect, knee jerk reactions, and emotions, which seems to be the real challenge.

The S&P 500 has been down for five straight sessions.  It looks more hapless than helpless, but it needs something to kick in and to turn the tide.  I am not sure where such a jolt will come from, with respect to scheduled economic news and corporate earnings.

Key S&P 500 Support Points

• 2050 is a symbolic level of resistance and support
• 2037 is where 50 and 200-day moving averages are currently

 

Happy Veterans Day Born Wood Buckles on February 1, 1901, Frank Buckles was the last surviving American World War I veteran when he passed away on February 27, 2011, at 110 years old.  Frank was too small for the Marine Corp and his feet too flat for the Navy, so he became an ambulance driver in the Army. At the end of WWI, Americans celebrated armistice with Germany on the 11th hour, 11th day, and 11 months.  Armistice Day became Veterans Day in 1954.

 

Race for White House

I would like to see the next President of the United States jump-start our hearts.

Rejuvenate the Spirit

Let’s remove the rhetoric about the evils of being or wanting to be rich, and stop punishing the smallest businesses.  President Obama has spent his entire presidency saying that we have never been a nation of folks that pulled themselves up by the bootstraps- instead; it’s been a communal approach.  Therefore, the spoils of success should be distributed accordingly.

With that kind of thinking, you get regulations and laws like the Affordable Health Care law that crushes small businesses.  It must be the first order of the day to ditch Obamacare, and replace it with a more competitive plan that doesn’t harm businesses or water down care.

Small businesses don’t have a voice; yet it’s  creating a bulk of new jobs- let’s rejuvenate and spark entrepreneurship.  First, stop with the avalanche of new regulations, which could reach one trillion dollars during the entire Obama administration; it is an unmitigated nightmare.

Cost of New Regulations (billions)
2009	$83
2010	$125
2011	$43
2012	$216
2013	$112
2014	$181

 

The money spent on these new regulations is completely avoidable.  Look at the 2013 cost of new regulations that came in at $112 billion (including $86 billion for compliance and $67 million in paperwork burden).

When it comes to small businesses, there is no issue as pressing as government regulations.  Take a look at the most recent read from the National Federation of Independent Business (NFIB). The government needs to be in front and behind  would-be entrepreneurs.

The American Dream

We need a Commander-in-Chief who can get native-born Americans, young people, and vets to start businesses.  According to the work from the Kauffman Foundation, entrepreneurship hit a record low in 2014.  While there’s a slight rebound, levels remain well below historic norms.

In the past, people wanted to be rich so they started a business.  These days, if you want to be rich, post something embarrassing on You Tube, then wait for your own reality television show.  These days, the idea of opening a restaurant, and working around the clock for a year, maybe two to break- even, simply doesn’t have appeal.  The risk aversion is something that’s influenced heavily by the crowd mentality.

Then, there the issue of gaining access to money for would-be entrepreneurs- 70% of new businesses is self-funded; however, there’s good news for those looking for bank loans.  As of May, 19.4% of applications were approved, which is the highest rate since the start of the Great Recession.

Don’t get me wrong, there’s a lot of money sloshing around as this year is on track to see $70 billion of venture capital poured into start-ups and private companies, including more and more unicorns.  But for those businesses that aren’t apps of software, it’s still tough getting cash.  Perhaps a restaurant that serves “unicorn burgers” could find funding.

I think it’s a great thing that immigrants are opening businesses in America.  From the outside looking in, they see the opportunities of living and taking a risk in the land of milk and honey.

New Entrepreneurs Nativity	1996	2014
Native Born	86.7%	71.5%
Immigrant	13.3%	28.5%

Somehow, we’ve got to get young folks to take the plunge.  I understand that there are issues with student loans and the flaccid recovery, but one of the great periods of business start-ups in America was the Great Depression; it saw an avalanche of new businesses- many of which were legendary.

New Entrepreneurs Age	1996	2014
20 – 34	34.3	24.7
35 – 44	27.4	22.9
45 – 54	23.5	26.6
55 – 64	14.8	25.8

Then, there are our veterans.  These men and women are the perfect candidates to start new businesses, and the perfect candidates for banks to take risks.  There probably should be a supercharged GI Bill.  A bill that understands that today’s veterans would have been a casualty in earlier wars and conflicts.

New Entrepreneurs Veterans	1996	2014
Vets	12.5%	5.6%
Non-Vet	87.5%	94.4%

I want a candidate that makes me feel like starting a business is a great way to show patriotism. The government should encourage the opening of delis, not regulations on lemonade stands.  On this day, we should be reminded that there is no better group of people to invest in than our veterans.

Today’s Session

The markets look slightly higher this morning but there's no conviction. Department stores are taking it on the chin big time.  Macy's used to be a juggernaut and always got the benefit of the doubt, but not anymore.  If the session is like yesterday, that would be fine. After six strong weeks, there has to be some consolidation, but the market needs a spark.  It might have to wait until tomorrow.

 

 

Comments

Amen! I still can't figure him out. Is he deliberately trying to destroy the United States? Or, is he just in another Universe? Or, is it something even more dangerous? Tom Holcomb on 11/11/2015 11:29:33 AM

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