Our inventions are wont to be pretty toys, which distract our attention from serious things. They are but improved means to an unimproved end…We are in great haste to construct a magnetic telegraph from Maine to Texas; but Maine and Texas; it may be, have nothing important to communicate.

-Henry David Thoreau

Academic and literary types opposed American-style capitalism from the very beginning, even as it was lifting the nation to a level of economic progress never seen in the history of mankind.  Hence, the release of The Gilded Age: A Tale of Today by Mark Twain and Charles Dudley Warner in 1873 was a satirical novel that poked fun at what they saw as a grand time for a select few (that gold gilded surface) while the masses languished in misery.

It is true that there were a tremendous number of scandals, mistreatment of labor, and the lack of civil rights.  Immigrants arrived to daunting obstacles for inclusion and opportunity, unless you considered where they were coming from.  The 1800s saw two financial “panics,” including one that began when Mark Twain published his tome in 1873.  The unemployment rate soared to 14% as 18,000 businesses were forced to shut their doors.

The Panic of 1893, some historians say was worse than the Great Depression, saw 15,000 businesses fail, 500 banks fold, and years of unemployment that remained above 10%.

There is no doubt the period wasn’t perfect; however, as you look back, it was perfect.

However, so much wealth was created that we saw the introduction of the so-called ‘robber baron,’ and the rise of unions demanding a bigger piece of the action.  But the industrial revolution saw a record of capital formation and machines that made workers more productive.  And individual wealth came with these developments.  Financial and health wealth:

1860 – 1890

• Real Wage Growth +60%

1865 – 1898

• Wheat Production +256%

• Corn Production +222%

• Coal Production +800%

• Rail Tracks +567%

Not only did the average person become richer, but life also lasted longer. The life expectancy surged from just under 40 years; today, it is near 80 years, and experts say that babies born today will routinely live to 100 years, on average.

Today, it is safe to say Americans long for another so-called Gilded Age.  Factories are shutting or moving away, and the industrial revolution has shrunken from iron-made machines to silicon wafers.  Interestingly, the left is still pushing its anti-capitalism agenda, which took much of its marching orders from the publication of ‘Progress and Poverty’ in 1879, despite the fact that our economic engine is nowhere close to the growth machine it was then.

Our industrial machine is rapidly becoming a rust bucket.  Yesterday, industrial production for October was -0.2 against consensus estimate of +0.1; down in nine of the ten months of 2015, the backbone of our success looks extremely vulnerable.  The capacity utilization was lackluster as well, marked by the decline in crude.

Industrial Production October 2015	M/M Change	Y/Y Change
Consumer	-0.1	+1.2
Business Equipment	+0.2	+3.5
Construction	+1.7	+1.5
Material	-0.4	-0.6
Mining	-1.5	-6.9
Utility	-2.5	-1.5

Industrial production peaked last year; now sideways, the movement is giving way to a downturn.

Moreover, there will be questions about what this news means for the data-driven Federal Reserve, but the larger issue and bigger question is how we can bring back the Gilded Age- America needs it desperately.

Today’s Session

Equity futures have been higher on mixed reactions to retail earnings.  Tech names are edging up in part to the addition of Apple (AAPL) and International Business Machines (IBM) to the Goldman “Conviction List.”

Housing data out this morning is mixed but underscores the shift from apartments and condos to single family homes.  I’ll have move details on that in the afternoon note.

I like the action in futures before the open but don’t trust any rally attempts at the moment.  That being said, the resolve must be noted as we build and re-check our buy list.

 

 

Comments

As the president's rationale for importing thousands of potential muslim terrorists is to keep them from joining isis (which is the reason he doesn't want to bring in the truly beleaguered Christians from the area) he should offer all members of isis a home in the suburbs with a two car garage and full welfare benefits as his strategy for defeating them. paul meyerhoff on 11/19/2015 6:07:19 AM

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