Monday, July 25, 2016

Mega

The June jobs report was all the news a few days ago, with the U.S. economy adding 287,000 new jobs, compared to economists’ expectations of 175,000 new non-farm jobs.  Markets around the world responded well to the news, and this news increases the likelihood of an interest rate increase by the Fed before the year is over.

The official unemployment rate stands at 4.9%, with 414,000 new entrants to the labor force in June.  The labor force participation rate rose a bit, to 62.7%.  Over the last 40 years, the labor force participation rate has ranged from a low of 61.3% in January 1976 to a high of 67.3% during the first quarter of 2000.

Average hourly wages in June were $25.61, and hourly pay has increased 2.6% during the 12 months to June 2016, exceeding inflation. 

One question that surfaces from time to time is how have wages and incomes grown over the last 40 years, compared to the net worth of those who own the companies that provide the jobs?  This question, like many, provides fodder for all sorts of commentary. 

My observation?  Any company which plans to be viable must make sure its products and services continually fill a need.  This typically requires a constant focus on product and service development and innovation.  It would be easy to make a list of companies which no longer exist, because their products or services became irrelevant.  And we can also make a list of companies who have been around for decades, who continually reinvent themselves.

In the same way, any employee who plans to be continually employable, and enjoy an ever larger payday, must also make sure they remain viable.  This often takes the form of learning new technical, people, organizational, or leadership skills.  Those who choose not to engage in continuing personal and professional development will find themselves either at the low end of the comp scale, or unemployed.  Again, personal decisions weigh more heavily on outcomes, than do larger economic trends.

UPS and Coke, among others, have chosen not to sponsor the Republican National Convention in Cleveland, citing budgetary constraints.  Houston-based energy company, Kinder Morgan, is selling a 50% stake in the Southern Natural Gas pipeline system to Atlanta based Southern Company for $1.47 billion.  Kinder Morgan will use the proceeds to pay down debt.

Ultimate Fight Club has been sold for $4 billion to sports talent giant IMG, backed by PE firms Silver Lake and KKR.  Brothers Frank and Lorenzo Fertitta bought UFC for $2 million in 2000.  Hats off to them for good timing on both entry and exit.  Here’s hoping the IRS at least sends them a thank you card, unless they happened to buy UFC through their IRA (not likely).

Megaship MOL Majesty has made it through the Panama Canal, and to the port of Miami, making it the first megaship to arrive at the port after transiting the newly expanded canal.  Prior to the expansion, the canal could handle ships of up to 5000 TEU’s (a TEU is a 20’ container equivalent).  The MOL Majesty carries 14,000 TEUs.

Here’s hoping you make it to the beach, or the mountains, or to spend time with extended family, before the fall season, and school, shows up in the next few weeks.



Quote of the week:

“The secret to successful hiring is this: look for the people who want to change the world.”

                                                                                                                                               
  Marc Benioff, CEO Salesforce

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