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I’m a sucker for irony when it comes to news headlines. When I did my morning check of overnight developments, I was struck by the juxtaposition of two on Bloomberg News:
The first? “Only Rich Know Wage Gains With No Raises for U.S. Workers”
The second? “Monaco $400 Million Penthouse Secrecy Booms: Real Estate”
The message from the first of the two articles couldn’t be clearer. More than a half-decade after the worst of the Great Recession, the average American wage earner is getting stiffed. Real compensation per hour … meaning wages adjusted for inflation … have risen just 0.5 percent since 2009. Five years into past recoveries since World War II, you typically saw gains of more than 9 percent.
If you’re unlucky enough to be in the bottom 20 percent of America, as measured by household income, guess what? Your income actually fell by $275 a year between 2008 and 2012. But if you’re lucky enough to be in the top 20 percent, you’ve seen an average, annual gain of $8,358.
It’s not like the job market is worsening. Most data suggest it’s been getting better. Unemployment has fallen to just 6.2 percent from 10 percent at the depths of the 2009 recession. Job openings are running at their highest level in more than a decade, as I’ve noted.
“Will wage earners get their share of the American recovery?”
Plus, the “quits” rate just hit a six-year high. That suggests employees feel confident enough in their earnings potential to leave lousy jobs. Yet wages still remain stuck in the mud.
Why? Is it that all the costs associated with health care are making it so companies can’t raise wages? Are executives just too uncertain about growth prospects, or too hampered by regulation, to pay more?
Or is it just that there is still too much labor slack out there? Too many unemployed job seekers that companies can pick and choose from, eliminating the need for them to pay their existing employees more? I’m interested in your take, and would love to hear your thoughts at the Money and Markets website!
|Employment is improving, but wage gains are lagging in America.|
Meanwhile, other stories like the one on Monaco real estate suggest the rich keep getting richer. Get a load of the double skyscraper that’s under construction there, and what your top-of-the-line multi-millionaires can get for his or her money:
“The Tour Odeon, a double-skyscraper being built by Groupe Marzocco SAM near Monaco’s Mediterranean seafront, will contain a 3,300 square-meter (35,500 square-foot) penthouse with a water slide connecting a dance floor to a circular open-air swimming pool. The apartment may sell for more than 300 million euros ($400 million) when it goes on the market next year.”
Where’s Robin Leach when you need him? Certainly the spiraling cost of artwork, vintage automobiles, and real estate in Monaco … or London … or Hong Kong … or Manhattan suggest the 1 percent crowd is doing better and better with each newly printed dollar the Federal Reserve churns out! Even if, as more than a half decade of data proves, programs like QE and 0 percent interest rates aren’t doing squat for average wage earners!
So how much longer can this keep up? Will wage earners get their share of the American recovery? Or will the rich just keep getting richer? Are there any policies that can help spread the wealth? Or should government just get out of the way? Let me know at the website!
|OUR READERS SPEAK|
Nothing makes me happier than to read about how investors are making money with our guidance. So I’m glad several of you wrote in on the website to share your thoughts about MLPs.
Reader James said: “I have a number of energy MLPs that have a yield of 3.41 percent to 9.45 percent. I like that income stream. Kinder Morgan (KMI, Weiss Ratings: B) is pulling its two MLP’s into the parent company. I am selling EL Paso Pipeline Partners (EPB, Weiss Ratings: B-)before that happens for a 38.33 percent net gain.”
Reader Anthony G. added that “I own quite a few ‘toll roads,’ and have several favorites. One of them is Calumet Specialty Products Partners (CLMT, Weiss Ratings: C). It pays a 10.7 percent dividend, and since I bought on April 9th, it’s up 12.45 percent!”
Nice job, folks. Keep those investment ideas coming. As for Reader Bill M., who asked, “How can I make money from every beep of the energy toll way transponder?” understand that the column refers to MLPs. The toll way imagery is an apt metaphor, because MLPs make money from the volume of energy products travelling through their pipelines, storage tanks, and the like.
Finally, Reader Byron M. weighed in on geopolitical tensions — focusing on an area of potential conflict that has not received as much attention as Eastern Europe or the Middle East. His comments:
“WWW III is more likely to be started between Pakistan and India with their fight over water rights, and unfortunately both countries have nuclear weapons. India is building more and more dams and power plants and pulling more and more water out of the common river between the two countries for irrigation. From what I am reading, things are getting pretty testy between the two nations.”
The tensions there are definitely worth keeping an eye on. That said, I highlighted Indian stocks (and U.S.-traded exchange traded funds and American Depository Receipts that track them) as a potential investment opportunity back in May.
The catalyst was the election of the reform-minded Narendra Modi. I’m still more inclined to buy Indian investments at this time amid hopes for an improved economy, than I am to sell them amid geopolitical fears. They seem to be coiling up for a nice upside breakout.
But do continue to keep those comments coming at the website.
|OTHER DEVELOPMENTS OF THE DAY|
One of my top recommendations — in a variety of venues — this year was to go “short” the euro currency. I’ve argued for a long time that our economic prospects are much better than Europe’s, and that our Fed is much farther along in the tightening cycle/mindset than the European Central Bank.
Sure enough, the euro plunged to a nine-month low earlier today. At 1.33 or so to the dollar, I still think it’s too expensive — and wouldn’t be surprised to see it drop to the mid-to-high-1.20s over time.
The cease fire between Gaza militants and Israel failed this morning, with renewed rocket fire and retaliatory airstrikes threatening to derail peace negotiations underway in Egypt.
Elsewhere in the Middle East, Iraqi and Kurdish forces backed by U.S. air power claim they recaptured a crucial dam from ISIS militants. Those militants, in turn, have ratcheted up their threats at Iraqi Christians and the U.S.
Hard to believe it, but it’s been 10 years since Google (GOOGL, Weiss Ratings: B+) went public. If you bought some shares in the 2004 offering, boy have you made out like a bandit!
Reminder: You can let me know what you think by putting your comments here.
Until next time,
P.S. I’ve been singing the praises of the domestic energy boom for a while — and my Safe Money Report recommendations have surged in value (by more than 100% in one instance!).
Here’s a great video and story from Yahoo Finance that touches on some important, related points. I encourage you to watch it. And if you want to make money from energy and the euro, what are you waiting for? Check Safe Money Report out here!