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Evening everybody I'm -- claim another big day for big business but if prophets are soaring.
Why isn't anyone hiring for more on the state of the economy I want to welcome my guests John -- is the chief economist at Moody's capital markets group.
Bob O'Brien is the stocks editor for Barron's.
And Mike Casey is a reporter for Dow Jones Newswires welcome to all of you.
-- the stock market ended up today we've got some.
Excellent excellent earnings reports.
We did get some good economic data out of Europe today the markets -- a lot higher but people aren't hiring what do you think evidence.
Well that's because we're still growing -- off of very low rates of capacity utilization you're talking about caterpillar.
We look at the government -- we find it for the second water.
New orders were construction equipment primarily from overseas.
Are rocked by nearly 180%.
From year ago.
That sounds fantastic.
And the caterpillar should be hiring people left and right to meet those orders but the fact of the matter is.
-- level of construction equipment orders.
Remain some 20%.
Less than what it averaged during the three years ended 2007.
So we need today they have.
This broke -- water is in sales around a bit longer before companies have no choice but -- -- either at the staff.
Were a four goal us sales.
OK well -- let's go to Intel for example Michael Casey you know we got great numbers from Intel in fact the best in history for that company they had -- -- sales so.
You know I'm sure Intel hiring a little bit here but also Microsoft came out after the bell with great numbers we have Coca-Cola yesterday.
Wimbledon start to see that trip wire go off and you start to see hiring job.
Woman -- -- -- see some hiring the tech sector I think he's been -- for some time that the bit.
That -- if you look at it from -- at current prices for things that interest me using his bifurcated economy.
So you've got lodged companies that are able to have -- capital very easily that if what exposure to to China to these -- going markets in Asia.
They don't necessarily count to a lot bulk of the American employment and still got small businesses to coordinated -- still a difficult.
Situation for raising finance banks and on opening up that they could outlines very quickly.
And there -- -- -- depended -- the US consumer those guys to dual hiring kind of stuck in this -- concerned that's and I think that's a fact this plan Bob O'Brien what they're waiting for well this is something on the horizon staring.
Well I I think some of the headwinds out of Washington are fairly substantial.
If you talk to CEOs they'll say.
If I hire if I had step right now I don't know what sort of health care obligations on facing children at a higher.
In the face of uncertainty it taxes are changing and -- and -- -- or under those circumstances but.
Corporate America is basically hoarding cash on its books you look at a company like caterpillar.
They they fired 36000.
During the downturn.
Now -- reporting these tremendous profits but you know overall corporate America has one point eight trillion dollars in cash on the balance sheet.
If they -- hire every displaced worker and pay them a 150000 dollars in salary.
Every displaced -- -- John -- -- -- -- the economist here we're looking at.
That disconnect that that bit of fear yet that these workers that happened been laid off are stretched to the limit that we -- -- productivity where you're squeezing the most.
Out of an employee -- and they're working overtime but how much longer does that continue before some of these employers.
Look at their numbers is that I don't bring in more people.
But that -- -- -- sales continue to grow.
We may be fast approaching that point where businesses have no choice but -- at the staff and the big surprise may be.
The size of employment gains.
That our real lives sooner rather than later.
You say companies are giving at least some of them negative guidance for the second half of -- here.
That means they're still not sure.
Yeah no they're still not sure in some of the concern right now is that a lot of the power in the earnings are we seeing -- simply.
From the fact that we went through this massive downsizing in corporate America.
Job layoffs spent plants being idled a slowdown in in you know replacing equipment and some of their services so.
A lot of that most of the fact that these are lean meat companies and now though we squeezed all of the benefits we can out of those nation.
It's Michael Casey Robert Altman who's investment banker and a former formerly worked in the government wrote an op Ed recently and said.
That President Obama is not anti business if you just look at the numbers for example.
Course the guys like gotten Seidenberg Verizon think he is but -- but corporate profits since President Obama took office are up about I believe 41%.
Dow is up since he took over more than 20% and so very -- disconnect at what point.
-- big business connect again with this administration.
One in the public needs to go to two ways vitamin I think it's an and that that I put things instinct that you pointed out -- the sudden administration should be doing just reaching out to it to businesses are showing much what sort of business friendly fights and to -- and the message in some respects -- -- Displaced.
But there's obviously -- things that could be done as well -- -- -- -- -- really sort of focus especially on small businesses I think if you were excluded -- -- Got to -- sell the hiring though that there have been so many other issues BP still not to mention all of the other problems out there and in the world.
With the war in Afghanistan but jobs becoming the number one focus do we start to see a shift toward what some people say should have happened more than a year ago.
Well you know if we continue to have improvements on the equity side.
Investor confidence will eventually be transferred to business executives and as a result I would expect to see more in terms of business hiring.
It would be very helpful -- business that executives were.
Firmly convinced that this latest climb -- rising trend of consumer spending will persist unfortunately.
Let's not forget.
We did have reversals by retail sales.
The last few months of may June so -- of the -- most important that the American consumer showed that they have the wherewithal and the willingness.
Could not continue to -- -- if that's the case.
And up -- and -- -- activity that will be material will not be that far away.
But that's a chicken and egg question -- because.
You don't do we're not gonna start to see consumer spending until companies start to hire but companies are gonna cite a higher -- -- really see the consumers.
Offended -- -- it's just think it's a classic vicious cycle.
And you're -- classic as well I think that's the dilemma of -- in just let's not forget how big shock was back in 2000 and I missile -- to the list in the losses CFOs and CEOs -- it looked at that stage.
Financial crises can actually -- deliver real economic -- and so it.
Things like the you know this crisis in Europe which would otherwise piece of rather -- a -- -- distant thing.
Is actually something that's in the BE in the minds of of executives and enough.
Focusing on every -- but it's something that's not there is as a concern that could bring.
You know it could turn that things back to have a more negative situation and the other -- but.
Yeah absolutely right I think you know what happened with Europe we were doing quite well up until -- late April -- -- problems in Greece.
Then we suddenly had a -- predict stock price volatility widening of credit spreads.
It not only did business does not think twice about capital spending an increasing staff I would have been in all likelihood.
Consumers who were on the war water lined up.
Regarding purchasing a home or some other big ticket item purchase.
Shied away when displaying the -- that.
-- -- rates and nobody did you know it makes sense for corporate CEOs to keep some money on the balance sheet.
Number one they went through -- exactly what Michael described the closing of the commercial paper market which meant they couldn't borrow money to meet their payroll.
Right now they're saying we're gonna happen if I -- -- -- -- the time to gain competitive market share assets are cheaper they could use some of that balance -- money and start buying up that -- but fear is to dominate you know at some point.
It's a battle between fear and grief -- is winning Giuliani is still -- all right John -- Michael Casey Bob O'Brien thank you great to all of you big brains here -- the Willis report.
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