All posts by James Cannon

James Cannon

About James Cannon

James Cannon is an experienced hedge fund analyst. He has served on the advisory boards for various different Fortune 500 companies as well as serving as an adjunct professor of finance. James Cannon has written for a variety of Financial Magazines both on and off line. Contact James at james[at]businessdistrict.com

Economy Hot Says JOLT Data

Unemployment by county in the United States 2017.

The numbers for August are in, and it seems they are telling a happy story right now about employment and the US economy. The positive findings appear in the Bureau of Labor Statistics’ Job Openings and Labor Turnover Report (JOLT), which is an important report that does not get enough attention.

According to JOLT there were 7.14 million job openings in the USA in August, a record number. In July there were 7.10 jobs available, which was also an historic high. It seems right now is one of the best times in US history to be job hunting.

JOLT’s assessment is that the economy is running hot. August was the fifth consecutive month in which there were more jobs available than there were unemployed people to fill them. According to JOLT there were about 1.2 million more jobs than the 5.96 million unemployed. That has never happened before, at least not since series began in 2000. Also setting records is the number of new hires, which reached 5.78 million in August.

Workers are also feeling more confidence in the labor market in general. That story is told by what is known as the “quit-rate.” In August about 3.58 million workers left their jobs voluntarily, a sign, according to economists, that people feel they can take a chance and leave their old job in hopes of finding a new, better job. The number for August 2018 was up by 12.7% over last years “quit-rate” number.

Elite US Business Schools Face Shrinking Applicant Base

The Graduate Management Admission Council released findings which show that the number of applicants to US business schools declined by 7% in 2018. Most of that drop comes from international applications which showed a 10.5% shrinkage. Domestic applications also dropped, but by only 1.8%.

Making up the slack are Canadian and European business programs, which showed strong growth from international students.

Among the schools facing a smaller number of applicants are such top MBA programs as Wharton and Harvard, a reflection that young professionals are hesitant to leave their jobs to go back to school.

The steep downturn in international applications is most likely due to the more stringent visa requirements for foreign students to enter the US on student, or any other kind, of visa. In contrast business schools in Europe, Canada and Asia Pacific all had sizable growth in their number of MBA applicants.

“Demand for graduate management education is stable year over year,” said Sangeet Chowfla, GMAC president and CEO. “However, there are significant regional variations. Non-U.S. programs continue to thrive, highlighting the continued emergence of enhanced educational and professional opportunities outside the United States.”

The trend is not only caused by “a disruptive American political environment,” but also by the growth of excellent MBA programs outside the borders of the USA. Non-US citizens are more often looking into educational and professional opportunities outside the USA.

Only One Third of Census Bureau Number for Small Businesses are Truly Small Businesses

Of the 32,570,855 small businesses the US Census Bureau says are small businesses, only about one-third of them are what most people think of when they think of a small business, one that has employees.

Its even worse than that. The 76.2% of small businesses that do not have employees only account for 4% of sales of all small businesses. So what is the explanation? Who are these non-employers?

According to Alan Grundy of the Census Bureau, they are

“self-employed individuals operating a very small unincorporated business which may or may not be the owner’s principal source of income.”

Simply put, these “small business owners” are not business owners at all.

A lot of them are people making some money “on the side.” Maybe they sell a few thousand dollars a year of stuff on Etsy. Or a student that babysits to support his education. Or a professional that occasionally rents out his apartment on Airbnb. These people most likely have a full-time job with health insurance and other benefits. They are certainly not entrepreneurs. They are just earning a few extra dollars that they report on Schedule C.

Then there are other types of businesses skewing the numbers. For example, a person who owns ten rental properties, each one with its own separate tax return. Yes, he is a real business owner, but of one business, not ten. There can also be several partners that own one business, but each one files his own tax return.

Another source of the inflated figures are “independents.” These are also real businesses, but without employees. Many of these “businesses” are the main livelihood of service providers such as stockbrokers, cleaners, delivery people. A hairstylist who is independent and just works in someone else’s salon; an accountant or lawyer who works from home; or a consultant or real estate agent who works from a work-share space are all small businesses without employees. The owner and worker is the same person.

A more accurate way of knowing if someone is a small business owner is to ask whether he or she has employees. Real employers sign paychecks, have vacation policies, break rooms, hires and fires.
More precisely, there are closer to 7.8 million true small businesses in the USA. The rest of the 32 million are just people reporting extra income on their tax returns.

Popular Costume Rental Store Closing After 40 Years in Vegas

After 40 years of supplying costumes to customers in Las Vegas, Martin Sadowitz, owner of American Costumes, announced that he is shutting down his business.

Sadowitz, who is now 71 years-old, opened his business in the 1970s after he was asked numerous times to rent out the outfit he wore to disguise himself as a “singing telegram.”
Today the store boasts three thousand costumes, 700 hats and 500 wigs to rent out of his 4,000 square-foot premises located in a strip mall. The owner of the strip mall, the Gold & Beyond consignment shop, is taking over American Costume’s space.

Conventions, film crews, themed corporate events have relied on Sadowitz for their costumes. Participants of Burning Man, an outdoor, counter-culture arts festival in the desert, come to him for goggles to protect their eyes from the dust and wind prevalent at its north Nevada location.

Sadowitz explained that when famous people pass away there is a surge in costume rentals. For instance, when Michael Jackson died in 2009, and Prince in 2016, business boomed. He is expecting his John McCain masks to become popular also in the after math of the death of the late senator from Arizona.

Some of his more well-known costumers include Las Vegas regulars like Siegfried & Roy, and the Penn & Teller television show, which rented gorilla outfits and Elvis costumes.

Sadowitz says Elvis and Madonna are among his most popular costumes.

“Every man should be Elvis at least once in a lifetime,” he said.

America’s Second Trillion Dollar Company Emerges

Jeff Bezos courtesy of
Steve Jurvetson

Coming just a bit more than one month after Apple became the first US publicly traded company to be valued at over $1 trillion, Amazon takes second place in the race to corporate hugeness.

Amazon entered the rarefied atmosphere of trillion-dollar companies when its stock rose 1.9 percent last Tuesday to a value of $2,050.50 per share, just 23 cents beyond what it needed to reach that magic trillion dollar point. The price of Amazon’s stock has climbed by 70 percent so far this year, continuing to explode along with other US stocks in the tech sector. The milestone was fleeting however, when the stock actually closed up only 1.3 percent, not enough to keep it beyond $1 trillion.

Amazon has been doing quite well lately, pulling past other tech major players such as Alphabet, Google’s parent company, and Microsoft. Alphabet’s valuation stands at about $840.3 billion, and Microsoft’s at $854.5 billion.

In 1994 Jeff Bezos founded Amazon as an on-line bookseller. The company grew quickly to become one of the US’ most influential companies. Based in Seattle, Amazon is a leader in e-commerce, but also is expanding to other markets such as cloud computing, home security and movie production. Only Walmart hires more people, and this year’s profit so far comes to $4.1 billion. Bezos is also the owner of the Washington Post.

Bezos is the world’s richest person. As a the major beneficiary of the skyrocketing stock price, as of Tuesday, Bezos’ worth is estimated to be $166 billion.