Moneybeat: Jobs and work

MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: Alright, time now to talk business, markets, and the economy with financial analyst and advisor David Bahnsen. He is head of the wealth management firm, the Bahnsen Group, and he is here now from Southern California. David, good morning to you.

DAVID BAHNSEN: Well good morning Nick, good to be with you.

EICHER: Well, David, let's kick off Labor Day by talking about jobs. The new jobs report is out from the government 187,000 new jobs added. But the headline unemployment number ticked up, it went up to 3.8%. So what did you see in the jobs report for August?

BAHNSEN: Yeah, I mean, I think that the headline kind of captured most of the basics, the fact that from a cosmetic standpoint, the unemployment rate jumped up, even as new payrolls were added. I think all things being equal, the Biden administration would prefer a 3.5% versus 3.8%. But that just you know, it really has more to do with the labor participation rate than anything else, the denominator changing. Average hourly earnings were up 2.2% for the month, and so they're up 4.3% year over year, I think that's a really good number in the sense that you want wage growth and wage growth over 4% is a good number. But it is most certainly not inflationary and adding to this idea of what they call the wage price spiral. I think we're now going on about six months or more of that whole theory being heavily disproven. And so it was mild improvement, it does give the Fed I think, no reason to, within their silly model of worrying about too many people having jobs in a red hot labor market and other things like that. The data was soft enough that I don't see any reason to think that the Fed changed their mind about not hiking rates again here in September. At this point, that looks to be pretty much a foregone conclusion. So I think you want to look at small business startups that there continues to be activity of employment on the self-employed side, small business startup, that number was good in August. But where you, you know, see things softening or some of the other areas where they had been really high. So a little bit of something for everybody in this month's report, Nick.

EICHER: Alright, David. Well, I know this subject is near and dear to you. We've touched on this before. But I do think it bears repeating, particularly on this day that we set aside to honor work and those who do it. Talk a bit about your theological commitments, David, and what they have to say about labor and vocation, and our responsibility that God gives to us to work.

BAHNSEN: Yeah, I always think it's nice people have a Monday Holiday like this going into the new school year. And the fall is sort of like officially, the end of summer is what Labor Day has become for American culture. In the Christian work ethic every day except for Sunday is a Labor Day. For God Himself, who created the world by working for six days and then rested on the seventh, every day but one is Labor Day. So I almost wish we didn't have to have a holiday. But I get it, it's to kind of celebrate the idea of work. But my view of work theologically is it's what God made us for. That he made us to work he made us to cultivate the creation to extract the potential out of the creation, to do so with the creativity and the innovation, the entrepreneurialism, the productivity that only mankind was created with that only mankind possesses unique from the other elements of creation, unique from the animal kingdom, the plant kingdom, that there's a dignity that we have by nature of being made in the image of God. And that one of the areas in which this is most manifest is our capacity for work. And I do have a book coming out on the subject. So it's all done. It's at the publisher, it's up on Amazon now. But I talk more about this subject in ways that I think will surprise people in the book, the website, by the way, it's fulltimebook.com. And what the argument I'm going to make, Nick, is not just that we have been created for work, but that we're living in a time where a lot of people are very isolated, very alienated. We talk a lot about despair that has taken over society, there's a high amount of suicide, a high amount of drug and alcohol addiction, other things that are just awful social epidemics that have gotten much worse. And this is undeniably true. And I believe that work is the primary solution on the table that not only is no one talking about, if they are talking about it, it is presented as one of the causes of the problems instead of the solutions to the problems that people are so stressed because they work so much. And I think this isn't major flaw major fallacy and that we have things happening that we can address that the Christian work ethic properly understood, properly restored from biblical teaching that a Christian work ethic would represent a world of good for this troubled society.

EICHER: Well, David, our Commerce Secretary was in China last week, several days, Secretary Gina Raimondo, she warned that American businesses and she was speaking to the Chinese officials. She said American businesses could decide that doing business in China is simply too big of a risk. She said that if China does not take action to address these risks, that American businesses may come to consider China un-investable. That was her term, un-investable. And when she says that she means things like the Chinese government hitting Western owned firms with unexplained finds and stealing their technology and even sometimes raiding their offices without cause. I did not expect to hear that from her this go round.

BAHNSEN: Yeah, so you have an interesting situation at play for the Chinese markets. When you're talking about investing in Chinese business, it's important to distinguish between public companies and private companies. The biggest thing that makes China un-investable for American investors is capital controls. And to the extent the Commerce Secretary is just reiterating, like hey, China, you would really help yourself if people were allowed to get money out of your country. You know, that would be a pretty obvious statement, and hopefully, one that people never stop uttering. And China's not going to change it anytime soon. But that's the biggest issue that keeps people from investing in China from foreign countries is the money can get in but it can't get out. Now, when you talk about public equities, American investors have the ability to not have to put the money in China, they can invest in Chinese companies, and do so through the New York Stock Exchange and do so through American vehicles that keeps the money from ever being under the control of Chinese regulators, CCP, etc. I think probably what the Secretary is referring to, though, is that even that American investors are gun shy because the reputation China has for these controls for intervention and so forth. And I am sympathetic to what she is saying. I would just like to say that, hey, America, Secretary of Commerce under the Biden administration, Secretary of Treasury under the Biden administration, regulators at the FTC, the FEC, all across the board, government interventions, discourage investment. And so if we want to make the obvious statement that what the Chinese Communist Party does discourages investment, I agree. And obviously, that's a message that most Americans agree with. But I would add the same principle she's alluding to, in a lecture in the Chinese Communist Party, you could apply the same principle here in the United States, you discourage investment with more intervention. And maybe we should be doing less of it within our own domestic economic administration as well. But yeah, I think that the whole issue of investing in China and any other geopolitical region, by the way that there are risks that you take on based on what the political atmosphere of that country may be. So there's there's kind of a lot to chew on in there, Nick, I hope I hope some of that was helpful.

EICHER: Yeah. Well, just real quick and before we go, should have brought this up last week. David, speaking of China, the expansion of the economic union, known as BRICS, Brazil, Russia, India, China, it's an anti-Western alliance, and it's becoming more anti-Western growing still further adding a rogue nation, Iran and several others. And at least one of the goals, I understand is to try to move away from the US dollar and try to avoid Western sanctions. Any concerns you have there?

BAHNSEN: Well, no. Okay, so I just addressed this in Dividend Cafe on Friday. And so it's a topic near and dear to my heart, because I think that people misunderstand how a currency works. So frequently, you have a number of countries, some of which have strong economic growth, and some of which are, are barely functioning as civilized nations. And then they've extended invitations, which will be accepted and everything will be, you know, simulated with Saudi Arabia, Iran, Egypt, Argentina, and Ethiopia. So you are going to have some large energy producers in there along with some very large energy consumers on the margin enhances the ability of some of these countries to transact. But the idea of them dropping the dollar as a reserve currency is just utterly absurd. To the extent that there's been about two transactions done so far in Chinese yuan, they still were converted into dollars post transaction, because these countries cannot hold the Ethiopian currency as a medium of stability. The currency of a third world country does not become strong by other countries wishing it so. Currencies are a reflection of a country being strong, a country's economic situation and leadership and, and trade reliability and monetary policy and so forth. And so I think that that distinction between a trading currency and a reserve currency is very important. There's no question that the motive of these countries is to be able to get around things like sanctions. I don't know what anyone believes we are supposed to do about that. These countries are going to operate in their self interest. And I would say it's imperative that the Americans operate in their own self interest. And fortunately for America, there's a population of 330 million people, and an economic powerhouse that the world has never seen, that still operates well beneath its own capacity because of our own silly decisions and excessive indebtedness. We could be so much stronger. But do I think that combining a number of weak economic countries, some of which are essentially third world countries that have come in and out of sovereign bankruptcy themselves, Argentina, Iran, Ethiopia that the combination of these countries is a threat to the world reserve currency of the dollar? I simply don't at all, but on the margin, do I think it gives them better trading leverage? Yeah, I certainly think it does.

EICHER: Alright. Well, David Bahnson is founder managing partner and chief investment officer of the Bahnsen Group. You can keep up with David at his personal website, bahnsen.com. His weekly Dividend Cafe is at dividendcafe.com. David, thank you so much. I hope you have a terrific Labor Day. And we will talk to you next time.

BAHNSEN: Thanks so much Nick.

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