Dallas, TX
March 2, 2010, 08:00 EST		 Dr. Joe Duarte's Market I.Q.


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Report: Small Business Has No Plans To Rehire Even If Times Improve
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U.S. stock index futures were pointing to a higher opening on Tuesday. The S & P 500 is on the verge of closing above a key resistance area near 1120. A move above 1120 could take the index much higher in the short term.
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News For Thought


Big Brother pill containers to be tested. According to The Wall Street Journal: "Much of the medicine prescribed to treat chronic conditions like high blood pressure and diabetes doesn't work—because patients neglect to take it." Enter the wireless industry with a solution. The Journal reports that Express scripts is about to start testing a new prescription bottle. According to The report: "The container—actually a high-tech top for a standard pill bottle called a "GlowCap"—is equipped with a wireless transmitter that plugs into the wall. When it is time for a dose of medicine, the GlowCap emits a pulsing orange light; after an hour, the gadget starts beeping every five minutes, in arpeggios that become more complicated and insistent. After that, the device can set off an automated telephone or text message reminder to patients who fail to take their pills. It also can generate email or letters reporting to a family member or doctor how often the medication is taken."

Medicare pay cuts of 21.2% to physicians went into effect on March 1. Physicians accross the country will likely start to make decisions about whether they continue to see Medicare patients in about ten days. That's how long CMS, the government guys that run Medicare have asked their contractors who administer doctor's service claims to hold them. This is to see if Congress will address the Medicare pay cuts.

If Congress fails to act, the pay cuts will go into effect. Then we suspect that lots of patients will have a hard time finding a doctor to take care of them, at least in a timely fashion. Reports have surfaced that physicians and hospitals have begun to lay off employees already. That means that even if you have a doctor that will actually see you, it's going to take a lot longer to get in and maybe even to get a phone call returned. That's health care reform government style.

If you're looking for someone to blame, send your letter to Senaton Bunning, who is holding up the spending bill that could ease the pay cut as well as continue unemployment benefits. According to The Journal: "Mr. Bunning is holding things up by objecting to a "unanimous consent" request to advance the bill quickly, a routine maneuver for moving legislation forward that requires all senators to go along. As the $10 billion measure foundered, Senate leaders began debating another, more than $145 billion bill that would achieve some of the same ends, including prolonging unemployment insurance until year's end. A vote on that bill is expected by Friday, and lawmakers hope to make it retroactive so that jobless workers would still get their benefits, albeit delayed."

What makes the Medicare issue worse is that this happens every year and every year Congress fails to repeal the act that makes the pay cuts automatic. The reason that doctors are getting a huge pay cut all at once is that cuts have accrued for several years, since the Clinton era law was passed.

Stay healthy or run for Congress if you want a doctor to consider seeing you anytime soon.

Report: Small Business Has No Plans To Rehire Even If Times Improve
Have Small Businesses Been Pushed Too Far?
Conventional wisdom and political talk says that small businesses are the job engines in the U.S. And while that's been the case in previous cycles, there is new evidence that this time is actually different.

Indeed, there is mounting evidence many small businesses where demand has increased, in many cases to pre-recession levels have no plans to rehire as they have learned to operate leaner and meaner.

According to The Wall Street Journal: 'Wendy Goldstein slashed 20% of her small company's work force in 2008 due to a major slowdown in sales. While demand has since picked up to close to what it was before, she says she has no plans to rebuild her staff to its previous level. "The jobs aren't going to come back just because business is better," says Ms. Goldstein, owner of Costume Specialists Inc., a costume manufacturer and retailer that today employs 38 workers and four temporary helpers. "We just cut all the fat."'

Thats' big news, because in past cycles, it was large corporations that did a significant amount of payroll trimming. In fact, small businesses are still trimming payrolls. According to The Journal: "Private-sector firms in the U.S. eliminated 22,000 jobs in January, the 24th decline in a row, according to payroll company Automatic Data Processing Inc. Employment at smaller businesses—those with fewer than 50 workers—dropped by 12,000, ADP data show"

The key is that small businesses were the ones doing the early cycle layoffs in a slowing economy as they are more sensitive to decreases in cash flow. What makes this cycle different is that "Some entrepreneurs now say they've learned to operate leaner and won't need the same headcount they had before, even after demand for services and goods fully rebounds."

This, of course, begs the question of why this time is different. And the answer, at least partially lies with Washington and the fear of rising taxes and health care expenses being perpetuated by the White House and Congress. As a response, small business owners are adapting to a new reality of doing more with less by "ross-training employees to handle new responsibilities. Others say they're hiring contract or temporary workers on an as-needed basis. And some are dividing the tasks that laid-off workers used to perform among those remaining in the same departments."

What makes this most interesting is that the recession has shown small businesses that hard decisions can lead to the company's survival. Many are cutting out people that don't produce and being more flexible by hiring contract help when needed. Others are moving work that isn't profitable off site or having it done by another firm.

Conclusion

Small business seems to have crossed the rubicon with regard to running as lean and mean as possible and this trend, if it remains in place, will have significant impact on the U.S. employment situation.

The rise of independent contractors and the self employed is likely the first thing that will become evident over the next six to twelve months as will likely be the political backlash against not just Democrats but incumbents.

The Republicans are feeling smug about their chances in the midterm election, but this trend in the trenches of small businesses suggests that something very dramatic and life changing has occurred.

That means that something different, and thus very unpredictable is now developing.

To us, it looks as if it's open season on incumbents and gridlock. More important, it looks as if the stock market is sensing that this time something different is ongoing, which is why the rally is starting to favor companies that are outside the major blue chip indexes.

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Market Moves - Stock Of The Day
Agilent Technologies (NYSE: A) Delivers A "Measured" Breakout
Agilent Technologies (NYSE: A) moved nicely higher on Monday behind a new portable measurement device.



Chart Courtesy of StockCharts.com




Gas chromatography isn't exactly dinner conversation, but it is important in chemistry and more important in drug testing, which is becoming a much more frequent development in the work place these days.

Agilent seems to have a potential hit on its hand with its new portable gas chromatographer, which according to a company press release is "the industry's first commercial transportable GC/MS system that delivers laboratory-quality analysis." In other words, if the new product delivers, it will make it easier for more people to do more testing with less bulk and less expense.

And perhaps this is what's more important, you can take this thing anywhere. The press release notes: "The 5975T LTM GC/MSD is particularly well-suited for chemical warfare analysis, first responders, and military and homeland security officials who need fast and highly accurate results in the field. Additional out-of-laboratory applications include food safety testing and environmental monitoring. "

You got it, it's got a military and a disater application, which means that anything from water testing to perhaps even criminal and forensic investigations may become easier to perform out in the field.

To the average person this may sound like inside basebal. But to investors, the breakout on the stock suggests that big money folks seem to like the idea of being able to take the lab on the road for quicker evaluation of samples and faster, more informed decision making during tough situations.

Agilent's breakout is also part of a much larger picture that is emerging in the stock market. And that is that lots of stocks outside the mainstream are starting to make big moves.
 

 


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