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Unskilled and low-IQ laborers suffer the most from porous borders. | Urgent Apple Announcement On Ju

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Unskilled and low-IQ laborers suffer the most from porous borders. [Morning Reckoning] June 06, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Urgent Apple Announcement [James] On June 10, Apple is due for their biggest product launch of the past 40 years… where they'll announce their breakthrough product in artificial intelligence. A product that will affect the everyday consumer’s life more than any company to date… That’s why James Altucher is hosting a live event this Thursday, June 6 at 7:15 p.m. (ET)... He’s going to pull back the curtain on Apple’s AI reveal and give you all the details you need to target a 1,000% opportunity in the next year. [Click here to reserve your spot NOW for Thursday, June 6th at 7:15pm (ET)]( Clicking the link above automatically registers you for Apple’s 10X AI Announcement. By reserving your spot, you will receive event updates and offers. We will not share your email address with anyone. And you can opt-out at any time. [Privacy Policy.]( The People Who Need and Deserve Our Help Asti, Northern Italy June 06, 2024 [Sean Ring] SEAN RING Good morning Reader, One argument Jordan Peterson made stood out when I first heard of him. Peterson discussed the challenges faced by [individuals with an IQ below 83](. He emphasized that people in this IQ range often struggle with tasks that require even moderate levels of cognitive ability, making traditional employment difficult. Peterson argued that this segment of the population, constituting roughly 10% of people, is often unable to perform many jobs without supervision or make significant errors. This presents an important societal challenge, as these individuals need to be integrated into society (and the economy) without being marginalized. Peterson pointed out that the U.S. military doesn’t accept recruits with an IQ below 83, as experience has shown they are more likely to become a liability than an asset. This policy underscores the broader issue that many roles in modern society are too complex for those with lower cognitive abilities. Peterson concluded these individuals require special consideration and tailored support to thrive. Let’s expand that special consideration to unskilled laborers. The average IQ of an unskilled laborer typically falls around 90. How many Americans have an IQ of 90 or less (which includes the sub-83 IQers Peterson talks about above)? (Skip the italics if you don’t want the math.) The distribution of IQ scores in the population follows a normal distribution (bell curve), with an average IQ score set at 100 and a standard deviation of 15. This means that most people (about 68%) have an IQ score between 85 and 115. Given the normal distribution of IQ scores: - Approximately 50% of the population has an IQ score below 100. - Roughly 16% of the population has an IQ score below 85. - Approximately 2.5% of the population has an IQ score below 70. To determine the percentage of the American population with an IQ of 90 or below, we look at the distribution: An IQ of 90 is about two-thirds of a standard deviation below the mean (100 - 90 = 10, and 10/15 ≈ 0.67). Using the cumulative distribution function (CDF) of a normal distribution, we find that the area under the curve to the left of 90 (or a z-score of -0.67) is approximately 25%. Therefore, about 25% of Americans have an IQ of 90 or below. Twenty-five percent. One-quarter of the population. My friend, that’s over 83 million Americans. As Peterson mentioned in the link above, liberals think if you spread educational resources around, everyone will get educated to the same level. This simply isn’t true. Conservatives think if people would just get up off their asses, they’d get a well-paying job. This is also untrue. Though I’m a free trader, I can see the damage NAFTA and its successor free trade agreement have wrought on these Americans. Unemployment isn't just a statistical blip for unskilled workers; it's a persistent and pervasive issue affecting Europe and North America. The unemployment rate for those with only basic education is a staggering 9.3% in OECD countries. This isn't a minor inconvenience; it's a systemic issue that needs addressing. Let's examine why unskilled laborers and those with lower cognitive abilities are left out in the cold and, crucially, what we can do to fix it. [ Strange and Powerful AI Project Revealed]( Jim Rickards was recently passed some urgent new intelligence involving a $10 million A.I. project… That could have a massive and direct impact on your life. Everything you need to know is in this 2-minute AI briefing. [Click here to play his urgent message now.]( [LEARN MORE]( The Wage-Setting Trap One common scapegoat for high unemployment among low-skilled workers is the minimum wage. The theory goes that setting a wage floor above the productivity level of low-skilled workers will price them out of the market. If an employer has to pay more than the worker's output is worth, they simply won't hire. But to my immense surprise, this theory doesn't hold water when we look at real-world data. In reality, the negative impact of minimum wages on employment isn’t as clear-cut. In countries where firms have monopsony power (where they are the dominant employer and thus can set wages), a modest minimum wage increase can boost employment. This is because it forces these firms to pay closer to the actual market value of labor, making jobs more attractive without reducing the number of positions available. Moreover, in many OECD countries, collective bargaining agreements set wage floors for various sectors and occupations. These agreements don't necessarily lead to higher unemployment. Countries like the Scandinavian nations, which have high union density and coordinated wage bargaining, often see lower unemployment rates among low-skilled workers. Employment Policy Failures Generous unemployment benefits are often blamed for reducing the incentive to work. If people can live comfortably on unemployment checks, why would they rush to take a job? This logic seems sound, but it's overly simplistic. While generous benefits can reduce the intensity of job searches, they also allow for better job matching. When people have time to find jobs that suit their skills and preferences, they are less likely to cycle back into unemployment. However, the duration of these benefits is crucial. Long-term unemployment benefits can trap workers in joblessness, particularly the low-skilled, who already face significant barriers to re-entry into the workforce. The solution here isn't to slash benefits but to combine them with active labor market policies (ALMPs). These include job search assistance, training programs, and hiring subsidies, which make the unemployed more attractive to employers and more efficient in their job search. Globalization's Double-Edged Sword International trade and labor migration are often touted as boons for the economy but also present challenges for low-skilled workers. As developed countries trade with emerging economies, the demand for unskilled labor in high-income countries diminishes. Jobs that require low levels of education and skill are outsourced to places where labor is cheaper. Furthermore, increased immigration increases competition for low-skilled jobs. If immigrants are willing to work for less, wages and employment prospects for native low-skilled workers will decrease. However, this issue is more complex than it seems. Immigrants also contribute to the demand for goods and services, potentially creating jobs. The key is managing immigration to balance these effects, ensuring that the influx of workers doesn't overwhelm the job market, something the President seems to have just learned. Monetary Policy and Aggregate Demand Monetary policy plays a significant role in determining employment levels. High real interest rates can stifle investment and consumption, increasing unemployment. Low-skilled workers are especially vulnerable during economic downturns because they are often the first to be laid off and the last to be rehired. The persistence of high unemployment among low-skilled workers during recessions leads to structural unemployment. Long-term joblessness erodes skills and makes workers less attractive to employers, creating a vicious cycle. The key is keeping interest rates at a level that spurs employment. The Role of Active Labor Market Policies Active labor market policies (ALMPs) are critical in combating unemployment among low-skilled workers. These policies include: - Job Search Assistance: Helping workers find available jobs more efficiently. - Training Programs: Enhancing workers' skills to make them more competitive. - Hiring Subsidies: Encouraging employers to hire workers who might otherwise be considered too risky. Countries that invest heavily in ALMPs, like Denmark and the Netherlands, see significantly lower unemployment rates among low-skilled workers. These programs improve job matching and ensure that workers remain engaged in the labor market, preventing the erosion of skills. Solutions to the Problem So, what can address the high unemployment rates among low-skilled workers and those with lower cognitive abilities? Here are some practical solutions: Reform Wage-Setting Mechanisms: Ensure minimum wages are set at levels that don’t price low-skilled workers out of the market. This can be achieved by tying minimum wage increases to productivity growth rather than arbitrary benchmarks. Enhance Active Labor Market Policies: Governments need to increase investment in ALMPs. This includes better funding for job search assistance, vocational training programs, and hiring subsidies. These measures help bridge the gap between job seekers and available positions. Manage Immigration Effectively: Implement immigration policies that balance the influx of low-skilled workers with the domestic labor market's capacity to absorb them. This can include quotas or temporary work permits that adjust according to economic conditions. Encourage Lifelong Learning: Promote continuous education and training programs for all workers, regardless of their current employment status. This ensures that the workforce remains adaptable and competitive in a rapidly changing job market. Promote Inclusive Economic Policies: Governments should focus on policies that promote economic growth across all sectors, ensuring that the benefits of globalization and technological advancements are widely shared. This includes investing in infrastructure and supporting industries that create jobs for low-skilled workers. Wrap Up High unemployment rates among low-skilled workers and those with lower cognitive abilities aren’t an inevitable consequence of modern economies. They result from specific policy choices and economic conditions that can be changed. By reforming wage-setting mechanisms, enhancing active labor market policies, effectively managing immigration, encouraging lifelong learning, and promoting inclusive economic policies, we can create a more equitable and prosperous labor market for all. With the right mix of policies, we can ensure that everyone, regardless of their skill level or cognitive abilities, has the opportunity to contribute to and benefit from economic growth. The path to full employment for all workers is clear — we just need the will to follow it. All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com X (formerly Twitter): [@seaniechaos]( [Urgent: Claim Your Copy Of This New Book From America’s #1 Retirement Expert!]( [Click here to learn more]( Forget everything you’ve ever been told about retirement. According to [this new book]( – written by America’s #1 retirement expert – you don’t have to wait until you’re 65+… and you don’t need millions of dollars. [The strategy you’ll find outlined inside this book]( is completely different… All you have to do is tap into the little-known income streams revealed inside this book… And you’ll learn exactly how you can generate almost effortless income every month… instantly, in some cases! [And today, for a limited only, you have the chance to claim a copy of this book for just $1. Click here now to claim your special book offer.]( [LEARN MORE]( In Case You Missed It… There's Blood Battery Juice in the Streets Greg Guenthner, Editor [Greg Guenthner] GREG GUENTHNER Good Morning Reader, All hell broke loose on the New York Stock Exchange early Monday morning as traders slammed shares of Berkshire Hathaway, opting instead to gobble up GameStop calls as meme madness returned to the markets with a vengeance. OK, that story’s not exactly true. But you have to admit this would be one of the most hilarious (and irrational) market narratives of all time. Imagine investors cratering Uncle Warren’s Berkshire Hathaway by more than 99% to follow a massive GameStop squeeze. Insanity! In reality, a glitch at the NYSE early Monday morning incorrectly showed Berkshire Hathaway and a few other high-profile stocks almost completely wiped out, which just so happened to occur right as shares of GameStop were halted for volatility following a Sunday night stunt courtesy of none other than Roaring Kitty — the GameStop trader who sparked the first meme stock rallies way back in 2020-2021. This time around, Roaring Kitty posted a screenshot of his GameStop portfolio reportedly worth more than $100 million. Of course, it’s impossible to say whether the screenshot shows his actual holdings. But that didn’t stop the meme stock crew from pouncing on shares late Sunday night using Robinhood’s 24-hour trading feature. By Monday morning’s premarket session, the stock had nearly doubled. But the momentum failed to carry beyond the first couple minutes of trade. GME opened above $40 and immediately started to sink. By midday, it was up “only” 30% — well off its early morning highs. It closed the trading day up only 21%. These fast gains are impressive when viewed out of context. But if we dig a little deeper, we see a chart that’s turning into a complete mess. Not only is GME exhausted following the Sunday night pump, but it’s also reversed well below those mid-May highs that briefly shot the stock toward $65. It’s beginning to look as if this echo bubble is already running out of juice. Less than a month ago, Roaring Kitty was able to send GME rocketing nearly 175% in just two trading days by posting a couple of memes on his Twitter/X account. Now, he’s starting to look like the boy who cried wolf as GME shares fail to build on their weekend momentum. Don’t worry — he’ll book his profits (another screenshot posted Monday evening claims he’s still “all in”). So, what about the folks who blindly followed his lead? I don’t think they’ll be too happy as they hang on for dear life this week… The trouble with these emotional trades is that we all remember the huge move that catapulted GME to outrageous heights during the first meme stock days of early 2021. Fast forward more than three years, and you’ll find desperate traders would do anything to get another shot at those epic squeezes. But lightning rarely strikes twice. Instead, we’ll have to settle for these little echo booms and busts. In fact, some of the other big tech rallies look like they could use a break as the calendar flips to June. A few semiconductors not named NVDA are starting to get wobbly. We also had the Salesforce Inc. (CRM) earnings debacle that ripped through the entire industry on Friday and caused some serious intraday volatility in tech. All the cloud computing stocks took a hit, along with semis and mega-caps. And don’t even get me started on some of these stalled-out growth names. Cathie Wood’s ARK Innovation ETF (ARKK) rolled over in early April and never recovered. It’s now down 17% year-to-date… Bottom line: With the hot summer vacation days quickly approaching and so many overextended stocks starting to settle down, it doesn’t feel like a great time to rally the retail trading troops behind a short squeeze. Instead of playing meme-stock roulette, I’m more inclined to dig for fresh breakouts among the stocks and sectors that are flying under the radar right now. Shining Light on Some Fresh Breakouts A funny thing happens when a down-and-out stock starts to break out… First, no one believes it. They assume the move is nothing but a dead cat bounce. The news hasn’t flipped yet, and everything you hear about the company/sector will be indifferent or bearish. But as the breakouts expand, you’ll begin to hear some bullish whispers. If the good vibes spread to the entire sector, those whispers will begin to attract more attention. That’s exactly what’s starting to happen with solar stocks. No one wanted anything to do with the solar names during the first quarter. The Invesco Solar ETF (TAN) was nearly chopped in half in 2023, and most of the most visible companies in the sector were limping into the new year at or near multi-year lows. Some of these stocks were still catching analyst downgrades as recently as January. At the time, the reasons to avoid these stocks made total sense: prices were up, installations were down, and high interest rates were crushing demand. But that was before First Solar Inc. (FLSR) broke out. FSLR suddenly launched higher in mid-May, jumping above $200 for the first time in nine months and sparking a rally that would push shares up 40% in just two weeks. All of a sudden, a stock no one wanted to own was quickly becoming one of the top momentum movers on the market… You can probably guess what happened next… The solar story quickly began to change. First, there was chatter about how Biden’s proposed China tariffs would offer a boost to the sector. Then, analysts began touting solar as an important piece of the artificial intelligence energy puzzle. In fact, UBS just highlighted FSLR as “an overlooked, direct beneficiary of increasing AI-driven electricity demand.” Now, we’re seeing other stocks in and around the sector beginning to firm up. And FLSR hasn’t given back a penny of its initial breakout, either. The stock continues to consolidate right at the top of its range, which just so happens to be in the neighborhood of its all-time highs from early 2008. Turning to the ETF, we can see TAN has been building a base for almost a year. It’s now in the early stages of breaking out. And if FSLR is any indication, we’ll see new 52-week highs from TAN soon enough (we own calls over at The Trading Desk, by the way). It’s still early in this solar narrative flip. If these stocks can power through the summer chop, we could be looking at a new leading momentum sector heading into the third quarter. Forget about the fizzling meme stocks — and don’t sleep on solar! Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Sean Ring] [Sean Ring, CAIA, FRM and CMT]( is a former banker and financial educator and is the editor of the Rude Awakening. Sean has trained interns and graduates from Goldman Sachs, Morgan Stanley, Citi, Bank of America, Standard Chartered Bank, DBS (Singapore), the Abu Dhabi Investment Authority (ADIA), Bank Indonesia (the central bank), HSBC, Barclays, RBS, and BlackRock. He knows the global economy is being corrupted by forces that most people can't understand and has used his unique and worldly experiences to help people navigate the markets. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@dailyreckoning.com. 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