Are some companies simply better at the “lots of work but no jobs” economy?

There’s plenty of work in this economy; there just aren’t any jobs. That sentiment, voiced by a friend of mine recently, pretty much sums up the U.S. economy of the moment. If you have a job, you’re being constantly asked to do more—usually without additional compensation. And if you don’t have a job, you’re being advised to volunteer, to intern, or to do part time and temporary work. All of those “alternatives,” of course, involve doing work that once made up a full time paying job for someone.

We all know what the “plenty of work but no jobs” economy feels like. High unemployment. Discouragingly long job searches for those without jobs. Cuts in services in areas that include public parks, schools, and fire protection.

But this kind of economy has implications for investors too. It tests the ability of every company to cut costs but it doesn’t test every company equally. For some companies it means a loss of business as customers look to cheaper alternatives or switch to competitors better able to deliver goods and services despite cuts to their workforce. For some companies it actually provides a boost in business as what these companies sell helps other companies cut costs.

All you have to do as an investor is figure out which companies fall into which camps.

This state of the economy was summed up by the recent news that Bank of America (BAC) will tell an additional 3,500 workers in coming weeks that they’re being let go. That’s on top of job losses of 3,228 since the end of the first quarter, which brought the job losses since June 30, 2011 to 12,624, according to the company’s second quarter earnings report.

The job losses would be even higher, the company said, some 20,000 since June 30, 2011, except that the company added about 8,000 full-time but temporary workers in this period to work on servicing mortgages. That hiring isn’t especially surprising. For the quarter the bank announced that it faced increased claims from Fannie Mae and other investors on billions in mortgage-backed securities sold to these investors that these investors say were written in violation of underwriting guidelines. Such claims soared in the quarter from $16 billion at the end of March to $22.7 billion.

Bank of America says it “remains in disagreement” with these claims. But any defense is certainly going to eat up the hours of thousands of employees as they look at the paperwork for these mortgages.

What you see at Bank of America, though, is just an extreme example of the vise squeezing many companies—in the United States and elsewhere. Companies feel intense pressure to cut costs—with job cuts often seeming to be the fastest, easiest, and most reliable way to cut costs—at the same time as the actual amount of work the company has to perform isn’t falling and may even be increasing.

The implications for all of us who live in the global economy are painful. More of us will be asked to work harder for the same or less money. More of us will wind up without permanent jobs as companies replace full-time permanent workers with temporary, part-time, or outsourced workers (or consultants.) And some of us will wind up with no jobs at all.

The implications for investors are less painful but still very real. Read more

Hey, there are stocks beyond the headlines from China, Europe, and the U.S.–here are 6 from elswhere

So what’s happening everywhere else in the world?

Eyeballs are glued to the euro/Spanish/French/Greek debt crisis. Investors are shifting every data dump from the Federal Reserve, the Bureau of Labor Statistics, and corporate earnings in the hope of figuring out if the U.S. economy is slowing—and how quickly. China’s momentum mavens are busy calculating how close the Chinese economy might be to a bottom and the odds that each piece of bad news might be the one to lead to the next round of stimulus from the People’s Bank of China.

But what about the rest of the world? What stock markets and what stocks should investors be watching—and maybe putting some money into–that aren’t Europe, or the United States, or China?

Investing somewhere besides the markets in the headlines assumes that you believe that none of the current crop of potential bad news rises to the level of catastrophe. If one of the world’s big economies and financial markets goes down hard, the likelihood is that it will take down everything. If China really hits a hard landing—with 5% growth and increased social unrest, for instance—it’s unlikely that you’ll be able to find safety—let alone profits—in one of the world’s other financial markets. One lesson from the post-Lehman crisis is that if it’s a big enough crisis, everything heads down at once.

If on the other hand, these potential crises don’t either turn into great big crises or really into a crisis at all, then the “everywhere else” markets could be either 1) profitable ways to leverage a positive result from any of the world’s headline grabbers, or 2) profitable ways to diversify a portfolio. Let me give the names of six stocks that exemplify those two groups. Read more

Update CEMEX (CX)

A cement maker like CEMEX (CX) couldn’t have picked a worse set of markets for the global economic crisis if it tried.

Second biggest market for the company? The United States, epicenter for the global housing meltdown. Next biggest? Spain and the United Kingdom. And then, of course, there is No. 1 Mexico, where domestic economic activity closely follows growth (or the lack thereof) in the United States.

No wonder that CEMEX almost went under during the crisis, drowning in an ocean of debt including that for its $14 billion 2007 top of the market acquisition of Rinker, an Australian cement maker with even bigger exposure to the U.S. market than CEMEX. The stock, which had looked like it was closing in on $30 a share in May 2008, bottomed below $4 in November 2008.

Now, however, the market concentration that was so damaging in 2008 is turning into a plus. Read more