CHARTS OF THE WEEK: Asia Killed Us With Low-End labour, And Now They're About To Finish The Job

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  • Remember When Men Used To Have Jobs?
  • Is Austria The Next Euro Nation To Get Vaporized?
  • All It Took Was a Few Bad Trading Days To Get Investors Terrified Of Stocks Again
  • Asia Killed Us With Low-End labour, And Now They’re About To Finish The Job
  • Dr. Copper Is Telling You To BUY

Remember When Men Used To Have Jobs?

Men between the ages of 25-54 are frequently described as being 'working-age,' because, well, they're expected to be working.

But as this chart, via Brad Delong, shows, that's happening less and less.

Nearly 20% of men in this age group are out of the workforce, and none of the overall second-derivative labour market improvements seem to be helping much. How this trend impacts society more broadly should be interesting, to say the least.

Is Austria The Next Euro Nation To Get Vaporized?

Right now everyone is focusing on the PIIGS, with special emphasis on the 'G' Greece.

If the ECB handles the situation right, then hopefully this goes nowhere. But if it goes bad, then we're talking about contagion.

So who might fall if periphery Europe goes down?

Check out Austria. As you can see, its CDS spread is just starting to turn higher, and it's well known that the country has major banks with dicey Eastern Europe exposure.

But for now, let's hope the PIIGS firewall remains in place.

All It Took Was a Few Bad Trading Days To Get Investors Terrified Of Stocks Again

In January, U.S. stocks began to see their first major mutual fund in-flows since July of last year. It took many months, but after a strong 2009 equity rally, investors began to rediscover faith in U.S. stocks.

Well, there goes that trend. All it took was a few bad trading days for the stock market to crush this tiny bud of renewed investor optimism.

Based on fund flow data released today by the Investment Company Institute, over $2.2 billion fled U.S. domestic equity mutual funds during the seven-day period ending February 3rd. The average investor's confidence in stock markets remains paper thin.

Asia Killed Us With Low-End labour, And Now They're About To Finish The Job

Asia is frequently lambasted as a source of low cost 'slave' labour by sceptics. The standard notion is that armies of Chinese communist automatons are building faulty plastic toys and copy-cat products, undercutting far more skilled, educated, and innovative Western workers.

While this belief may have had some basis over the last few decades, it's hard time for a reality check.

Emerging Asia, which doesn't include Japan, now has more skilled researchers than any other economic unit in the world, as shown in the chart below from Citi based on UNESCO data.

As you can see, Asia made great strides in increasing its share of skilled researchers from 2002 - 2007. They will make even larger ones going forward since education levels are rapidly improving.

Thus, we can easily imagine that Emerging Asia will be immensely competitive very soon -- it will have lower cost labour (since many Asians are still moving up the wealth chain), but at the same time it will have tons of highly skilled, educated (and yes wealthy) people at the same time. Asian industries are likely to be competitive both at the low- and high-end in the not too distant future. Ouch.

P.S. And by the way, hiding from the global economy won't be a successful long-term solution here. It would just mean that 10 - 20 years forward Emerging Asian competitiveness would be even stronger while American and European competitiveness would have gone nowhere. Double Ouch.

Dr. Copper Is Telling You To BUY

Of all the commodities, copper is frequently extolled for its ability to predict the economy, and as such its fans joking say it has 'PhD' in economics.

Well, the industrial metal is earnings its tenure.

Not only did it clearly anticipate the turnaround in 2009, you could have used the copper selloff to anticipate the recent swoon.

And now copper is rebounding, while the market is heading down. Is this an opportunity?

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