The FT reports on the threat that the electric car revolution poses to auto workers in the U.S. and Europe. Because electric cars have far fewer moving parts some researchers believe that far fewer people will be needed to make the vehicles and the parts that go into them. The auto industry is fond of saying that if it were a country, it would be one of the world’s largest economies. Its figures show it supports around 7m jobs in the US alone and close to 13m in Europe. Robots may have encroached on the assembly line already, but wait until the beguilingly deceptive electric car takes … [Read more...]
Are these Iconic Food Brands Dying?
Here Money explains the impact the trend toward private label is having on some iconic American food brands. Brands that were once household staples are falling out of favor with consumers. One reason is a broad shift away from national brands—shoppers have increasingly shown a willingness to eschew them in favor of lower-price private labels like Kirkland at Costco, Great Value at Walmart, and nearly everything sold at Aldi. Analysts say that one of the impacts of Amazon's acquisition of Whole Foods is that there will be even more pressure on national food brands, as the supermarket is … [Read more...]
Is the UK Auto Market about to Change Forever?
Under pressure from activists, the UK has been forced to release a plan on dealing with air pollution. As part of that plan Michael Gove, the current environment secretary, has announced that by 2040 the sale of cars running on petrol (gasoline) or diesel will be banned in the UK. Jim Pickard and Peter Campbell write of the plan in the Financial Times: Mr Gove will say that all new cars will have to be fully electric within a quarter of a century. His promise to ban other engine types — including hybrids — shifts the government further from its existing position, which was an “ambition” for … [Read more...]
The 2% Inflation Fraud
There is increasing chatter in the financial press that the Fed is becoming concerned about the recent slowing in inflation. By the Fed’s preferred personal consumption expenditures index, inflation is running at 1.4%--down from 1.75% in 2016. I know what you are thinking, oh the horror! The Fed’s focus on hitting an arbitrary 2% inflation target makes little sense to most Americans. Why not target zero? Or if you are going to bother with a target, why not set a range? Does a couple of a tenths of a percentage points in inflation make any difference to anybody outside of … [Read more...]
Are Retail Stocks at an Inflection Point?
Amazon-Mania has taken over the stock market. Every mention or speculation that Amazon is going to enter a sector of the retail market drives the share prices of every company in that market lower. Can Amazon really do it all? That seems to be what many investors are assuming, but what the crowd knows is usually baked into share prices. Here, MarketWatch asks if the ultra-bearish sentiment toward brick and mortar retail has reached an inflection point? “After a two-year, ~24% bear market in the SPDR S&P Retail ETF XRT, -0.57% , someone is finally creating a way to get short the … [Read more...]
Is this a Solution to America’s Pension Crisis?
Here the FT reports on the value of land underlying America’s city and town governments as a possible solution to America’s pension crisis. According to one estimate, the value of land owned by local governments, excluding public parks is $25 trillion. That compares to $3.8 trillion in municipal debt and $7.5 trillion in accumulated pension obligations. Matthew Klein writes: Boston’s Logan International Airport was built in the wrong place. Instead of occupying undesirable plots on the outskirts of the city, it sits on almost 1,000 hectares of easily accessible waterfront property close to … [Read more...]
Portfolio Strategy: Looking Past the End of the Bull
The current bull market which started in March of 2009 is now the third longest bull market on record. I’m using the Dow as the yardstick for bull and bear markets. Bear markets are defined as a 20% drop from a prior peak. The fuel that has kept this bull running is of course the most aggressive and prolonged use of monetary stimulus in U.S., and probably world, history. How do stocks perform following historic bull markets? The chart below shows the four longest Dow bull markets on record. The table on the chart shows the subsequent ten year capital gain performance from the day prior to … [Read more...]
Are the Bulls Right about Netflix?
Netflix reported second quarter results earlier this week that “blew away” expectations according to many financial news outlets. It wasn’t a beat on earnings, which actually missed expectations, or a beat on revenue which was inline with expectations. Subscriptions are the metric Netflix investors care most about. Netflix's beat on subscriptions pushed the shares up almost 14% for an increase in market value of about $10 billion. The jump in Netflix shares yesterday pulled the shares of the rest of the FANG group higher with it. Young Research’s Bubble Basket is now back near its … [Read more...]
Three Serious Problems with Using AI for Investing
Here is a must read from the WSJ on the pitfalls of automated investing. James Mackintosh explains the pitfalls of algorithmic trading and the problems with artificial intelligence. He identifies three serious problems with using AI for investment. Ten years ago, computer-driven traders pulled the plug after their algorithms ran amok, leading to billions in losses and the eventual closure of Goldman Sachs ’s flagship quantitative fund. A decade on, artificial intelligence and machine learning are the buzzwords in automated investment. But for all the hype, applying AI to investment has … [Read more...]
The Minimum Wage Debate Goes off the Rails
Here The Economist reports on the minimum wage debate. Some in the academic community have managed to convince themselves that unlike any other market, in the labor market, setting a price floor does not lead to lower demand. How does one come up with such a half-baked theory? The data we are told. The data doesn’t show any deleterious impact from minimum wage hikes. Yet, if you asked this same crowd what they thought of a minimum price for tea by example, you would get an earful on why such a policy would lead to more supply and less demand. As far as the laws of supply and demand are … [Read more...]
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