In Pittsburgh, America's historic center of manufacturing prowess, GE is improving a technique called additive manufacturing which could change the world by making processes more efficient and reliable. GE Reports writes: Few technologies have spread as rapidly as additive manufacturing, and few show as much promise. As recently as the early 1990s, 3D printing prototypes were a rarity found at only a handful of research labs scattered across the globe. Today, GE is printing fuel nozzles and other components for jet engines that already are powering planes with paying passengers on board. CATA … [Read more...]
Epic Rally Squeezed Short Money Until it Really Hurt
The shorts got squeezed after Trump’s speech. The fast money didn’t look very smart here. Stock market gurus are out in full force explaining the reasons for the rally. But I have not heard the real reason from a single person. To get to the answer, let’s start by reviewing an annotated chart of DJIA futures. Please click here for the annotated chart. To find out what happened today, we’d have to know how large players were positioned going into Trump's speech, which took place after the close of the stock market. (Positioning, in this context, means aggressive short selling or buying … [Read more...]
The Fed Signals a Rate Hike for the First Time in 2017
Fed officials are attempting to prepare the market for a rate hike in March as best they can. They proclaimed loudly on Tuesday that March is the right time. The market is listening. On February 22nd traders pegged the chances of a March rate hike at 35%, by Tuesday night odds had risen to an 82% chance. Early morning trading on Wednesday appears to show even more confidence in a March hike. Also illustrating the market's confidence in a March hike is the movement in the 12 month Treasury bill, which is typically sensitive to expectations of Fed funds rate moves. You can see in my chart … [Read more...]
Japan Stuck in Unparalleled Years Long Low Rate Trap
The Federal Reserve and other global central banks should pay close attention to the low rate trap Japan has created for itself. John Lyons and Miho Inada write for The Wall Street Journal: The U.S. appears to be leading other parts of the globe out of an extended era where central banks relied heavily on low and negative interest rates and stimulus to jump-start growth and keep prices from falling. The Federal Reserve has raised U.S. interest rates, and the European Central Bank is considering easing its stimulus. Japan remains definitively stuck, despite a long and aggressive experiment … [Read more...]
This is What Happens When Companies are Threatened with Tariffs
LG Electronics has announced a new washing machine factory in Tennessee, its first major US. facility. LG isn't the first Asian company to bypass domestic production in its home country to instead produce appliances in the U.S. Haier, a Chinese conglomerate, purchased GE's appliance unit in June of 2016 for $5.4 billion. But The Wall Street Journal's Andrew Tangel writes that the plant could help LG avoid U.S. tariffs. LG’s decision to locate production in the U.S. could aid its push into the American home-appliance market, where it has gained share in recent years competing against rivals … [Read more...]
Kellogg Abandons the Old, Embraces the New
As American shoppers flee big box stores to do more of their shopping from the comfort of their homes, Kellogg is changing its delivery model to adapt to the trend. If shoppers aren't even going to stores, Kellogg won't either. Instead the company will be delivering its products to grocery warehouses where the grocer will decide what to move to retail aisles, and what to keep on hand to fulfill online orders. Annie Gasparro explains the choice at The Wall Street Journal: Kellogg Co. is abandoning its traditional way of delivering some snacks to stores in an effort to cut costs, though it … [Read more...]
This Has Only Happened Three Other Times in the Last 117 Years
The Dow has now increased for the twelfth day in a row. Since 1900, the Dow has achieved this feat on only three other occasions—once in July of 1929, again in December of 1970, and then finally in January of 1987. The good news is that on all three occasions, the Dow went on to rally double-digits. The bad news: those gains didn’t last. Stocks crashed hard in 1929 and in 1987. The best year out of the bunch was 1970 when over the subsequent 12 months, stocks rallied and then corrected, but never fell far below their December 1970 level. A sample size of three doesn't provide a … [Read more...]
What happens when the low-cost producer loses its edge?
China has gained massive market share in manufacturing over the last 15 years. Cheap labor and a managed currency helped China become the world’s go-to factory. But as the FT reports, China has now lost its edge in labor. Wages in China are now higher than they are in Brazil, Argentina, and Mexico. What happens to the low-cost producer when it loses its edge on cost? China could either try to regain competitiveness by devaluing the yuan (a bad choice) or attempt to move up the value chain (a better choice). Whichever direction the country takes, the global economic landscape is likely to … [Read more...]
Taxes Undermine, Exploit and Punish the Productive
Cato Institute's Dan Mitchell details the results of a European Policy Information Center study on how non-income based taxes, like consumption taxes and payroll taxes, affect high income earners. He begins: Back in 2014, I shared some data from the Tax Foundation that measured the degree to which various developed nations punished high-income earners. This measure of relative “progressivity” focused on personal income taxes. And that’s important because that levy often is the most onerous for highly productive residents of a nation. But there are other taxes that also create a gap … [Read more...]
How Much Surprise are You Looking for in Retirement?
Your answer to this question is probably not a whole lot, at least in terms of your investment portfolio. Some surprises may be great, like if you've saved more than you needed, but you could also be devastated by not planning for things like medical expenses. In The Wall Street Journal Glenn Ruffenach writes that retirees often find themselves in surprising situations, whether for better or worse. The surprises ran the gamut, from the wonderful to the devastating. Many readers told us they were surprised that their savings are holding up just fine, although several said that household … [Read more...]
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