News Flash: Sunday 7/23/17

Technology:

  • Norway is leading the charge on building ships that will not need a crew; they call this “autonomous shipping.”  This vessel is scheduled to make it’s first trip in late 2018, and will ship fertilizer 37 miles through Scandinavia.  These ships are costly, and legislation will most likely not be passed allowing crew-less ships traveling far distances until 2020.  However, this took me by surprise and means autonomous vehicles are closer than they appear.
  • The most costly part of eCommerce currently is the labor associated with warehouses.  i.e. putting products in boxes, moving boxes around, handling returns etc… The next step for engineers is to create robotics that will automate that process, and greatly reduce the cost of eCommerce.  Robot developers are apparently “close to a breakthrough” , and we could see this technology implemented in the near future.

Companies are saying their robotics can move consumer products 50% faster than humans.  In a time where growing eCommerce is growing exponentially (390 billion dollars, doubled since 2011), autonomous technology and robotics in warehouses could seriously threaten the nearly 1 million warehouse jobs and 3.5 million professional truckers in America.  However, this isn’t the worst news in the world if you are an investor in any large company that stores products in warehouses and ships internationally.


China:

President Xi Jinping is starting to regulate big business in China.  Banks are going to have a tougher time lending to corporations, in which they would use the financing for foreign expansion.  This will decrease demand of United States assets.  It could stir things up in the market short term, but we do not want China having control of us economically.  It doesn’t seem like they would wage economic warfare on us since we are their largest trading partner, but it is good to be aware and cautious of the fact that we are largely indebted to them and that the Chinese own a large amount of U.S. assets.  China’s motivation behind the regulation is that high-profile entrepreneurs and business men are gaining too much power and influence, and they want to limit profits.  Previous policy encouraged investors to go out and find deals worldwide, but as we know the Chinese government loves their regulation and does not want to concede power/influence to anyone else.


Economy:

Bond yields are falling, and this is a reflection of subpar economic reports and realization that Trump is not stimulating as much growth as he promised.  GDP growth is not hitting targeted levels, and there are not enough inflationary pressures to hit the goal of 2%.  Overall, lower rates = lower growth potential that the market is pricing in.

OPEC had a goal of raising oil prices by hoping that consumption would decrease oil reserves, therefore increasing price.  However, the supply has drained less than expected, keeping oil near it’s all time low levels.  A 2% cutback in production was supposed to help, but as oil prices remain under $50 a barrel, we expect action from OPEC to try something else in an effort to raise prices, as their last attempt was a swing and a miss.


Markets: CLOSED TODAY


 

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