Timing & trends

“SARS” Versus “Wuhan”: The Difference Between “Now & Then”

A week dominated by headlines of a spreading respiratory virus has had investors recalling pandemics past, from SARS in 2003 to the Ebola scare six years ago. While the “Wuhan” virus, or known scientifically as “nCoV,” is still in its infancy, it is closely tracking both the infection and, unfortunately, death rates of the SARS virus.

However, the question everyone wants an answer to is: “what does the virus mean for the markets?”

Will it derail the longest bull market in U.S. history? Or, is it nothing to worry about? 

If you read the mainstream media, the answer seems to be the latter. To wit:

“However, gauged by the market’s performance during the onset of other infectious diseases, including SARS, or severe acute respiratory syndrome, Ebola and avian flu, Wall Street investors may have little to fear that this disease will sicken a U.S. stock market that finished 2019 with the best annual return in years and has kicked off 2020 at or near all-time highs.” – MarketWatch

With the stock market perched near all-time highs, it is understandable investors are quick to dismiss the potential ramifications of the virus very quickly. There is also plenty of anecdotal evidence to support the bullish claims as well. The chart below is the S&P 500 index versus its exponential growth trend with a history of the more important viral outbreaks notated…CLICK for complete article

The Survival Of A $2.7 Trillion Market Rests On This Tiny Niche

The space race has begun. Private companies have exploded, soaring beyond multiple billion-dollar valuations seemingly overnight. Some of the hottest tech companies on the planet are already facing off for a piece of the pie. But there’s a looming crisis that, if not addressed, could bring the entire industry crashing down. Literally.

After over 60 years of space exploration, humankind has left a lot of trash behind. Already, hundreds of thousands of pieces of space debris are in orbit. This is a terrifying reality, especially considering just a tiny 1mm object can have a catastrophic effect on a satellite or spacecraft.

Holger Krag, head of the space debris office for the ESA, notes, “Even today we are losing satellites due to debris and it is only a matter of time before more start colliding. If we continue the way we do, 10 years from now some regions in space will be too risky to visit.”

With companies such as SpaceX, Blue Origin and Virgin Galactic eyeing commercial space flight within the next few years, and even more looking to roll out an array of new private satellites, the space debris risk has never been greater. And if Krag is correct, the more crowded our orbit gets, the more dire the threat will become. CLICK for complete article

Fresh ideas – an EV that breaks the mold?

Electrified cars are approaching mainstream acceptance and adoption, be they a hybrid or a full fledged Electric Vehicle (EV).  There is widespread concern about the continued burning of fossil fuels, and electrification can resolve a lot of that if the electric power is generated without burning fossil fuels ( hydro-electric versus coal or diesel fired power plants ).  To date, most EV manufacturers have looked to the past in designing vehicles that replicate a look …Click here for full article.

Recession Arithmetic: What Would It Take?

David Rosenberg explores Recession Arithmetic in today’s Breakfast With Dave. I add a few charts of my own to discuss.

Rosenberg notes “Private fixed investment has declined two quarters in a row as of 2019 Q3. Since 1980, this has only happened twice outside of a recession.”

Since 1980 there have been five recessions in the U.S.and only once, after the dotcom bust in 2001, was there a recession that didn’t feature an outright decline in consumption expenditures in at least one quarter. Importantly, even historical comparisons are complicated. The economy has changed over the last 40 years. As an example, in Q4 of 1979, fixed investment was 20% of GDP, while in 2019 it makes up 17%. Meanwhile, imports have expanded from 10% of GDP to 15% and the consumer’s role has risen from 61% to 68% of the economy. All that to say, as the structure of the economy has evolved so too has its susceptibility to risks. The implication is that historical shocks would have different effects today than they did 40 years ago….CLICK for complete article

Billions Of Dollars Are Flooding Into The Flying Taxi Space

In the 1940s, Henry Ford regaled us with this little fantastical gem: “Mark my words – a combination aeroplane and motor car is coming…You may smile. But it will come.” Eight decades later, and Ford is vindicated.  Toyota just made a nearly $400-million bet on flying taxis as tech competition in this segment gets fierce.

The Japanese carmaker said it is investing $394 million in California-based Joby Aviation, an aerospace company that hopes to be among the first to develop and commercialize all-electric flying taxis.

It’s the second time Toyota has seen fit to pump money into this idea.

In early 2018, the Japanese auto giant teamed up with Jetblue, investing $100 million in Joby during the company’s previous funding round. With Toyota’s latest investment, Joby  just closed its latest round of financing with $590 million in venture capital funding.

And the year before that, Toyota backed Recogni Inc., a Silicon Valley maker of autonomous vehicle systems, and May Mobility, a Michigan-based operator of self-driving shuttle buses….CLICK for complete article

 

U.S. Restaurants Are Struggling With Rising Labor Costs

In the one year since New York City implemented a mandatory $15 minimum wage, businesses have been struggling with the increased labor costs, Fox News reported previously. “They’re cutting their staff. They’re cutting their hours. They’re shutting down,” said Queens Chamber of Commerce president, Thomas Grech – who reports seeing an uptick in small business closures over the past six to nine months. “It’s not just the rent.”

Bronx Chamber of Commerce president Lisa Sorin notes that the increase has hurt small businesses the most, while Manhattan employers and their customers can afford to pay more to compensate. “It’s almost like a whirlwind of keep up or get out,” she said.

This dynamic was reflected in a Gothamist survey, which revealed that NYC restaurants are ‘thriving’ amid the $15 minimum wage, but acknowledges “Nearly 50 percent of respondents to the Hospitality Alliance’s survey said they would have to eliminate jobs in 2019 to make do.” CLICK for complete article