“Investment banking giant Citigroup has hailed the start of the ‘age of renewables’ in the United States, the world’s biggest electricity market…the big decision-makers within the U.S. power industry are focused on securing low-cost power, fuel diversity and stable cash flows, and this is drawing them to the increasingly attractive economics of solar and wind.” Citi predicts the LCOE (levelized cost of energy) for solar and wind will trump the rising LCOE of natural gas, coal (basically already priced out of the market) and nuclear. Also, like nuclear power, biomass and hydro plants have a much higher cost of capital than solar or wind, and that financing cost (interest rates) is likely to increase soon. Meanwhile, the Bank of England wonders if the “age of asset management” is upon us: “the good news is that asset management is going to be huge — spectacularly, monumentally more huge than it is now.” Indeed, by 2050, the Bank of England forecasts total assets under management of insurance companies, pension funds, mutual funds and other funds to exceed $400 trillion (currently ~ $87 trillion). Furthermore, the asset management industry poses a unique “too big to fail” type challenge: “concentration is actually higher in asset management than banking, when it comes to the top ten share of assets…solvency of the asset managers isn’t really the problem (thanks to third party ownership of the assets) but pro-cyclic behavior, herding and short termism may be.”
New Vision For The Future: Humans Thwacking Glowing Lumps Of Metal
“There is reason to be skeptical of the assumption that machines will leave humanity without jobs. After all, history has seen many waves of innovation and automation, and yet as recently as 2000, the rate of unemployment was a mere 4 percent. There are unlimited human wants, so there is always more work to be done…Nonetheless, technologically related unemployment…may prove a tougher problem this time around.” Meanwhile, “inside Toyota Motor Corp.’s oldest plant, there’s a corner where humans have taken over from robots in thwacking glowing lumps of metal into crankshafts…’When I was a novice, experienced masters used to be called gods, and they could make anything.’ These gods, or Kami-sama in japanese, are making a comeback…Humans are taking the place of machines in plants across Japan so workers can develop new skills and figure out ways to improve production lines and the car-building process.” Meanwhile, GM could probably use some Kami-sama on their ignition switch team, or maybe some Kami-sama in their dealership therapy team? Finally, here are some possible reasons for the long-term decline in the participation rate for prime-working age men.
Question: if Android “has about an 80 percent market share in some areas of the world [then] why aren’t designers paying it more attention?” Answer: “Android users don’t pay for apps, they don’t have data plans, you can’t monetize them easily, and designers are all iPhone users and don’t really understand Android users.” Furthermore, an “Android user is worth one-quarter of an iOS user,” at least for video game sales, however sales of physical goods suggests a similar conclusion. Meanwhile, Apple is still sitting on a massive $159 billion cash pile. With very few acquisitions in the last couple of years, and none over a billion dollars, some people are wondering: “Where are the robots, the driverless cars, the virtual reality goggles?” Tim Cook, CEO, says “buying something for the purposes of just being big” isn’t part of the strategy, but it is kind of fun to consider all the possibilities $159 billion can afford (e.g. space travel, iTesla etc.).
“Russell 2000’s underperforming the S&P 500 has been a general theme lately. So far this year, it’s down 0.7 percent while the S&P 500 is up 1 percent. In the last six months, the Russell 2000 is up 7 but the S&P 500 gained 10.5 percent during the period.” Meanwhile, “high flying tech [stocks are] crashing back to earth.” Companies like Twitter, LinkedIn, SolarCity and Facebook are all down ~30% so far this year, while “established names with strong dividend yields” have been performing well (i.e. Microsoft, Oracle and Cisco).
Calculating Nigeria’s GDP was rebased this weekend “to include previously uncounted industries including telecoms, information technology, music and film production,” in an effort “to measure one of the world’s biggest informal markets.” The result: $510bn. “$190 billion more than South Africa…on a par with that of Poland and Belgium, and ahead of Argentina, Austria and Iran.”
“The rise of ‘off-exchange trading’ is terrible for the broader market because it reduces price transparency a lot, critics of the system say. The problem is these venues price their transactions off of the published prices on the exchanges — and if those prices lack integrity then ‘dark pool’ pricing will itself be skewed. Around 40 percent of all U.S. stock trades, including almost all orders from ‘mom and pop’ investors, now happen ‘off exchange,’ up from around 16 percent six years ago.” For more, here are a bunch of different takes on high frequency trading.
“Chinese property companies are buying stakes in banks and raising fears that the country’s already stretched developers are trying to cosy up to their lenders…Some of the developers are heavily indebted, sparking questions about the motivation for these deals, and specifically whether the property companies are hoping to use their links to the banks to obtain preferential financing.”