Last night I had an interesting conversation with two folks who see the US economy from different perspectives. One raises pigs in a semi-rural part of our county and the other is a manager of other peoples’ money – he runs a local investment firm. The topic of the economy came up and I, of course, gave my take on what was happening – the US and global economy are slowly but steadily improving and will continue to do so. Interestingly, the response from each of them was quite different.
The woman who raises pigs (as well as being a “fiber” artist) pushed back because she sees the dark side of commodity prices that have risen steadily. She told me how the price of feed had gone up some 30% last year alone making her pig raising more costly.
The investor told me he has had a pretty good ride for his clients over the past few years. He did not say so, but my guess is that he and his clients have benefited from rising commodity prices.
The interesting part of the above dichotomy is the stark reality of the market. It is a game of winners and losers. More importantly, though, these folks seem like earnest and hardworking people, which makes their contrasting market realities somewhat painful. “Say it isn’t so, Joe,” but the truth of the matter is this – the rising tide does not lift all boats equally.
- The real estate group is down almost five percent (depending on which barometer you use, IYR, ^RMZ, RWR) in the past 30 days at a time when the S&P has advanced 2.5%, and other groups such as Retailing and Transportation are up more than six percent.
Folks have backed off from buying homes for several reasons, not the least of which is the reality of rising mortgage rates. Another, the political lunacy in Washington D.C. frightened more than a few potential buyers into putting a house purchase on hold. Arguably, another reason is the learned reality that a fast-moving housing market can be dangerous. The good news is two-fold, though.
First, a slowing housing market is a good thing. Like the overall market, it brings balance back into play. Second, it shifts the money into other areas that might need some help. The retail sector took a hit at the end of August, as did transportation. Apparently, they are doing better now. This presents two possibilities for market players.
One, get in on the REITs while they are lower, as surely they will come back and come back strongly and two, jump on the retail and transportation train, as it too will surely do well in Q4, given the dollars that will flow in during the holiday spending and travel season.
E-commerce is on the move, as I have been pointing out and smart devices are leading the way. Everywhere one looks nowadays, there is an app for this and an app for that.
- Shoppers who want to avoid long lines to nab a deal during Black Friday can download new apps that will let them shop for bargains from the comfort of their home. Whether it is getting notifications about items going on sale, shopping from print magazines and flyers, or turning email promotions into shopping magazines, apps are helping shoppers find deals.
Maybe overall revenues will drop this holiday season because folks now have the ability to find and secure online deals quickly and comfortably, but that is okay. If the new reality is that more product is bought but for less money, then so be it. Retailers and producers will adjust, as they always do, which means bottom-line profit will perform well enough to keep the market happy with earnings, and as I always say – corporate profit is what ultimately matters to the market.
I have mentioned before I receive a daily dose of information from MIT, that bastion of innovation and creativity. Sometimes, the information points to a far-off future, but other times, it suggests both technological evolution and technological revolution are happening just as quickly as I think.
- Bulky and expensive batteries are the bane of electric vehicles. A new MIT spinoff company, SolidEnergy, says it has a solution: materials that can increase the amount of energy that lithium-ion batteries store by 30 percent or more and lower costs enough to make electric vehicles affordable.
Okay, so the application of this innovative technology is still coming, meaning, the actualization of more efficient and cheaper batteries for electric cars is a process in motion, but within the process, a current benefit is happening.
- The first application of the technology will likely be in portable electronics, says cofounder and chief technology officer Qichao Hu. Electric vehicle batteries take longer to develop, in part because they need to last a decade, whereas batteries for powering electronics need only last a few years.
And, so we come back to smart devices and the evolutionary/revolutionary reality of these virtual appendages. I am still building my watch lists, however, the problem I am having is the immensity of the realm. Suffice it to say, the vertical base is wide and spreading, which means opportunity is everywhere. I will keep you posted.
- A British website which allows members of the public to buy stakes in small unlisted businesses is expanding across Europe, saying it was responding to demand to open the site beyond Britain. As banks rein in lending due to tougher capital rules and greater regulatory scrutiny, crowdfunding, which originated as a way to raise money for creative projects, has expanded rapidly as an alternative source of finance.
The above concept has appeared in my radar recently on more than one occasion. It seems that the idea is catching on, as the excerpt suggests. As a market player, I like the idea of a completely new market evolving, one where the power of big money has less potential to manipulate the outcome. Yup … Quite unlike the market we have now.
Trade in the day; Invest in your life …
