Don't assume the future

Published 5.3.2017
LWRAS regularly considers factors both economic and political that might impact the markets covered here.

NPR (National Public Radio) interviews Rex Tillerson. US Secretary of State Rex Tillerson has begun to talk to the press. Tillerson has the unenviable job to put a grown up and consistent face on Trump’s blustering. And to his credit, he does a good job of it.North Korea dominates the conversation, but Russia is discussed as well.

Tillerson’s credibility provides a patina for Trump’s foreign policy a direction, and listeners are to believe that Trump set that direction. If only Trump himself could articulate for himself, rather than repeat campaign bumper sticker slogans. While Tillerson presents a measured and reasoned view to the world and Asian region, his boss threatens to end the free trade agreement with South Korea and to force the Koreans to pay a $1.2 billion dollars for the missile defense system we built for them.

The deployment of the U.S. Terminal High Altitude Area Defense (THAAD) anti-missile battery was agreed to last year by the administrations of then U.S. President Barack Obama and then South Korean President Park Geun-hye. Park was able to evade demands that she seek National Assembly approval for the deal by claiming no additional funding would be required for the THAAD deployment.

This will not happen. It is not in the interests of the US. Trump also managed to threaten the trade agreement with South Korea.

[Sound bite: U.S. President Donald Trump]
"It's unacceptable. It's a horrible deal made by Hillary. It's a horrible deal. And we're going to renegotiate that deal, or terminate it."
("When are you going to announce that?")
"Very soon. I'm announcing it now."
The free trade pact is supposed to be terminated 180 days after one side notifies its partner of its intention to finish the deal.
An official at Seoul's trade ministry said that it is too early to respond to the U.S. president's remarks until his intentions become clearer.

So far, the South Koreans are not taking the bait.

Russia may be meddling in the French election.

Vilis Dambiņš, a director of an intermediary company managing assets related to the family of Vladimir Putin’s special representative for relations with Russian organisations abroad Alexander Babakov, has personally met with at least two high-ranking officials of Le Pen’s Front National (FN) to discuss options for the party to get a Russian loan, a joint investigation by the Baltic center of investigative journalism Re:Baltica and French online investigative journal Mediapart.fr has found.

In other news, Le Pen was accused of plagiarizing a competitor’s speech. The general tenor of coverage of the French election, at least in the US, is that Le Pen has no chance. Given the events of 2016, LWRAS goes on record as saying that the sanguinity is foolhardy. Yes, the polling differential between Macron and Le Pen is much greater than in either Brexit of the US election, but the

Investors begin to realize that Trump blusters, but gets little accomplished.

In the immediate aftermath of the November election investors dared to hope that the U.S. had entered a new political era. The market reaction—or lack of it—to Donald Trump’s sketchy plan for tax cuts on Wednesday is part of a recognition that Washington remains stuck with politics as usual.

It’s not a plan at all, it can barely be described as an outline. It was only published in a transparently obvious attempt to “keep” some version of a campaign promise. Trump is reaping the rewards of his ridiculous campaign rhetoric.

His base may be mollified, but the rest of the world seems to be recognizing him for what his is. Some of the 100 day commentary suggests there are signs that Trump is (finally) acknowledging that he must alter his tactics. Time will tell, but the betting here is that this view is over optimistic. Others agree that skepticism is warranted.

Robots and artificial intelligence will alter retail forever. Dr. Keng Siau is a chair and professor of business and information technology.

Online retailers like Amazon are “crushing” brick-and-mortar department stores in terms of sales, Siau writes, and these online retailers are replacing their retail salespeople with “AI, robotics, and machine learning,” or, as Siau has taken to calling them, “salesmachines.”

This research seems to be assuming that in the future all retail sales will be online. Perhaps for mass produced products, electronics, gadgets, maybe even clothing.

Robots are improving, but robots can’t yet sew clothing. Nor do robots create circuit boards. Repetitive tasks are what robots are best at, and that would include clothes sewing. Sewing garments still takes too much precise digit work to be done by robots. Laser cutting of pattern pieces is becoming a thing, but I don’t know how common it it.

However, just as with car models, every time fashion changed there the robots would need to be changed out or reprogrammed. That’s why clothing manufacturing is done in low wage countries. because it can’t yet be done by hand.