“Property is as safe as houses, at least until the roof falls in. Our latest tally of global housing markets shows that American house prices have recovered to a new nominal high, and in Spain and Ireland, prices are again rising at a decent clip. In the English-speaking Commonwealth countries of Britain, Canada, Australia and New Zealand, prices have risen largely unabated in recent years.
Since autumn 2014 $1.3trn of capital has flowed out of China. Some of that cash has found its way into residential property in some of the world’s most desirable cities. In America, Chinese investors bought some 29,000 homes in the 12 months to March 2016 with a total value of $27bn, according to the National Association of Realtors. Much of this money is focused on a handful of cities: Seattle, San Francisco, New York and Miami. Foreign money has helped propel skyrocketing prices in other places, too. In Vancouver, home values have risen by 47% in four years; in London they have risen by 54%; and in Auckland the rise has been a whopping 75%. The influence of foreign capital flows on housing markets is being scrutinised, particularly as affordability becomes ever more stretched.
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According to the latest data on global GDP released by the World Bank this February, the U.S. still is the world’s biggest economy – by far. As shown by this Voronoi diagram, the United States (24.3%) generates almost a quarter of global GDP and is almost 10 percentage points ahead of China (14.8%), in second place, and more than 18 percentage points ahead of Japan (4.5%) on three.
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A Columbia University study suggested that with a fleet of just 9,000 autonomous cars, Uber could replace every taxi cab in New York City – passengers would wait an average of 36 seconds for a ride that costs about $0.50 per mile. Such convenience and low cost will make car ownership inconceivable, and autonomous, on-demand taxis – the ‘transportation cloud’ – will quickly become dominant form of transportation – displacing far more than just car ownership, it will take the majority of users away from public transportation as well. With their $41 billion valuation, replacing all 171,000 taxis in the United States is well within the realm of feasibility – at a cost of $25,000 per car, the rollout would cost a mere $4.3 billion.
- Car ownership has been rising with the growing global middleclass. There are 3.5 billion or so global middle and this could rise to 5.5 billion by 2030
- Self driving cars will start bending that curve or car and vehicle ownership and the growth of driving and driving related jobs
- Intel just announced they will spend $15.3 billion to buy Mobileye (a maker of self driving car components)
- Qualcomm spent $47 billion to buy NXP, the largest automotive chip supplier
- Google, Uber, Ford, Tesla, Nvidia and others are pushing hard to make self driving cars
- Regulation and laws
Peak Car – Rise and fall or car ownership
According to a forecast by PwC, a total of 107.4 million vehicles will be manufactured worldwide in 2020. Globally over 90 million motor vehicles were produced in 2015 and there were about 73 million passenger cars built.
Self driving cars will mean that far fewer drivers and cars and trucks will be needed to fulfill many of the motor vehicle related tasks.
- Delivery of goods
- Non-commuting passenger travel Read more »
Investors are more likely to reach their long-term goals if they remain invested and avoid short-term decisions that may take them off course. As the hypothetical example below shows, investors may make suboptimal decisions when emotions take over, tending to buy out of excitement when the market is going up and sell out of fear when the market is falling. Markets do ultimately normalize, and when they do, those who stay invested may benefit more than those who don’t.
To help reason prevail, first make sure you’re comfortable with your allocation to riskier assets and that it makes sense in light of your time horizon. You also need a logical framework for financial decisions and a plan that anticipates periods of market turbulence. A systematic approach for reviewing portfolio results, with pre-established guidelines for selling, may help as well.
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S&P Index at inflection points
Source: J.P.Morgan Asset Management, as of Feb. 28, 2017
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Source: J.P.Morgan Asset Management
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Bill Gross: “The expansion of central bank balance sheets from perhaps $2 trillion in 2003 to a now gargantuan $12 trillion at the end of 2016 is remarkable. Not only did central banks buy $10 trillion of bonds, but they lowered policy rates to near 0% and in some cases, negative yields.
Withdrawal of stimulus, as has happened with the Fed in the past few years, seemingly must be replaced by an increased flow of asset purchases (bonds and stocks) from other central banks, as shown in Chart below. A client asked me recently when the Fed or other central banks would ever be able to sell their assets back into the market. My answer was “NEVER”. A $12 trillion global central bank balance sheet is PERMANENT – and growing at over $1 trillion a year, thanks to the ECB and the BOJ.
An investor must know that it is this money that now keeps the system functioning. Without it, even 0% policy rates are like methadone – cancelling the craving but not overcoming the addiction. The relevant point of all this for today’s financial markets? A 2.45%, 10-year U.S.Treasury rests at 2.45% because the ECB and BOJ are buying $150 billion a month of their own bonds and much of that money then flows from 10 basis points JGB’s and 45 basis point Bunds into 2.45% U.S. Treasuries. Read more »
The world’s working-age population is shrinking faster than expected, leaving fewer people to support a growing number of seniors, according to the Bloomberg Sunset Index.
Bloomberg Sunset Index uses statutory retirement ages in 178 nations. Conventional measures of old-age dependency calculate the ratio of people ages 65 and older with those of working age: 15 to 64. But many people stop working well before 65: Men in 66 percent of the 178 countries Bloomberg evaluated and women in 78 percent can begin receiving retirement benefits earlier.
So the Bloomberg index calculates dependency based on each country’s statutory pensionable age, revealing substantial differences in some places with 2016 estimates from organizations including the World Bank and United Nations. For instance, Nigeria, with a statutory pensionable age of 50, has only 4.8 workers supporting each senior, compared with 19.4 as indicated by conventional measures. Russia has 2.4 instead of 5.1, and Colombia has 4.5 instead of 9.4.
As seniors increasingly outnumber people still in the workforce, pressures rise on investment pools, medical systems and funds to build economies for future generations. Read more »
OPEC often touts its 81% share of global “proven” reserves of oil. However, today it seems like OPEC’s peak influence is in the rear-view mirror due to several external factors. To start with the obvious, oil is slowly waning in importance in the global energy mix. According to the EIA, oil made up 34% of total global energy demand in 2010. By the year 2040, the EIA expects this share will be closer to 30%, though things could happen faster if the technology behind renewables and batteries makes a bigger impact than expected.
Next, U.S. domestic production has almost doubled because of the shale and fracking revolution. In 2008, the U.S. produced 5.0 million bpd, and in 2015 the country averaged 9.4 million bpd. Lastly, as you can see on the chart, accelerated development of Canada Oil Sands has enabled the U.S. to buy any imports needed from Canada instead of the Middle East. In 2005, Canada only supplied 16.1% of U.S. oil imports, but Canada is now the major supplier of oil to the U.S. with a massive 43.0% share.
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