Wednesday, July 18, 2018

Movies: Damsel

(Drivebycuriosity) - Everything is changing, even western are getting more and more modern, or is post-modern? The movie "Damsel" is the newest example ( imdb ). The film is a black comedy - and maybe a western persiflage - based on the classical theme "damsel in distress", set in America´s pioneer period. A young man arrives in the wilderness of the US west around the year 1870, accompanied by a cute tiny horse, named Butterscotch. He wants to rescue his fiancee who got "abducted by 2 very evil men and merry her", he claims. His efforts start a chain reaction of surprising & hilarious events (this is a spoiler free blog).

The camera indulged into awesome landscapes found in Utah and Oregon - a combination of beauty & toughness. The set designers recreated pioneer settlements almost as rough as the environment. The scenery was populated by cranky characters, apparently shaped by the brutal nature they had to deal with. I had much fun watching these odd persons, especially Robert Pattinson as the eloquent & stubborn savior and Mia Wasikowska, the damsel, who was a beautiful and tough as the environment.

I found the film funny & entertaining and was mesmerized by the displayed nature.

Monday, July 16, 2018

Economics: China - Don´t Trust The Headlines

(Drivebycuriosity) - If we believe the headlines then "China´s cooling economy spells trouble for global growth" ( bloomberg). This is just scaremongering. Last night we got the newest economic data from China which defy the pessimistic predictions. In the second quarter 2018 China´s GDP grew 6.7%, after 6.8%. Troublesome? Retail sales grew in June 9% (May plus 8.5%) and industrial production advanced 6% (May plus 6.8%  tradingeconomics).

The numbers prove that China still generates a solid growth and stays the growth engine of the global economy. The numbers also show that China`s consumers are getting more important and are becoming a growth engine, as they are in the US where the economy is mostly driven by consumer spending.

China is still in a transformation process: Changing from an industrial country - which relies on exports - into a modern economy like the US which is dominated by services and focuses mostly on the domestic market. For years imports & retail sales have been growing faster than exports & industrial production. Therefore a growing part of the national production is consumed in China, which reduces the country´s dependence from global markets. Thanks to the fast climbing consumer spending China can weather a trade war much better than the China haters think.

Contemporary Art: Eminent Domain - Intersectional Feminism Art

(Drivebycuriosity) - Last week - as I walked on 10th Avenue in Chelsea - a post caught my eyes. The image invited in an exhibition hosted by Art511 Magazine called "Eminent Domain. Intersectional Feminist Art (art511mag). The show displayed a variety of images including abstracts and photos of African men, all allegedly related to feminism. But anyway, some images found my interest and I display them here, a very subjective selection as usual.

The images above have a clear message.

These images are nice, feminist or not.

More nice images.

Some images are really funny

To be continued

Saturday, July 14, 2018

Stock Market: Did The Summer Rally Already Start?

(Drivebycuriosity) - It seems that the usual summer rally on the stock market had already started. Last week the S&P 500, the gauge for the US stock market, gained 1.5%, about the same as in the first half of 2018 (plus 2%).

In the first half of the year stocks had been hold back by rising interest rates, climbing oil prices (which fueled inflation) and Trump`s trade war. But these negative impulses are now priced into stock aluations. In the first half Wall Street neglected the strong company earnings and ignored that US Companies had a stellar earnings season. In the first quarter of 2018 earnings for the big US companies, which are represented in the SP 500, grew about 25% from the same period last year - and 78% beat the  earnings estimates of the analysts (nasdaq). Stocks rose much less than earnings (plus 14%) so they have been getting cheaper in the recent months (falling P/E ratios).

Just a part of the earnings growth is the result of the recent tax cuts of the Trump administration, about 7 percentage points estimates LPL research. Even without tax cuts earnings grew about 18% (basic earnings growth rate). Company earnings are fueled by the global economy which is growing about 4%. But the earnings growth is also a long term trend. Corporations are getting more efficient & more productive over time - thanks to learning processes and the technological progress. They are learning organisms because they are managed by humans who are continuously improving themselves and their companies. During the recession 2008 companies had restructured and reduced costs significantly in order to survive. Now they are more fit & more efficient than before.

Company earnings are also boosted by automation.  Since the early 18th century (the first industrial revolution) the technological process has been enabling companies to produce more goods & services with the same amount of employees. More and better machines are doing the work of people which translates into lower costs, higher profit margins and climbing earnings.

It seems that this process is accelerating again and we are at the begin of new industrial revolution. We are experiencing a rapid advance of information technology, meaning combinations of computers, smartphones, Internet and other digital systems. Software - which is increasingly Internet connected and uses more and more the cloud (access to huge external data centers) - organizes the whole business: Creating new products, inducing machines to run more efficient, finding cheap suppliers, manage customer relations and so on. Car producers and many other manufacturers are increasingly using robots and similar machines to reduce their costs. Companies are also beginning to use 3D-printers to become more cost efficient and flexible-

We are now at the begin of a new earnings season and companies will report about Q2 in the coming weeks. I think that the strong earnings growth from Q1 will continue and may even accelerate. There is a high change that the earning growth will lift sentiment in the coming weeks and will overcompensate the headwinds from interest rates, trade war & oil prices. Welcome to the summer rally.

Wednesday, July 11, 2018

Economics: Why The China Pessimism Is Unjustified

(Drivebycuriosity) - If we believe the popular blog "Marginal Revolution" then the China pessimism is coming back. Was it ever away? Tyler Cowen, owner of the blog, who belongs to the China skeptics, refers to new pessimist articles in Western media (2015 2018). The China skeptics complain for instance that fixed-asset investment — a core driver of Chinese growth that includes spending on new buildings, machinery and infrastructure — grew at its slowest annual pace since at least 1995 and that the stock market in Shanghai reflects the negative sentiment and lost 17% in the first half of 2018.

I think that the China pessimism is unjustified. China`s growth changed just from red-hot to strong. The economy (BNP) is still growing 6-7% annually, the mentioned fixed-asset investment is increasing 6%, retail sales are climbing more than 8% & industrial profits are soaring 16% (calendar). So what?

The China skeptics miss the big Picture. China is still in the begin of a perpetual catching up process, which is fueled by extreme income & wealth differences to the US and other Western nation. In 2017 China had about $8,827 income per capita, the US number was $59,531 (worldbank).  China is following other countries which had caught up to the leading economies  (to the UK before 1920, since then to the US, graph below).


The country has a huge natural resource which is fueling the perpetual growth: A gigantic amount of human capital: There live 1.3 billion people who are intelligent, work hard and save money to achieve a better life and to adapt to the living standards in the US and Europe. The Chinese economy benefits from an education system which is more rigorous, competitive and success focused than the American and the British (chinese ). Wikipedia counted in 2014 already "2,236 colleges and universities, with over 20 million students enrolled in mainland China" (wikipedia). Fast expanding knowledge is driving science & innovation and fostering economic growth (washingtonpost). Chinese corporations, think tanks & administrations can employ a large number of highly dedicated & educated people - a strong driver of economic growth (scottsumner).

China`s growth is boosted by a rapid transformation process.  For decades the country has been changing from an agricultural economy into an industrial economy, following the role models of the US, Japan, South Korea and many other countries. Now China is entering another stage of the transformation process: Changing from an industrial country - which relies on exports - into a modern economy like the US which is dominated by services and focuses mostly on the domestic market.
For years imports & retail sales have been growing faster than exports & industrial production. Therefore a growing part of the national production is consumed in China, which reduces the country´s dependence from global markets.

China´s catching up process also benefits from historical lessons & the experience made by other countries. China does not need to reply the mistakes of other countries and is learning from them. Beijing`s central bank is doing a good job by avoiding inflation & recessions. China´s transformation also gains from the technological progress: Rapid advances in software & Internet (including cloud computing), robotics, 3D printing, nanotechnology, genetic engineering and other technologies are all lifting the productivity of the economy (byronwien).

The Internet - including the "cloud" - increases the flow of information and reduces the cost of data. New ideas can spread faster, encouraging discoveries and inventions and boost the technological progress & China`s transformation. A large part of the population uses already smartphones, tablets and other devices which allow them permanent access to the world wide web. These high tech devices help them to organize shopping, leisure time, traveling, dating, eating out and more and are so rising productivity & economic growth. "Although China’s internet penetration is just over 50%, its sheer scale means that there are 3x the number of smartphone users and 11x the number of mobile payment users in China than in the U.S" (china-internet-report). Chinese companies are using cloud services for organizing & reducing costs. China has already huge Internet companies like Alibaba, Tencent & Baidu which are growing faster than their Western counterparts and are becoming global power houses (visual). The government - and companies like Baidu - are investing massively into artificial intelligence which is boosting the transformation process & economic growth for years to come (economist).  

China´s megacities (there are at least 15 metropolises with a population of more than 10 million people wikipedia) are supporting productivity and the growth of the whole nation. History shows "that clusters of talented and ambitious people increase one another’s productivity and the productivity of the broader community, spurring economic growth" (citylab). "80% of economic output originates in cities: urbanization is the engine of economic growth" (project-syndicate). The migration to big cities fosters a fast rising affluent middle class, driving consumer spending & economic growth.

The China skeptics lament about the high debts. But they are wrong, China does not have a debt. The country is big creditor and loans money to the US which is highly indebted. China`s foreign reserve ( dollar holdings) are $3.11 Trillion! The Chinese save more than 40% of their income, the American just around 20% (worldbank). The high savings lay the ground for investments in infrastructure and other targets (capital accumulation) and are fueling the sustainable growth of China´s economy.

I get the impression that the permanent China skepticism is just a kind of racism.

PS For illustration I used an image from the China Fashion Week in Bejing 2017 displaying creations by designer Tom Dong as a symbol for China`s modernization  (xinhuanet).

Monday, July 9, 2018

Stock Market: Trump Giveth And Trump Taketh Away?

(Drivebycuriosity) - It seems that the US economy is gaining speed. Analysts expect that the US GNP grew about 4% in the second quarter (frbatlanta).  The economy is getting some tailwinds from President Trump`s economic changes. His tax cuts are raising company earnings and are encouraging investing & hiring.  He also curbed regulation, especially in the banking sector, which had hold back bank lending and daunted investing. I think that the business friendly attitude that Trump had shown last year gave the US economic a strong boost.  

But now Trump is also causing severe headwinds. His trade war against China - and maybe Europe and the rest of the world -  is irritating investors and the stock market and could slow down investing again. Trump`s tariffs will hike prices of imported goods, curb US exports and disrupt supply chains & production processes. The trade war could reduce company earnings and slow down investing & hiring again. Trump´s sanctions against the Iran could reduce the global oil supply and and lift oil prices which will curb consumer spending in the US and will raise production costs.

In the moment the positive impulses of tax cuts & deregulation are dominating. I expect that in the rest of the year we will get strong economic numbers (BNP growth, retail sales, job market and so on) and sharply rising company earnings which should lift the stock market. But if the trade war escalates and if the stupid Iran sanctions lead to sharply higher oil prices their harmful effects will get stronger and in the coming year the economic gains could get lost and the US economy could slow down again or even fall into a new recession. Trump has still the chance to moderate and keep the economy on a strong growth course.

Saturday, July 7, 2018

Contemporary Art: A Glance Into Condo New York 2018

(Drivebycuriosity) - New York City is known for Wall Street & Broadway but the metropolis is also a mecca of art. Now 21 galleries in southern Manhattan are hosting shows from 47 galleries in foreign countries or other US cities. The program is called Condo New York 2018 ( condocomplex).

I checked about half of the hosts and I was disappointed. Some of the galleries were closed or didn`t exist on the announced addresses, others were just tiny places and showed mediocre works. But I collected some pictures anyway. Above images from Bodega, 167 Rivington St, hosting Galerie Crèvecœur Paris.

Above images from Bureau, 178 Norfolk St, hosting Hopkinson Mossman Auckland & Kristina Kite Gallery Los Angeles.

Above images from Rachel Uffner Gallery, 170 Suffolk St, hosting Cooper Cole Toronto & Night Gallery Los Angeles.

To be continued