Morning Commentary
In this month's newsletter, we look into the Trust Economy and how it is changing capitalism, but maybe the hype is ahead of reality. We know all the sexy names like Uber and Airbnb and others:
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But, reports this week state that Uber X will lower prices and the company will take losses to gain market share and fend off competition. The news gave a lot of people pause. Maybe this isn't an economic cure-all that the hype and multi-billion dollar values suggest. I for one prefer stocks of companies that have pricing power and take market share through sheer demand, not discounting. I do see the trust economy changing the world, but what is the ultimate economic cure-all? I'm not sure.
Heck, it's not even a sure thing that people trust each other enough for the kind of penetration needed for a new paradigm in business.
Trust People that... |
Great Deal |
Somewhat |
Not Too Much |
No Answer |
Access medical records |
50 |
29 |
17 |
4 |
Prepare food |
47 |
36 |
14 |
3 |
Work in your home |
41 |
37 |
18 |
4 |
Share photos, videos and social network |
38 |
30 |
29 |
3 |
Swipe your credit or debit card |
30 |
43 |
24 |
3 |
Drive while you're driving, walking or biking |
21 |
36 |
39 |
4 |
Meet while travelling away from home |
19 |
49 |
29 |
3 |
Maybe the Trust economy won't come to the rescue, after all. The hype may just be overblown.
If so, it wouldn't be the first time. An article in the Atlantic reprints a NY Times editorial from May 2, 1938 titled "Prosperity out of Fantasy" which suggested that where new industries and products like televisions, air-conditioners and flivver airplanes ("Model T of the Air") failed to produce good wages or heavy sales, maybe "Industrial Fantasy" would do the trick.
(Wow, who knew we almost had personal airplanes almost 100 years ago.)
The Disney Magic Touch
Walt Disney's early success had many thinking Industrialize Fantasy would be the answer, after all, Snow White and the Seven Dwarfs needed an army of artist, animators, gagmen and then showered fortune on playhouses.
Moreover, the byproduct of toys was remarkable with Snow White alone garnering 117 licensing deals alone. (And you thought that was a recent phenomenon, too.)
Well, Disney was on to something big, but it wasn't big enough to end the recession which took the Great War that brought women into the work place and forever shifted the paradigm of capitalism in America.
So, is the trust/sharing economy Mickey Mouse in the wrong sense of the phrase? It remains to be seen, but it's really amazing that the more things change, the more they stay the same. The bottom line is that America is built to rebound and will this time as well.
Today's Session
Yesterday was a typical session-after-earnings report, but still a little unnerving. The market is grappling with the next would-be catalyst. In the meantime, heavy selling in momentum stocks points to continued anxiety with holding profitable positions and an eagerness among the fast money crowd to stay nimble. The big pullback probably begins with a whimper, not a big news announcement, so we will be vigilant about a proverbial snowball to boulder situation.
That said, I continue to think stocks are not at levels associated with crashes and the gradually improving economy is the right backdrop for higher share prices.
Comments |
Communism/progressive-ism seeks to negate private property ownership first. Then slavery to central gov't takes its place. Jerry McDonough on 7/8/2014 10:45:29 AM |
Dumb idea... Phil G on 7/8/2014 12:12:09 PM |
In today's society, play it safe, trust NO ONE. tom wayne on 7/8/2014 1:36:14 PM |
I actually think it will be more than a fad, but I don't think that it will have a major impact on the economy. It is an idea that will continue, but only at a small level. It will be valuable to people at lower incomes, but it won't have a major impact on hotels and restaurants. Part of the fun of travel is eating at new restaurants and staying in different hotels and resorts. This idea will not have a major impact on that. Bill on 7/8/2014 1:37:47 PM |
Why don't the Cable and satellite companies start testing a system where users buy only the channels they want. I think they would be surprised at how much people would pay for the channels they want on an individual basis. I know that the sports fans would pay well to get the channels they want. And the cable companies could stop carrying channels that nobody wants. Bill on 7/8/2014 1:45:18 PM |
All it will take is some lurid, "how could I have been so stupid" bad outcome to a few of these schemes and the concept will die. Craig's List murderers anyone? Jim Philipp on 7/8/2014 2:15:47 PM |
Where is our educated population? Charlene Voss on 7/8/2014 2:20:51 PM |
This concept id non-other than agreed-to-Communism! Joe T on 7/8/2014 2:26:02 PM |
That's what regular neighbors used to do, when we used to think of those people living nearby as neighbors. It might be useful to allay the current trend where people get alarmed when a familiar-looking neighbor just say "hello". Patricia Flynn on 7/8/2014 2:26:57 PM |
Dumb idea! Only this administration would think it could work. Colonel Jack Kelly on 7/9/2014 1:47:48 PM |
OK with dog walking_____Not with the rest Dick on 7/10/2014 4:43:14 PM |
Hi Charles, Maybe it is that I grew up in Texas that I am just to independent to want to get into someone's car, use their home, etc. I'll just get along on my own. Then, I will have a better idea of how things will turn out. Cindy on 7/12/2014 10:38:20 AM |
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