Daimler spends big to compete with Tesla

Technological advancement is coming fast and furious today, especially in the areas of energy and transportation.  This is exciting but it will also require a lot of capital investment to make these transitions.  That means less corporate profits and excess cash for non-productive rents like share buybacks and dividends.  More reasons not to pay today’s extreme multiples for share ownership.  See:  Daimler spends big to compete with Tesla:

Management expects revenue and profit to increase again this year, thanks to ongoing growth in China and Europe, a recovery in other emerging markets and a fresh model lineup. Crucially, though, the German industrial giant isn’t counting on growth in the free cash flows that fund its big dividends.

The key reason: heavy investment in future technologies, namely electric powertrains, self-driving features, web-connected cars and the smartphone-enabled car-hailing or carpooling services pioneered by Uber. Last year Daimler’s investments, including spending on plants and equipment and research and development, totaled €13.5 billion ($14.56 billion)—8.8% of sales and 16% ahead of the 2015 level. This year spending is expected to rise a further 13% to €15.2 billion, and stay at that level in 2018.

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With robots taking jobs: study the arts?

Manufacturing is on the move, migrating closer to able customers and available land, resources and infrastructure.  For many companies that means North America is increasingly attractive.  The bad news is robots are going to keep taking the jobs.  We are all at risk of being unskilled labor in the future.  See:  When robots steal your job:

This rise in automation has only just begun and is going to change far more than the manufacturing sector. With the growth of machine learning and artificial intelligence, job losses will not be limited to assembly lines. The service industry, office administration, computer programming, and many other sectors are all on the cusp of automation.

Sure automated operations are highly efficient and can greatly increase productivity.  But all the arguments in favor of greater productivity, make two key presumptions.  The first is that there are customers able to purchase that increased production.  Second, that hours freed up by greater labor efficiency are able to be used more productively in other pursuits.

In reality, unemployed workers make poor consumers and once human labor is not needed to provide for our own food, shelter, utilities, clothing or transportation, what other productive things will people do with their time?  Sure some will devote their energy to solving the world’s other problems, but the masses, what will they do? Surf the net? watch shows? take selfies?  At some point, more free time is completely non-productive where it does not improve health and life quality, nor increase available cash flow.  This is where creative thinking is required, different than the prevailing economic theories about how to produce more product and stimulate more spending through debt.

Henry Siu, the UBC professor who specializes in automation and the decline of middle-class jobs says this question must be on the minds of every worker, leader and policy-maker today.  Among other sectors, Siu predicts that the trucking industry could automate within the span of one to two years, sparking the loss of 8-9 million US jobs alone.  His suggestion may surprise many:  cultivate creative thinkers and study the arts.

How do we prepare for the inevitable job losses? Siu has a counterintuitive suggestion: avoid education that focuses on the STEM disciplines (science, technology, engineering and math). This only trains people for jobs that are the next to be automated, like programming. Instead, we need a work force to take on jobs that computers can’t: to think laterally, to make subjective judgment calls an algorithm can’t, and to solve problems. Not game programmers, but game animators; not payroll clerks, but career counsellors.

The great irony of the robotic revolution may be the unexpected resurgence of the long-derided bachelors of arts degree—you still can’t automate creativity.

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Taking advice from a financial conglomerate? Read this

Twenty years ago I naively stumbled into the investment ‘business’ on the broker/dealer side of a bank owned financial conglomerate.  It was a shocking, repugnant, dishonorable, client-abusive business model to work in.  And has only gotten more self-serving, conflicted and corrupt since.

If you are still taking your investment, retirement, financial advice and management from the companies that are paid to sell products and get you into more risk so they can make more fees, then you are doing yourself and your family a great disservice.

The ‘cross-sell’ of high fee products to gullible/greedy/unsuspecting clients is the holly grail of financial firm profits.  This detailed investigative report on JP Morgan is well worth reading.  See:  Private Banking meets cross-selling for JP Morgan’s wealthy clients.

If you think (or hope) that your investment/dealer/broker firm is different, you are deluding yourself.

The only rule that posed a serious threat to the financial cartel was the incoming ‘fiduciary standard’ that the Labor Department had set to take effect in April, requiring ‘advisers’ to place the best interests of their clients ahead of firm profits. But now the new Trump administration has frozen its enactment, and is said to be working on a permanent roll back.  If this happens it will be a clear indication that the self-enriching, finance cartel is still running the government under Trump, as it is in most other countries today.

“Disclosure goes only so far.  Clients shouldn’t have to worry that their bank can screw them because somewhere in a large offering document it says the bank can screw them.”

–Philip Aidikoff, securities lawyer representing a client in an arbitration against JPMorgan over an alleged breach of fiduciary duty

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