Fossil fuels is old-school but Trump shall support it.
Electric vehicles are new, but Trump might remove the EV subsidy.
Solar & wind likely will not be seen as good as they were.
Carbon emission will probably not be strictly watched.
Buildings and construction sites shall boom.
And interestingly, the company, Caterpillar, was helped by Trump during his last term.
While EV is not popular, Musk did pivot to Republican by moving headquarters of Tesla, and more recently, SpaceX and X.com.
Musk also donates to Trump.
But problem is that his companies are not something Trump likes.
Besides electric vehicles, Optimum, which can replace factory workers in the future, is probably not what Trump wants. Trump wants blue-collar jobs in the US.
Plus, although Musk bought Twitter and lifted the ban on Trump’s account, Trump hasn’t been active on X.com besides a post in Aug 2023.
https://t.co/MlIKklPSJT pic.twitter.com/Mcbf2xozsY
— Donald J. Trump (@realDonaldTrump) August 25, 2023
On top of these, Musk might be too close to China, which would be frowned upon.
also here: https://time.com/6317339/rooftop-solar-power-failure/
Solar panel for some = Financial products that don’t work
And this disappoints customers.
As a product, it fail too easy and too often.
Too sales driven and customers feel they got tricked.
Thinking about this question, here are five potential answers.
1/ For the older generations, shortages are deeply rooted in their memory, so they dislike the idea that anything might be in short supply.
2/ The required return is too low. Many experienced poverty in their youth, therefore lots of effort for little money is still attractive.
3/ The local governments want to create local jobs and boast about industrial upgrades, with banks being the main enablers. When every local government invest in a similar direction at the same time, it’s hard to control and estimate the entire capacity.
4/ For top party members, abundance of all sorts of goods is a sign of victory for socialism and communism.
5/ China is preparing for war. Many capacity will shut down if at war.
Housing
US new home sales down 7.7% yoy in Apr; median prices were flattish and should be flattish going forward. May data will come in this week.
US existing home sales was down 1% yoy in May, although median price rose 5.8% yoy. Sellers love their low mortgage rate.
Rental market looks still warm. Median rental price needs to go down.
Food & beverages
McDonald’s $5 meal shall provide a relief.
Starbucks has the new $5 or $6 combo. For $5, you shall get a tall iced or hot coffee + a croissant. This price is similar to China already (32 rmb, or $4.4).
Gas price
Gas price is lower than or similar to 2023 level.
Looks to me that inflation pressure is very manageable.
Time for $TLT, $IWM, and biotech etc. to shine.
And check Truflation: 2% is not far away.
US Apr new home sales (seasonally adjusted) dropped 7.7% yoy, reported last month.
The drop was long overdue, as interest rate (thus mortgage rate) has been high for quite some time.
The yoy strength from Apr 2023 – Mar 2024 was due to
A) the base effect
As most of 2022 was pretty weak after the war in Ukraine broke out. Fed also started the rate hiking cycle in Mar 2022.
B) the amazing AI-driven tech rally
Nasdaq rose over 60% from end of Sep 2022 to end of Mar 2024.
It reached all-time-high so even if you invested at the peak of 2021, you will still make money.
I bet many people enjoyed the wealth effect from stocks.
The base for the next 6 month (May 2023 – Oct 2023) looks pretty high, so yoy comparison should look weak, which is good if Fed is looking for “weak data”.
Meanwhile, inventory (new home for sale) has reached ATH since Feb 2024.
Previous high was 466k, seen in Oct 2022.
Time to clear the inventory is climbing in recent months. Now (Apr 2024) it’s 9.1 month vs. an average of 9.8 month between Jun 2022 to Oct 2022.
The median price for new homes sold is quite stable since Fed increased interest rate.
According to the China Population Census Yearbook 2020, China has 462 million households, with average area of 111 sqm per household and 41.76 sqm per person. Average room per household is 3.2 and average room per person is 1.2.
Average space per capital of 41.76 sqm is not a small number.
To compare, I asked ChatGPT for other countries’ numbers – 40-45 is quite the average. Only US, Canada and Australia are meaningfully above that number.
Just to double check in case ChatGPT is wrong, I looked up for German’s average living space, which was 46 sqm per person in 2018.
This number hasn’t changed much in the last decade or so. It was ~42 sqm per person in 2006 already, after decades of improvements (from 19 sqm per person in 1960).
Some further cross -check
Take a look at average home size in Europe, 100 sqm is already quite good.
Source: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8073340/pdf/ijerph-18-04278.pdf
Average room per person is 1.6 among EU countries.
2008
A total of 861,664 families lost their homes to foreclosure last year, according to RealtyTrac.
A total of 3,157,806 foreclosure filings—default notices, auction sale notices and bank repossessions—were reported on 2,330,483 U.S. properties during the year, an 81 percent increase in total properties from 2007 and a 225 percent increase in total properties from 2006. The report also shows that 1.84 percent of all U.S. housing units (one in 54) received at least one foreclosure filing during the year, up from 1.03 percent in 2007.
2009
RealtyTrac, the online marketer of foreclosed homes, reported that one in 45 households — or 2,824,674 properties nationwide — were in default last year. That’s 21% more than in 2008, and more than double 2007’s total.
2010
RealtyTrac, a leading online marketplace for foreclosure properties, released its Year-End 2010 U.S. Foreclosure Market Report, which shows a total of 3,825,637 foreclosure filings—default notices, scheduled auctions and bank repossessions—were reported on a record 2,871,891 U.S. properties in 2010, an increase of nearly 2% from 2009 and an increase of 23% from 2008.
And a 14-year graph
https://www.attomdata.com/news/most-recent/2018-year-end-foreclosure-market-report/
Link: https://www.acquired.fm/episodes/visa
Three major pieces of technology
1/ authorization network letting banks talk to banks
2/ automated clearing house
3/ digitized point of the transaction
Very interesting timing of the IPO (2008) that gives selling banks an important lifeline.
A fair problem raised – this “regressive tax” on transactions as merchants raise price for all customers but rewards are higher for premium customers.
Electric vehicle tariff sounds preventative. No Chinese car companies are selling mainstream in the US. 100% tariff is more political and sounds tough to voters maybe.
Batteries tariff is around 25%, which is about the gross profit margin of CATL. So it makes CATL export (if at the same price) 0% gross margin.