Financial, Economic and Social Mood Update (March 2, 2018)
The US stock market peaked on January 26, 2018 with the Dow Jones 30 Industrials Index reaching 26,617 on that date. The market dropped 3,234 points in 14 days but it has recovered 26 percent of that initial drop since then. The overall stock market remains robust with high asset values – 91 percent of record high value. EWI analysis believes that the crash has commenced and that the next major target is Dow Jones = 18,000.
In recent monthly updates I have discussed the major technological changes coming our way. These include Artificial Intelligence (AI which is projected to eliminate 70 to 80 percent of all existing jobs over the coming 2 decades) and the revolution in energy whereby nuclear fusion electricity will eventually eliminate much but not all of the need for fossil fuels such as crude oil, natural gas and coal. Crude will still be needed for things such as asphalt pavement (roads and the like) plus the production of everything plastic which includes much of the physical goods produced in the world today.
Both governments and major auto manufacturing companies worldwide have committed a tremendous amount of capital and they have set real timetables for the coming transformation in transportation. These changes are already underway.
Geely (the number 8 automaker in China with annual output of 1,266,456 units) owns both Volvo Cars and Volvo Truck of Sweden. Starting in the 2019 model year Volvo will only manufacture either plug-in hybrid or gasoline-hybrid engines.
Brazil is the largest country in Latin America with 209 million inhabitants. 94 percent of all new motor vehicles in Brazil run on sugarcane-based ethanol (they refer to this fuel as alcohol). This burns much cleaner than either gasoline or diesel, and has resulted in much better air quality in Brazil.
Mainland China is the most populous country on earth with 1.41 billion people. China has the largest GDP on earth, the largest auto market on earth and China is the number one manufacturing country in the world which makes one half of all physical goods on earth. China has long had very serious problems with both air and water pollution since the major advances in both industrialization and wealth creation commenced in 1976. By 2020 China will require all automotive manufacturers to have a product portfolio in China with an average fuel economy of 47 miles per gallon. This compares to an average 25 miles per gallon in the USA in 2015.
The European Union (EU) is a 28-member country supra-national entity with 512 million inhabitants. The GDP of the EU is larger than that of the USA. By 2021 the EU will require all automotive manufacturers to have a product portfolio in the EU with an average fuel economy of 57 miles per gallon – even more aggressive and ambitious compared to the law in China.
The existing law in the USA (the 3rd most populous country in the world with 324 million inhabitants) requires automakers to reach an average fuel economy rating of 47 miles per gallon by the year 2026. The Trump Administration is considering lowering this target to 36 miles per gallon by 2026 – basically decreasing the rapidity of the goal but by no means eliminating the goal. Lincoln (the small upscale luxury division of the Ford Motor Company of the USA) will electrify its entire model portfolio (much like Volvo) by the year 2022. The state of California (the richest and most populous US state with 40 million inhabitants) is considering a new law which would require all new motor vehicles to be plug-in electric by the year 2040.
The Kingdom of Norway (a small and wealthy Scandinavian country with only 5 million people) has the largest percentage of new motor vehicles which are either plug-in electric or hybrid electric – 52 percent of all new cars sales in 2017. This is mandated by law to be 100 percent by the year 2025. This is very interesting when one considers that Norway is both a major producer and exporter of crude oil.
Volkswagen AG of Germany (the largest automaker on earth with annual unit volume of 10.7 million new cars and trucks) will go 33 percent plug-in electric and hybrid electric by the year 2025 and 100 percent by the year 2030. Mazda (the 7th largest motor vehicle manufacturer from Japan with annual unit volume of 1,586,013 new cars and trucks) will do likewise.
India (the 2nd most populous country in the world with 1.324 billion inhabitants) will require all new motor vehicles to be electric by the year 2030. France and the UK (the 3rd and the 4th most populous countries in Europe with 67 and 66 million inhabitants, respectively) will do likewise by the year 2040. The first nuclear fusion plants are forecast to come online by 2040 and by 2050 they should be fully commercial on a global basis. Unlike nuclear fission power, nuclear fusion power does not use the dangerous mineral of uranium, but instead uses hydrogen or water. Nuclear fusion power is what powers the sun and the stars. It is safe, plentiful and inexpensive.
