Financial, Economic and Social Mood Update (February 1, 2018)
The US stock market continues to be very robust – the Dow Jones 30 Industrials Index reached a new record nominal high of 26,617 on January 26, 2018. The NASDAQ Composite Index hit a new record nominal high of 7,506 (on January 26), as did the S&P 500 Index at a level of 2,873 (also on January 26) and the Wilshire 5000 “Total Market Index” at the level of 29,761 (on January 26 as well). A major failure of Elliott Wave International has been the timing of the forecast collapse of the equity market – it must happen at some point, but the truth is that the equity market has skyrocketed in nominal value for the last decade. And when this crash does come it may manifest as a collapse of the real value of our currency as opposed to a collapse in nominal value. Here are a few examples of the increase in nominal value in the last 10 years. The Dow Jones 30 Industrials have gained 293 percent, the NASDAQ Composite has gained 470 percent, the S&P 500 Index has gained 312 percent, the Wilshire 5000 Total Market Index has gained 239 percent, and Berkshire Hathaway (a huge conglomerate holding company with equity stakes in most major industrial sectors) has gained 339 percent. The Bitcoin Investment Trust has gained a whopping 6,344 percent since its inception in July 2016.
This month’s topic is the future of the automotive industry, especially with respect to AI (artificial intelligence), ride-sharing and all-electric plug-in vehicles. Since 2010 I have written and published three books about Volkswagen AG, the largest automaker in Europe and the manufacturer of my favorite automotive brand name (their core brand of VW).
VW (Volkswagen) and many other carmakers with deep financial pockets have already committed to invest no less than USD $90 BILLION to reach the goal of these new technologies. Whether we like it or not, and regardless if we are ready for it (or not), these changes are coming. Why are these changes coming? One reason is governmental regulation of a worldwide scope, and the other reason is due to advancements in many different types of technology.
The reason behind the governmental regulation has to do with the environment in which we live on the planet earth. High levels of emissions from motor vehicles (pollution) has led to very serious problems with air quality, water quality and the like especially in the very large urban regions of Asia and Europe. Many political jurisdictions including very populous countries such as Mainland China, India, the EU government in Brussels, the USA, the UK, France and Norway already have definite legislation which will eventually outlaw all new internal combustion engines for passenger cars and commercial vehicles (or legislation which greatly increases mandated MPG or miles per gallon of gasoline / diesel / ethanol).
The technological changes afoot are doing the following. AI (artificial intelligence) will eventually allow motor vehicles to be “self-driving” whereby human beings will be no more than informed passengers in those motor vehicles. Ride-sharing services (computer applications or apps) such as Uber and Lyft will put traditional taxicab businesses out of business, and they will allow tens (or hundreds) of millions of drivers & passengers especially in larger urban areas to forego personal motor vehicle ownership altogether.
All-electric plug-in vehicles are becoming more practical in the sense that they are faster, quicker and above all that their driving ranges are becoming longer & that their battery recharging times are going down. Current problems or obstacles include the special type of water required for their batteries (a threat to flamingo bird habitat in countries such as Chile because the water needed is in their habitat) and in the unique minerals needed to manufacture such batteries (the largest supplier of these hard minerals is the Democratic Republic of the Congo in central Africa – one of the poorest per capital GDP and the most corruptly-governed countries on earth). Another obstacle is the huge cost necessary to upgrade global infrastructure. Every car owner will require a special recharging station in their garage (like the ones made by Bosch today) which will require both an initial purchase and monthly electricity usage charges. These recharging stations will eventually replace the gasoline, diesel and ethanol stations of today.
The massive amount of electricity required for this evolving change in our lives will eventually have to come from nuclear fusion power (not to be confused with the nuclear fission power which began in the decade of the 1940s). Nuclear fusion power uses water or hydrogen which is like the power used by the sun and the stars in the universe. Nuclear fission power requires a very dangerous mineral which is of course uranium. Nuclear fission power was primarily developed at the Los Alamos National Laboratory (LANL) which located in remote northern New Mexico. Nuclear fusion power is being developed in southern France by the International ITER project. Prototype nuclear fusion power plants should come on line around the year 2040 and this should be fully globally commercial by 2050. The power generated will be efficient, plentiful, inexpensive and safe – but the global infrastructure needed to accommodate this change will not be inexpensive at all.
What do these changes mean to the lives of most ordinary people on earth? I believe that individual motor vehicle ownership will become much more expensive than it is today, and that many or most people on earth will no longer be able to afford their own personal car or truck. Car ownership will likely return to what it was until the introduction of the Ford Model T in 1908. Before 1908, most car owners were wealthy individuals who owned cars as enthusiasts – they owned these expensive cars merely because they wanted to enjoy them during their free time.
Artificial Intelligence (AI) may eliminate 70 to 80 percent of all jobs now in existence within 20 years from today, and the powers that be at the top of society are debating the necessity of a guaranteed minimum income – social welfare benefits for the masses due to the likely displacement (outplacement) of so many workers.
