QUOTE OF THE DAY
Together the Facebook community has raised over $10 million to help people affected by Hurricane Harvey.”
Mark Zuckerberg
Market Snapshot
- Major U.S. indexes finished up—their fifth-straight monthly gain.
- Inflation in Venezuela picked up again after three slow months.
- Copper hit a three-year high.
- Gasoline prices rose, affected by flooding from Harvey.
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You’re Fired…No Wait
“How will technology affect jobs?” From Aristotle to John Maynard Keynes, theorists have long debated this simple question.
And Carl Frey—an Oxford professor and leading expert in automation—just doubled down on his position. Automation threatens 47% of American jobs, and it’s coming after retail next.
Frey makes a few compelling points
E-commerce is growing at nearly 20% per year, yet accounts for just 2% of all retail sales. Meaning, many bricks have yet to fall within brick-and-mortar, leaving 63% of sales jobs currently at risk.
Then, consider disruptions in warehousing and transportation—where up to 80% of jobs in these sectors could be hurt as well.
- Warehousing: Amazon bought Kiva Systems for $775 million in 2012. It’s gone from 346 robots per warehouse in 2013 to 3,200 (with over 45,000 warehouse robots worldwide).
- Transportation: Uber, Tesla, and Google are all dabbling in autonomous truck driving—putting ~1.7 million truck drivers at risk.
But there’s always another side
The critics argue that America’s blue-collar grit can’t be smited by a few floating blimps, or a know-it-all computer named Watson.
And they may have a point. As periods of industrialization, internet revolution, and autonomy have woven themselves into the fabric of society, they’ve left new opportunities in their wake.
History shows that from 1942 to 2012, manufacturing jobs in the U.K. fells from 46% to 8% of the workforce. But over that same time, the number of accountants rose by 2,000%.
Some also believe the shift to Big Data, AI, and the IOT could net 15 million jobs over the next 15 years.
So while retail might be in for it, American jobs could still have a fighting chance.
*Clears Throat*-We’re Sorry
For Wells Fargo (-0.56%)—the U.S.’ third-largest bank by total assets—what is worse than sales associates pressuring clients into opening 2.1 million additional accounts? Finding out the number is actually 3.5 million…among other problems.
It was last September when we learned that a culture of sky-high expectations from upper management drove sales analysts to act outside of their clients’ best interests. And while initial reviews only poured through 93 million accounts, a second review of nearly 165 million accounts tells a bleaker story. One that might go back to 2002.
As for the the fallout? Well, it’s as you’d expect.
We’re talking 5,300 fired employees, a $100 million fine, $10 million in customer refunds, a $142 million class-action settlement, a new CEO, and one elegant quote from Warren Buffett (Berkshire Hathaway is Wells Fargo’s biggest shareholder)—“there’s never one cockroach in the kitchen.”
In a Galaxy iPhone Far, Far Away
Apple (+0.40%) has confirmed September 12th for its next big product launch. The broadway-level production is going down at the new $5 billion, saucer-shaped headquarters nicknamed the “Spaceship.” But this Steve Jobs creation has a little more room than your average spaceship.
The 2.8 million square-foot building sports a 100,000 square-foot fitness center, two miles of running paths, 9,000 planted trees, and a 1,000-seat “Steve Jobs Theatre.”
…and what better place to introduce the new iPhone 10, LTE Apple Watch, and Apple TV compatible with 4K televisions (remember when these reveals used to be a secret?).
So if $1,000 iPhones are your thing, or you just enjoy watching a bunch of tech enthusiasts “ooh” and “ahh” for three hours straight, mark your calendar.
Don’t Blink
Fox is finally appealing to us simple-minded, smartphone-obsessed, millennial folk by rolling out six-second ads for the start of the NFL season.
The media network clearly took a hint after viewership dropped from 17.9 million to 16.5 million during the 2016 season.
While traditional TV industry ads run for 15-30 seconds, Facebook and Google have created a new standard with their pre and mid-roll, six-second commercials. Now, Fox is the first legacy network to take the plunge.
And it looks to be working. The ads will appear in small boxes on the sidelines, or right before kickoffs with premiums hitting $200,000—its first go at the Teen Choice Awards yielded $75,000 per ad.
Not quite Miller Light High Life’s 1-second ad, but definitely getting closer.
What Else Is Happening…
- A lawsuit accusing Uber of tracking Lyft drivers has been dismissed.
- Disney (-1.59%) is cutting up to 300 jobs at ABC.
- Treasury Secretary Steve Mnuchin said the tax plan should be released by the end of September.
- The podcast company HowStuffWorks just raised $15 million as it spins out from its parent company System1.
Economic Calendar
- Monday Earnings: No Events Today
- Tuesday Earnings: Best Buy (+), H&R Block (+/-)
- Wednesday Earnings: Five Below (+)
- Thursday Earnings: Campbell Soup (-), Lands’ End (+/-)
- Friday Earnings: No Events Today
Economic Events: No Events Today
Economic Events: Consumer Confidence (+)
Economic Events: MBA Mortgage Applications (-), ADP Employment (+), GDP (+), Corporate Profits (+)
Economic Events: Jobless Claims (+), Chicago PMI (+/-), Consumer Comfort Index (+), Pending Home Sales (-)
Economic Events: Motor Vehicle Sales, PMI Manufacturing Index, Construction Spending, Consumer Sentiment, Baker-Hughes Rig Count
Buy/Sell/Hold
Buy: 21-year-olds
At least that’s Google’s strategy. Michael Sayman is a self-taught coding savant, who at 18-years-old, became one of Facebook’s youngest hires ever (that is until Zuckerberg’s newborn daughter, August, was promoted to head of the Blocks & Chains division). Now, after years of advising Facebook execs on the social media trends of millennials, he is moving on to product management within Assistant—Google’s voice-based assistant within search. Pretty startling to think all of this came before his first (legal) beer.
Sell: Cyborgs
Because he didn’t have enough on his solar-powered plate, Elon Musk is making headway in the world of neuroscience. His company, Neurolink, develops technology that creates a “neural lace” between human brains and computers to drastically enhance cognitive functions. After starting a nonprofit to promote the safe development of AI, a twitter feud with Mark Zuckerberg, and one-too-many Terminator marathons, Elon Musk is certain human beings will need to become machines to beat the machines. And to date, Neurolink has already raised $27 million in funding.
Hold: Domino’s Pizza
It’s 2017, so naturally, Ford, Domino’s, and autonomous driving tech companies are linking up to meet the demands of the overly-ambitious and desperately-hungry American consumer. Domino’s is now testing out autonomous pizza delivery complete with an in-car oven to keep your hawaiian slice nice and warm. But there’s a catch: since there’s no driver, you will actually have to walk to the car to get your pizza.
Question of the Day
You drive to the store at 20 mph and return by the same route at 30 mph. Discounting the time spent at the store, what was your average speed?
(Give up?)
Who Am I?
I am the only person to have founded three Fortune 500 companies.
I dropped out of college to drive a garbage truck around.
I owned the Miami Heat, Miami Dolphins, and Florida Panthers.
I turned a small, 19-store video chain into a $4 billion (temporary) success.
Stat of the Day
$80 billion
That’s how much Saudi Arabia is spending to renovate the holy city of Mecca. This week, over 1.75 million people will make the Hajj.
A note from the Brew:
- There will be no newsletter on Monday in observance of Labor Day.
- We apologize for an incorrect link in yesterday’s ‘Who Am I?’ The correct answer was Abigail Johnson.
I'm not convinced that automation is a zero-sum game. I can think of countless examples of companies or products/services that exist because of automation. If automation improves efficiency enough to help a small business stay in business then it has saved/created all of the jobs that that business maintains.
An example I recall from Shark Tank was where an automated "sign swinger" was designed to replace the human that is generally hired to swing signs on the side of a road. The Sharks pushed back against the inventor, saying that he (or was it they?) was taking away someone's job, but the inventor replied that, on average, his customers saw a 40% (I can't remember the exact number) increase in revenue when the auto sign was being swung, so the human sign swinger's labor was re-deployed back inside of the business.
I think about my friend, a mortgage broker. He uses all kinds of SaaS products to automate and/or outsource unproductive tasks (e.g. bookkeeping, call answering). As a result of automation, his time is freed up to increase his sales production. Because of his excellent production, he directly employs a staff to assist him of I believe 3 full-time employees whose jobs would not exist without his excellent sales production.
My larger point is that a lot of specific jobs are threatened by automation, but that doesn't necessarily mean automation will, on net, destroy jobs.
I think your larger point may be right and seems to get broadly overlooked. However, I think the timing of how it all unfolds could still sow a lot of disruption and disorientation into system even if the long-term net on jobs is naught.
I look at some of the disruptive technology waiting in the wings, autonomous vehicles in particular, and the potential for rapid adoption and massive displacement seems staggering. Now, the cost and time savings may eventually manifest itself as growth in other areas of business operations, but I would imagine there is a significant lag from a timing perspective—possibly on the order of years.
In the long-term the issue may correct itself, but I still expect a lot of turbulence in the interim. Who knows, we’ll have to wait and see.
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