War Room 29 August 2012 Jobs + Inequality

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War Room 29 August 2012 Jobs + Inequality. War Room. Monthly macro discussion Using tools in context Update on HiddenLevers Features Your feedback welcome. Jobs + Inequality. Jobs Picture: Current Snapshot Comparative: Post-Recession Job Recoveries III. Market Inequality - PowerPoint PPT Presentation

Transcript of War Room 29 August 2012 Jobs + Inequality

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War Room 29 August 2012 Jobs + InequalityWar RoomMonthly macro discussion

Using tools in context

Update on HiddenLevers Features

Your feedback welcomeJobs + InequalityJobs Picture: Current Snapshot

Comparative:Post-Recession Job Recoveries

III.Market Inequality

IV.ScenariosHiddenLeversJobs Picture: Current Snapshot

Current Snapshot: Long Way To GoStill 5 million jobs from peak

Unemployment claims:

decreased significantly since 2009 peak

Currently not decreasing

Currently equal to peak of 2001 recession

Current Snapshot: Jobless Claims Now at 2001 Highs450k

Current Snapshot: Muddling Through

upticking unemployment this summerunemployment downconfidence up

approaching 2008 lowsCurrent Snapshot: Recovery + Demographics

Singles5 million jobs lost 90% recovered

Married6 million jobs lost 22% recovered

Comparative:Post-Recession job recoveriesHiddenLevers

Comparative: Post-Recession Job Recoveries

source: Bureau of Labor Statistics

Qualitative:Character of recovery similar to 1990 + 2001Quantitative:% job loss dramatically moreComparative: 2000s = Jobless RecoveryLosersManufacturingAutomotive

WinnersProfessional servicesHealthcare

Market inequalityHiddenLevers

(Rich Kids of Instagram)Inequality Top 1% versus The Rest

Takeaways- excluding top 1%, income inequality has not risen over past 20 years- system that works well for richest, doesnt for the rest- Income share for top 1% is at Great Depression era highs

Source: Economic Policy InstituteFortune 500 CEOsCEO/worker pay ratio has risen exponentially 20x in 1965 to 200x today CEO pay has accelerated even faster than top 1% incomeShareholders could affect things vote down CEO packagesWinner-take-all Ratio of CEO to Worker Compensation: 1965-presentInequality Part of General Trend?Inequality Part of General Trend?Baseball SalariesAverage MLB salary up 100x since 1970Median wage across all pro-athletes = 40k (minor leagues)Winner-take-all

Startup BillionairesStartups not creating jobs, creating wealth for fewAutomation = key to many startups success, but eliminates jobsWinner-take-all

12 employees1b usd acquisition

67 employees1.65b usd acquisitionInequality Part of General Trend?Inequality Russell 2k vs Mega Caps

Top 8 Firms outperformed over last 20 years

Mega Caps outperformed small caps (and S+P) over last 20 years.

All but Apple were huge companies 20 years ago no cherry picking hereApple demonstrates inequality marketsiPhone is king of smartphone marketiPad has even greater share of tablet spaceWinner-take-all

Apple - Outlier or new Paradigm?Future: Automation + Change in Workforce

Examples:

Tesla - new factory uses robots + few humans

FoxConn - automating iPhone factories in China, use 90% less workers

Amazon automating logistics, new warehouses devoid of humans

Philips robots replacing workers to make consumer electronics devicesTechnology + Automation = Spoils to go to a few, companies and individuals Ford Factory 1925 - humansTesla Factory 2012 - robots

they dont need me anymoreWhat are the effects of continued automation on the workforce?

Pessimists: Once a robot can do everything an unskilled laborer can do, and better, what happens to mass unemployed? If a robot can serve you fries, what's the purpose of a minimum wage worker?

Optimists: We've been through this transition before: 19th century Industrial Revolution, 20th century rise of services and information economy this is just creative destruction at its best.

These trends are far reaching too early to model scenarios here. Future: Optimistic and Pessimistic Scenarios

HiddenLevers Product UpdateMacro Profile for a Portfolio (print to PDF)War Room now on iPad

Coming soon:iPad App (beta)Big Screen Presentation (beta)

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