This holiday-shortened week was packed with geopolitical news, but other than felonious assault on an airline passenger and war-porn images of the “Mother of all Bombs,” my attention was caught by increased references to something I mentioned in last week’s article. Namely, more people are starting to think the “global reflation” trade might be long in the tooth. Bill Gross seems to have garnered somewhat of a bad reputation over the last few years, but could it be that his idea of a “new normal” marked by tepid economic growth might be right?
Here are the stories that caught our eye, including some potentially good news out of India that backs up Jim Litinsky’s thesis from the recent Grant’s Conference.
Activist Jana builds near 9% stake in Whole Foods (The Financial Times). Mid-day Monday, Whole Foods’ stock price shot up by 10% midday. This was the news that did it. After a series of successful bearish investments in Whole Foods Market last year, we are dusting off our model to see if there may be another opportunity here.
United chief defends staff after screaming man dragged off flight (The Financial Times). Strangely enough, the worst international flight (NY to Tokyo) I ever had was on United. Hard to imagine any other business treating a customer in this way and easy to imagine better ways for a business to handle the problem.
Toshiba Warns of Its Ability to Continue as Going Concern (Bloomberg). This is an amazing story for this watcher of both Tech and Japan. I have not followed the story closely, but in the company’s delayed quarterly results (which did not receive the auditor’s unqualified opinion) Toshiba’s equity shows as negative due to issues with its US Westinghouse nuclear engineering business. Toshiba engineers created, with the founder of SanDisk, NAND Flash memory, and its memory assets most certainly have economic value. The thought is that Toshiba will be able to remain as a going concern if it can sell off the memory unit. Hon Hai Precision has expressed an interest in the business.
FedEx Freight calls for US self-driving truck regulations (The Financial Times). The trucking industry is pushing for a model by which long-haul trucks will operate on “autopilot” in much the same way airlines operate their planes. The sticking point slowing self-driving trucking is not technology, it is regulation and social acceptance, according to FedEx Freight’s CEO. The industry wants federal regulations (so that self-driving trucks can cross state lines without issue) and beefed up spending for highway technology that will improve the safety and efficiency of self-driving rigs.
Think New York Transit Is Bad? Just Wait (NY Times Op-Ed). I used to take NJ Transit under the Hudson every morning and every evening when working at Morgan Stanley. From that experience, I knew just how badly the tunnels and rail infrastructure needed updating even back in 2003. Flash forward six years and, in the midst of the Financial Crisis, New Jersey governor Chris Christie refused federal stimulus funds to beef up the tunnels and bridges to Manhattan as a political nose-thumbing to the newly elected President Obama. A few years later, damage to the tunnels caused by Hurricane Sandy allowed salt water in, and is now corroding the tracks and equipment there. Engineers guess that the tunnels may be unusable within the next decade. How ’bout that stimulus money now, Chris?
US tourism’s vulnerability to an unwelcoming image — in five charts (The Financial Times). According to the US Government’s SelectUSA site, one out of every 18 Americans is employed, either directly or indirectly, in a travel or tourism-related industry. In 2015, U.S. travel and tourism output represented 2.6 percent of gross domestic product. By various metrics, the US is becoming a less friendly destination for tourists.
India’s ambitious plan to tax goods and services (The Financial Times). Ever since Jim Litinsky’s presentation at the Grant’s Conference, articles about India have been catching my eye. This article suggests that much needed tax reform may be implemented this year in India – in line with Litinsky’s thesis about the enormous country and potentially enormous economy.