Alchanati Campbell & Associates
Alcohol, energy, metal straws, the yield curve, STDs, Apple… enjoy the longer read for the longer weekend.
“I get drunk because it tastes good…” The harm from alcohol worldwide increases with each additional drink per day. For each set of 100,000 people who have one drink a day per year, 918 can expect to experience one of the 23 alcohol-related problems in any year. At two drinks per day, the number increases to 977. The current population level of average daily drinks is 1.9 for women and 3.2 for men.
Out with the old, in with the new… For those unaware, the Trump Administration has held a less-than-favorable stance on NAFTA, the North American (that’s us, Canada, and Mexico) Free Trade Agreement. Everything that NAFTA does (removing tariffs/barriers, promoting economic growth/increasing competitiveness in global market) is crucial for our country and its consumers. Still, Donald Trump ordered that NAFTA be renegotiated back in January. This week, the United States and Mexico came to terms on a bilateral agreement. What Changed? The two countries came to terms on changes for auto-manufacturing - now, 75% of parts used in cars sold in North America must be made in the two countries. Wages for the workers in the auto-manufacturing industry are also going up. This new deal is going to last for 16 years, and every 6 years will allow opportunity for revision. While President Trump is a fan of separate, bilateral trade deals with each country (i.e. a separate deal for both Canada and Mexico), Canadian and Mexican officials have expressed interest for a trilateral deal between all three countries. The United States gave Canada until today to come to terms in the negotiations with the two countries. Alas, that didn’t quite happen today, and President Trump is moving forward with United States-Mexico deal. However, negotiations will resume next Wednesday with Canada so that they may enter the deal. Let's hope that a fair deal may be reached in the coming weeks.
Energy at its cleanest… California lawmakers approved a measure mandating that all electricity come from wind, solar and other clean sources by 2045. 29% of California’s current consumption of energy is coming from renewable energy. Solar and wind are the cheapest sources of electricity in some regions and some say California can get to 100% in 15 years.
An Apple worth a trillion… Apple has now become the first modern day American company to have a market value of $1 trillion, thats $1,000,000,000,000. What’s next for Apple? According to company insiders, more iPhones! The trillion dollar giant will be announcing three new iPhone in the coming month in order to help sustain future growth in a market that has cooled off in recent years. Apple is said to be releasing a model similar to the iPhone X, but will substitute the OLED screen for a LCD making it cheaper for consumers, as well as a large iPhone measuring 6.5 inches diagonally, and finally a model similar to the X, but with upgraded components. With 2019 just around the corner, it’s promising to be the inaugural year of the long anticipated 5G network. Apple has not made mention of any 5G capabilities even though other companies already have phones with 5G ready receivers. When 4G launched, Apple waited until the technology was reliable and practical before launching a phone with 4G capability and we are likely to see that next year after the launch of 5G. The future looks bright for the world’s most valuable company as they prepare to launch new iPhones, iWatches, iPads, into a 5G ready world where we are even more reliant on technology. Warren Buffet also agrees, considering Berkshire Hathaway just acquired a $46.6 billion stake in Apple.
Metal straws… First it was plastic bags, then eating utensils, and now, plastic straws. More than a dozen coastal cities prohibited plastic straws this year, but the number 1 man-made contaminant in the world’s oceans is the cigarette butt. The next thing that may be banned is the cigarette filter…
The market is going to crash, we are all going to die… So, what is this whole “flattening yield curve” panic all about? On December 31, 2007, the yield rate difference between 3-Month and 10-Year treasury notes was (68) basis points. As of yesterday, the spread between each stands hazardously close at (75) basis points. Why does this matter? Yield rates for short-term treasury notes tend to increase as investors expect interest rate tightening by the Fed and market deleveraging. Long-Term rates react inversely to this, decreasing in lue of the same expectations. When the Fed signals that it will be increasing interest rates, the two phenomena coincide, leading to what is known as a “flattening yield curve”. When the yield curve is flattening, like what is happening now, the market is in a sense signaling that it is anticipating a correction. What’s most concerning about this flattening is its forecasted inversion; something analysts at Morgan Stanley say will happen mid 2019. Since 1975, when ever short-term yields have exceed long-term yields (when ever the yield curve has inverted) recession has always followed. *No one will outright say that there will be a recession soon, but based on the flattening yield curve, we predict that there will be one in the near future.*
2.3 million cases in 2017 alone… 2017 marked the 4th straight year of sharp increases in gonorrhea, syphilis and chlamydia. The trend is exacerbated by the fact that gonorrhea could soon become resistant to antibiotic treatment. Since 2013, syphilis cases have risen 76%, gonorrhea 67% and chlamydia is the most commonly reported with 1.7 million cases in 2017. Lack of screening, stagnant federal funding for prevention efforts, decrease in condom use and more accessibility through dating apps are the reasons for the rise. Go get checked.
Questions answered… There isn’t a definitive answer to most of these questions, as we have a basic understanding of why blockchain is needed in our current environment and how it will impact the average person in the future. With that being said, we really don’t know how/if it will change our financial institutions into the future, to be honest the only thing that is really definitive is that the early days of blockchain is now, and its here to stay. Imagine a currency that doesn’t require third party centralized institutions to issue/validate the currency, and has no opportunity for counterfeits. Now take that currency, and put it in the hands of a decentralized community to validate all transactions through the blockchain, and give the possibility for another body of people to earn an income by mining the coin (which we will talk about at a later date). In its most simplest form, “bitcoin is a form of electronic cash utilizing the decentralized ledger from blockchain, that doesn’t need a central bank/institution to run”. With bitcoin, you could make a transfer between a US citizen and a CN citizen within 30 minutes, with a minimal fee, at any time/date.
In the world of sports. “If I panic, everyone else panics.” Spoken like a true leader, this quote by Lakers legend Kobe Bryant sums up what it takes to stand up and not be afraid. Staying with the NBA for now, Cavs forward, Kevin Love, says he wants to help kids with mental health problems overcome them. He’s not the first to discuss this topic. DeMar DeRozan of the Spurs also talked to the Players’ Tribune last season about how mental health in the NBA is real and even though they are taller and more athletic than the average Joe, super star athletes also go through normal people problems. With football less than a week away, we open up our season with the Falcons heading into the defending champion Eagles on Thursday night football. The NFL released a new rule this summer in the name of player safety, which strictly defines what players are allowed to do with their helmets. The rule is there to completely eliminate crown of helmet contact from player to player. From a leagues perspective, there should definitely be less concussions; but from the players perspective, this completely changes football as they know it. Last night, the New York Jets traded Teddy Bridgewater to the New Orleans Saints. Bridgewater, who’s 25, is on his second move in six months. Stay tuned to hear how the season kicks off.
The Alchanati Campbell and Associates Team
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WHAT'S UP FRIDAY? is a weekly newsletter that will give you a summary of "What's up?" on Wall Street, in the US and around the World written by The Alchanati Campbell and Associates Team. What makes us unique is we focus on long-term knowledge; knowledge that will still be useful to you 10 years from now.