The Reversion to American Manufacturing
If you think about it for a second, were it not for constant change we would probably all be in a world of hurt.
Almost nothing we enjoy today, products, services, experiences, and benefits in all shapes and sizes - and even the work we get to choose to endeavour in - would exist if we hadn’t embraced change in the past.
So, why then does change in the present seem to cause so much angst and concern?
Face it, as the 2020s dawn and begin to blossom change will be seen every day, and sometimes it will seem radical.
That’s particularly true if you have your head down, as it seems most investors do at present.
There are some clear indications that the current environment is rife with massive short-term focus where even the good weeks we’ve had thus far this year have ended in the red - with 4 of the last 5 Friday's being down on the close.
We can presume that this is the short-term trading aspect of "not wanting to own the future of the US into the weekend with news of the virus lurking out there."
The black boxes and the high-speed trade shops will see to it this continues if scared investors keep themselves pliable to any direction the next headline points towards.
But we can also rest assured that it’s very hard to significantly dent a $22 Trillion economic juggernaut called the US economy.
As for the knee-jerk reactions and media headline nonsense – you don’t want to react to it, but equally, you don’t want it to stop.
Because without it we wouldn’t get that very necessary volatility that shakes the week hands from their grip and offers up great price deals that have been abandoned through fear.
What tangled web we weave.
Well, let’s scratch a few things off the chalkboard starting with "China will rule the world" syndrome.
It was just a few months ago while mid-swell in "tariff war" all sorts of experts suggested they had the upper hand, and that somehow this was just the beginning of how China would be the masters of the universe.
China is a country that has gutted its demographics and now operates in a state of disrepair through the effects of their one-child policy that will take roughly three decades to erase.
Their reporting capacity (read: their ability to know what is going on) has been hampered by the communist lockdown of communications; a terrible mistake that’s being outed of late.
Their healthcare system "lacks" capacity to handle real emergencies despite how advanced they claim to be. The big shiny cities lit up at night do not hold a candle to what is required to serve 1.5 billion people.
And the virus response shows you how unprepared they are for handling what they soon will be: the largest nursing home on the planet. Don't forget they now have more 80-year-olds than 10-year-olds.
The Good News?
The virus now has a fancy 4-letter acronym: nCov.
And the long-term effect of nCov could be startlingly positive in one area: Manufacturing.
Warning: We are about to see the mother of all backups in the system.
All the recent choppiness still has not taken into account the impact of not getting tech parts out of China with factories closed and cities quarantined.
Shelves of stuff we buy here, specifically electronics or tech-related items, risk going empty if the supply-line are not reopened shortly.
We must also assume that some impact will be felt on at least the Q1 numbers of some of the more popular brand names.
This should be obvious to all concerned, though it’s unlikely to be fully known until later in March as the books begin to close out.
Most important of all is the overlooked reality, somewhat removed from the direct spotlight, where swathes of boardroom and corporate planning conversations will suggest bringing manufacturing back to the US.
Well, the cost benefit we went to China for, some 30 years ago, has all but dissipated and we have better weapons against outbreaks like this within our own borders.
On top of that, China's demographics will not support the factory-worker flow needed for many more years into the future.
Hence, do not be at all surprised to see the US benefit on that front as the effects of the virus spiral through the system - driving more productive decisions on how to protect against the next one.
We better find those robots soon because we are going to run out of people to do all the work.