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Amazon Introduces Amazon
Key, Which Gives the Company
Access to Your Home ...
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The e-commerce giant rolled out an electronic entry system that gives it access to your home for delivering packages.
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Such entry systems, like combination locks or electronic key passes, have been around for years and are common with Airbnb providers. But giving such access to delivery services is new.
Amazon's goal is to dramatically reduce the number of lost and stolen packages while adding another layer of vertical integration into its customers' lives. They already know everything about us online. It will be interesting to see how much people are prepared to share about their personal space.
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Daimler AG Unveils Electric
Semi Ahead of Tesla ...
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The parent company of Mercedes-Benz is the largest commercial vehicle manufacturer in the world and its new battery-powered truck can haul 11 tons of cargo 220 miles before needing a recharge.
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The latest announcement by Daimler just adds another competitor to the long list of Tesla adversaries. In addition to commercial vehicles, Mercedes will invest $1 Billion in its Tuscaloosa, Alabama, plant so that the company can produce plug-in passenger vehicles in the U.S. Given that the car company has extensive experience building vehicles and a valuable brand, its electric vehicles should compete favorably with Tesla.
As major car companies catch up with and surpass Tesla in battery power, they will be able to offer attractive vehicles at much lower costs because of their existing economies of scale, dealer networks, and existing logistics.
Tesla might have been first to prove demand for plug-in cars, but it will be difficult, if not impossible, for the company to retain its lead.
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Inventories and personal spending drove the numbers higher.
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Just as we've discussed for weeks, Hurricane Harvey drove GDP higher, not lower. The storm, along with Hurricane Irma, caused inventories to build at manufacturers, which gooses GDP, and consumers who lost cars rushed out to replace them. Durable spending, which includes autos, shot up 8.3% last quarter.
With GDP over 3.0% for the last 2 quarters, bankers at the Federal Reserve might feel confident enough to raise rates. That would be a mistake. The factors driving up GDP are transitory and should subside during the 1Q of 2018.
If the Fed reacts too soon, it will look like it caused the slowdown.
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Durable Goods Orders Up
2.2% in September,
Up
8.3% Over Last Year ...
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Aircraft orders jumped 64%, but even without transportation, orders grew 0.7% for the month and are 7.5% higher than last year.
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Volatile aircraft orders make the headline number fly all over the place, but stripping that out, things still look pretty good. Core capital goods orders (excluding aircraft and Department of Defense orders) grew 1.3% last month and are 7.8% higher than last year.
Those are strong numbers, which should only get better in October as more replacement orders for refrigerators, washing machines, and other durable goods come through after Hurricane Harvey.
Look for a solid economic finish to 2017.
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New Home Sales Jump
18.9% in September, the
Largest Gain in 28 Years...
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Sales in the South, which includes Texas and Florida, shot up 26%.
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Hmm. So, in the wake of hurricanes, new home sales exploded higher. This probably has more to do with the volatility of new home sales than the possibility that so many people in storm-ravaged areas were desperate to put down roots.
If we step back and look at a 3 month average, new home sales are in line with the recent trend, reversing a slide in sales during the normally busy months of July and August. That makes a lot more sense.
On the pricing side, the median price of a new home climbed 5.2% to $319,700, and now sits 1.6% above the median price at this time last year.
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European Central Bank Will
Reduce Bond Buying in January
from 60 Billion Euros per
Month to 30 Billion ...
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Market watchers expected the ECB to drop the bond buying down to 20 Billion Euros per month, so this move is less dramatic than anticipated.
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ECB President Mario Draghi remains true to his word to do "whatever it takes," when it comes to saving the Euro. Not only will the central bank reduce bond buying slower than anticipated, but it will also keep it going through at least September, if not beyond, and the ECB has pledged to keep its balance sheet intact once the bond-buying program ends. The bankers also left interest rates at negative 0.40%.
It's amazing that we think of this as normal. The ECB has pledged to pump another Quarter Trillion Euros into the European bond markets next year while holding interest rates below zero, and we yawn at the news. European bond yields fell after the announcement, keeping that asset bubble alive.
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This Week's Events Reviewed
In Next Digest
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The last few days of October and first few days of November include several important economic reports. The Fed will hold a regularly scheduled meeting on Tuesday and announce its policy decisions on Wednesday, and we'll get reports on the S&P CoreLogic Case-Shiller Home Price Index, U.S. motor vehicle sales, and the U.S. employment situation.
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The Demographic & Economic Digest provides an excellent opportunity for timely dialogue. I value your opinion and feedback and would love to hear from you. What do you think?
Sincerely,
Bob
Robert A. Hardies, CFP, MS, ATP
Financial & Portfolio Advisors, Ltd.
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