Category Archives: Economy

Why Manufacturing is Leaving China, with Andrew R. Thomas—EP 142

By Noah Graff

Our guest on today’s podcast is Dr. Andrew R. Thomas, best selling author and Associate Professor of Marketing and International business at the University of Akron.

Thomas says today reshoring is finally happening. After decades of sending manufacturing work to China, Western companies are finally realizing this strategy is often not the answer for generating better profits.

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Main Points

Why Manufacturing First Left the U.S.

Thomas challenges the claim that most Western companies sent manufacturing operations to China solely out of greed. Starting in the 1990s many U.S. manufacturers, particularly small and medium sized companies, were pushed to move operations to less expensive labor markets because of a change in the dynamics of the American business model. For 30 years, business schools and consultants preached to maximize efficiencies and focus on core competence. They prescribed the “Toyota model”—outsource what you don’t do well and focus on what you do best. 

In the 1980s and 1990s big box stores like Walmart signed large contracts with American manufacturer suppliers. At first, the suppliers prospered from having such large customers, but after a few years, the Walmarts began to squeeze them on price. The suppliers did not have negotiating power because they no longer had a diverse group of smaller customers to compete for their business. They were forced to seek cheaper labor overseas just to survive. For decades, reshoring did not even appear to be an option for Western companies.

The Pandemic and Labor Markets

Because of the supply chain problems brought about by COVID-19 and the country’s increasing wages, China is no longer the answer for many Western manufacturers to produce the cheapest parts. Thomas points out that manufacturing work is currently coming back to the West, but not exclusively to the United States. Much of the work leaving Asia will land in Latin America and Eastern and Central Europe. In those regions labor is cheaper and more abundant.

While the United States and Western Europe provided a safety net to businesses and unemployed workers in 2020 and 2021, poorer countries did not have the resources to do so. Thomas says in countries such as Panama, where he lives much of the time, the only government assistance people received was a modest stipend for food and necessities, and free rent. These desperate conditions have made people in poorer countries eager to work.

Andrew R. Thomas, Author and Associate Professor

American Legacy of Global Leadership

According to Thomas, since the United States was founded, Americans have always had the notion their country was special. They believed it was important to share their values and lead the world.

This identity was solidified in 1944, when 44 allied nations sent delegates to the Bretton Woods conference in New Hampshire. The conference set up a framework to regulate an international monetary system. It created the International Monetary Fund and the International Bank for Reconstruction and Development. It ultimately established a dominant economic position for the United States and the U.S. dollar.

More than just setting up an international economic framework, Thomas says Bretton Woods spawned a gentleman’s agreement between the United States and its allies based on four guaranties. 

—If a country allies itself with the United States, the U.S. will provide that country with military protection.

—The U.S. will provide countries with capital to rebuild post war economies. 

—The U.S. will encourage open trade.

—The U.S. will secure the world’s supply chain with its Navy.  

Much of these foundations are still present today despite claims of the last few U.S. presidents that they want to meddle less in international conflicts and focus more on the domestic economy.

Self-Reliance from New Energy Security

Thomas says one factor changing U.S. international trade is the current revolution in fracking technology. A trillion and a half dollars in private capital has been invested to build an infrastructure for fracking. For the first time in recent memory the U.S. has a choice to not be carbon dependent on foreign countries, which would give it considerable power.

It will be interesting to see how much the United States’ legacy as the world’s watchdog lives on, while its ability to focus its energy inward grows.

Question: Have you seen reshoring in your business?

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Bitcoins in Your Duffle Bag

By Lloyd Graff

A few years ago, I asked a  pawnbroker acquaintance if he would sell me a little certified high-quality gold. 

It was not an investment. I was not betting on the appreciation of the precious metal. It was strictly a “what-if” purchase, contemplating the possibility Risa and I would have to flee our home. Currency might rapidly erode in the event of an invasion, a tyrant, or a natural catastrophe, “but gold would always be accepted as valuable” we reasoned.

We had watched too many Holocaust documentaries, read too many books about refugees perhaps, but the images of gold sewn into duffle bag compartments enabling people to survive the worst, haunted us both, so we invested some of our savings in certified weight gold ingots.

Our pawn shop owner friend told us he’d sold gold fairly often for exactly the same reason to occasional clients like us. 

If it had been 2021 when I considered a “what-if metal,” I probably would have made a different choice. I would have bought Bitcoin.

So much has changed in the three years since we bought the gold. As an investment, Bitcoin has gone up close to ten times what it was worth then. Gold is up 20%. 

More and more places accept the digital currency today, probably more than do gold, and if you had to flee within minutes, all you would need to take is your cell phone and your passwords to access the Bitcoin.

Many people, often my age, are Bitcoin skeptics, but younger people are not. To them, digital money seems more rational than $100 bills, bank accounts, stocks, or corn silos. Gold in a suitcase, if you have to pass through a TSA line at an airport, sounds like lunacy in a national emergency.

At a family gathering during Thanksgiving, Bitcoin, and not the Bears or Cubs, was the primary topic of table conversation. Recently, when Mark Cuban was asked where he was putting his money these days, he said “digital currency and gaming” because that is what the kids are interested in, and he always likes to invest where young people are putting their money. 

Cuban is usually right.

***

Nobody has offered to buy a Citizen nor Star Swiss screw machine from us yet in Bitcoin, but it will probably happen next year.

The Chinese Communist leaders seem to be terribly afraid of Bitcoin, which means the leaders probably have a big stash of Bitcoin to go along with their Swiss bank accounts. For sure Putin owns Bitcoin.

Jamie Diamond and Warren Buffett say Bitcoin is phony. I wonder how much they have bought secretly. They may feel that legitimizing digital currency would harm their business interests.

I don’t know if Bitcoin and Ethereum and other wannabe Bitcoins will stand the test of time, but will gold save me if it seems like America is going to fall apart? If climate change really is an existential threat will anybody take gold in the great flood? 

Bitcoin? Maybe they will take it if you throw in one of those gold trinkets as a tip.

Question: Do you think Bitcoin is the real deal?

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I See Opportunity

By Lloyd Graff

If you consume the newspapers and watch and listen to the daily media torrent, you would think Americans are living in bubbling misery. 

The existential threat of climate change, the border crisis, the catastrophic shortage of workers. I’m sure you could add a few more. 

But for me, admittedly privileged by being white, affluent, educated, and a Cubs fan, the United States of America continues to be an amazing place to live that manages to shift and sway whatever comes its way, despite the politicians and charlatans who thrive on the perception of an engulfing tar pit.

What do I see that they do not, or do not want to admit? 

I see opportunity. Almost every day, I receive an email inquiry from someone who has a small business or an idea, a backer, or a partner who believes in her. They want to buy a machine, or convince someone to help them. They often speak with a foreign accent. They have watched somebody else do it, or they may have already failed but still believe in themselves. 

The people I see are not usually well educated in the way that is normally described in the media, but they do know how to make something that other people will buy. They watch Shark Tank on TV, or they have a friend who sells stuff on eBay or Etsy. They know how to use social media and think they can make it work for them. They do not think their planet is going to burn up or the air will poison them, at least for the next 100 years they will live. 

They don’t seem to be phased by the immigration crisis, often because they are immigrants or their parents were. They understand why folks are wading across the Rio Grande River or sending their children alone on buses and trucks and squalid containers through Mexico to cross into America to take their chances. These people pouring across the border have a dream that life will be somehow better because they know people in Miami or LA or Topeka who are putting together a life for themselves. Maybe they use forged papers and a new name, but at least it’s a chance. They know it is better than the squalor in Cuba or Pakistan or Afghanistan or Myanmar. Wouldn’t you do it if you had no future as a woman under the Taliban?

America is a huge country. People still help each other, and the government affords opportunities to get help. Still, America desperately needs workers. Or, have you missed all of the help wanted signs for Amazon offering $17 per hour, plus college tuition and health insurance thrown in?

Why do we have this labor shortage as the COVID epidemic is fading?

Baby Boomers are retiring. Women have dropped out of the workforce because they are doing childcare or parents care. Legal immigration is a trickle because of COVID restrictions on travel and a federal bureaucracy which isn’t functioning. Of the 55,000 FY-2021 Diversity Visas which are supposed to be issued every year to people around the globe (the US annual visa lottery), only 14,000 were processed at the end of September. Perhaps illegal immigrants coming north could help fill the worker shortage.

You would think America is a mess from reading the New York Times or listening to the Fox News nightly fear-mongers. I doubt it is. 

Topeka, Kansas, and the state of West Virginia are offering $10,000 bonuses for people to move there. Does that sound like a country falling apart?

Question: Should the US increase future immigration?

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A Black Woman’s Job Title

By Lloyd Graff

Rosalind Brewer took the helm at Walgreens this week, becoming one of only a few African American woman CEOs to ever lead a large American corporation. She had been #2 at Starbucks before being recruited by Walgreens. 

I wasn’t surprised to see a black woman get a top job with a company like Walgreens. It would have been more shocking if a black woman’s small machining firm applied for membership in the Precision Machined Products Association (PMPA), an organization I belong to as a technical member. 

This is not a putdown of the PMPA, which I am happy to be a member of. It is an observation about my America, where women have generally been outsiders in manufacturing, engineering and metals, both by culture and by prejudice for as long as I can remember.

Perhaps the scene is changing, with Mary Barra now heading GM, but an African-American woman running a machining outfit with 25 employees in America is something I would love to see in my lifetime.

New CEO of Walgreens, Rosalind Brewer

****

As I talk to clients and people in the industry, I’m getting the strong impression that business is perking up. While the media is obsessed with COVID-19, empty malls, and evictions, the shortage of people who want to take manufacturing jobs gets even more acute. 

Even in fossil fuels, which we all know are yesterday, the US is still pumping 11 million barrels of oil a day and importing the black gold from Canada too. Farm prices are up, which means tractors are finally selling, and car lots are short of inventory.

Home sales are allegedly frantic, at least in the suburbs, and new home builders are having their best years ever.

It’s all a bit bewildering as the Washington politicians lament the worst economy since the Depression and are bargaining the difference between $600 billion and $1.6 trillion to dump into the economy.

The stock market has given its verdict. Buy, buy, buy. The Fed has made its call to keep interest rates low. Bank losses have been a fraction of what had been expected to this point.

It must be the time to book a cruise for this summer.

***

The least recognized vital aspect of health is posture. I don’t know how the chimpanzees and gorillas live like they do, but a bent over Lloyd is a miserable mammal.

The last year has been brutal on my body. I have been home for much of the time, from Groundhog Day to Groundhog Day, and it feels like perpetual winter. During this period, I have made the kitchen table my workspace, and my neck has been almost continually bent as I navigate the phone and iPad to write. My spine feels like a defective erector set. I look like a FANUC robot. I might be turning FANUC yellow as well.

My neck and shoulders are tight as 2-year-old unopened pickle jars. I keep fiddling with the thermostat because the compression of my shoulders and neck and rib cage gives me the chills. 

I tried to throw a snowball the other day and it landed 12 feet from me. I am a sorry heap. 

But, I now have placed three foam rollers strategically around the house, and I’m starting to feel like bread dough. The rolling is beginning to work. My pain is six Advils less a day. I have fewer groans when I hit the bed. The chills are fading. My stretches have some elasticity. 

Why, oh why, didn’t I start the bread dough a year ago?

Question: What are your back pain remedies?

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The Manufacturing Rebound

By Lloyd Graff

I talk to a lot of folks in the machining trade every day, and the clear sense I am getting is that business is improving. The automotive segment is definitely firming. Auto related work has bounced back from the April, May, June, July doldrums. Demand has picked up, and car showrooms are extremely short of hot inventory. 

European and Japanese companies were also shut down, and the supply chains are strained. Guns and the medical sector are strengthening. 

We are seeing an uptick in the used machinery business. The auctioneers are surprised at how strong their sale prices are holding up. Inventory of late model Swiss-type and multi-axis CNC machines appears to be light.

On the macroeconomic front, the recent perverse behavior of stocks is being attributed by pundits to the surprising decrease in unemployment after PPP money ran out and extra layoff checks ended. Evidently some people did choose to return to work.

Small businesses, especially those travel-related and restaurants, have been severely hurt, but the wounded giant called the American Economy appears to be healing. The prospect of multiple viable vaccines being approved soon, while good for most people in business, is viewed by some speculators as negative for tech stocks like Apple and Amazon, which have continued to thrive despite the swooning economy. It appears that improving conditions are sell signs for the option trader gamblers. 

From my observation, the impending election does not seem like it will be a significant issue for the stock market, but it could be an issue small business people.

They should ask LeBron for advice. He seems to know all.

****

Do politics and NBA basketball mix well? 

Maybe the better question is does China own the NBA? Or perhaps the real question is does LeBron James play for the Los Angeles Lakers or Nike?

The three questions are tied together. LeBron signed a contract in 2019 easily worth a billion dollars with Nike, becoming its most valued endorser, though Michael Jordan trails him very closely.

The NBA also signed a $1.5 billion dollar contract last year with Tencent, the Chinese mega company, granting it the exclusive rights to broadcast all of the NBA games it chooses to air in China. The games are mainly watched by young people on their cell phones as they ride public transportation to work in the morning. 

The NBA has built academies in China to teach and promote the basketball. When Daryl Morey, the general manager of the Houston Rockets, had the audacity to tweet critically about communist China crushing the human rights demonstrations in Hong Kong, the Beijing Party leaders bristled. Then the NBA bosses cowered and tried to make nice.

LeBron, who probably sees himself as a potential president of the United States, and heir to Oprah and Martin Luther King Jr. in America, had a real dilemma. It was magnified when COVID-19 hit midway through the 2020 NBA season. The players were undecided about continuing to play, but LeBron had the NBA, Nike, China, and Black Lives Matter all looking at him to thread the needle. It was a time to prove himself to be politically skillful before he even stepped on the court again with Anthony Davis and the rest of the Lakers.

I watched LeBron play brilliantly Monday in the playoff series, ironically against Daryl Morey’s Houston Rockets. Black Lives Matter signage was everywhere in the Orlando bubble, where all of the games are being played and broadcast on TNT and Disney’s ESPN. Player uniforms displayed social and political messages, and a huge VOTE sign was prominently displayed during all broadcasts. 

It is a fascinating mishmash of sports, business, politics, and LeBron, who is proving himself to be the Confucius of America in 2020.

Question: Is your business rebounding?

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“Fulfillment” Centers

By Lloyd Graff

Like desert marigolds flowering out of nowhere, 4 million square feet of new buildings are going up simultaneously this week in the primarily African American South Suburbs of Chicago where I live and work.

Twenty miles north of here in Englewood, where my dad grew up and attended High School, people are shooting at each other every night and connecting with disturbing accuracy. The daily carnage is staggering and overflowing into the expensive Magnificent Mile of North Michigan Avenue, leaving it looking like Beirut’s downtown.

Amazon loves the South Suburbs. They already have built half a dozen fulfillment centers in the area and are building two more. One of them is within walking distance of Graff-Pinkert, and the other is near my favorite corn stand. The Logistics Center of 2 million square feet, consisting of four expandable buildings, is also in walking distance. It is located on a 102-acre site, which was supposed to be an outlet mall until Amazon growth killed that idea. Its closest neighbor is a multi-story apartment building, built just a few years ago, which accepts people who have lost their jobs and have nowhere to go. The developers jumped on the site when they could put together $29 million dollars in tax subsidies from the village and county, plus the tax advantage of being in a designated Opportunity Zone with the recent tax law changes.

Add in cheap mortgage money and a great location between two interstates, plus an abundance of inexpensive workers with lousy job prospects in the neighborhood—and bring in the excavators. 

The broker for the logistics project says there is an industrial real estate boom taking place, with Amazon picking up half of the new space in Chicagoland.

What is it like for the $15 per hour people who are drawn to the thousands of Amazon jobs, before the robots make them obsolete?

A woman who used to clean our friend’s house went to work for Amazon in Joliet a half hour west of the new fulfillment centers. Her work consisted of opening boxes 10 hours a day, four days per week. She wanted the job because it was her first opportunity for full-time work that offered health insurance. It was also an opportunity to get free tuition at a local community college if she worked for Amazon for 18 months.

It was demanding physical work and took its toll. Both of her hands absorbed enough punishment to require surgery. Her dream of training to become a nurse’s assistant sterilizing instruments was postponed by these injuries.

2-Million-Square-Foot Logistics Center

I am a capitalist, an investor, and a happy customer of Amazon. I think Jeff Bezos is a genius who has enriched me and my family because I invested in Amazon stock over 10 years ago and have held on to it. Bezos himself was born to a 17-year-old mother. His father, who he barely knew, owned a small bike shop in Albuquerque. His mom got an education, moved to Florida, and married into an upper-middle-class world. Jeff went to Princeton but he started Amazon on a prayer, and it is now worth hundreds of billions of dollars.

Our former cleaning person will not be taking another job at Amazon with her damaged hands. The two new 865,000-square-foot fulfillment centers will each hire a thousand workers for bigger packages, but Amazon has proudly announced that the buildings are built for robots when they become more capable.

The South Suburbs, the stepchild of Chicago real estate, is finally bustling. It has the cheap land on the interstate highways, and, above all, it has cheap people, the folks who will line up for the grueling jobs that more efficient, stronger robots will eventually take.

Capitalism drives America, and I love it. But it does come with a cost. My Amazon stock is up 2,218%. The gulf of income between people with securities and those who dream of sterilizing instruments keeps growing, but with Opportunity Zones and other tax breaks, we’ve got 4 million feet of new buildings blooming in my backyard.

Question: Have you lost workers to Amazon?

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Ep. 94 – The Machining World of South Africa with Peter Frow

By Noah and Lloyd Graff

On today’s show we’re discussing the machining business in South Africa. Our guest is Peter Frow. Peter has been immersed in the machining business and has also been a participant in the social change of South Africa over the last 50 years.

While so many of his countrymen emigrated, Peter stayed and has recently started a business building a new machine tool in South Africa called FAS Machine Tools.

Scroll down to listen to the podcast. Or listen on your phone on your favorite app or Apple Podcasts and Google Podcasts.

Main Points

Peter talks about his businesses, Renfield Machine Tools, which he started in 1991, and his new company, FAS Machine Tools. Renfield Machine Tools reconditions used cam screw machines and turnkeys them, while FAS Machine Tools builds new machines. (3:40)

Peter says FAS Machine Tools builds a machine in South Africa that has the fast cycle times of a cam screw machine and the user-friendliness of a CNC lathe. He says his machine costs half the money one would likely pay for a comparable machine. Peter describes his machine as similar to a Swiss style machine but with a fixed headstock. It has an 8-station turret that moves on 2 axes, a dedicated turning slide that moves on 2 axes, a dedicated forming slide and a dedicated parting slide. The machine’s design allows for tools to work simultaneously on a workpiece, which gets cycle times down. (5:25)

Peter discusses what it’s like being 75 years old and starting a new company. He doesn’t worry about his age. (8:00)

Peter talks about his background in the machining industry. His father was an engineer at a power utility company in South Africa. Peter received a degree in mechanical engineering and for seven years worked for the same power utility company where his father had worked. In his late 20s he changed careers and went back to his hometown of Durbin. Once there, he joined his father’s screw machine shop. It was supposed to be a temporary gig, but he ended up staying and building up the company over the next nine years, from 1973 to 1982. (9:15) 

Peter describes the history of Apartheid in South Africa. He says country consists of essentially four racial groups: black, white, Indian, and those of mixed racial heritage, which South Africans call “colored.”  White South Africans are descended either from Dutch colonists (Afrikaners) or the English. In 1948, the Nationalist Party, supported by the Afrikaners, came to power and instituted the Apartheid, separating the country’s racial groups into different geographical areas. The whites, who represented only 20% of the population, controlled the majority of the land. Despite economic sanctions, the unjust situation lasted 40 years. In the late 1980s, F.W. de Klerk was elected Prime Minister. He eventually released political prisoners such as Nelson Mandela, allowed political parties that had been prohibited, and embarked on the process of negotiating a new constitution, which came to fruition with the 1994 Election. (13:50) 

Peter talks about his work as church leader and how he worked to bring reconciliation in South Africa in both a religious and political context from 1983-1990. (18:30)  

Peter talks about many whites leaving South Africa for fear of what would happen when Apartheid ended. He says he and his wife never considered leaving. He says he likes the complexity and colorfulness of the country. Peter says he enjoys the variety of people in South Africa, and sees a kinship with America in its diversity. Peter’s son lives in the US and holds dual citizenship. (21:20) 

Peter says many South Africans still want to leave the country, most of them white people. He says this is partly because the economy has had a lot of tough times, much of which stemmed from political corruption. He says the country at one point was over 20% white and now it is around 9%. He says that though unemployment is high, there are strong affirmative action programs in place that have helped to level the playing field for black South Africans. (23:40) 

Peter says the rise in the price of precious metals has helped South Africa’s economy. He says a big part of the economy is based on mining, specifically gold and platinum. (26:30)

Peter says there are a lot of black people and mixed race people working in machining in South Africa, but there still aren’t many who own machining companies. However, he says things are changing. (29:25) 

Peter says South Africa continues to suffer from significant disparities in income and living standards. The rich people live in modern cities, while others live in rural areas in mud huts, carrying water on their heads. However, he says the poverty in South Africa is not as extreme as places like India and that people from all over Africa travel to South Africa to find work. (30:10) 

Peter says engineering is a relatively popular career choice in South Africa, but the country has the same problems as the US when it comes to finding skilled people to work in machine shops. He says one of the reasons he created his new CNC lathe is because it’s hard to find skilled labor to work on cam machines. (31:40) 

Peter discusses where he lives. His home is in a suburban area on the edge of a wildlife reserve so he gets to see a lot of bush bucks and wild pigs nearby. He says his home is just 25 minutes from a small game park, but jokes that there are no lions roaming down the street. (33:00) 

Peter talks about wages of a factory worker in South Africa. He says it is not accurate to compare salaries to those in other countries because the cost of living in South Africa is relatively low. He says the standard of living for a person working in the machining industry is similar to what it would be in the US. (34:15)

Peter says one of the most interesting things he has learned in the last week was reading about the new peace accord between Israel and the United Arab Emirates (UAE). (35:20)  

Question: What country do you think builds the best machine tools?

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A Gap in My Perception

By Lloyd Graff

We just recorded the biggest gain in stock prices for any quarter since 1998 with American unemployment at unprecedented levels. You don’t need to read the obvious in this blog, so let’s talk Yeezy, Kanye West, and Gap.

Gap stock rose 42% in one day last week when Kanye West announced he was designing a clothing line with his Yeezy brand on it, exclusively for Gap for 10 years. Gap’s value jumped $2 billion dollars with the news.

Being no fan of hip hop music, but mildly interested in West because he grew up near where I did on Chicago’s South Side, and because he met cordially with Donald Trump at the White House, I checked out Yeezy. The brand has turned Adidas from the German blahs to Jordan-esque cool with outrageously priced sneakers. A Yeezy pair of gym shoes may sell for $500 a pair if you can get them.

I really don’t feel the allure of celebrity apparel, but undoubtedly West is hot today and Gap, where Kanye worked as a kid, is capitalizing on his caché. Will Kanye West become a fading yesterday in a year? Not likely, with the magic of his wife, Kim Kardashian, continually polishing his image?

***

Another brand that fascinates me with its phenomenal stock performance is Peloton. The company sells an exercise bike and will lose more than $100 million this year. Yet it is worth more than Ford and Chrysler, and its stock has more than doubled since it went public a few months ago.

You don’t buy a Peloton at Dick’s Sporting Goods or Target. For $2,000 you can buy the hardware, but the secret sauce is the $40 a month subscription fee, which brings you a huge array of virtual programs. It also buys you status, because the Peloton bike is the Tesla of exercycles. Like Kanye’s $500 Kicks, it is the brand of the cool rich folk on the 40th floor of Manhattan high rises. And you can use it without having to schlep to the gym and put on a mask with the other infectious plebeians.

The branding is working brilliantly. The company is worth $16 billion.

***

Another fascinating story is Nikola, headed by Elon Musk wannabe, Trevor Milton. The company went public a couple weeks ago and has a market cap approaching $30 billion. They plan to build hydrogen powered semi-trucks at a yet-to-be-built plant near Phoenix. They might get a vehicle on the road in a couple of years. They are also taking reservations for a battery powered pickup truck called the Badger, which will eventually compete with Tesla’s Cybertruck, which Musk is already testing.

Nikola’s branding is clever, right down to the name, which is a play on the first name of the famous Serbian-American inventor Nikola Tesla.

***

One other stock I like to follow is DraftKings, which is an online sports betting company. The stock goes up and down with the likelihood of playing the baseball, basketball, and football seasons. When COVID flares up and players fall ill, the stock price falls. The company is valued around $10 billion dollars now. It is a play on the likelihood of a viable vaccine in a short period of time.

An assessment of Gap, Peloton, Nikola, and DraftKings, paints a colorful picture of America around the 4th of July 2020. The promoter and the entrepreneur are definitely alive. Should we be joyful or sad? Not a Yeezy question.

Question: Did Gap make a good deal?

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Zooming in Different Worlds

By Lloyd Graff

I feel like I am living in several different worlds. 

During the day I am a business guy, trying to put together the diverse strings of commerce around the country and the world, culminating in a buy and a sell with a margin of profit for my company built into it. The outside world keeps telling me that there isn’t anything but scraps to be had, but I am finding a lot of opportunities when I contact the smart small and medium-sized business owners who are sniffing for opportunity at the moment. It really is quite refreshing to connect with these aggressively optimistic folk who ignore the gloom of the TV and radio blabs. I feed on their energy and they seem to enjoy mine.

As the late dusk sinks in, I turn on the news shows, which at the moment are immersed in pictures of broken windows, strewn Nikes, and stray flat screen TV boxes thought to symbolize the moment. It is demoralizing and scary journalism with no depth of understanding, just an abject play for ratings and a rising fear quotient. It affects me, even though I know it is a transient flicker of pain in 2020. The race riots have replaced COVID-19 this week as the story of the moment.

COVID is a lingering story of government mismanagement framed by the paranoid thirst of the press. It is an extremely costly one, but the threads of fear have a vibrancy for me in the death numbers of older, sicker people which comprise 80% of the dead.

Then I check stock prices and oil prices before I go to bed. Stocks are near their record highs. The NASDAQ, which has younger firms, is 3% below its all-time high. If I am looking for an indicator of optimism in America and investors from around the world, this is where I look for it.

I also take my assortment of medicines at night, which include a statin for cholesterol, a refined fish oil for all around cardiovascular health, and a Bystolic, which is an amazing beta blocker that controls high blood pressure. The negativists who see the world in decline don’t understand that people like me would never be alive at 75 after a heart attack 12 years ago. Folks living in the good old days of 1962 never would have recovered from blocked arteries like mine and their kids might well be in Iron Lungs with polio. 

We are likely to have a COVID-19 vaccine that actually works by the end of the year.  We now have a useful treatment for the illness, which will be augmented shortly. 

Not to be ignored is the rapid adoption of Zoom to connect people. My wife Risa uses it every day. I get to see my grandkids more often than I ever did before. Some young entrepreneurs infiltrated the market with a better product and took a dominant position in person to person TV while the giants, Google, Microsoft, and Cisco, slept. Now they are hopelessly behind.

The SpaceX Dragon 2

Before I go to sleep at night, I like to imagine the possibility of Zoom connecting the world with American astronauts zooming up to the International Space Station in Elon Musk’s rocket taxi. Yet the image of a brick smashing a Macy’s window plunders my calm. 

It’s June 2020. My life is good except when the noise of the day interrupts my joy of being alive.

Question: Do you still listen to the news?

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Do You Trust Yourself?

By Lloyd Graff

Deciphering the path of business through the COVID-19 mess is more difficult than finding your way through Boston without Google Maps. 

Stock markets zoom while Hertz declares bankruptcy. Oil prices fall to $18 a barrel but then double in five weeks. Auto plants shut down en masse but then reopen to parts shortages from Mexico, which didn’t want to produce until GM, Toyota, and VW leaned hard on the government.

The political and scientific elites caution us not to reopen because a mistake could mess up their reputations. They scare us about the “second wave” that may be coming sometime.

Meanwhile, the salon owner worries that she may never comb out another wave at her shop if she can’t reopen.

Small businesses navigate through government bureaucracies to claim the cash to survive, not knowing how much they will have to pay back because the SBA itself doesn’t understand the authorizing legislation. Washington consultants earn their juicy retainers by explaining stuff even the dudes who wrote the laws don’t understand.

People ignore barricade near Chicago’s North Avenue Beach.

The boardwalk fills up in Venice Beach, California, and Myrtle Beach, South Carolina. In Chicago, real people keep knocking down the fences that the park police keep erecting to keep them off the grass. In Georgia, Florida, and Alabama, where the governors took the risk of opening before other states, the caseload from COVID did not change.

There are at least a dozen possibilities for successful vaccines. With a decent chance we’ll have a real one before Christmas, and a drug is being made today that really does help reduce hospital stays.

Yet 100,000 people have died in the United States.

The press makes its living by promoting bad news. Maybe there would be no pandemic without cable news. But there is 20% unemployment, doors are locked, cities have emptied, and I am afraid to go to my own anniversary party. 

Yet somehow Americans seem to retain their optimism. The smart people predicted new home buying would fall apart. Yet yesterday the Commerce Department stats showed that real people put down real money and took out real mortgages to buy more homes in April than in March. People are making airline and hotel reservations. They probably are even nutty enough to plan cruises.

But if you are running a machining business, even if you are making respirator parts, it looks iffy. Will people start buying new cars? There are lots of leases ending, but dealerships are quiet because they seem like scary places to go to. 

Major League Baseball can’t seem to figure out if players can take showers if it resumes.

We live in the land of phases.

I am coming around to the idea that government should trust people to decide their next steps. It would be chaotic, I know. Most old people will not do dumb stuff like going to the beach or a restaurant. Young people will mix it up and some will get sick, but probably not real sick. 

We could have school this fall for those who want to go. We will get closer to the herd immunity that a successful vaccine could complete. 

Death in the economy by asphyxiation could be defeated. China would lose the COVID-19 war. Toilet paper would be everywhere. 

Is this crazy?

Question: Do you trust yourself to make the right decisions regarding COVID-19? Do you trust other people?

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