Category Archives: Economy

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?

Share this post

“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?

Share this post

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?

Share this post

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?

Share this post

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?

Share this post

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?

Share this post

Ep. 82 – Running a Pizza Place During COVID-19 with Marco Schiavoni

By Noah Graff

Today’s guest on the podcast is Marco Schiavoni, owner of Pizza Metro, one of my favorite pizza places in Chicago. Marco has been in the restaurant business for 20 years, and like most business owners he’s seen his share of ups and downs over time.

Scroll down to listen to the podcast.

I spoke to Marco last weekend about how restaurants in Chicago are navigating the COVID-19 crisis. He also taught me the secret to making the perfect espresso.

Main points of the interview

(2:45) Marco gives his story. He talks about leaving his home in Rome to come to Chicago in the ‘90s. He realized there wasn’t a traditional Roman style pizzeria in Chicago so he opened Pizza Metro in 2001. Roman style pizza is served cut into square slices that are easy to eat on the go. He says that Pizza Metro is one of the top 10 pizza places in Chicago. 

(4:10) Marco describes the small size of Pizza Metro. The restaurant is around 700 square feet and has 15 stools. One cool feature of the restaurant is that you can sit at a bar and interact with the cooks while you watch them cook your food. 

(7:00) Marco talks about how his pizza is unique because it’s made in the traditional roman style, but every slice customizable as far as toppings. This differs from pizzerias in Italy, which usually only offer a few choices

(8:40) We discuss how Chicago’s Wicker Park neighborhood has changed since Pizza Metro opened on West Division Street in 2001. Marco says when he first opened there were hardly any restaurants and many gangs in the area. He said during his second year in business the laundromat across the street was replaced by Starbucks and everything started to change. Today, Division Street is super trendy, with too many restaurants to choose from.

(10:15) Marco explains why Pizza Metro’s espresso is the best in Chicago. Marco says he started making espressos when he was 13 years old. He says you have to grind the coffee to a different thicknesses based on the humidity at the time. He says his beans are some of the best imported coffees from Italy. Marco also says he makes his espresso with much less water than the way it’s usually made in the US. He says you can tell if the espresso was made properly if you put some sugar on top and it takes 6 seconds for it to fall through the surface. 

(16:40) Marco speaks about shutting his restaurant down at the very end of March. He says that one day he noticed the street was empty and that Starbucks was closed. He saw this as a sign that he should close as well. Marco closed Pizza Metro for a month and said it was the first time in 19 years he had a true vacation because it was first time that he didn’t have to worry about what was happening in the business. 

(18:22) Marco explains that the pizza business is good in both strong and weak economies. He says in a weak economy a pizza business can thrive because many Americans don’t know how to cook and a pizza can feed a family for a relatively low price.

(19:30) Marco says that what spurred him to reopen his business was that his employees needed the work. Otherwise he might have stayed on vacation a little while longer. 

(21:30) Marco says that people are going to start new businesses and alter their business models to adapt to the COVID-19 crisis. He says that restaurants who succeed will use social media to get exposure. He says people will put up videos of new, creative dishes they are working on. He alludes to a secret new desert item he is working on. He plans to pass it out to Starbucks customers waiting in line for coffee when it reopens.

(25:20) Marco thinks that many big restaurants will close, which will decrease competition. He says that many restaurants cannot stay in business if only a small number of people can eat there because the restaurant still has to pay the same rent and expenses as they did before COVID-19. He also says that if the country goes into a recession less people will eat out.

Marco Schiavoni, owner of Pizza Metro in Chicago

(27:30) Marco expresses worry about the health of restaurant workers. He says most restaurant kitchen staff do not have a lot of money so they are forced to take public transportation, and this puts them at higher risk for catching coronavirus. He says if one person on staff gets coronavirus he would have to close his restaurant for at least 2 weeks to ensure everyone is not infected. 

(33:40) Marco says he thinks that the US will look at how businesses are reopened in Europe. He talks about the first coffee bars in Italy that are just opening up. He says that people have to wait outside the cafe and only one customer is allowed to enter. The customer has to be 2 meters from the barista, so after the barista makes the coffee she has to back up from the bar for the customer to pick up the cup of coffee and leave the money. He says that even some restaurants in Italy that have been open for 50 years will eventually be forced to close because they can’t afford to pay their fixed expenses.

(35:00) Marco believes that people will learn to adjust to the new normal. He wishes the best to all the other restaurant owners and says the ones who survive will be stronger than before.

Question: What’s been your favorite takeout food during the COVID-19 crisis? Are you afraid to order takeout?

Share this post

Ready to Travel?

By Lloyd Graff

The reopening of 90% of the Starbucks stores in the US over the next 4-6 weeks is a signal moment in the COVID-19 recovery, but what does it mean for the machining world?

I think it is a significant moment, but not a game-changer in itself. Nor are the very hopeful results coming in on the new Gilead drug remdesivir, which is already in use but not approved yet as an antiviral in America.

For many of our clients who make so much product for cars, trucks, and airplanes, as well as the oil and gas industry, the big question is when will people feel confident about getting out of their homes and doing the things they did routinely last year when the economy was humming along.

Unfortunately, this is much less clear because we are dealing with the big issue of fear of sickness and dying, especially if you are over 70 or have issues such as diabetes, heart disease, breathing problems, or lack of immunity. These categories probably affect over 25% of the American population.

If you take out 80 million people in America, plus millions in other countries with a lot of older people, such as those in Europe, it is hard to imagine robust auto, aviation, and travel business for quite a while. A second wave of COVID would cement the fear factor well into the next year.

Travelers cautiously brave O’Hare Airport

It seems to me that America really goes back to work when illness and death from COVID-19 is no longer the lead story in the news. This is why I keep thinking how important it is for the 2020 election and big time sports to become the focus on TV. The news media has correctly gauged the interest in the pandemic but have also fanned the panic.

We are really getting closer to it becoming just an addition to the flu season, but it will probably not happen until we have a credible vaccine. The scientists who know the regulatory hurdles, which will probably be more significant than the successful development ones, say it is very unlikely until next year sometime.

The question that I keep noodling is when will my wife and I feel confident enough to go to the airport, get on a plane, and visit our daughter and family in the Bay Area and vice versa. I know it will take longer than just for Starbucks to open its doors. It will take longer than the NBA and Major League Baseball to restart, which I project to restart by early June.

I will throw out my guess and ask you to give me yours. When will you feel safe to travel? When will you jump into an Uber car? When will COVID-19 be old news?

I will go with August 15th 2020. The Cubs will be in first place then. The presidential campaign will be starting to get nasty, and the 2021 cars will be ready to roll out.

Your guess?

Question: When will you feel confident enough to travel?

 

Share this post

The COVID Conundrum

By Lloyd Graff

Norm and I were born on the same day. We grew up together. We did Cub Scouts in his basement. His mom, Miriam, was the den mother. Norm died from COVID-19 last Friday.

I was stunned when I received the news, even though I had not had any contact with Norm for over seven years, and didn’t know of his Alzheimer’s. He was the first of my high school classmates to die from it. I heard this from the internet listserv our class maintains. It brought the COVID plague off the CNBC news streamer into my heart.

The cold brutal fact is that most of the people who are dying from this terrible plague are like Norm. They are over 70 with other complicating health issues like Alzheimer’s, kidney dysfunction, lung disease, cancer, and diabetes. Their defenses are very weak and COVID-19 devastates them quickly. 

* * * 

In the past week the narrative in the country has rapidly shifted from desperate New York City and shortages of respirators, to what do we do when we loosen up the nation’s economic strait jacket. Many of the vital facts needed in the national and individual decision-making process are gradually emerging from the fog, and the MSNBCization of the news media. 

Most of the people who are dying are people like Norm. He is “the norm.” It kills mostly the weak who can’t fight back. It kills old people on cruise ships, but not sailors on aircraft carriers.

We know this because it hit the aircraft carrier Theodore Roosevelt and virtually every one of the 4860 crewmembers was exposed. Only one person, 41-year old Chief Petty Officer Robert Thacker, died.

Old people on cruise ships got infected and several succumbed. One person out of nearly 5,000 was the unlucky one on the carrier. Anecdotal evidence, yes, but also very important for the country to make its decision on going back to work. Opening up the economy is not just President Trump’s call, or Andrew Cuomo’s call, or Gavin Newsom’s or Jim Cramer’s on CNBC.

The decision will ultimately rise up from the people in a democracy because the politicians will be polling incessantly. Real people are gradually going to start coming out of their homes, meeting their friends, going into grocery stores, and returning to their barbers and hair salons. 

Temporarily closed barber shop in Bucktown, Chicago


The shutdown will begin to collapse because people will gradually, very gradually, start to shed their fear and their masks. They will quietly start asking Starbucks about when it will open its stores, and then they will ask to go back to work. Soon after that they will demand that they go back to work.

When the news trickles out that the number of people who have been exposed to Covid-19 but did not get really sick is 50 to 100 times higher than the published statistics, which is what the data coming out of Santa Clara County, home of Stanford, Google, and Apple indicates, the decision for the fearful politicians will almost be made for them. The people will decide.

More folks like my Cub Scout buddy Norm will die. The statistics in Italy are about as blunt and awful as it gets—55% of those who have died were 80 or older. People age 70 or older have accounted for 80% of deaths.

COVID-19 is the Grim Reaper for the old, infirm, and defenseless. For everybody else it is the flu. 

We had to shut down the country to save the hospitals in the big urban areas from being overwhelmed. That moment has passed. 

If we open up the country gradually, more of the old and weak will die, but the vast majority of people will be okay. People like me, born on the same day as my childhood buddy Norm, but hopefully in better shape, will ultimately have to decide for themselves when to get back in the fray.

Question: Do you feel safe enough to go back to work?

 

Share this post

False Positive?

By Lloyd Graff

Are we getting a false positive signal from the stock market, or is it a predictor of the economy in 3 to 6 months? This is the question business folk, big, small, and tiny, are asking themselves as the markets regain the ground lost in the early March slaughter.

The big tech stocks, Microsoft, Google, Apple, and Facebook, plus Amazon, Walmart, and Costco, are still sitting near all-time highs, while unemployment swells, small businesses languish, and Macy’s and Kohl’s starve. GM and Ford stock shrink, and Tesla stock hits $700 per share.

Are we on the eve of a depression or is this just a temporary misstep on the great trampoline of growth in America?

The machining business is straddling the chasm between panic and smiles of confidence. If a firm is predominantly an automotive supplier to anybody but Tesla, things look bleak. But for how long? There is plenty of potential demand waiting in the bushes.

People fear public transportation, which may translate to car sales. My sister bought an Audi SUV in February and my wife and daughter were both on the cusp of buying new vehicles. They will be back in the market when it feels safe to test drive some possibilities. My daughter is looking at the Jeep-Chrysler Pacifica, while my wife’s lease expired 3 months ago on her Camry.

We are waiting for the waters to calm. I’m sure there are many others in our shoes. But when will it be safe to do something, when right now a big trip is to visit the local supermarket for groceries to be put in the trunk after ordering ahead? The crazy thing is that we know our fear will dissipate and mostly be forgotten, but will it take 2 months, 6 months, or a year to regain our mojo?

We are just beginning the early spring of revival. I can feel it on good days when the sun is shining and neighbors are venturing out and talking without masks on. My sons are going out on walks together. My granddaughters recently met up with some close friends (10 feet away). I’ve almost gone to Dunkin Donuts to pick up coffee. My cardiologist tells me that his hundreds of patients are doing well and that the few who tested positive have recovered, except for the one frail man who died. I have friends who have recovered. It almost gives me confidence, but not enough to end my 33 day quarantine.

Yet business goes on. Most of my precision machining clients are working and reasonably busy. Medical and guns are strong. Military is okay but hesitant. Auctions are still taking place.

When will the umps say “Play Ball!”?

There will be a warm gust that begins to clear the fog of hesitation. It may be Major League Baseball or the NBA that gives the signal that we are waiting for. Yes, they will probably play without crowds and all of the participants will take their temperatures before play or practice begins. There will be missteps. A player or coach or ump will get sick, but one misstep does not mean it isn’t worth resuming. People always get sick and the world doesn’t fall apart.

Eventually we will have to coexist with COVID-19. We are social beings. We need to connect, travel, touch, and do business. We need to shed fear and take some calculated risks. The politicians and bureaucrats will dither, but the stock market is telling us, hopefully correctly, that good news is coming soon. Maybe when the ump yells “Play Ball!”

Question:  What is the first thing you plan to do when shelter-in-place orders are lifted?

Share this post