Inside this Issue:
- Dimon Says: King of the Bankers is Bullish
- Cook and the Car: What Exactly, Are Apple’s Automotive Motives?
- There Goes the Laborhood: Amazon Workers Vote No on Union
- Sub-Prime Bubble Trouble? Seems So, This Time in Autos, Not Housing
- Facebook Frustrations: At the Mercy of Rivals
- The Creator Economy: More Than Just TikTokers Making Money Moonwalking
- The Economy’s Creators: A Startup Surge Across America
- The Semiconductor Shortage: It’s Getting Worse
- Axe the Tax Hacks: Yellen Yelling Cries for Reform
- Wi-Fi from High in the Sky: Satellite Internet is Coming
- Debate: Tesla: Longterm Winner? Or Way Overhyped?
- And This Week’s Featured Place: Lewiston, Maine, from Mills to Migration
Quote of the Week
“I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom.”
-JPMorgan Chase CEO Jamie Dimon
Here we go. First quarter earnings season starts this week, with banks taking center stage. The biggest highlight? JPMorgan Chase, the biggest bank, with the biggest-name chief executive.
That of course, would be Jamie Dimon, king of Wall Street and unblemished survivor of yesteryear’s global financial crisis. During the Covid crisis, Dimon wrote, in a lengthy letter to shareholders last week, government stimulus measures have put the economy on course for rapid growth. Maybe, he said, that growth can advance without the accompanying scourge of inflation. But the risk is real. So too, Dimon adds, are systemic risks from regulatory deficiencies—too many restrictions on critical bank lending but too few on non-banks performing bank-like functions in the shadows. Washington’s mounting debts, cybersecurity, America’s swollen health care costs, toxic politics, the China challenge… also add these to Dimon’s list of dangers.
No less dangerous, some fear, are the vulnerabilities of the crucial semiconductor market. They include an uncomfortable dependence on Taiwan’s largest producer (which also happens to report earnings this week). Also worrisome is the inadequate supply now bottlenecking auto production. Other key industries could be affected too.
On a less systemic scale are bubble risks in sub-prime auto lending. The market isn’t nearly as big as housing sub-prime—no need to worry about a 2008-sized financial meltdown. But it could prove a pocket of pain. As for risk on a far more sweeping scale, climate change was a central topic at last week’s springtime IMF meetings. The fund’s director, Kristalina Georgieva, separately warned about the world’s uneven recovery, along with ongoing threats from the virus. Another speaker, Fed chairman Jerome Powell, struck a more positive tone with U.S. joblessness falling and vaccination rates rising (roughly a third of all Americans are now at least partially vaccinated). Importantly, the hard-hit U.S. service sector is starting to reawaken. But “J-Pow” also repeated his concern about the bottom 20% of the labor market, where unemployment remains extremely high. Longer-term, the U.S. labor market faces headwinds from demographics, possible scarring effects and accelerated adoption of technology that reduces demand for lower-skilled workers.