BALTIMORE – The Dow rose 250 points on Friday… putting it back near its all-time high.

A “blow-out jobs report” was said to be the inspiration.

Oh my… so many dots… so little time.

Meaningless Noise

Friday’s jobs report said that 278,000 Americans found work in June – up from 11,000 in May.

This was considered such good news that investors rushed to buy stocks. At least, that was the line taken by the mainstream financial press.

But a single month’s number is meaningless noise. Even honest numbers should be disregarded; they just don’t have any useful information.

The feds’ numbers are worse. They are lies – statistical confections that so heavily sugarcoat the data they practically give you diabetes.

In a protracted economic slump – such as we’ve been in since 2007 – people give up. Then, if they stay out of the workforce for a few years, it can be very hard to get back in.

The statisticians do not merely ignore these people; they disappear them.

Officially, the jobless rate is under 5% today, just as it was in 2001. That implies that there are 20 times as many people with jobs as without them. But if you take the number of people with jobs today and multiply by 20, you come way short of the number of people of working age.

Allowing for the same ratio of non-working spouses and shiftless layabouts as there were 15 years ago, there are about 15 million people missing.

What happened to them?

They are invisible. They tend to live in fly-over country and don’t make campaign contributions. They don’t bid for federal contracts or write angry letters to the editor. They may as well not exist.

But watch out: They may not be simply the worn-out losers of the “old” economy. They may be showing us what’s in store for the rest of us.

Rise of the Robots

“Robots are taking over,” says a friend.

“They began by doing the simplest, lowest wage jobs. But they were competing with very low-paid workers. So employers wouldn’t pay much for them. But now they’re getting a lot more sophisticated. This is where it gets interesting.

“When you buy a robot to replace a human employee, what you’re really doing is capitalizing the cost of the employee. Let’s say an employee earns $50,000 a year. You have to figure that you spend another $25,000 a year on benefits, a personnel office, lawsuits, counseling, management issues, health care, holidays, a desk, a phone. So you have a total cost of $75,000. And he’s working only eight hours a day… five days a week.

“In a normal world, with a cost of capital at 5%, and an amortization period of 10 years for the robot, you could afford to spend about half a million. [I’m not doing the math. I’m just guessing.]

“But here’s the point: As you go up the income ladder, you can spend a lot more. If you can replace a guy who earns $100,000 a year, you can pay $1 million… and so forth.”

Dumping Workers

As robots get more sophisticated, it’s a matter of time until most people who do routine and not-so-routine work will be replaced.

Robots don’t complain when they get pinched on the derriere by a  frisky manager. They work nights without grumbling or overtime. They don’t call in sick. They don’t care if there’s a home game. They don’t make excuses when they run over an elderly blind woman with the company truck.

“And guess what?” continued our friend.

“The feds say they are stimulating the economy and aiding employment with their ultra-low rates. But what they’re really doing is helping robots find jobs.

“As the cost of capital goes down, the relative cost of capital… as opposed to labor… also goes down. You can’t capitalize an employee. At least, not since slavery was abolished.

“But the real cost of a machine goes down when the cost of funds goes down. It’s a capital investment. So, when the cost of capital goes down to zero, a company with access to that cheap – or even free – money can afford to pay almost an infinite amount of money to get rid of its employees.

“Zero-interest-rate policy is really a full robot employment program.”

Regards,

Signature

Bill

 

Tech Insight


By Jeff Brown, Editor, Exponential Tech Investor


We don’t yet have the luxury of food replicators such as the ones we saw in Star Trek. But we do have the next best thing… robotic cooking devices.

Innovators have been developing robotic devices that prepare fresh, healthy, and delicious meals with almost no human effort.

Tech-No-Logic’s OneCook

OneCook, developed by Tech-No-Logic, looks like a large bread machine or rice cooker. Simply place the tray of pre-prepared ingredients into the OneCook, and your meal will be ready in minutes.

The company plans to begin shipping its product by August this year. It will also be selling pre-prepared ingredients for daily delivery. You can order the meals using an application on your smartphone.

Sereneti Kitchen’s Cooki

Cooki is a product under development by Sereneti Kitchen. The unit is a bit larger than the OneCook. It has a robotic arm that stirs and mixes ingredients while cooking.

Sereneti’s business model will be similar to Tech-No-Logic’s. It will also sell pre-prepared, fresh ingredients and deliver right to consumers’ homes. Plus, you can control the machine using the smartphone application.

Moley Robotics MK1

Things get really interesting with the futuristic MK1, produced by Moley Robotics. It’s the most advanced robotic cooking device I have seen. The company expects to sell it in late 2017.

Its robotic arms, oven, and touchscreen unit require kitchen installation. The movement of the robotic arms, hands, and fingers is incredibly human-like, only faster and more precise.

It can watch a human preparing a dish, record it, and then prepare the dish itself. The MK1 even has the ability to prepare ingredients. You can download recipes via the touchscreen.

The consumer robotics market is growing rapidly at an annual growth rate of 24%.  In 2015, the total revenue for consumer robotics was $3.5 billion. By 2025, it is forecasted to reach $17 billion.

In the consumer robotics category, robotic vacuum cleaners have had the most success to date. That said, I believe the potential for robotic cooking devices may be even larger.

Food preparation consumes more than one hour every day for the average household. Frozen and microwaved meals are loaded with chemicals and just don’t taste very good. The thought of having inexpensive, quick, fresh, delicious, chemical-free meals prepared daily not only sounds like a tasty proposition; it sounds like an amazing investment opportunity.

P.S. I predict a huge change is coming to the stock market… One that could send shares of “safe” blue chips like Apple and Microsoft plummeting. But I want to show you exactly what’s happening and how to prepare for it…

That’s why I’m hosting a special online (and absolutely FREE) training event later this week. To make sure you don’t miss out, I urge you to register now, while it’s on your mind to do so… Click here to learn more.

 


Featured Reads

How the Rise of the Robots Will Transform the Economy
Oxford University estimates that 47% of U.S. jobs will be automated within the next two decades. And not just low-paid jobs either. Here’s what our robot-filled future could like…

The World’s Biggest Gold Buyers Are Getting Ready to Load Up
Central banks are set to pile into gold like they haven’t throughout this year. With so many bonds now carrying negative yields, gold looks more attractive than ever to these big buyers.

Yesterday Was a Historic Day for Digital Currencies
A top investing expert explains how yesterday could mark the beginning of a huge bull run for digital currencies. And how that could help you shield your savings… and turn a nice profit in the process.

 


Mailbag

Bill really stirred it up with Friday’s Diary – “Fat People for Trump!”

I don’t care for your negative comments about Donald Trump. I think he is the only person with enough guts to save this country and “make America great again.”

He is smart, a businessman, and will surround himself with the brightest minds available. I hope he wins by a landslide.

– Clarence J.

 

Maybe if you spent as much time dissing Hillary as you do puking on Trump, your audience could make a more informed decision which of these clowns is the lesser of two ridiculous choices.

– Bob W.

 

So, Bill thinks the fat vote will tip the scales in favor of Trump? That’s some heavy thinking!

– Carl W.

 

I’m a little surprised at your theory that fat people would be Trump supporters. I went to a Trump rally to see what all the ruckus was about and I didn’t see a preponderance of fat people. It looked to be a pretty massive crowd of people lining up after work to hear what he had to say.

They looked like my neighbors actually, and probably some of them were. It looked like a Tea Party rally they had here back when that was popular. Wouldn’t the lower income, higher weight people (according to the report you mentioned) want the gravy train to continue and thus support the establishment candidate?

The cheapest food also seems to be the stuff that makes people grow fatter. How does that play into it? I think you missed the mark on this one, but I also think you’re just trying to stir things up. So bravo.

– Jerry B.

 

The fat vote! Bill, I suggest you put the bottle away for a while.

– William C.

 

Congratulations! I am in favor of democracy, just wish we had it. I’m old(er), overweight (fat), and hair challenged. Not sure yet if I can vote for Trump. Just sure I can’t vote for Clinton. Though deeply offended, keep up the good fight.

– Jim S.

 

As you so often do, Bill, you hit the nail right on the head with Friday’s Diary. I haven’t laughed so hard in a long while. And try as I might, I can’t find any flaw to your Monty Pythonian logic. Keep it up.

– Dale A.

 

There is no question you are right, as you always are. It is your letter after all. Trump is the worst candidate in the running… except for the rest of them. They are worse than swine.

– C.M.