US manufacturing is alive and well. We have the most productive and among the most skilled workers in the world.
We make big, expensive, complicated things like jet engines and gas turbines, and specialty steel that have to be absolutely perfect. The US automotive sector is bigger than its ever been (just not all are US based companies). Pharma manufacturing is huge business, and one where mistakes are not tolerated. You’ve never flown on a plane built in Bangladesh.
You don’t pay a doctor to mow your lawn, and you don’t pay a US worker to put laces on shoes.
Productive is a key word there. There are fairly few manufacturing jobs. Most of the output is automated. High quality production with few workers involved. That has been a trend for many decades.
More US manufacturing means very few additional jobs. It does require building more of those highly automated plants. Which require robots that are not built in the US … that have high tariffs on them. And that cost more with the dollar worth less. But once built yes the product has an advantage if the dollar is worth less.
Additional issue is having the workers. Separate thread but we have too low a birthrate to keep up a supply. You really need to get some people immigrating here to be the new taxpayers.
The other big issue is how much the value drops. Once the dollar is no longer reliable it is fairly useless as the reserve currency, and as already discussed, we then go into uncharted seas where krakens live. Multiple central banks could be racing to be ahead of the crowd releasing their reserve dollars and exchanging for a mixed bag of other currencies and gold. The drop is not something you can finesse at that point. It quickly risks a collapse.
In general, I would (and have) argued that we’d do better to split into two currencies. Have one for finances, tech, and other growth industries centered around cities and a second that covers agriculture, commodities, manufacturing, and other more rural-centric or blue collar job holders.
You start the two off at the same level as the dollar and then let them drift under separate management.
You don’t have to pick one and make it handle separate, contradictory tasks. And, importantly, the changes will happen on their own, over time so that the markets can adapt and build their own standards.
As of yesterday, my 401(k) was down $71.67 from March 3rd. In the interim, I’ve contributed $446.41 through automatic deductions, so my total loss as of yesterday was $518.08.
IIRC, the Dow was around 43,900 on 03/03. The Stock Market just closed, and Yahoo says it closed at 39,142.23.
My understanding is that because the US dollar is the global reserve currency, the federal government is able to pay very low interest rates on government bonds. Giving up the status as reserve currency would increase those costs, meaning that more of the annual budget would need to go to paying down the federal debt. Stephen Miran suggests that a weaker dollar would encourage investment in domestic manufacturing.
That’s fine but the other day I saw Fareed Zakaria’s CNN program and he pointed out that only eight percent of US employment is in manufacturing and even then, only four percent is in production (the rest being sales, marketing, distribution, etc). He also showed a chart (shown here) of the decline in the share of manufacturing in US employment. It shows a steady decline since 1940, and the decline doesn’t even appear to have changed even with the rise of Chinese manufacturing.
Since the late 1940s, manufacturing has fluctuated in a tight range around 12% of real GDP. When using real GDP, the effects of price increase (aka, inflation) are removed. This gives a clearer perspective on the sector’s output over time. Said another way, manufacturing has held its own over the decades, continuing to generate a significant share of the overall economy.
Preamble. I am attracted to contrarian plays and love to look for market over reactions for stocks that likely still will do well over a long term. I have two or three stocks that have done very well and have not been hit too bad, and am ready to spread a bit off the top of those winnings. (Already moved a bit into Pfizer.)
So two to get thoughts on that have had I think excessive punishment.
United Healthcare. Down 22% today on both missed earnings and negative guidance. Seems excessive and again I see healthcare as a defensive play in possible recessionary times. OTOH I think of the company as evil.
Nvidia. Down 28% over 3 months. Trading now we they were last May. Long term AI is still going to grow dramatically and they are still the powerhouse there. But I am cautious about trying catch a falling knife. They might have more to drop. Trying to decide what price point would be worth buying some.
I agree that UNH seems overly punished and is a good buy. The insurance system is completely entrenched, they are the biggest (?) player, and they’re relatively resistant to tariffs (other than pharmaceuticals, but it’s likely they can find alternate sources) and the sort of arbitrary actions Trump would take. Trump is not gonna play around with some sort of national health care that could potentially wreck the industry. I’d even consider taking a position myself but I don’t know if I’m going to be going long on US assets anytime soon.
NVIDIA is complicated. They can be impacted by tariffs, AI might be a bubble to a degree, they may have soared too high and were vulnerable to a correction. However, Trump is corruptly granting various exemptions to tariffs and NVIDIA is likely to be a beneficiary to those, and there’s a decent chance of a significant climb based on that perception.
I think it’s too unstable to own (too vulnerable to conflicting factors), but if you want to get value for the possibility that everything goes well and it goes up quite a bit, this seems like a good situation for a filthy, degenerate call. Maybe in the 2-4 week range.
I can’t speak to a specific stock, but if you think you’re getting it on sale, then get it. On sale is a good buy. It might fall lower and you could get a great buy, but you shouldn’t worry about that. That’s mostly luck. Take the good buy. It’s the best anyone can do.
This is not a sure bet. It is absolutely something that they want you to believe. AI is the current champion that will allow tech stocks to continue to grow unchecked forever. However, nobody is making money on AI, except Nvidia, who are selling shovels.
Microsoft has recently cancelled building several large data centers because they are not seeing AI growth. Of course Microsoft is already heavily invested in AI, so they don’t come right out and say that’s why they cancelled them. That’s why they were building them, though.
Even without all of the other stuff happening righ now, AI is a very dangerous bubble to be investing in. None of us can help being part of it though, as all of our index funds own lots of companies deep into AI.
It seems to me that new things come along, get everyone all hot and bothered, and then- nothing.
Then the second generation figures it out.
In 1997 the internet was going to change everything. Then the dot com bubble burst, and we had a few new things to play with, but things didn’t change all that much.
Then, after that, the internet changed the world.
I’m a believer that with most technologies it’s the second gen that makes it work.
As I type this on my Commodore 64bit Laptop.
Yeah that’s why I’m asking here. I agree that AI was ahead of its skis. And a major recession may slow down the head long rush to adopt to not get behind the competition. Not sure it has dropped enough yet to consider it “on sale”, and my index fund still gives me ample exposure to it.
UHC I do think is a lower risk defensive bet at this price. I just hate the company and what they represent. In general I also want to not feel dirty with my individual stock picks.
So Trump is making yet more noise about firing Jerome Powell (which is illegal, but that is unlikely to matter) and threatening the independence of the Federal Reserve.
Annie Lowrey in the Atlantic says that if this happens:
So what do I do now (i.e. today) with my savings and retirement accounts?
I failed to predict that Trump would actually go through with his tariff threats and now my 401(k) is down 20% this year. All of the market advice you read says to leave things alone. But I’m starting to seriously worry about the long-term future of my financial health. (And lots of other things, but those are topics for another thread.)
I’m currently mostly invested in U.S. index funds, U.S. growth funds, and some bonds. Should I shift my 401(k) to foreign index funds? (I’m not even sure how to do that.)
Or gold? (I can’t believe I’m writing this, as I’m no goldbug.) I’m not sure how to do this either. I certainly don’t want to hold onto physical gold.
My savings are mostly in short-term CDs earning about 4.5%. These are fine, I guess, so long as the U.S. doesn’t experience hyperinflation. Which I now think has a nonzero chance of happening in the next four years, if not sooner.
Any advice would be greatly appreciated.
P.S. I know this is a common expression but as a skier, it always irritated me. Because in downhill skiing you want to have your weight (i.e. center of gravity) forward. Indeed, it’s almost impossible to get your weight too far forward. It’s when your weight shifts backwards that you lose control and will likely fall.