A corona variant and human innovation are impacting investing and business.
The stock market is like a boxer who keeps taking punches but won’t go down — at least not much.
Financial markets reignited their upward momentum Thursday following a week of uncertainty surrounding the latest coronavirus variant. Then came November’s jobs report.
The Dow Jones Industrial Average dropped 59.71 points or 0.17 percent by the close yesterday.
Conflicting Jobs Report
The U. S. Department of Labor issued a mixed message on jobs. It showed only 210,000 were created in November. The expectation was over twice that amount. At the same time, unemployment dropped from 4.6 to 4.2 percent.
Apparently, some investors felt adding fewer jobs than expected to an employment market saturated with unfilled jobs was a bad thing. It would not be surprising to see them come back and have the market rebound next week. That is what happened when the news of Omicron broke.
Omicron Rattles Market
Omicron was discovered in South Africa. That announcement on Thanksgiving led to a sell-off of stocks the following day.
The Dow fell over 900 points, or about 2.5 percent, in early trading on Black Friday. Meanwhile, the S&P 500 fell 2.2% at intraday lows.
At the same time, vaccine companies posted immediate gains. Moderna was up 25 percent, Pfizer rose eight percent, and BioNTech elevated 20 percent.
Financials rose early this week, then fell again on news of Omicron cases in the United States. However, stocks returned to their upward march Thursday as Moderna and BioNTech predicted they could have a new vaccine ready early next year.
“If we have to make a brand new vaccine, I think that’s going to be early 2022 before that’s really going to be available in large quantities,” Paul Burton, Moderna’s chief medical officer told BBC’s The Andrew Marr Show.
Some well-known investors quickly called the Black Friday sell-off a buying opportunity.
Among them was Bill Ackman, The founder and CEO of Pershing Square Capital Management.
A thought. While it is too early to have definitive data, early reported data suggest that the Omicron virus causes ‘mild to moderate’ symptoms (less severity) and is more transmissible. If this turns out to be true, this is bullish not bearish for markets.
— Bill Ackman (@BillAckman) November 29, 2021
Cramer is In
Jim Cramer, host of CNBC’s Mad Money agrees. He warns investors should move quickly to scoop up stocks he believes are listed at “bargain-basement” prices.
“If you wait too long to buy these bargain-basement stocks and omicron becomes nothing more than a running nose for the vaccinated — even as the unvaccinated exercise their God-given right to hospitalization and death — I think you’ll look back and kick yourself for missing some of these obvious buying opportunities,” Cramer said.
Cramer touts four stocks owned by his charitable trust as long-term buys. They include Disney, PayPal, Master Card, and Wynn Resorts
Learning From Delta
Investment bank Morgan Stanley sees no reason to change its positive outlook on the economy’s reopening.
Andrew Sheets, chief cross-asset strategist for Morgan Stanley Research, cites the economy’s strength against Delta as a reason for confidence.
Sheets commented in Morgan Stanley’s Thoughts on the Market podcast “we don’t think we have enough evidence around this variant to change our baseline economic forecast to change that optimistic view on growth.”
Alluding to the Delta variant, Sheets said, “And you know, if you step back and think about this year, the market was still good, yield still rose, there was a lot of market movement, very consistent with better economic growth if you take the year as a whole, even though you had this variant, but the variant did introduce some kind of twists and turns along the way.”
Many Unanswered Questions
Little is known about Omicron. Scientists say it will take weeks, even months to know if this new strain is worse than Delta.
What is known still puzzles researchers. Omicron has 50 mutations across its gnome. That is 20 more than Delta.
“Everyone is afraid that omicron will be significantly more transmissible than delta. Upon first impression, it looks like it could be,” Dr. Jeremy Luban, a virologist at the University of Massachusetts Medical School told NPR. “But that could be totally wrong. Right now, nobody knows. The problem is that our data is very limited.”
Job Market for Robots Taking Off
For decades the United States has been creating mind-numbing jobs that offer no fulfillment, no opportunity for advancement, and no hope for a bright future.
It took a global pandemic to turn that bleak economic picture upside down.
Today, there are more low-paying jobs than people to fill them. As a result, some employers are filling them with something other than people.
American Robotech produces robots that transport materials for business. Their “autonomous servers” deliver food to restaurant tables.
Espartaco Borga, the owner of La Duni Latin Cafe, Dallas, TX is renting American Robotech’s HolaBot for his restaurant.
Restaurant staff does not see the robots as displacing humans, Borga told CNN, “No one wants to work in hospitality right now.”
“They see them as part of the service experience,” said Borga, “because these robots have a personality, they can interact. If you touch them, they giggle and they tell you things.” That is unlike human employees who respond to such behavior by quitting and telling you things through their attorneys.
They can also sing “Happy Birthday” (talk about drudgery).
Changing Future of Work
The robot population is expected to reach five million by 2025, according to a new Bank of America report entitled Robo Sapiens: Future of Work Primer.
That may conjure up visions of Arnold Schwarzenegger telling you to say “Hasta la vista” to your job. However, you have nothing to worry about, says BofA.
“The World Economic Forum estimates that even as technology eliminates 85 million jobs by 2025, it will create 97 million new ones,” says Haim Israel, head of Global Thematic Investing Research at BofA.“That’s a net increase of 12 million jobs worldwide.”
It Won’t Be Easy
About one billion people worldwide will need to learn new skills to fill the jobs created by robot technology, according to BofA. However, greater flexibility and leisure time are expected to be hallmarks of future employment.
Investment opportunities are also present, says the report. Over $14 million in market capitalization is expected to be generated by companies supporting job transformation.
Your Future Job
Technical skills will be in higher demand than ever in the near future, according to the report.
“The decade ahead will see unprecedented change in the world of work, as the tech disruption gathers pace,” says Felix Tran, equity strategist for BofA Global Research and a co-author of the report.
As a result, the 40-hour workweek may get shorter.
“If automation helps free workers from mundane and repetitive tasks,” says Tran, “the future of work might tilt towards more leisure time.”
DAOs – a New Way To Do Business
A group of people, many unknown to one another, decided to pool resources and begin buying digital art in June. Their first purchase was the Doge meme NFT (non-fungible token) that inspired the creation of Dogecoin. The price tag was $4 million.
Since that time, the same group, PleasrDAO, has made additional purchases, such as the only recording of Wu-Tang Clan’s Once Upon a Time in Shaolin. That October buy was for another $4 million.
What Are DOAs
What makes these purchases unique is that they were made by a DAO (Decentralized Autonomous Organization).
DAOs are groups of individuals who form through the internet for a common purpose (such as acquiring collectibles). In that regard, DAOs function like LLCs (Limited Liability Companies). However, unlike LLCs or any traditional corporate structure, DAOs do not have a management hierarchy. They are governed by rules embedded as a transparent computer program controlled by members.
All DAO rules and financial transactions take place on a blockchain. All members must vote on rule changes and transactions.
Each DAO has unique goals. However, many have been formed as part of a broad effort to democratize finance. For instance, PleasrDAO began selling fractional interests in the Dodge NFT in September for $1. You can make purchases on the Fractional.art platform.
Many futurists see DAOs as co-existing with or replacing traditional investor models as we head into the Metaverse.
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