Macro Themes for 2013 (part I)

1. Man vs. Machine
• Productivity gains will outstrip pace of consumption – technology such as automation, robotics and 3D printing will destroy jobs faster than it create jobs
• Up to 50 million current jobs could be automated in the future (and thus destroyed)
• How many jobs will be created through this automation? The answer is however many AI programmers you need (probably far less than 50 million)
• Firm's labor demand will be for a few skilled workers rather than many unskilled workers
• Hiring - firms are spending on capex instead of hiring; 75% of US manufacturing firms already employ <20 workers
2. US Manufacturing Renaissance
• Localization, or Anti-Globalization
• Production is being re-shored to be closer to the huge US consumer market and take advantage of local logistics
• EM (emerging market) are becoming less competitive
• EM currencies are appreciating such as CNY (Chinese Yuan)
• China could enter the "middle income trap"
• Overseas transportation are too high due to energy prices, incentivizing firms to repatriate
• Underinvestment and low capex spending in US means pent-up demand
• Theme 1 - automation and robotics override low labor costs
3. US Energy Boom
• EIA forecasts
• US will become energy independent by 2020
• Largest natural gas producer by 2015, surpassing Russia
• Oil output poised to surpass Saudi Arabia’s by 2019
• Consumption - 87% will be from domestic sources of energy by 2020, up from 79% today 
• Imports - 13% of consumption by 2020, will be primarily supplied by Canada & Mexico, increasing from 36% of imports today to 62% by 2020.
• Competitiveness
• EU suffers from expensive gas contracts with Russia
• Latam has moved plants to US due to low natural gas and electricity prices
• Electricity - prices are 50% cheaper in the US than in Europe
• Roughly 30% of US electricity is generated by burning cheap domestic natural gas
4. DM (Developed Markets) Aging Demographics
• Population - baby boomers outnumber millenials due to decreasing fertility rates
• Labor - baby boomers are retiring later due to recession, crowding out young from workforce
• Gov't debt - millenials inherit high gov't debt caused by spending on entitlements towards baby boomers
• Other - high student debt, tight credit, skills mismatch, high job turnover
• "Peter Pan" generation - millenials reliant on parents, delay adulthood, live at home
5. DM Big Gov't Socialism
• Political sentiment will lean towards fairness and equality
• Theme 1 - high unemployment and inequality will be balanced by redistribution through increased taxes and spending
• Theme 4 - baby boomers dominate gov't and are biased towards increasing gov't healthcare, pensions, social security, etc.
6. DM Central Bank Printing
• Currencies - race to the bottom means depreciation
• Inflation - will stay low due to tight lending and low velocity
• Financial repression - captive investors ensure low rates
7. "Peak Car"
• Urbanization, high fuel prices, increasing youth insurance premiums
• Car-sharing schemes - 1 rental equals 15 owned cars; e.g. 700k Zipcar members share only 9k cars
• Theme 4 - tight credit depresses auto-ownership