Tuesday, December 15, 2015

BlackRock On Advances In Technology

From ValueWalk, Dec. 13:

Advances In Technology – The Topic We Should All Be Paying Attention To (In 3 Charts) by Rick Rieder, BlackRock

While everyone focuses on the Fed, this important topic isn’t receiving as much attention as it deserves. Rick Rieder explains, with the help of three charts.

As the December Federal Reserve (Fed) meeting nears, discussions and speculation about the precise timing of Fed liftoff are certain to take center stage.

But while I’ve certainly weighed in on this debate many times, I believe it’s just one example of a topic that receives far too much attention from investors and market watchers alike.

The Fed has been abundantly clear that the forthcoming rate hiking cycle, likely to begin this month, will be incredibly gradual and sensitive to how economic data evolves, meaning the central bank is likely to be extraordinarily cautious about derailing the recovery and rates will likely remain historically low for an extended period of time. In other words, when the Fed does begin rate normalization, not much is likely to change.

Shifting the Focus to Other Economic Trends
In contrast, there are a number of important longer-term trends more worthy of our focus, as they’re likely to have a bigger, longer-sustaining impact on markets than the Fed’s first rate move. One such market influence that I believe should be getting more attention: The advances in technology happening all around us; innovations already having a huge disruptive influence on the economy and markets. These three charts help explain why.

Adoption of Technology in the U.S., 1900 to present

As the chart above shows, people in the U.S. today are adopting new technologies, including tablets and smartphones, at the swiftest pace we’ve seen since the advent of the television. However, while television arguably detracted from U.S. productivity, today’s advances in technology are generally geared toward greater efficiency at lower costs. Indeed, when you take into account technology’s downward influence on price, U.S. consumption and productivity figures look much better than headline numbers would suggest.
Percentage Top 1500 U.S. Stocks with Zero Inventory through Q2 2015...

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Here's the old school version of that chart, back when things weren't so vertical:

Behold the S-Curve: Uptake of Various Technologies 1900-2005

http://4.bp.blogspot.com/_D9-JNTtRKgs/TBuFe2NvKHI/AAAAAAAABBE/Z3mDC6xW_aE/s1600/Picture+99.png