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War Room 29 August 2012 Jobs + Inequality

War Room 29 August 2012 Jobs + Inequality. War Room. Monthly macro discussion Using tools in context Update on HiddenLevers Features Your feedback welcome. Jobs + Inequality. Jobs Picture: Current Snapshot Comparative: Post-Recession Job Recoveries III. Market Inequality

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War Room 29 August 2012 Jobs + Inequality

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  1. War Room 29 August 2012 Jobs + Inequality

  2. War Room • Monthly macro discussion • Using tools in context • Update on HiddenLevers Features • Your feedback welcome

  3. Jobs + Inequality • Jobs Picture: Current Snapshot • Comparative: • Post-Recession Job Recoveries • III. Market Inequality • IV. Scenarios

  4. HiddenLevers Jobs Picture: Current Snapshot

  5. Current Snapshot: Long Way To Go Still 5 million jobs from peak

  6. Current Snapshot: Jobless Claims Now at 2001 Highs 450k • Unemployment claims: • decreased significantly since 2009 peak • Currently not decreasing • Currently equal to peak of 2001 recession

  7. Current Snapshot: Muddling Through unemployment down confidence up upticking unemployment this summer

  8. Current Snapshot: Recovery + Demographics approaching 2008 lows • Singles • 5 million jobs lost – 90% recovered • Married • 6 million jobs lost – 22% recovered

  9. HiddenLevers Comparative:Post-Recession job recoveries

  10. Comparative: Post-Recession Job Recoveries Quantitative: % job loss dramatically more Qualitative: Character of recovery similar to 1990 + 2001 source: Bureau of Labor Statistics

  11. Comparative: 2000s = Jobless Recovery • Losers • Manufacturing • Automotive • Winners • Professional services • Healthcare

  12. (Rich Kids of Instagram) HiddenLevers Market inequality

  13. Inequality – Top 1% versus The Rest Takeaways - excluding top 1%, income inequality has not risen over past 20 years - system that works well for richest, doesn’t for the rest - Income share for top 1% is at Great Depression era highs

  14. Inequality – Part of General Trend? Ratio of CEO to Worker Compensation: 1965-present Source: Economic Policy Institute • Fortune 500 CEOs • CEO/worker pay ratio has risen exponentially – 20x in 1965 to 200x today • CEO pay has accelerated even faster than top 1% income • Shareholders could affect things – vote down CEO packages • Winner-take-all

  15. Inequality – Part of General Trend? • Baseball Salaries • Average MLB salary up 100x since 1970 • Median wage across all pro-athletes = 40k (minor leagues) • Winner-take-all

  16. Inequality – Part of General Trend? 12 employees 1b usd acquisition 67 employees 1.65b usd acquisition • Startup Billionaires • Startups not creating jobs, creating wealth for few • Automation = key to many startups success, but eliminates jobs • Winner-take-all

  17. Inequality – Russell 2k vs Mega Caps • Top 8 Firms outperformed over last 20 years • Mega Caps outperformed small caps (and S+P) over last 20 years. • All but Apple were huge companies 20 years ago – no cherry picking here Apple - Outlier or new Paradigm? Apple demonstrates inequality markets • iPhone is king of smartphone market • iPad has even greater share of tablet space • Winner-take-all

  18. Future: Automation + Change in Workforce Tesla Factory 2012 - robots Ford Factory 1925 - humans Technology + Automation = Spoils to go to a few, companies and individuals they don’t need me anymore Examples: Tesla - new factory uses robots + few humans FoxConn - automating iPhone factories in China, use 90% less workers Amazon – automating logistics, new warehouses devoid of humans Philips – robots replacing workers to make consumer electronics devices

  19. Future: Optimistic and Pessimistic Scenarios What are the effects of continued automation on the workforce? Pessimists: Once a robot can do everything an unskilled laborer can do, and better, what happens to mass unemployed? If a robot can serve you fries, what's the purpose of a minimum wage worker? Optimists: We've been through this transition before: 19th century Industrial Revolution, 20th century rise of services and information economy – this is just creative destruction at its best. These trends are far reaching – too early to model scenarios here.

  20. HiddenLevers – Product Update • Macro Profile for a Portfolio (print to PDF) • War Room – now on iPad • Coming soon: • iPad App (beta) • Big Screen Presentation (beta)

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