shekispeaks

Financial Markets

JP Morgan predicts a 90% chance for a recession in 2019 based on past stock market performance. The chance drops to 26% if other features like homebuying and job growth are taken into account. S&P 500 Dropped by 6% in 2018, 2019 is expected to go the same way.

https://www.economist.com/finance-and-economics/2019/01/05/what-the-market-turmoil-means-for-2019

The economist claims that the steam has gone out of globalization. A bigger segment of the economy is now service based and difficult to trade. US is turning inwards under trump. Globalization increased trade in a few particular regions for e.g. China-US. Now that the steam has run out of US China trade, globalization’s benefits are tapering off. The world economy may not grow as the same rate as before.

https://www.economist.com/leaders/2019/01/24/the-steam-has-gone-out-of-globalisation

Airline Industry

Herb Kelleher’s SouthWest airline is a unique airline. They have been always profitable and believe in slow deliberate growth. Unlike other airlines they fly point to point instead of using hubs. When they launch a city they usually set up 6-7 flights. Efficiency and low turn around times are their modus operandi. They were the original low cost airline. The only thing the rest of the airline industry shared with SouthWest that it is run by big personalities. The airline industry is competitive and chummy with the government. Deregulation in the 80s made the prices drop but at the cost of a lot of well paying union jobs.

As of now, American, Delta and United are the worlds three biggest airlines. The Chinese Airlines are growing at an unprecedented rate and are expected to introduce lower fares and are better placed to serve new destinations in China.

Hard Landing: The Epic Contest for Power and Profits That Plunged the Airlines into Chaos Paperback

Jan 30 2018

https://www.economist.com/business/2018/04/05/chinese-carriers-are-the-new-disrupters-in-air-travel