Thursday, June 22, 2017

Last Call For Automation Nation

First Wendy's announced a pilot program already under way, now McDonald's is going to replace thousands of cashiers with automated kiosk terminals.

McDonald's shares hit an all-time high on Tuesday as Wall Street expects sales to increase from new digital ordering kiosks that will replace cashiers in 2,500 restaurants.

Cowen raised its rating on McDonald's shares to outperform from market perform because of the technology upgrades, which are slated for the fast-food chain's restaurants this year.

McDonald's shares rallied 26 percent this year through Monday compared to the S&P 500's 10 percent return.

Andrew Charles from Cowen cited plans for the restaurant chain to roll out mobile ordering across 14,000 U.S. locations by the end of 2017. The technology upgrades, part of what McDonald's calls "Experience of the Future," includes digital ordering kiosks that will be offered in 2,500 restaurants by the end of the year and table delivery.

"MCD is cultivating a digital platform through mobile ordering and Experience of the Future (EOTF), an in-store technological overhaul most conspicuous through kiosk ordering and table delivery," Charles wrote in a note to clients Tuesday. "Our analysis suggests efforts should bear fruit in 2018 with a combined 130 bps [basis points] contribution to U.S. comps [comparable sales]."

He raised his 2018 U.S. same store sales growth estimate for the fast-food chain to 3 percent from 2 percent.

The analyst raised his price target for McDonald's to $180 from $142, representing 17.5 percent upside from Monday's close. He also raised his 2018 earnings-per-share forecast to $6.87 from $6.71 versus the Wall Street consensus of $6.83.

"MCD has done a great job launching popular innovations within the context of simplifying the menu, while introducing more effective value initiatives that have recently begun to improve the brand's value perceptions," he wrote.

Of course Wall Street loves replacing several thousands of jobs with machines.  More profit!  Of course, if everyone automates, who's going to actually have money to pay for things?

Thirteen years ago, two prominent U.S. economists wrote that driverless cars couldn’t execute a left turn against oncoming traffic because too many factors were involved. Six years later, Google proved it could make fully autonomous cars, threatening the livelihoods of millions of truck and taxi drivers. Throughout much of the developed world, gainful employment is seen as almost a fundamental right. But what if, in the not-too-distant future, there won’t be enough jobs to go around? That’s what some economists think will happen as robots and artificial intelligence increasingly become capable of performing human tasks. Of course, past technological upheavals created more jobs than they destroyed. But some labor experts argue that this time could be different: Technology is replacing human brains as well as brawn.

When politicians talk about jobs, they tend to focus on iconic, goods-producing industries, such as mining, steel production and auto making, that have traditionally been the hardest hit by global competition and technological progress. Lately, though, the loss of manufacturing jobs in the U.S. pales in comparison to the much larger losses in parts of the services sector.

Overall, services accounted for three-fourths of the job losses among more than 350 sectors of the private economy in the last year. That’s a big shift from previous decades, when goods-producing categories tended to suffer the most losses.

In the U.S., for example, department stores employ 25 times more workers than coal mining companies. And as customers increasingly purchased goods via the internet, average employment in the first four months of 2017 was down 26,800 from the same period a year earlier, against just 2,800 job losses in coal.

The effect on labor markets of free-trade agreements and increased immigration has already caused significant political upheaval, as the resurgence of populism in the U.S. and Europe demonstrates. But some economists believe that the world is on the cusp of much bigger change, on the scale of the revolution brought about by industrialization in the 18th and 19th centuries. Researchers at the University of Oxford estimate that nearly half of all U.S. jobs may be at risk in the coming decades, with lower-paid occupations among the most vulnerable.

What jobs will today's kids actually have twenty years from now?  Odds are very good the answer will be "they won't have one."  Doctors, dentists, and CEOs will still be with America for decades, but any job that requires say, analysis, repetitive motion, or lots of math?  Kiss it goodbye.  Bookkeepers, actuaries, insurance underwriters, loan officers, and short-order cooks?  Not going to be a lot of those a couple decades from now.  If your job involves a computer and a phone, and you never meet face to face with anyone, I've got bad, bad news for you.

It's going to be a mess for the rest of my lifetime, and probably that of your kid's lifetime as well.

Russian To Judgment, Con't

As I've been saying for a while, Special Counsel Robert Mueller's investigation into Trump and Russia has three components: one, possible collusion with Russian hackers to damage our elections, two, long-time money laundering through Russian firms, and three, obstruction of justice in attempting to cover up one and two.

It's that second one, the money laundering, where we have the most evidence so far.  Tim O'Brien at Bloomberg covers this angle of the story, and it's very grim for Team Trump.

Trump has repeatedly labeled Comey's and Mueller's investigations "witch hunts," and his lawyers have said that the last decade of his tax returns (which the president has declined to release) would show that he had no income or loans from Russian sources. In May, Trump told NBC that he has no property or investments in Russia. "I am not involved in Russia," he said. 
But that doesn't address national security and other problems that might arise for the president if Russia is involved in Trump, either through potentially compromising U.S. business relationships or through funds that flowed into his wallet years ago. In that context, a troubling history of Trump's dealings with Russians exists outside of Russia: in a dormant real-estate development firm, the Bayrock Group, which once operated just two floors beneath the president's own office in Trump Tower. 
Bayrock partnered with the future president and his two eldest children, Donald Jr. and Ivanka, on a series of real-estate deals between 2002 and about 2011, the most prominent being the troubled Trump Soho hotel and condominium in Manhattan. 
During the years that Bayrock and Trump did deals together, the company was also a bridge between murky European funding and a number of projects in the U.S. to which the president once lent his name in exchange for handsome fees. Icelandic banks that dealt with Bayrock, for example, were easy marks for money launderers and foreign influence, according to interviews with government investigators, legislators, and others in Reykjavik, Brussels, Paris and London. Trump testified under oath in a 2007 deposition that Bayrock brought Russian investors to his Trump Tower office to discuss deals in Moscow, and said he was pondering investing there. 
"It's ridiculous that I wouldn't be investing in Russia," Trump said in that deposition. "Russia is one of the hottest places in the world for investment." 
One of Bayrock's principals was a career criminal named Felix Sater who had ties to Russian and American organized crime groups. Before linking up with the company and with Trump, he had worked as a mob informant for the U.S. government, fled to Moscow to avoid criminal charges while boasting of his KGB and Kremlin contacts there, and had gone to prison for slashing apart another man’s face with a broken cocktail glass. 
In a series of interviews and a lawsuit, a former Bayrock insider, Jody Kriss, claims that he eventually departed from the firm because he became convinced that Bayrock was actually a front for money laundering. 
Kriss has sued Bayrock, alleging that in addition to laundering money, the Bayrock team also skimmed cash from the operation, dodged taxes and cheated him out of millions of dollars. Sater and others at Bayrock would not comment for this column; in court documents they have contested Kriss's charges and describe him, essentially, as a disgruntled employee trying to shake them down.

These are the guys Trump has worked with for years, and now he's pretending he never did.  What sort of leverage Bayrock -- and by logic, Russia -- now has on him, well, I hope Mueller gets to the bottom of all this and soon.  That Bayrock to Sater to Putin line is blood red, emphasis on blood.

Only fitting that Trump is caught up in all this.

The Senate GOP Trumpcare Bill Is Awful Too

As widely expected, the Senate Republican version of Trumpcare is also a raging dumpster fire that will kick tens of millions off their current insurance and wreck the market for tens of millions more. In several ways it may actually be worse than the House GOP version of the bill.

Senate leaders on Wednesday were putting the final touches on legislation that would reshape a big piece of the U.S. health-care system by dramatically rolling back Medicaid while easing the impact on Americans who stand to lose coverage under a new bill. 
A discussion draft circulating Wednesday afternoon among aides and lobbyists would roll back the Affordable Care Act’s taxes, phase down its Medicaid expansion, rejigger its subsidies, give states wider latitude in opting out of its regulations and eliminate federal funding for Planned Parenthood
The bill largely mirrors the House measure that narrowly passed last month but with some significant changes aimed at pleasing moderates. While the House legislation tied federal insurance subsidies to age, the Senate bill would link them to income, as the ACA does. The Senate proposal cuts off Medicaid expansion more gradually than the House bill,\ but would enact deeper long-term cuts to the health-care program for low-income Americans. It also removes language restricting federally subsidized health plans from covering abortions, which may have run afoul of complex budget rules. 
Senate Majority Leader Mitch McConnell (R-Ky.) intends to present the draft to wary GOP senators at a meeting Thursday morning. McConnell has vowed to hold a vote before senators go home for the July 4 recess, but he is still seeking the 50 votes necessary to pass the major legislation under arcane budget rules. A handful of senators, from conservatives to moderates, are by no means persuaded that they can vote for the emerging measure.

Aides stress that the GOP plan is likely to undergo more changes to garner the 50 votes Republicans need to pass it. Moderate senators are concerned about cutting off coverage too quickly for those who gained it under the ACA, also known as Obamacare, while conservatives don’t want to leave big parts of the ACA in place.

So it wouldn't be as stridently anti-women as the House version, but it would make deeper cuts to Medicaid over a longer period of time, resulting in even more long-term damage.  At this point calling your local Senate office is a really smart idea, because if this passes, tens of millions of Americans are going to lose coverage outright, will be unable to get new coverage thanks to "pre-existing conditions" and millions more will be locked out by lifetime or annual limits on treatments on group plans.

In other words, we'll be back to the bad old days of the Bush era, only with Medicaid block grants and one in five Americans not having insurance.

And believe me, my two Senators will absolutely vote to take insurance from half a million here in Kentucky and won't lose a wink of sleep.  Your state may fare better, so make those phone calls.


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