With the U.S. dollar declining and the Dow trading well above 18,000, while gold, below is a key piece which highlights how Google and Apple are looking to transform our world.
March 23 (King World News) – Is The Driverless Car Really About Access To The Driver? – Nicholas Colas, the Chief Market Strategist at Convergex is quite an interesting guy. He may think outside the box more often and in more different ways than anyone else on Wall Street. His daily note is rarely, if ever, on a conventional Wall Street topic.
The reason I bring Nick up is as backdrop to a piece he wrote a few weeks back. In it he explored why two top technology companies – Google and Apple would separately set out to build a driverless car from scratch.
In typical Colas fashion, Nick presented the case as if it were an M&A pitch-book from an investment banker. Here's how Nick laid it out in the summary of his report:
Summary: Would a major technology company consider buying a global automobile manufacturer? We don’t see how they can avoid it. At stake is “The Last Hour” of growth available to the tech sector – the daily time most Americans spend alone commuting in their cars. With both Google and Apple – and their substantial corporate ecosystems – clearly focused on the self-driving car it is just a matter of time before you hear that any one of the world’s major automakers are attractive takeover candidates for Silicon Valley’s biggest and brightest.
There are impediments, to be sure, including the challenges of a deeply cyclical business, regulation, and long standing cultural differences. But if the tech sector is serious about entering the car business, an acquisition of an automaker is actually the most efficient way to create a first mover advantage. Ladies and gentlemen… Start your tech-enabled engines!
Colas goes on to define the rich target of the "Final Hour":
The vast majority – some 86% – of Americans commute to work in a car. Only 10% car pool and a mere 5% use mass transit. And no, Uber/Lyft/any other ride sharing company isn’t ever going to change that. There are 120 million drivers on the roads every weekday morning; you would need 30 million third-party drivers to get them all to work on time. And who is going to shuttle them all home again, or to a child’s soccer game, or to the supermarket?
Nick repeats the potential of capturing that final hour target as he wraps up his "pitch":
The average American’s daily commute is 25 minutes each way, and that is essentially the tech industry’s “Final hour” of potential growth. All those drivers can’t use anything but the most rudimentary online tools during that time. So how does the technology industry insert itself into the Final Hour? Connected cars, which can alert other vehicles to traffic conditions, weather and the like is one partial solution. It does not solve for how you claw back the time spent commuting for other tech-friendly uses, like streaming movies or social networking.
Developing a driverless car in order to interact with millions of commuters for a nearly exclusive hour a day? Sound preposterous? No more preposterous than if I told you ten years ago that, in order to invent yet one more interactive screen, they would teach us to "look" at our phones and not just listen to them. The future's coming.
Coming Attractions – Fed Vice Chair Stanley Fischer will speak Monday (today). I believe it may be a critically important presentation.
Consensus – The dollar may dominate most assets as it did for much of last week. Depending on the level of candor, the Fischer speech could be a major influence or boilerplate. Stick with the drill – stay wary, alert, and very, very nimble.
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