Wednesday's Market Minute: Time Machine, Part II

There is a theoretical American future in which physical labor plays a negligible role in the economy. Companies build high-margin, efficiency-enhancing services, and automation replaces repetitive manufacturing roles. Wealth is determined not just by trade but also by investment in these services and businesses. Some style of universal basic income establishes a living wage that can be the foundation for wealth if invested in the right services and products.

For example, someone uses his or her government check to invest in a tech company using AI to replace assembly-line work at a factory in – wait a minute – oh wait, that’s right. We are already here! The U.S. government is firing off so much stimulus and unemployment support that Americans have more disposable income than before the virus, and what are many doing with it? Plowing it into the market, buying stocks like NVIDIA Corporation NVDA, Tesla Motors Inc TSLA and all the rest. How long this immediate boost to the economy sustains will depend on how much the government continues to support the unemployed.

Still, right now we are getting a glimpse of the future. Quarantine measures forced tech adoption forward. The FAANG suite is back at all-time highs. There is not a cloud stock not at highs. In this context, nothing right now looks particularly abnormal or egregious in the market. While the continued reopening of the economy will be crucial to long-term equity strength, investors have been reminded once more that betting against world-changing technological innovation is a losing bet. Covid-19 has forced an effective economic time machine, and the future looks bright.

Photo by Patrick Weissenberger on Unsplash