🐂 U.S. vs Google

Markets

While all three major indexes experienced declines last week, there is a notable sector showing signs of growth, and that's the cannabis industry. Despite facing substantial year-to-date losses, cannabis stocks such as Canopy Growth have witnessed a notable upturn in the past week. This surge can be attributed to recent government initiatives aimed at enhancing financial transparency within the sector. Specifically, Senate Banking Chair Sherrod Brown stated last Wednesday that a consensus on cannabis banking legislation was on the horizon..

Unions Flex Power When Workers Are in Short Supply

Labor unions are currently flexing their influence in a way not seen for many decades. They have successfully negotiated substantial pay hikes and improved benefits in industries grappling with severe worker shortages.

Airlines, shipping companies, and ports, all struggling to recruit much-needed employees as the economy recovers from the pandemic, have recently agreed to significant salary increases with their respective unions.

The question remains whether other employers, who don't face the same hiring challenges, will follow suit. For instance, car manufacturers are dealing with the possibility of strikes from the United Auto Workers (UAW).

In recent developments, American Airlines pilots ratified a contract that will raise wages by over 40% over a four-year period. West Coast dockworkers secured a 32% pay increase through 2028 during the summer. United Parcel Service (UPS) workers, affiliated with the International Brotherhood of Teamsters, reached an agreement that will boost the top hourly pay by 18% over five years. According to UPS's CEO, this deal will result in an average annual pay and benefits package of $170,000 for full-time drivers.

In some instances, the recent gains achieved by unions merely bring their members' compensation in line with the increases that nonunion workers have seen since the pandemic struck the U.S. economy in 2020.

Data from the Labor Department shows that wages and benefits for nonunion workers increased by 15.8% from the end of 2019 through June, compared to a 12.2% gain for unionized workers. While union workers earn more on average, they made up only about 10% of the workforce in 2022, marking a record-low percentage.

The United Auto Workers (UAW) have pushed for a 40% pay increase over four years and a 32-hour workweek in their negotiations.

In the transportation, warehousing, and utilities sectors, the job-openings rate, which reflects labor demand, surpassed the private-sector average in July. This category includes pilots, dockworkers, and truckers.

Tech

The US government takes in Google

When Google was founded 25 years ago, it was a small player in the vast landscape of web search options. Fast forward to today, and Google has captured a staggering 90% share of the search engine market. Whether this monopoly status was achieved through unlawful means is the central issue in an upcoming high-profile antitrust trial.

The trial, known as U.S. et al. v. Google, represents the most significant monopoly case pursued by the U.S. government since 1998 when Microsoft, led by Bill Gates, faced legal action over anti-competitive behavior. The outcome of this trial could potentially disrupt the power dynamics of Silicon Valley, a region already grappling with the profound impact of artificial intelligence.

The government's case against Google centers on the agreements it has with hardware manufacturers like Apple, which result in Google search being the default option on devices like iPhones. The Department of Justice argues that these deals, which are worth billions of dollars annually, constitute an unlawful abuse of Google's monopoly power aimed at stifling competition from rival search engines.

As anyone familiar with behavioral economics understands, it can be quite cumbersome for users to opt out of default settings. For instance, it has been noted that a user of an Android smartphone would need to navigate through 15 steps to set DuckDuckGo as the device's default search engine.

Google, however, contends that its agreements with other tech companies are not anti-competitive because, while it may take a few extra clicks, users are not prevented from choosing an alternative default search engine.

During the 10-week trial, prominent figures from the business world, including Google CEO Sundar Pichai and Apple executives, will provide testimony and insights.

Regardless of the trial's ultimate outcome, whether Google prevails or not, it is unlikely that Pichai will be extending warm wishes to anyone involved once the verdict is delivered. The trial represents a costly distraction that could potentially affect Google's long-term growth prospects. It's akin to trying to be productive with someone closely monitoring your every move.

Politics

Why Biden’s first Vietnam visit was a BFD

During his inaugural visit to Vietnam on Sunday, President Biden received a warm welcome from schoolchildren waving American flags and complimentary remarks from General Secretary Nguyễn Phú Trong, who remarked that Biden appeared not to have aged a day.

Significant transformations have taken place since the Communist Party's triumph in the Vietnam War in 1975, leading to decades of chilly relations. Presently, both nations perceive an opportunity to strengthen their friendship and economic partnership. The United States aims to bolster its connections in Southeast Asia as a counterbalance to China's growing influence in the region. Meanwhile, Vietnam seeks to expand its exports to the US, already its largest export market.

The path to this point: Vietnam has become a global manufacturing hub thanks to economic reforms in the 1990s. As the relationship between the US and China resembles a precarious Jenga tower, American companies have begun shifting their production operations to Vietnam. Corporations such as Apple, Nike, Google, Dell, and Microsoft are either relocating or expanding their presence in Vietnam to reduce their dependence on Chinese factories.

So, it's increasingly likely that you'll come across more products labeled as "Made in Vietnam." According to the Wall Street Journal, annual trade between the US and Vietnam has more than doubled in just five years.

Finance

Japan Has a Long History of Disappointing Investors. Why This Rally Might Be Different

The Japanese stock market has witnessed a substantial surge in performance this year, and investment professionals are cautiously optimistic that these gains could be sustained.

Several factors have contributed to the robust performance of Japanese stocks in 2023. Notable among these are corporate policy changes encouraged by the country's stock exchange, an endorsement from Warren Buffett, and the relatively attractive valuations of Japanese equities. As a result, Japan's Topix index has advanced by 25% as of last Friday, outpacing the S&P 500 (up 16%), the Stoxx Europe 600 (up 7%), and the Shanghai Composite (up less than 1%) during the same period.

It's worth noting that skeptics of this rally point to Japan's history of disappointing investors. Japan, as the world's third-largest economy, has not seen its stock market reach record levels since 1989 when the Berlin Wall fell. Following the burst of the Japanese real estate and financial market bubble, the country endured a prolonged period of economic stagnation in the 1990s and early 2000s, often referred to as Japan's "lost decades."

Nevertheless, current circumstances have sparked optimism among many investors and analysts who believe that Japan might be on a different trajectory this time. The country's economy is experiencing growth, and the persistent deflation that previously kept wages low and hindered corporate investments appears to have receded, with inflation consistently meeting or surpassing the Bank of Japan's 2% target since the previous year.

Foreign investors are taking notice of these developments, with major financial institutions like Goldman Sachs Group and JPMorgan Chase reporting increased interest from clients looking to invest in Japan.

Jeff Atherton, head of Japanese equities at Man GLG, the discretionary investment unit of hedge-fund manager Man Group, described the current Japanese market as potentially the best in decades.

Goldman Sachs's chief Japan equity strategist, Bruce Kirk, believes there is still room for further upside and compares the current excitement around Japan to the period when the late Prime Minister Shinzo Abe initiated the policies that later became known as Abenomics.

Kirk also suggests that if the yen strengthens against the dollar, it could attract more American investors to the Japanese market. A stronger yen would make the returns earned by U.S. investors in Japan more valuable when converted back into dollars.

Real Estate

The Brady Bunch’ House Sells for $3.2 Million

Tina Trahan, a devoted fan of "The Brady Bunch" at the age of 53, has purchased the Los Angeles house that served as the iconic exterior of the Brady family's home on the beloved TV show. The price she paid for the property is $3.2 million, which represents a roughly 9% discount from what the seller, HGTV, originally acquired it for in 2018.

Trahan, known for her passion for historic homes, is the spouse of former HBO chief executive Chris Albrecht. She expressed her genuine affection for "The Brady Bunch," which aired from 1969 to 1974 on ABC, and even found humor in the 1995 film adaptation, "The Brady Bunch Movie."

Her intention for the Studio City residence is to utilize it for fundraising and charitable purposes, turning it into a venue for various events. In her words, she sees the house as akin to a life-sized dollhouse.