Carnegie Market Blog

Brent Luce

Brent Luce
Brent Luce Senior Portfolio Manager Cleveland, OH. Brent serves Carnegie Investment Counsel as Senior Portfolio Manager. Brent manages custom portfolios for select clients and is an integral part of Carnegie’s investment selection and portfolio structuring processes. He is also author of the “Carnegie Market Blog”. Email Brent at bluce@carnegieinvest.com.

Recent Posts

Inflation and the Biggest Product Launch Ever

Posted by Brent Luce on Apr 7, 2016 3:49:21 PM

Biggest Product Launch Ever

Last week, Tesla started taking “reservations” for the new Tesla Model 3.  The Model 3 is the new Tesla for the masses – the electric car that Tesla CEO Elon Musk believes will revolutionize the auto industry.  It turns out that in the first week, as evidenced by the lines at Tesla dealers you may have seen in the media, Tesla received reservations for 325,000 model 3s.  This number shattered expectations and represents $14 billion in sales, making it the biggest product launch in history, at least according to Elon Musk.  Put another way, the rest of the industry sold 90,000 units in the U.S. in 2015.   Maybe they need to start applying surge pricing on Teslas to balance supply and demand…haha.  What is unknown at this point is how many of these reservations will convert to sales and how much difficulty Tesla will have in delivering all of these vehicles.  MORE:  Everything you want to know about the Tesla Model 3 

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The Sharing Economy is here to stay

Posted by Brent Luce on Mar 30, 2016 4:33:30 PM

Sharing Economy

Over the Easter holiday, my family and I took a short trip to Southern California.  I have been a proponent of the “sharing economy” and am a believer that it is changing the landscape in a number of industries.  In hindsight, I realized that we partook in the “sharing economy” for many of the details of our trip:

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Dividend Stock Bubble?

Posted by Brent Luce on Mar 17, 2016 3:36:45 PM

Happy St. Patrick’s Day

Today is a big day in Cleveland, Ohio.  Our St. Patrick’s day celebration, which started in 1867, is one of the oldest and largest in the country with over 500,000 people all converging on downtown Cleveland.  For those taking notes, 500,000 is now more than the population of Cleveland proper.

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Synchronized Bottom?

Posted by Brent Luce on Mar 9, 2016 3:47:11 PM

Happy Anniversary

 On this day seven years ago, one of the fiercest bear markets in history came to an end.  Here are some statistics on the bull market that started that day:

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Is Steel Bouncing Back?

Posted by Brent Luce on Mar 2, 2016 3:31:02 PM

U.S. Steel Production

 U.S. steel production has jumped this year.  In talking to some of my contacts in the steel industry, the comments range from “things are still dismal” to “there is a ray of hope” to “there are pockets of strength and weakness, depending on which type of steel you are talking about.”  While the recent bounce back is nice, the chart below illuminates the fact that steel production in the U.S. is still trending down and is still far below 2008 levels (before the bottom fell out).  Not coincidentally, as you can see in the second chart, steel stocks have bounced over 50% from their recent lows.  MORE:  U.S. Steel Imports Drop Sharply in January

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Kuwait on the Prairie

Posted by Brent Luce on Feb 23, 2016 3:22:02 PM

Recession?

Every day, I hear the constant debate about whether the U.S. is going into a recession.  If it does happen, it will be the most telegraphed recession in history.  Interestingly, four states are already in a recession – Wyoming, South Dakota, Alaska and West Virginia.  This is not surprising, as all of these states are highly exposed to energy in one form or another.  Read More: Recession Already Reality in Spots.

The pockets of recession make me think of Williston, North Dakota.  Williston is ground zero for the fracking industry and the population was exploding until the bottom fell out of oil prices.  It was such a phenomenon that several documentaries focused on the new boomtown and the dark side that its unprecedented growth had brought with it.  Today, the town has an emptier feeling.  Read more here about the decline from The New York Times.  The image below illuminates how hot the North Dakota shale oil boom had become.  This is a satellite image of the U.S. at nighttime in 2013.  For the most part, this map makes a lot of sense; all of the major cities are bright spots and most of the west is dark.  BUT…What is that huge city that is bigger than L.A. and Chicago in the middle of prairieland?  It turns out that this is the light from the Bakken oil fields.  

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Facebook is Now Bigger than the Largest Country on Earth

Posted by Brent Luce on Feb 12, 2016 3:36:54 PM

Facebook is Everywhere

Many people have a hard time believing that Facebook is now almost a $300 billion (by market capitalization) company.  I happened to be looking at the diagram below on Ford Motor Co., which shows their top ten quantified customers and suppliers.  Fully expecting to see companies like Lear, Johnson Controls, steelmakers and other obvious choices, I was surprised to see Facebook.  The fact that Facebook shows up as one of Ford Motor Company’s largest quantified vendors is a testament to what an incredible marketing engine Facebook is and that companies are willing to pay for that exposure.  MORE:  Facebook is Now Bigger than the Largest Country on Earth


This of course leads to the next question, which is “What does this diagram look like with Facebook in the middle?”—Interestingly, their largest customers are a “who’s who” of massive consumer-related companies:

 

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There’s a New Sheriff in Town

Posted by Brent Luce on Feb 4, 2016 4:03:56 PM

New Sheriff

My plan was to talk about how there is a “New Sheriff in Town” as Google, aka Alphabet, has taken over as the most valuable (by market cap) company in the world.  Unfortunately, this state only lasted a day and Apple has taken back the crown, at least temporarily.  The chart below shows GE, Exxon Mobil, Apple and Google since the beginning of the century.  A mere fifteen years ago, Google was not even a public company and Apple was barely surviving.  They have since surpassed two companies that for generations were considered the biggest and best companies on the planet.  I wonder what a chart like this will look like in another 15 years?  RELATED:  The Rise and Fall of the Largest Corporation in History 

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Restaurants are the New Retail

Posted by Brent Luce on Jan 28, 2016 3:42:42 PM

Restaurants are the New Retail

I can’t speak for other cities, but in Cleveland there has been an  influx of new and great   It occurs to me that restaurants are becoming the new retail.  In the past, people would go shopping at the mall and much of the fun was about the experience of going to the mall, not necessarily about buying things.  Now, people are making more purchases online and malls seem to be dying.  Instead of going to the mall, however, people are spending their free time on culinary experiences.  People are thinking of going out to eat as more of a social experience than just a way to fill their stomachs. As you can see below, restaurant sales now exceed grocery store sales for the  first time ever.  The bottom chart shows that over the past year, restaurant stocks have significantly outperformed the market, while department stores have significantly underperformed.  Is this a short-term coincidence or a reflection of a long-term trend shifting from traditional retail and toward culinary experiences?  Related:  Celebrity Chefs Feed Cleveland Real Estate

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Oil, Texas Tea and Black Gold

Posted by Brent Luce on Jan 21, 2016 4:08:20 PM

Oil Prices

Everyone and their mother (and grandmothers) is talking about oil prices.  It has become THE central topic related to the financial markets.   Two years ago, Wall Street gurus were calling for $120 oil, seeing almost nothing that could hurt oil prices.  Today, these same people are calling for oil to drop to $20 (I have seen as low as $10), with no end in sight and no prospects for higher prices.  This behavior is very typical of market and human behavior.  Anyhow, there are a couple of topics below related to oil, so I thought I would start with a long-term chart of oil prices, including the inflation adjusted price, which is not shown in most charts.  As you can see, real oil prices are as low as they have been in at least 32 years. 

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