Inflation, government spending, immigration, jobs, and fossil fuels are just some of the areas that are motivating partisan politics as we enter 2024. Both sides are adamant that their approach is correct. Is there a common ground? 

 

In this land of deep divides, neither side seems willing to listen or understand the position of those who disagree. Today, I am giving my two cents on explaining why former President Trump's supporters believe their positions are best for the country and them. The hope is by deepening your understanding of the "whys," the willingness to compromise might also be enhanced.

 

The former president has the backing of 67 percent of registered Republicans, 71 percent of conservatives, and 55 percent of those who do not have a college degree, according to a recent CNN poll. By overwhelming numbers, they believe Trump will do a much better job running the economy. Given those numbers, I ask myself, how can so many people be wrong? What motivates these pro-Trump voters on the economic front?

 

For years, I have been writing about the increasing inequality in this country. For decades, as governments and politicians lauded the benefits of global trade, American jobs were exported overseas. The country's middle class was whittled down. The Rust Belt grew wider and the divide between the haves and have-nots became frightening and apparent to everyone. I warned that the consequences of this trend would lead to great change.

 

Enter Donald Trump and the advent of populism.

 

Liberals tend to dismiss Trumper's stance on many issues as not worth discussing. Starting with their leader, Trumpers are enmeshed in a tangle of racism, bigotry, outright lies, and conspiracy theories. Their anti-immigration position, for example, is the result of racism, even though many who back that position are black, Asian, and Latino.

 

Was the anti-immigration movement simply motivated by a desire to preserve American jobs while reducing crime? Over the last several years, as immigration policies have been tightened by both the Trump and the Biden administrations, the unemployment rate has dropped to historical levels. Whether that trend is coincidental or connected is immaterial to more than half of those Trump supporters without college degrees. To them, it is simple — immigration down, employment up.

 

Corporate America bemoans this trend. Scarce labor has driven up wages, and jobs for even the least educated have been plentiful. And it is not just for white people. More job opportunities for minorities, women overall, and single mothers have been climbing as have jobs for teenagers. All of them have been beneficiaries of the tight job market.

 

Better still, due to labor shortages, companies are even reconsidering college degree requirements in certain positions. So, while the 10 percent of the highest income earners may complain about the higher costs of nannies and gardeners, meat packers, farm workers, drivers, and other manual laborers can now buy gas and feed their families.

 

There are other areas where Trump supporters have major beef with the economy. Inflation, the Federal budget, and fossil fuels come to mind. In my next column, I will examine those areas and more. If this column has raised your ire and your fingers are just twitching to send in a rebuttal buttressed by the facts, you are missing the point. 

 

We need to know what drives the differences between us. Today, your facts mean nothing or everything depending on the source and who is listening. Take the time to understand the other side and find common ground. Otherwise, we are all on a train to nowhere and none of us will like the last stop.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

Bell bottoms, Cabbage Patch dolls, pet rocks, Disney popcorn buckets — the list goes on. This year it is the Stanley Cup Quencher in a rainbow of colors. Fads are part of our society. They are different than trends or cults and most have a limited life.

 

There are fads everywhere you look. Fashion, diets, music, clothes, and especially toys. Who remembers the Power Rangers? They seem to come out of nowhere, blaze a path of widespread adaption by multitudes of people, and then crash into sudden decline seemingly overnight.

 

Take the Stanley Cup for example. I had no idea that the thermos company of my youth had transformed its reliable "hammer tone" green-bodied container of my working days into a plethora of sippy cups that are now the rage in America.

 

I credit a local story by Meg Britton-Mehlisch in the Berkshire Eagle this past weekend, that revealed how this venerable 110-year product was not only invented by William Stanley Jr. but was manufactured in Great Barrington just a stone's throw from where I sit. It is also true that when the inventor announced his invention back then, he did so through that very same newspaper in 1915!

 

It was the first vacuum-insulated steel bottle and it found its way into the hands of mainly working men for the next century.

 

But I digress. Fads, as I have discovered, can be driven by several factors. Social influence, marketing, novelty, word of mouth, and in this age of TikTok, the internet. In the case of the Stanley Cup, it seems the product took off after it was profiled in the New York Times. From there, social media influencers on a site called #WaterTok, that focuses on hydration, went bonkers over the cup. After all, who wouldn't want another plastic water cup that not only fits in your car's cup holder but features a straw and a handle in 26 glorious colors?

 

By January 2024, videos of what is now called an "adult sippy cup" have been viewed over 201.4 million times on TikTok. Stanley fans, of which many appear to be women, have been called a sisterhood. Marketers and advertising firms jumped on the bandwagon pitching the product to women as not only a sustainable product, but one that can be part of a woman's day-to-day accessories, thus the number of colors offered. As such, it is being promoted as a lifestyle essential on many social media sites.

 

"Limited" is a keyword that marketers use time and time again when promoting fads. Not only does it convey a feeling of exclusivity and urgency but usually triggers that fear of missing out on a product. It is what causes fistfights among consumers. 

 

The Stanley Quencher certainly has had its share of that kind of behavior.    

 

And what fad would not be complete without a growing interest in collecting these $45 reusable water bottles? The Winter Pink Starbucks Collaboration cup is a hot item. Collectors are selling some hard-to-get models like that one for $400 on the resell market. Others command two and three times the purchase price, which is nothing new in the world of crazes. The trick is not to be caught with inventory when the worm turns and the fad fades.

 

Fads can be fun and sometimes generate a sense of community. They can also trigger new ideas and innovations at times. But they can also lead to overconsumption and waste. The idea behind reusable water bottles 15 years ago was to cut down on all those plastic water bottles we were dumping in the trash. Today, there are hundreds of different models and colors of water bottles sold by dozens of companies for a product that was supposed to be a once-in-a-lifetime sustainable purchase.

 

I do wish the Stanley company well in Fad Land. It just so happens that I have a black and silver, two-stage lid, one quart, Stanley thermos in mint condition for sale. Do I hear $100, $150, or maybe trade for the Winter Pink Starbucks cup? 

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

There are two shortcuts to moving goods around the world, the Suez Canal and the Panama Canal. Drought has more than halved the traffic able to sail through the Panama Canal that connects the Atlantic and Pacific Oceans. That was bad enough, but the alternative shortcut around the world has all but shut down.

 

This is a serious matter since maritime transport accounts for 80 percent of global trade. Under normal circumstances, the Panama Canal would account for about 3 percent of that global trade and 46 percent of container traffic moving from northeast Asia to the East Coast of the U.S. On average, more than 13,000 vessels passed through the Panama Canal per year — until last year.

 

Climate change, and now the El Nino climate pattern, has sabotaged Panama's ability to keep the system of water locks and infrastructure functioning properly. What is worse, Panama's dry season began last month and will run into April 2024. That is draining even more water from the locks. As such, the prolonged waiting times and capacity limitations that have plagued the man-made 40-mile canal will not be alleviated anytime soon.

 

This has already delayed American exports of grains bound for East Asia. In the case of Japan, U.S. corn exports account for more than 65 percent of that country's needs and 71 percent of its soybean imports. It is only a matter of time before these delays begin impacting the Japanese consumer. The Panama bottlenecks have also increased costs. Shippers have bid up the price for a transport slot through the canal as waiting times lengthen. A slot can now cost anywhere from $1.4 million to $2 million. That effectively raises the price of transporting grain to Japan from the U.S. by 50 percent. Charter rates have also increased by about 30 percent as well.

 

Given this background, is it any wonder that shippers had decided to opt for the Suez Canal, instead, even though it adds about 18 days to the trip? And that is where the shippers found themselves between a rock and a hard place.

 

The Israeli/Hamas war started in October 2023. It did not take long for those aligned with Hamas to begin retaliating against Israel and its allies. Over the border, missiles and drones failed to avoid Israel's air defense system. In late November 2023, the Houthi rebels found an easier target. Armed attacks against defenseless container ships in the Red Sea were launched by the Houthi Militia. To date, the Iran-backed militia that controls northern Yemen is targeting all shipping, some with not even a remote connection to Israel. 

 

For those who are unaware, the Red Sea is a narrow strip of water, west of Sudan and Saudi Arabia and Yemen to the east. At the northern end of the sea sits the Suez Canal. At the southern end lies a strait, called the Gate of Tears, which borders Yemen. It is where the Houthis have been targeting many of the tankers and container ships with increasing ferocity.

 

This waterway is a crucial piece of the world's supply chain. Up to 15 percent of the world's shipping sails through the Suez Canal. It is the most direct ocean route between Asia and Europe. And now it has become part of what appears to be the tip of a widening conflict in the Middle East.

 

In the maritime industry, shipping companies can buy war risk insurance. Almost overnight, the premium on this kind of insurance went from 0.02 percent to 0.7 percent of the total value of the ship and its cargo. Container ships can easily carry hundreds of millions of dollars' worth of cargo, so insurance fees alone are now in the millions. Shippers are now passing on those extra costs by charging higher fees for transporting cargo in that area. Average costs to ship containers have doubled in the last two months.

 

As more and more attacks occurred, shipping companies began rerouting vessels to avoid the area altogether. For those vessels who were already on a detour from using the Panama Canal, costs are continuing to mount. The new alternative route has ships going around the Horn of Africa, and then back into the Mediterranean. That route can tack on an extra 14-15 days to a trip already delayed by avoiding the Panama Canal. 

 

The costs of extra fuel, labor, and penalties for late deliveries must now be added to already sky-high shipping fees. Europe and Asia are feeling the brunt of this extra cost. But in the end, I suspect that given the interconnectedness of global supply lines, it should be only a question of time before the U.S. is also whacked from this new threat to global supply chains.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

The proliferation of streaming services over the past few years appears to have reversed course. Price increases, the introduction of advertising, and fewer hit shows have consumers finally looking at the number of streaming services they are paying for.

 

Wall Street has also lost its love affair with streaming companies, except for Netflix. That company continues to benefit from its competitors' woes. During COVID, when Americans were trapped at home, they spent hours watching television. Streaming services could do no wrong.

 

However, times change, and the couch potato behavior is disappearing. As it does, the willingness to pay higher prices for something few are watching is also declining. Throw in the fact that due to the writers and actors strikes last year, there will be fewer streaming products available, and you have a ready-made excuse to pare back on streaming services.

 

From Wall Street's perspective, there are simply too many services competing for your dollars. The major players led by Netflix include Disney+, Hulu, Paramount+, Max, Starz, Peacock, Discovery+ and Apple TV+ are facing lower profitability or no profits at all. Few of these streamers have developed the scale necessary to achieve profitability.

 

There are two main options to turn around profitability — increase prices, add advertising, or merge with other streamers. Over the past several months, most of these services announced price increases. In addition, levels of pricing were offered, if you want to put up with advertising. Those who do can pay a lower price.

 

Starting at the end of this month, for example, Amazon Prime Video will be charging viewers another $2.99 per month. If you don't pay the extra fee, you will be forced to watch advertising interspersed within all your shows. Disney, Netflix, Max, Apple+, and others have raised prices, and some have introduced advertising as well.

 

These moves have had a predictable knee-jerk reaction from their audience. Consumers who didn't care suddenly became interested in discovering exactly how much they were paying and for what services.

 

Back in June 2022, I pointed out in a column "Streaming Come of Age," that almost a third of U.S. consumers underestimated how much they spend on subscriptions by $100 to $199 per month, according to a study by market research firm, C+R Research. It was also true that many people (42 percent) have forgotten that they are paying for a streaming service that they no longer use. That appears to be changing. In the past two years according to Antenna, which studies subscription services, about 25 percent of consumers who had subscribed to the major streaming services have dropped three or more of these services.

 

Some consumers, like my brother-in-law, who is an avid sports fan, are debating whether cutting cable or cutting streamers is the cheapest way to go. This is surprising since streaming services have been the beneficiary of the recent trend of cutting cable services. By the end of 2023, over half of U.S. consumers (54.4 percent) have dropped cable TV and traditional Pay-TV services, according to Insider Intelligence.

 

For some streamers that lack the scale needed to achieve profitability, the only course that makes sense is merger or acquisition. Paramount, for example, is in discussions with Warner Brothers Discovery to combine forces. Rumors abound that other streamers are going down the same path. Disney+ is acquiring the remaining 33 percent stake in Hulu it does not already own from Comcast.

 

Merging two unprofitable streaming services into a single service might improve scale, but probably not enough to guarantee profitability. Subscribers of both services could save money, but beyond that, I can't see how the costs of producing content would change. 

 

It may be that we are on the verge of a "back to the future" moment where bundles of streaming services are offered at a discounted price as they were on cable. What bothers me more is that the trend toward reinstating advertising in streaming services takes us back to a time when audiences were forced to watch hours of mindless drivel on cable. I was saved with the advent of DVR which allowed fast-forwarding through ads. It is not available on streaming. That puts most of us between a rock and a hard place. Who knows, it may make cable a better option for many once again.  

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

 

Numerous studies have predicted that climate change will be the death knoll of skiing. That may be true, but year after year, ski resorts large and small seem to eke out one difficult season after another. And not every year has been a disaster.

 

No one is denying that the weather is changing, and winters are getting warmer. This week, which kicks off the 2023-2024 ski season, for example, most of the country is experiencing warm weather, disappointing skiers and resorts alike in the Midwest and New England.  And yet, during the 2022-2023 ski season, there had been mammoth snowfalls in some areas of the country. Climate change can do that, dumping extraordinary amounts of precipitation in some places while causing drought in others.

 

Record snowfall totals at western ski areas, for example, contributed to the number of skier visits, while overall average snowfall at ski areas across the country totaled 224 inches. That was a 30 percent increase above the 10-year average, which contributed to an increase of six days for the season, above the average of 116 days. 

 

New England winters, where I live, have been warming faster than the national average. Over the past 50 years, the temperatures have increased by 4.5 degrees and as the weather gets warmer, nature is producing less snow. For the entirety of New England, January 2023 was the warmest it has been since record-keeping began in 1895. New Hampshire had its third warmest winter on record.

 

As such, snowmaking has become the saving grace for the ski industry. Ski resorts have become increasingly reliant on snowmaking to combat climate change. Today, more than 90 percent of resorts depend on some system of artificial snow production.

 

Some may be surprised to know that investment by the ski industry hit a record high last year at $812.4 million and is expected to be even higher this season. The lion's share of spending was on upgrading lifts, but snowmaking has also taken an increasing share of expenditures. Climate change has made that a vital area for continued improvement. Overall, resorts reinvested $26 per skier visit back into their operations last year.

 

As the winter temperatures get warmer, companies are coming up with technology to counter the temperature changes. Back in the day, making snow required temperatures around 14 to 10 degrees below freezing. Today, new snow-making machines can make snow with temperatures as high as 80 degrees — if you are willing to spend the money to do so. Improvements in snow guns, for example, can make copious amounts of snow much faster, and at higher temperatures. Unfortunately, snowmaking is an energy-expensive process, especially in compressing the air needed to spread the artificial snow.

 

Most local utilities limit the amount of energy resorts can consume. However, both hardware and software breakthroughs have allowed energy cost-savings and efficiencies in the snowmaking systems that encompass everything from hydrants to fan snowmakers, and computer systems that can automate and analyze the entire process. 

 

One of the challenges many resorts face is drought in many regions. The amount of water needed to make snow doesn't change. Areas that are experiencing decreases in their water supplies due to climate change or resort expansion are scrambling to come up with ways to conserve and/or increase their water supply. 

 

Last season (2022-2023), the $50 billion U.S. ski industry saw an estimated 65.4 million skiers and snowboard riders hit the slopes. That was a jump of almost 5 million skier visits from the previous season, according to the National Ski Areas Association.  Factors that boosted industry performance were heavy snowfall in ski areas on the Pacific Southwest and the Rockies. The number of working ski areas also increased a bit from 473 to 481.

 

In 2024, the arrival of the El Nino cycle is set to bring a warm dry winter to this part of the world. The impact of climate change colliding with the El Nino event has a 54 percent chance of being one of the top five events since 1950, according to the U.S. National Oceanic and Atmospheric Administration. Mild and wet with a cooler drier end to winter, is the NOAA prediction. However, The Old Farmer's Almanac is predicting a banner ski season for 2024. 

 

No matter what forecast proves accurate, snowmaking will continue to be the difference between a good and a bad year for the ski industry overall.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.