Reinventing the Gas Station

Jun 28, 2019   //   by Bruce Mason   //   Weekly Market Update  //  No Comments

Only seven days into Summer and the doldrums have officially set in.  Markets are taking a wait-and-see attitude ahead of earnings announcements coming in the next few weeks.  Expectations are for moderating growth and stable guidance.  As always, those companies meeting or beating expectations should be fine.  However, with the heightened level of trade uncertainty, we might experience more volatility that usual this earnings season.

A large part of this week’s lassitude is that investors are waiting for the outcome of President Trump’s meeting with President Xi on Saturday.  Some have called it a “drive-by” meeting in the sense that not much is expected to be accomplished other than an extension of trade negotiations to the end of this year.  In a sense, that would be a victory.  In recent weeks, the President has threatened adding tariffs on an additional $300 billion of Chinese products, essentially taxing everything coming into the United States from China.  Delaying further tariffs will be a win, and should give both countries time to hammer out an agreement over the next six months.

In company news, Boeing can’t seem to catch a break.  While the company is in talks to reimburse airlines for the grounding of the 737 Max since March, a pilot’s class-action lawsuit, and liability over the two crashes earlier this year, it was announced the FAA has discovered another “potential risk” in the plane’s software that will likely ground the plan for longer than expected.  Talking about breaks, Citigroup is breaking with tradition and rolling back credit card perks on many, if not most, of its credit cards.  Among those perks being eliminated are price-protection guarantees, free trip insurance, and car-rental and lost-baggage insurance.  The company claims these rewards saw low utilization rates.  If you are a member of Costco and signed up for the Citi Costco Visa Card, this applies to you too.

If you have been car shopping lately, you might have experienced sticker shock.  The average price of a “light vehicle” (read: not a truck) today is $37,500.  What may be even more shocking is the average price of a full-size pickup truck is $48,000 as of last year which is a 20% increase in just the last five years.  Considering the acceleration of automotive pricing, I was surprised when I read this week that General Motors is eyeing the first $100,000 pickup truck.  It is in the process of rolling out a new version of its heavy-duty Chevy Silverado that could become the first to list for six-figures.  Ford’s Limited-Edition F-Series Super Duty truck can run at $95,000 when fully loaded.  With large margins, and a consumer willing to pay for the creature comforts, it is no wonder Ford and GM are pushing the boundaries with pickup trucks.

In closing, I often talk about ways in which the world is changing or has changed.  As people have become busier over time, convenience has grown.  For example, twenty years ago you might have laughed if I suggested a food delivery service like DoorDash or Grubhub.  So keep an open mind when I tell you the latest service being marketed as a convenience: a gas station on wheels.  Booster, a 4-year old company, delivers millions of gallons per month in twenty cities, using purple-branded trucks to fill up tanks on corporate campuses.  Fortune 500 companies such as eBay, HP, and Cisco user Booster to provide a fueling perk for employees.  Users can request gas from an app on their smartphone and a Booster truck shows up soon after to refuel the vehicle.  The kicker is the price paid is comparable to prices offered at local gas stations, and in many cases, is even less expensive because of its low overhead and lack of physical locations.  The day will soon be here where you can hit a button on our phone and the gas station will come to you.  That day is already here for some.  Now you know.

June 28, 2019

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