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Inside the Market In private, Davos plutocrats are obsessed with using AI to replace workers

A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

I don’t usually feature individual company news ,but Caterpillar Inc.’s huge miss on earnings Monday could have broader economic implications.

Caterpillar’s results, through the construction and mining industries, are highly sensitive to global economic activity,

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“Here’s how the company did compared with what Wall Street expected: Adjusted earnings: $2.55 per share vs. $2.99 per share expected by analysts surveyed by Refinitiv Revenue: $14.34 billion vs. $14.33 billion as expected by analysts surveyed by Refinitiv … Caterpillar’s guidance for 2019 profit was weaker than expected. It said it expects 2019 profit to increase to a range of $11.75 to $12.75 per share. Analysts had expected $12.73 per share.”

“Caterpillar stock skids after the company reports earnings miss” – CNBC

“Caterpillar shares slide 6% after profit falls far short of estimates” – Marketwatch

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The New York Times published an interesting report from Switzerland as global billionaires’ nauseating festival of preening in Davos comes to a close,

“They’ll never admit it in public, but many of your bosses want machines to replace you as soon as possible… All over the world, executives are spending billions of dollars to transform their businesses into lean, digitized, highly automated operations. They crave the fat profit margins automation can deliver, and they see A.I. as a golden ticket to savings, perhaps by letting them whittle departments with thousands of workers down to just a few dozen… IBM’s “cognitive solutions” unit, which uses A.I. to help businesses increase efficiency, has become the company’s second-largest division, posting $5.5 billion in revenue last quarter… “That’s the great dichotomy,” said Ben Pring, the director of the Center for the Future of Work at Cognizant, a technology services firm. “On one hand,” he said, profit-minded executives “absolutely want to automate as much as they can.”On the other hand,” he added, “they’re facing a backlash in civic society.””

“The Hidden Automation Agenda of the Davos Elite” – New York Times

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A BNN Bloomberg report cites Macquarie economist David Doyle (who, to be fair, has been consistently bearish on the domestic growth in recent years) who believes the economy is at a “critical juncture,”

““Canada’s economy, we think, is at this critical juncture, and it’s confronting several headwinds – that includes challenged demographics, low productivity, structural imbalances like the housing situation and our trade deficit… And we see a real absence of growth drivers”… Doyle said areas like manufacturing likely won’t make a comeback to contribute to the country’s economic growth in a meaningful way”

“Canada’s economy at ‘critical juncture,’ economist warns” – BNN Bloomberg

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Writing for the Financial Times, a former venture capitalist compares the tech market now to 2000 and suggests that another tech bubble is set to burst,

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“Then, as now, we were at the late stages of a credit cycle, with too much money chasing too little value. And then, like now, investors were counting on a spate of hot IPOs to pour a little more kerosene on markets that were clearly over-inflated. We all know how that ended, on both sides of the Atlantic.As long as investors are willing to accept growth as a metric for value, the music can keep playing. But as the University of California academics note, “unicorns are mythical beasts”. This year, their financial reality, as well as the sustainability of the current funding model, will be subject to some much-needed testing.”

“Another tech bubble could be about to burst” – Financial Times (paywall)

“Rallying #Tech Stocks Get No Love With Profit Recession Looming . Hedge funds trim exposure while industry ETFs see outflows” – Bloomberg

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Tweet of the Day:

Diversion: “Why Do We Sleep?: There are plenty of theories, but nobody really knows for sure” – Scientific American

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