Troubles with Autonomous Vehicles, Ukraine War Direction and other Interesting Predicts

As SCDigest has noted for many years, supply chain practice does not occur in a vacuum – it is significantly impact by the economic, political, and social environment right now and over time.

With that, we thought it would be fun to highlight a number of “surprises” for 2024 predicted Michael Cembalest, Chairman of Market and Investment Strategy at J.P. Morgan Asset & Wealth Management. These 10 surprises that Cembalest sees come at the end of a long general commentary in a letter send to clients. We eliminated several very investment-oriented predicts, and repeat here five that are along more general grounds, from thoughts on autonomous trucks to major an election development:

Supply Chain Digest Says... Tesla is experiencing problems even at Level 2, which requires driver oversight. The NHTSA investigated a series of crashes involving Tesla autopilot. What do you say? Click here to send us your comments   Click here to see reader feedback

"[1] The US dollar remains stable. Despite all the hand-wringing about the weaponization of the US dollar via US sanctions, the trade weighted dollar ends 2024 +/- 7% from where it began. Furthermore, the dollar will retain its roughly 50% share of global trade invoicing.

[3] President Biden withdraws sometime between Super Tuesday and the November election, citing health reasons. Biden passes the torch to a replacement candidate named by the Democratic National Committee. Biden has a low approval rating for a President with ~10% job creation since his inauguration, although that figure is the by-product of his inauguration coinciding with the rollout of COVID vaccines and a reopening US economy.

[4] The driverless car backlash is coming. In the few places where full Level 5 autonomous cars are being tested in real world conditions (San Francisco, Austin), they have blocked ambulances on their way to the hospital, hampered other emergency responders, caused accidents, increased congestion and run over pedestrians, one instance of which reportedly resulted in the resignation of Cruise’s CEO. Waymo has added technology to reportedly allow firefighters to take control of its vehicles if they stop moving.

LiDAR (autonomous vehicle technology) stocks have collapsed by 85% from their peak, and I don’t think a rebound is imminent. I believe a possible backlash is coming from citizens who believe, as in the case of the despised urban scooter plague38, that convenience for some results in dangers and inconvenience for others.

Tesla is experiencing problems even at Level 2, which requires driver oversight. The NHTSA investigated a series of crashes involving Tesla autopilot and found that its methods of insuring driver compliance are inadequate and can lead to “foreseeable misuse”. In December, Tesla issued a recall of 2 million vehicles to update the software to require greater driver compliance.

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[7] Russian invasion of Ukraine drags on with no ceasefire in 2024. Despite Russia reportedly losing 87% of its prewar active troops (315,000 killed or injured) and two-thirds of its tanks, there is no ceasefire and the war drags on for another year. Some US financial support for Ukraine is maintained after Democrats agree with the GOP to provide greater funding for US border security given surging cross-border crossings coinciding with an election year. Russia’s prosecution of the war finally pushes Europe to spend 2% of GDP on defense, which is what Europe agreed to in the 2006 NATO agreement but hasn’t been adhering to.

[9] Due to retirement of dispatchable power generation (nuclear, coal, gas) and underinvestment in pipelines, gas storage and winterization, major US cities will face electricity outages and/or natural gas outages (which are much worse).

The North American Electricity Reliability Association just released its 2023 risk assessment. The region NERC highlights as having the greatest risk of power outages, even in normal peak conditions:

Midwest MISO, which stretches from Minnesota down to Louisiana. Outage risk in more extreme weather conditions is cited for New York, New England and the entire Western US. NERC cites peak loads rising at “an alarming rate” due to electrification, coinciding with increasingly intermittent new sources of generation (wind and solar power) and 80-110 GW of nuclear and fossil fuel generation retirements by 2033 which is ~7% of current installed capacity."

So there you have it from Cembalest of JP Morgan. Interesting.

Any reaction to Erdoes's list of surpises? Let us know your thoughts at the Feedback section below.