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Thank you Eleanora! This is a fascinating read, and it’s obvious you did a great job researching it. My opinion is that over time, isolationist policies and tariffs will not be as needed to push companies to want to manufacture here, for a number of reasons you mentioned. First and foremost, I think that as more and more tasks get automated in manufacturing processes, the cost advantage of offshoring gets less and less. Unskilled labor will not be as necessary, and highly skilled engineers, coders, etc. will be needed (many coming from U.S. universities).

As you mentioned, if the goal of protectionist policies is to create more jobs on the home front, I’m not sure this is the best strategy. These tariffs distort the free market and fly in the face of Pareto efficiency concepts. Additionally, automation will cut many more jobs than those that are being outsourced. We’ve seen many nations attempt these types of policies in the past, and I think they are more likely than ever to be value-destroying in an economy now, given how globalized trade has become.

On December 1, 2017, James commented on Acciona Energy: Saving the world, a risky affair? :

Thanks Charis, this is a problem that I’ve never considered. It’s both interesting and a bit disheartening that the problem we are trying to solve could potentially hurt our efforts in doing so. It essentially implies that as climate change gets worse, there is a possibility that we become even more dependent on fossil fuels (if indeed it’s true that those are not as exposed to weather volatility issues), leading to an acceleration in climate change damage.

Regarding your second question, “Would the company benefit from reducing its sustainability impact commitments to selfishly secure its own future?”, I think in many ways the ends justify the means here. If needed, I wouldn’t be overly upset if the Company did what it needed to survive as long as its core mission stays intact. A better outcome, however, would be if the government decided to further the climate change cause by offering additional incentives to companies like Acciona such that the private sector is more incentivized to work on this critically important problem.

On December 1, 2017, James commented on Good Tariffs Make Good Neighbors? :

Very thought-provoking piece. To me, this really helps highlight the complexity around international trade policies, and understanding intent vs. impact. The economy has become so globalized, that enacting protectionist policies aimed at helping one industry in a specific nation will almost certainly hurt another domestic industry in that same nation. I believe this is especially true in the United States, given how many countries we trade with and how international our economy is.

It’s interesting that in many ways, ArcelorMittal’s incentives differ greatly from the U.S. automobile manufacturers. While President Trump has made it clear throughout his campaign and since being elected that he wants to revitalize the steel industry in middle America, I’m sure that he would not intend to do that at the expense of U.S. automakers, especially companies in key Midwest states such as Michigan. I believe we need to proceed cautiously as a nation and make sure all economic policies are well-researched in terms of all the expected outcomes.

Thanks Bob, this was a great read. Regarding your question of “could the continued evolution of consumer behavior and innovations in e-commerce technology nonetheless kill brick-and-mortar retail?”, I’m rather bearish on Target’s prospects. Many of the initiatives you mentioned that Target is implementing or should implement, including autonomous distribution warehouses, automatic demand forecasts, etc, are all things that Amazon is already doing. These initiatives will shrink Target’s supply chain and make it much more efficient, but it won’t solve the fundamental problem that consumers simply would rather have goods (especially commoditized goods) shipped directly to them vs. having to visit a store.

Unless Target actually becomes a distribution company, I’m not sure how they will be able to compete with Amazon in the long run. It’s puzzling to me that they would be opening more stores against this macro environment in retail. The markets seem to be bearish as well, with Target’s share price having declined 23% over the last year(1). I do think there is a place for a certain amount of physical stores, but only in Target’s most profitable locations. I’ll be interested to see how the Target story continues to play out over the next few years.

1. Sourced from Capital IQ as of December 1st, 2017

On December 1, 2017, James commented on Nike: Leading the Path to Fighting Climate Change :

Interesting read! It’s a very good sign that a global leader such as Nike has undertaken these initiatives, because I believe climate change awareness needs to start at the top. In regards to your question of how Nike can also help other apparel companies and industry participants work on climate change problems, I think a good way for them to do this is to try to establish industry “best practices” and benchmarks. If companies feel like all competitors are equally hampered by these initiatives, they’ll be more likely to do them.

I also believe that many of the initiatives you mentioned will actually help Nike grow its business in the long-run. Having a closed loop ecosystem is something that reminds me of our IKEA discussion in TOM, as that Company was attempting a similar thing with wood as a raw material. Much is made about actual governments being responsible for solving climate change, but I think if more and more companies like Nike, IKEA, etc. step up and commit themselves to actual activities that help the cause (not just marketing ploys), the private sector will be immensely important in this endeavor.

On December 1, 2017, James commented on Cerner and Interoperability :

Very interesting post! I’ve done a fair amount of work relating to EMRs and healthcare focused software in my prior role in technology investing. I believe your concerns about Cerner’s potential for disruption are well-warranted. As others have mentioned, Epic Systems has already begun to take market share from Cerner and the more established players, and should continue to do so. One area my investing firm spent a good amount of time was the post-acute EMR space. We bought both Mediware Information Systems as well as Kinnser Software, which are companies focused on the Home IV and Home Health sub-markets markets respectively within Post-Acute.

Post-acute is another area Cerner needs to think about going forward. Essentially, Cerner focuses on EMR software for actual hospitals, but there are a number of demographic factors driving more patient volumes to providers that focus on patient care outside of the hospital (Home Medical Equipment, Home Care, etc.). Most of the white space / greenfield inherent in EMR software can be attributed to the Post-Acute market. Going forward, in addition to Ali’s suggestions, I believe Cerner should invest heavily in their Post-Acute solutions.