Most Recent Audio: 26 February 2015

David Fuller and Eoin Treacy's Free (Abbreviated)
Comment of the Day

The more detailed Subscriber's Comment of the Day becomes available for public access after 4 months.

Click HERE to see the most recent free Subscriber's Comment from 26 November, 2014

February 26 2015

Commentary by David Fuller

What Clever Robots Mean for Jobs

My thanks to a subscriber for this informative article from The Wall Street Journal.  Here is a brief section:

But recent advances—everything from driverless cars to computers that can read human facial expressions—have pushed experts like Mr. Brynjolfsson to look anew at the changes automation will bring to the labor force as robots wiggle their way into higher reaches of the workplace.

They wonder if automation technology is near a tipping point, when machines finally master traits that have kept human workers irreplaceable.

“It’s gotten easier to substitute machines for many kinds of labor. We should be able to have a lot more wealth with less labor,” Mr. Brynjolfsson said. “But it could happen that there are people who want to work but can’t.”

In the Australian Outback, for example, mining giant Rio Tinto uses self-driving trucks and drills that need no human operators at iron ore mines. Automated trains will soon carry the ore to a port 300 miles away.

The Port of Los Angeles is installing equipment that could cut in half the number of longshoremen needed in a workplace already highly automated.

Computers do legal research, write stock reports and news stories, as well as translate conversations; at car dealers, they generate online advertising; and, at banks, they churn out government-required documents to flag potential money laundering—all jobs done by human workers a short time ago.

Microsoft co-founder Bill Gates , speaking in Washington last year, said automation threatens all manner of workers, from drivers to waiters to nurses. “I don’t think people have that in their mental model,” he said.

Gartner Inc., the technology research firm, has predicted a third of all jobs will be lost to automation within a decade. And within two decades, economists at Oxford University forecast nearly half of the current jobs will be performed with machine technology.

David Fuller's view

This is progress.  Rapidly developing robotic machines are wonderful and any time humans are replaced by machines, productivity increases.  The biggest beneficiaries are the increasingly automated companies.  The next biggest beneficiaries are shareholders who invest in these firms.

The biggest losers are people who find themselves out of work, for no fault of their own, because they have been replaced by machines which can work around the clock, seven days a week if required.  The second biggest losers are governments which find that they are collecting fewer and smaller payroll taxes, and are also having to subsidise the unemployed. 

Luddite, anti-robotics demonstrations are pointless.  There is no turning back the clock on progress.  Instead, individuals, families, schools and universities, job counsellors and governments need to think creatively about new jobs which will still require people.  They will, but I have long said that the accelerating rate of technological innovation ensures that jobs are being replaced more rapidly than they can be created at present.     

(See also Eoin’s comments below on this subject.)

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February 26 2015

Commentary by David Fuller

Email of the day 1

On the Markets Now:

“Dear David Just a quick note to thank and congratulate you on the informative, stimulating and enjoyable Markets Now events on Monday evening. After several decades as a subscriber it was good to meet you and put a face to the dulcet tones that have educated and guided me over the years! As ever, your ability to distil so much information to deliver a clear and concise market commentary was much appreciated and I thoroughly enjoyed David Brown's 3rd IR presentation. Like you he was able to present diverse and sometimes complex information clearly and left my mind spinning with possibilities and ideas for further exploration. Like you, I am somewhat cautious about entering the market just now but I certainly feel more alert to the dynamics within the tech and biotech world and the various developments curves that he explained will undoubtedly help master that key factor of timing! The evening was topped off by informal discussions in the bar proving your point about the value that other subscribers bring to the party. Well done on organising such a worthwhile evening, I hope to return at some point in the future when my diary permits. Best wishes, James”

David Fuller's view

Thank you so much for your kind words and for travelling a fair distance to join us from Scotland.  It is a treat to see veteran subscribers, especially as you said we last met in 1970!  You participated in a lively evening at Markets Now and I also thank you for your contributions to the conviviality in the Club bar following the presentations.  That is always my favourite portion of the evening.  I look forward to our next meeting.   

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February 26 2015

Commentary by David Fuller

3D Printer Creates Jet Engine in World First

My thanks to a subscriber for this remarkable story from The Independent.  Here is the opening:

Australian engineers have created the world’s first 3D-printed jet engines.

The work of engineers and researchers at Amaero Engineering and Monash University, located on the outskirts of Melbourne, could lead to cheaper, lighter and more fuel efficient engines.

“The project is a spectacular proof of concept that’s leading to significant contracts with aerospace companies,” Amaero's business development manager Ben Batagol told the Guardian.

Researchers worked for two years to create two revolutionary jet engines after a challenge by French aerospace giant Safran.

"They gave us an old engine, we pulled it apart and then part by part we've been manufacturing it for them," Mr Batagol told theSydney Morning Herald.

Although the first took almost 12 months to complete, the second was finished in only three months.

Of the two created, one has been delivered to the aerospace company in France, and the other is on display at the Avalon Airshow in Australia.

A third engine, focused on using lighter weight materials, is now being planned by the team.

"3D printing allows us to make very complex parts, that we have trouble casting on machining right now, in a very quick fashion," Mr Batagol explained.

The engines were created using a high-powered laser, fusing powdered nickel, titanium or aluminium into the shapes of objects layer by layer.

David Fuller's view

3D printing is another extraordinarily useful development of almost unlimited potential in our rapidly developing world.     

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February 26 2015

Commentary by David Fuller

February 26 2015

Commentary by David Fuller

Email of the day 2

“The service remains wonderful (audio on the ipad tablet with the breakfast egg) and the content always stimulating and useful. I will also repeat my service request for the reinstatement of the TA filter features which were always useful (not least with such a comprehensive library, a unique selling point for the company). I will continue to repeat that on each renewal but my loyalty and admiration will continue regardless..”

David Fuller's view

Thanks for your kind words, your understandable request and patience, also shown by other subscribers.  The TA filter features have long been a priority but the problem has been in programming time and understanding.  Eoin thinks the project is near completion and he will supply working examples next month, when the TA filter features are satisfactory. 

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February 26 2015

Commentary by David Fuller

February 26 2015

Commentary by Eoin Treacy

The Future of Education

Eoin Treacy's view

Subscribers will be familiar with how excited we are at the pace of technological innovation. It is resulting both in beneficial deflation and enhancing the productive capacity of economies. These factors are some of the key building blocks required to fuel a secular bull market. Nevertheless, there is widespread angst about the role this will have on the ability of people to find productive employment.

A job for life is no longer realistic for the vast majority of people but that is old news. What is new is that more people will have to learn to adapt to a rapidly changing environment. It is looking increasingly likely that people will no longer be paid to be bored. Long haul driving, assembly line jobs and other, often mundane, repetitive jobs will eventually be outsourced to machines. The timeline for this migration will be measured in decades but there will inevitable be a requirement for a lot more skilled workers. 

 

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February 26 2015

Commentary by Eoin Treacy

Mattel Vows Makeover After Slumping Sales, CEO Ouster

This article by Lauren Gensler for Forbes may be of interest to subscribers. Here is a section:

It has worked to diversify its toy offerings, but doll sales still account for 40% of Mattel’s business.

Net income was $149.9 million, or 44 cents per share, down 59% from $369.2 million, or $1.07 per share, a year ago. Total sales fell 6% to $1.99 billion.

Analysts polled by Thomson Reuters estimated per-share earnings of 96 cents and revenue of $2.14 billion.

With Stockton out, Mattel is looking for a new candidate for the top job. A change in leadership was necessary ”to change the trajectory of the business and maximize our potential going forward, and certainly to take advantage of our many assets,” said Sinclair on a conference call with investors.

Mattel said it won’t offer any outlook for the year amid the transition. Shares of Mattel are down 33.7% over the last 12 months and slid 1.5% to $26.50 in pre-market trading.

 

Eoin Treacy's view

CEOs who have overseen massive declines in the shares of the companies they are responsible for are increasingly being fired by their boards. Over the last year there have been a number of instances where this has occurred among the Autonomies, not least Tesco which has since staged a rebound. Standard Chartered’s decision to remove the CEO today was also greeted with enthusiasm by investors and Mattel’s move on Monday was equally well received. 

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February 26 2015

Commentary by Eoin Treacy

Tesla gearing up for release of batteries for the home

This article by John Anderson for Gizmag may be of interest to subscribers. Here is a section: 

As the company’s first foray into selling directly to the home energy storage market, the batteries are expected to get plenty of attention just by virtue of the attached Tesla label. And it should be an improvement from the home batteries Tesla has been quietly supplying to its sister company, the solar panel maker SolarCity, located up the road from Tesla in San Mateo, California. Those batteries are currently available in select markets within California, and only through SolarCity. The new batteries would be more widely available.

Tesla would face plenty of competition for their batteries, with names like Bosch, GE and Samsung involved. Honda has unveiled a demonstration smart home that features a rechargeable home battery, along with an electric vehicle, solar panels and geothermal heat pump, and is driven by an energy management system.

Researchers from both Harvard and MIT have developed flow batteries for renewable energy storage, while Bloom Energy’s fuel cell boxes act as a power source as well as an energy storage device.

One area where Tesla might stand out is in cost. Tesla assembles its battery packs from battery cells provided by Panasonic, and is about to do it on a massive scale as soon as 2016 at its gigafactory currently under construction in Nevada. Such an economy of scale – producing 50 gigawatt-hours of battery capacity each year – is expected to push the company’s car battery costs down by 30 percent. Based on the same technology, Tesla's home battery costs should come down as well.

 

Eoin Treacy's view

The same efficiency gains observed in how Moore’s Law is applied to semiconductors can also be seen in solar technology. This has changed how companies perceive the growth of the domestic energy production sector. This requires a much more flexible electric grid and a utility sector that will have to evolve if it is to avoid obsolescence. As the potential to cut one’s personal expenses through the application of technology develop, homebuilders will be happy to see that the benefits of owning a new home equipped with the wide range of modern gadgetry is becoming increasingly convincing. 

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February 26 2015

Commentary by Eoin Treacy

The Chart Seminar 2015

Eoin Treacy's view

Following a productive collaboration last year we have agreed to co-host another Chart Seminar with the CFA Institute in Singapore. This will be on  April 16th and 17th at the M Hotel on 81 Anson Road.

To book your place or express interest, please contact Sarah Barnes at sarah@fullertreacymoney.com

The full rate for The Chart Seminar is £950 + VAT. (Please note US, Australian and Asian delegates, as non EU residents are not liable for VAT). The early booking rate of £875 for non-subscribers expires two months ahead of the event start date. Subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.

Private Seminars and Partnering Opportunities
We are also available to conduct private seminars and occasionally agree to speaking engagements at investment conferences and professional societies. 

 

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