Most Recent Audio: 05 March 2015

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

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March 05 2015

Commentary by David Fuller

Email of the day

Dr David Brown interviewed by Forbes:

“Dear David, I was interviewed by Forbes Magazine following my presentation on the Third Industrial Revolution last week at the Markets Now evening. The interview was published yesterday and it is available at this link.

“It provides a summary of the main factors that drive industrial revolutions, which I covered in the first part of my talk. Subscribers who could not attend Markets Now last week may be interested in this summary - which is much shorter than my 2 hour presentation! However, the Forbes article does not cover the investment opportunities which were of course the most important part of the talk. Those are available to subscribers on the slides you posted.”

David Fuller's view

Many thanks for this email and the link to your excellent interview with Forbes Magazine.  A small number of fortunate subscribers were mesmerised by your presentation and Q&A session at the last Markets Now, and many more saw your presentation, posted here last Wednesday.  The Forbes article, partially reproduced below, will generate considerable interest, as will your next presentation at Markets Now on an entirely different topic of considerable interest.  

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March 05 2015

Commentary by David Fuller

The Third Industrial Revolution: Internet, Energy and a New Financial System

Here is the conclusion of this fascinating interview with Dr David Brown by Goncalo de Vasconcelos for Forbes:

de Vasconcelos: So what will the Third Industrial Revolution impact the most?

Brown: Eventually everything, but the early movers have been USA-led computing, IT, internet companies and social media sites, which have grown to global behemoths faster than ever in history. These in turn have driven biotechnology as the genome at last begins to impact. Both went through a hype phase in the 1990s, then a bust, then the real winners emerged. That is a typical pattern over the initial 15-20 years of a breakthrough technology. Solar power has been driven mainly by Germany and more recently China, though the USA is catching up fast. Current solar systems have only 10-20% efficiency in sunlight capture but new materials will take this into the 50-100% range very soon now. And battery storage technology is advancing rapidly.  Additive manufacturing (aka 3D printing) will replace our old material and energy-wasteful methods. Robotics is beginning to spread out of factories with Japan, Germany and China leading the charge, though expect the USA to catch up and contribute to innovation. Nanotechnology will mature in the 2020s. The Internet-of-Things is a few years away, and it will probably drive the next phase of healthcare advances, but needs more stable internet, better security and cheaper components before it can take off. And machine learning /AI will be a game-changer for humanity, beginning to impact within the next decade. The new finance is now appearing through Africa-led mPesa, followed by Google GOOGL +0.55%-wallet and Apple-pay etc. The US internet giants are registering as banks, they have very cheap infrastructure and billion-size customer bases and are likely to challenge patriarchs of the current financial system. There is much innovation in finance in the UK too. We see positive deflation all over the world as a result of these lower-cost and more-efficient solutions to human needs.

de Vasconcelos: So where are we in the Third Industrial Revolution?

Brown: Industrial revolutions take decades to play out. We have barely started in this one. Remember that the first and second Industrial Revolutions involved only Western Europe and its off-shoots, whereas this one is truly global. And online education is available to everyone for the first time ever. OECD projections indicate the world will become about 10 times wealthier during this century, and these advances certainly support their case. Exciting times!

David Fuller's view

David Brown is assessing the current economic outlook in the context of two previous industrial revolutions.  Moreover, the panoply above is certainly no less exciting or revolutionary than anything else that has occurred throughout human history, and it is occurring at a much more rapid pace.  

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March 05 2015

Commentary by David Fuller

How the Internet of Things Is More Like the Industrial Revolution Than the Digital Revolution

Philadelphia’s Centennial Exposition of 1876 was America’s first World’s Fair, and was ostensibly held to mark the nation’s 100th birthday. But it heralded the future as much as it celebrated the past, showcasing the country’s strongest suit: technology.

The centerpiece of the Expo was a gigantic Corliss engine, the apotheosis of 40 years of steam technology. Thirty percent more efficient than standard steam engines of the day, it powered virtually every industrial exhibit at the exposition via a maze of belts, pulleys, and shafts. Visitors were stunned that the gigantic apparatus was supervised by a single attendant, who spent much of his time reading newspapers.

“This exposition was attended by 10 million people at a time when travel was slow and difficult, and it changed the world,” observes Jim Stogdill, general manager of Radar at O’Reilly Media, and general manager of O’Reilly’s upcoming Internet-of-Things-related conference, Solid.

“Think of a farm boy from Kansas looking at that Corliss engine, seeing what it could do, thinking of what was possible,” Stogdill continues. “When he left the exposition, he was a different person. He understood what the technology he saw meant to his own work and life.”

The 1876 exposition didn’t mark the beginning of the Industrial Revolution, says Stogdill. Rather, it signaled its fruition, its point of critical mass. It was the nexus where everything — advanced steam technology, mass production, railroads, telegraphy — merged.

“It foreshadowed the near future, when the Industrial Revolution led to the rapid transformation of society, culturally as well as economically. More than 10,000 patents followed the exposition, and it accelerated the global adoption of the ‘American System of Manufacture.’ The world was never the same after that.”

In terms of the Internet of Things, we have reached that same point of critical mass. In fact, the present moment is more similar to 1876 than to more recent digital disruptions, Stogdill argues. “It’s not just the sheer physicality of this stuff,” he says. “It is also the breadth and speed of the change bearing down on us.”

While the Internet changed everything, says Stogdill, “its changes came in waves, with scientists and alpha geeks affected first, followed by the early adopters who clamored to try it. It wasn’t until the Internet was ubiquitous that every Kansas farm boy went online. That 1876 Kansas farm boy may not have foreseen every innovation the Industrial Revolution would bring, but he knew — whether he liked it or not — that his world was changing.”

As the Internet subsumes physical objects, the rate of change is accelerating, observes Stogdill. “Today, stable wireless platforms, standardized software interface components and cheap, widely available sensors have made the connection of virtually every device — from coffee pots to cars — not only possible; they have made it certain.”

David Fuller's view

At the risk of sounding pedantic, I do not think we have actually reached the point of critical mass in terms of the Internet of Things, as mentioned above.  It has not quite happened yet, although we can envisage it. 

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March 05 2015

Commentary by David Fuller

March 05 2015

Commentary by Eoin Treacy

Alibaba Shares at Post-IPO Low After JD.com Tops Estimates

This article by Spencer Soper may be of interest to subscribers. Here is a section: 

The challenges in Taiwan and a Wall Street Journal report about Alibaba merchants paying people to pretend to be customers, called “brushing,” to pad sales figures have created some short-term negative publicity, Ji said.

“We don’t think those views will have a negative financial impact on Alibaba,” she said. “But PR-wise, it may have some negative impact on the stock.”

Alibaba, which connects consumers and businesses across its platforms, has a “credibility crisis” fueled by its failure to crack down on shady merchants, counterfeit goods, bribery and misleading promotions, China’s State Administration for Industry & Commerce said in January.

James Cordwell, an analyst at Atlantic Equities LLP in London, said Alibaba’s fourth-quarter results raised concerns about e-commerce growth and advertising revenue. There may also be a selloff ahead of the first major lockup expiration for insider share sales in mid-March, he said.

“Today’s weakness is no doubt also a result of strong results at key competitor JD.com and also the Taiwan withdrawal news,” Cordwell said.

Eoin Treacy's view

Jack Ma is an adept stock market player. The first listing of Alibaba in Hong Kong was also met with fanfare but the share languished after the initial spike and was eventually delisted for its IPO price in 2012.

The issues with its platforms being the world leaders in the distribution of counterfeit goods are nontrivial. There have been anecdotal stories for years about the cottage industry in Hangzhou centred on gaining preferential positions on websites through a web of bribery. These are damaging issues and will need to be addressed if the company is serious about preserving the interests of its minority shareholders. 

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March 05 2015

Commentary by Eoin Treacy

Top 10 Emerging Technologies of 2015

This article from the Scientific American may be of interest to subscribers. Here is a section:

Neuromorphic technology
Computer chips that mimic the human brain

Even today's best supercomputers cannot rival the sophistication of the human brain. Computers are linear, moving data back and forth between memory chips and a central processor over a high-speed backbone. The brain, on the other hand, is fully interconnected, with logic and memory intimately cross-linked at billions of times the density and diversity of that found in a modern computer. Neuromorphic chips aim to process information in a fundamentally different way from traditional hardware, mimicking the brain's architecture to deliver a huge increase in a computer's thinking and responding power.

Miniaturization has delivered massive increases in conventional computing power over the years, but the bottleneck of shifting data continuously between stored memory and central processors uses large amounts of energy and creates unwanted heat, limiting further improvements. In contrast, neuromorphic chips can be more energy efficient and powerful, combining data-storage and data-processing components into the same interconnected modules. In this sense, the system copies the networked neurons that, in their billions, make up the human brain.

Neuromorphic technology will be the next stage in powerful computing, enabling vastly more rapid processing of data and a better capacity for machine learning. IBM's million-neuron TrueNorth chip, revealed in prototype in August 2014, has a power efficiency for certain tasks that is hundreds of times superior to a conventional CPU (central processing unit), and more comparable for the first time to the human cortex. With vastly more computing power available for far less energy and volume, neuromorphic chips should allow more intelligent small-scale machines to drive the next stage in miniaturization and artificial intelligence.

Potential applications include: drones better able to process and respond to visual cues, much more powerful and intelligent cameras and smartphones, and data-crunching on a scale that may help unlock the secrets of financial markets or climate forecasting. Computers will be able to anticipate and learn, rather than merely respond in preprogrammed ways.

Eoin Treacy's view

IBM was a major contributor to the above article and as a result it mentions a number of areas where the company has a competitive advantage. We have all marvelled at the ability of its Watson program to compete against humans in real life tests of mental agility and at the company’s continued ability to develop cutting edge technology. However there has been a gap between development and delivery that has resulted in a lacklustre performance.

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March 05 2015

Commentary by Eoin Treacy

Philippine President Benigno Aquino walking a tightrope

This article from the South China Morning Post may be of interest to subscribers. Here is a section: 

Three groups - one including Corazon Aquino's brother and his wife, both former lawmakers; another including a cardinal and bishops of the influential Catholic Church; and a third, a radical left-wing political party - are pushing for a return of People Power. Their protests are drawing only thousands to the streets. The president is taking their tactics seriously, though, with officials speaking of violations of the sedition law and warning against a coup. Filipinos fought hard for their democracy and the president has to avoid overreacting.

Alleged abuse of power is behind the protests. Beyond the claims of corruption is a botched commando raid on Muslim insurgents on southern Mindanao Island on January 25 that killed a suspect in the 2002 Bali bombings, but also left 44 officers dead. Benigno Aquino is claimed to have had a hand in the secretive planning, adding to the outrage, and a peace pact with separatist Muslims in Mindanao that he has devoted much of his energies to could be in jeopardy.

The economy is still performing well and Aquino's approval ratings have not worryingly dipped. But the president is well aware that corruption and plunder charges tainted the legacies of his two immediate predecessors. He, and his rivals, have to tread carefully lest they trample on the People Power spirit that has inspired democracy-seekers the world over.

Eoin Treacy's view

In an environment where currency market performance is increasingly being looked at as a prerequisite for investment, the Philippines stands out. While the Indonesian Rupiah and Singapore Dollar have been particularly weak, the Peso has been a regional stalwart. In addition to a burgeoning new middle class, the political situation has stabilised after decades of upheaval. The true test of a democracy is in the peaceful transition of power following elections and the continuity of long-term growth strategies. The Philippines has, so far, passed that test.

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March 05 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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March 05 2015

Commentary by Eoin Treacy

Twitter

Eoin Treacy's view

FullerTreacyMoney set up a Twitter feed in December but I didn’t start updating it until yesterday. In the era of social media many people tend to look more at their Twitter accounts than free daily emails so we will post content both on our website and via Twitter.

Additionally, I will post interesting charts on a daily basis when I have completed by morning click though of markets. Today I posted charts of the historical oil price, Canadian Dollar, Singapore Dollar / Swiss France cross rate, Check Point Software and Veolia.

Please feel free to follow us on Twitter at https://twitter.com/FullerTreacy  We would also be happy to follow the Twitter account of any of our subscribers who follow us. 

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