Most Recent Audio: 27 March 2015

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

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March 27 2015

Commentary by David Fuller

Yellen Sees Gradual Pace of Rate Rises Starting This Year

Here is the opening of this report from Bloomberg:

(Bloomberg) -- Chair Janet Yellen said she expects the Federal Reserve to raise interest rates this year, and that subsequent increases will be gradual without following a predictable path.

“I expect that conditions may warrant an increase in the federal funds rate target sometime this year,” Yellen said Friday at a conference hosted by the San Francisco Fed. She and fellow policy makers “generally anticipate that a rather gradual rise in the federal funds rate will be appropriate over the next few years.”

After the initial increase, officials won’t follow “any predetermined course of tightening” that involves similar-sized increases at regular intervals, Yellen said.

“The actual path of policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause, or even reverse course depending on actual and expected developments in real activity and inflation,” she said.

Policy makers last week opened the door to an interest-rate increase as soon as June, while also signaling they’ll go slow once they get started. The benchmark federal funds rate has been kept near zero since December 2008.

“They are focused on keeping markets calm as they start the process,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York. “They can adjust as needed later.”

David Fuller's view

Janet Yellen remains calm and predictable, in contrast to the crowd which has been second guessing her strategy.  She has my confidence.  More importantly, remember the old adage: “Don’t fight the Fed.”

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March 27 2015

Commentary by David Fuller

Fanuc Parts Curtains On Secretive Culture

My thanks to a subscriber for this informative article from the Financial Times. Here is a brief section:

Investors including Mr Loeb remain fascinated by the company’s ultra-focused management policy and high profit margins of 40 per cent.

The company expects a 67 per cent rise in full-year net profit to Y185bn ($1.6bn). Since Mr Loeb revealed his stake in mid-February, shares in Fanuc, which has a market capitalisation of $43bn, have climbed 18 per cent to hit record highs.

Analysts have raised concerns that orders for Fanuc’s Robodrill machine tools, used to make metal cases for iPhones and other smartphones, could be reaching a peak. But Mr Inaba says he is counting on growth in theChinese market, where rising labour costs have increased demand for industrial robots.

He hopes to expand the company’s market share in Europe, India, Brazil and Africa. The US market, of which Fanuc holds about 50 per cent, is also booming, with Fanuc having clinched orders from Ford, Tesla and aircraft manufacturers, according to Goldman Sachs analysts.

“We are also going to plant the seeds for future growth,” Mr Inaba adds, though he declines to give any details.

Mr Inaba, who took over from his father in 2003, began his career at Japanese truckmaker Isuzu and was not groomed to run the company. Soft-spoken and relaxed, he claims he has not inherited his father’s authoritarian management style.

Still, he says he learnt from his father the need to adapt quickly to changes. That flexibility is being tested as Fanuc tries to woo more people into investing in its future.

Making peace with robots

A new green “collaborative” robot may soon join Fanuc’s army of yellow factory robots.

The recently revealed robot is installed with sensors and other safety technologies that will allow it to stop immediately when it comes in contact with a human being.

“Robots are considered a dangerous presence since they have become so powerful, to carry heavy items at a faster speed,” says Yoshiharu Inaba, Fanuc’s chief executive. “But robots can work together with humans.”

Mr Inaba also says robots will not be stealing the jobs of humans any time soon even if they become more intelligent. “Robots make products for human beings. It’s up to human beings to decide whether what the robots made are good or not,” he said.

David Fuller's view

I have previously described Fanuc as a successful company whose time has arrived.

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March 27 2015

Commentary by David Fuller

China Casts Sky Net in New Hunt for Corrupt Fugitive Officials

My thanks to a subscriber for this informative report from Bloomberg.  Here is the opening:

(Bloomberg) -- China will widen its hunt for corrupt officials who have fled overseas with a new campaign that extends to more government agencies and the central bank.

The “Sky Net” operation, starting next month, will focus on capturing fugitive officials, cracking down on underground banks, and confiscating misappropriated assets, according to a statement posted Thursday on the website of the Communist Party’s top anti-graft agency.

The drive will involve at least four key central agencies: the People’s Bank of China, the party’s organizational department, the country’s top prosecuting body, and the Ministry of Public Security.

Tracking down economic fugitives and bringing them, and their ill-gotten assets back, has become a key component of President Xi Jinping’s anti-corruption campaign. Xi’s crackdown on graft -- the harshest since the republic’s founding in October 1949, state media say -- started weeks after he became party boss in November 2012. The campaign has snared more than 100,000 cadres, according to Central Commission for Discipline Inspection figures released in December.

David Fuller's view

The only sensible policy on political corruption is to crack down on it, assuming that the current regime is setting a high benchmark for governance standards, rather than persecuting political rivals.

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March 27 2015

Commentary by David Fuller

The Markets Now

On Monday 20th April at the East India Club, 16 St. James’s Square, London, SW1Y 4LH

 

David Fuller's view

Here is the new brochure.  Guest speaker David Pinniger’s subject could not be more topical.  Iain Little suggested David Pinniger as a guest speaker and contributed this comment:

“I met David Pinniger at a recent investment forum here in Zurich.  I found that, despite David’s impressive academic and professional credentials, he was also able to communicate a complex subject –biotechnology - in a way that non-scientists like me could understand.  So he would be a logical “next step” after David Brown’s bravura presentation on The Third Industrial Revolution at the last Markets Now.”

Iain Little and I are looking forward to a lively evening with subscribers and their friends, including at the Club’s spacious American Bar following presentations. 

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