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December 07 2016

Commentary by Eoin Treacy

Chinese-Korean group to build $2 billion lithium batteries plant in Chile

This article by Cecilia Jamasmie for mining.com may be of interest to subscribers. Here is a section:

Lithium, frequently referred to as "white petroleum," drives much of the modern world, as it has become an irreplaceable component of rechargeable batteries used in high tech devices.

The market, while still relatively small — worth about $1bn a year — is expected to triple in size by 2015, according to analysts at Goldman Sachs

That should be great news for Chile, as the country contains half of the world’s most “economically extractable” reserves of the metal, according to the US Geographical Survey (USGS). It is also the world’s lowest-cost producer, thanks to an efficient process that makes the most of the country’s climate.

Chile is essentially “the Saudi Arabia of lithium,” according to Marcelo A. Awad, executive director of the Chilean brand of Wealth Minerals, Canadian company that also has interests in Mexico and Peru.

The country, he noted in a recent interview, is perfectly positioned, with ports across the Pacific from the world’s largest car market, China, which is expected to increase electric vehicles production in years to come. There, lithium is also used to manufacture rechargeable ­batteries that power hundreds of millions of smartphones, digital cameras and laptops.

The challenge for foreign investors, particularly the Asian conglomerate, is to persuade Chilean authorities of making the leap from exporting the white metal to producing lithium batteries at the point of extraction.

Estimates from the group’s advisors believe opening the proposed plant would make the value of the product 35 times higher than what it could be obtained by just selling it as lithium carbonate

Eoin Treacy's view -

Elon Musk might be one of the world’s great promotors but there is no denying that he has upended the automotive sector with just about every major auto manufacturer planning to release a range of electric vehicles within the next few years. 



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December 06 2016

Commentary by Eoin Treacy

Parkinson's May Actually Originate From Microbes in the Gut

This article from Futurism.com may be of interest to subscribers. Here is a section:

Mice bred to develop Parkinson’s were put in cages that were either sterile or non-sterile. The mice in the germ-free cages manifested less motor degeneration, and their brains had reduced tangling of the protein a-synuclein. They had “almost normal performance” in motor tasks. The researchers injected gut bacteria from human Parkinson’s patients into these mice, and they deteriorated quickly. This effect did not occur with bacteria taken from healthy humans.

The mice in the normal, non-sterile cages developed the expected symptoms of Parkinson’s. When treated with antibiotics, their symptoms were reduced, suggesting effectiveness in a microbial approach to the disease.

Gut bacteria taken from healthy people didn’t have the same effect.

 

Eoin Treacy's view -

There are more nerve endings in your gut than your brain so in one sense you gut is smarter than you think. That makes intuitive sense considering the work that goes into breaking down everything we put into our mouths into useable fuel and waste. The microbiome living in each of our gut’s has an inordinate effect on both health and mood. With advances in genetics it represents a rapidly evolving field of study we are sure to hear more about in 2017. The more I read about the subject the better my diet has become, you really are what you eat. 



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December 05 2016

Commentary by Eoin Treacy

New efficiency record for large perovskite solar cell

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

"Perovskites came out of nowhere in 2009, with an efficiency rating of 3.8 percent, and have since grown in leaps and bounds," said Anita Ho-Baillie, a Senior Research Fellow at the UNSW's Australian Centre for Advanced Photovoltaics. "I think we can get to 24 percent within a year or so."

The solar cells are made from crystals grown into a particular structure called perovskite. Smooth layers of perovskite with large crystal grain sizes allow the cells to absorb more light. The technology has been advancing fast and attracting plenty of attention thanks to its ease of production and low cost compared to silicon cells.

"The diversity of chemical compositions also allows cells be transparent, or made of different colors," said Ho-Baillie. "Imagine being able to cover every surface of buildings, devices and cars with solar cells."

Perovskite cells do have downsides like much less durability, something Ho-Baillie and her team say they're confident they can improve, while also shooting for higher levels of efficiency.

Eoin Treacy's view -

Perovskite is a development stage technology that is likely to play an important role in the future of solar cells but it could be a decade before it reaches commercial utility. The primary argument supporting perovskite is the relative cost of producing the crystals versus the panels used today. That enhances the technology’s competitiveness so that cells do not need to be as efficient because they are so much cheaper. However what do need to be overcome are the issues described above regarding durability which are non-trivial.



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December 01 2016

Commentary by Eoin Treacy

OPEC Meeting Review

Thanks to a subscriber for this report from DNB which may be of interest. Here is a section: 

OPEC has just decided a headline cut of 1.2 million b/d

We calculate that compared with October secondary sources in the OPEC report, the net OPEC cut from the 11 participating countries in the deal is 0.982 million b/d

Angola was allowed to use September output as the base instead of October

The cartel will use secondary sources to monitor output reductions
Indonesia, Libya and Nigeria is not part of the deal

Since the cartel has distributed quotas to the different countries, have organized a monitoring committee and are using secondary sources, the deal is very bullish to the oil price

 

Eoin Treacy's view -

A link to the full report is posted in the Subcsriber's Area.

Brent crude oil hit a new recovery high today and upside follow through tomorrow would confirm a return to demand dominance beyond what has been an impressive two-day rally. Considering the fact that the price has been rangebound for the last six months the potential for a breakout that is outsized relative to the amplitude of the congestion area cannot be discounted. 



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December 01 2016

Commentary by Eoin Treacy

Email of the day on technology shares underperforming

Any idea why NASDAQ 100 dropped 50+ points yesterday?

Eoin Treacy's view -

This has been a spectacular year for some technology shares, with companies like Nvidia performing beyond the expectations of even the most ardent bulls. However the prospect of rising interest rates is potentially an issue for companies that are reliant of cheap financing to fund growth. 



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November 28 2016

Commentary by Eoin Treacy

Email of the day on electric cars and overall pollution

With regard to electric cars decreasing the world's need for fossil fuels, how is the electricity going to be generated? I have heard the Netherlands, who are one of the world leaders in using electric cars, have had to build three new generating plants already to meet the demand and these are coal fired. It is true that electric cars will laudably reduce urban pollution, where 85% of CO2 generation is created. But CO2 production will simply be transferred to rural areas, where electricity generating plants are normally situated. Energy consumption not be reduced and, since the energy production will be a two-step procedure instead of a single stage, it may well be increased.

Eoin Treacy's view -

Thank you for this email which raises important questions and highlights that the energy sector is not suitable for a one size fits all solution. I agree that an electric vehicle is, on aggregate, only as clean as the fuel used to generate its power. This graphic from shrinkthatfootprint.com is a useful barometer for how successful countries are in that regard. 



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November 17 2016

Commentary by Eoin Treacy

Is the EV finally coming of age?

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

One important breakthrough will be increasing the energy density of the battery through being able to cram more cells into the same volume of battery packs. The battery density doubled between 2009 and 2016, and this is definitely not the end. Just like with the technological development of the personal computer, there is something similar to a 'Moore's Law' in the battery development: currently, we recognize an annual improvement rate of 14 percent, which is quite immense."

Although 14 percent is significant, it's only just a start when it comes to battery technology. At the moment, electric cars make use of lithium-ion batteries, the type pioneered by the Tesla Roadster back in the mid-2000s. Schenk says there's plenty of improvement to come in lithium-ion tech, but greater leaps forward are in the pipe.

"New technologies, and especially those aimed at material-related improvements, plus ever-increasing production volumes leading to further price decreases, will determine the development stages of the next few years," Schenk says. "Within the next decade a major technological leap is expected with lithium-sulphur systems, and these are set to revolutionize costs and operating range as extraordinarily relevant buying criteria for electric vehicles."

Already, improvements to battery chemistry are starting to pay off, and people are starting to buy electric vehicles in greater numbers. Renault, one of the largest players in the European electric game, sold 23,087 electric cars in 2015 - a 49 percent increase on its 2014 numbers.

 

Eoin Treacy's view -

Advances in battery technology have been slower to manifest than in microprocessors because of limitations in chemistry but perhaps more importantly because there has just not been enough incentive for companies to spend money on innovation. 



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November 14 2016

Commentary by Eoin Treacy

Siemens boosts software business with $4.5 billion deal

This article by Maria Sheahan for Reuters may be of interest to subscribers. Here is a section: 

Mentor sells software and hardware used to design electronics for the semiconductor, automotive and transportation industries. The company reported a loss of $10 million in the six months ended July 31, compared with profit of $21 million in the same period last year, according to an Aug. 18 regulatory filing. The company forecast revenue of $1.22 billion for the 12 months through January.

Under Kaeser, Siemens has pushed deeper into software applications that are crucial to run its industrial equipment.

At the same time, Siemens is simplifying its sprawling portfolio, and the company announced last week that it wants to list its health-care subsidiary, among the biggest makers in the world of diagnostics and imaging equipment.

Eoin Treacy's view -

In the industrial automation sector there has been a wide gap in performance between the purveyors of hardware and software. A robot is really only a hunk of junk unless it is powered by intelligent software. Perhaps more importantly software and particularly optics companies have been innovating much faster than hardware companies not least because the relative of cost of development is so much smaller. By purchasing Mentor Graphics Siemens is aiming to provide a more holistic solution and therefore harness more of the revenue potential from industrial automation. 



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November 11 2016

Commentary by Eoin Treacy

Mosquito War: Voters Approve the Release of Genetically Modified Organisms

This article from futurism.com may be of interest to subscribers. Here is a section:

As Tuesday’s presidential votes were cast, Monroe County, part of the Florida Keys Mosquito Control District also voted to use genetically modified mosquitoes to fight their Zika-carrying cousins. The engineered mosquitoes were courtesy of British biotech company Oxitec, and received approval for trials from the US Food and Drug Administration (FDA) last August.

Monroe County would be the first in the US to carry out these trials. Oxitec CEO Hadyn Parry is optimistic, saying that the “ultimate goal of the trial is to prove what we say we can do, which is reduce the population significantly.” Previous reports indicate that these factory-made mosquitoes can effectively reduce Zika-carrying mosquito population by 90%.

 

Eoin Treacy's view -

By some measures malaria has killed more people than any other disease in humanity’s history. It is one of the primary contributing factors to the enormous challenge of sustaining economic development in the tropics and humanity has struggled to overcome the challenge represented by malaria for millennia. It has taken a separate virus threatening the unborn children of first world parents to galvanise support for a campaign to deliberately target the offending parasite; certain genus’ of which have evolved specifically to target humans.



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November 07 2016

Commentary by Eoin Treacy

Tesco Bank Halts Web Trades as Money Taken From 20,000 Accounts

This article by Paul Jarvis for Bloomberg may be of interest to subscribers. Here is a section:

About 40,000 of the bank’s 136,000 checking account holders experienced suspicious transactions over the weekend, Tesco Bank Chief Executive Officer Benny Higgins told BBC Radio 4’s Today program. About half of those had money taken from their account, he said. The problem has only affected checking accounts, a representative for the bank said.

Some of the world’s biggest financial institutions, including JPMorgan Chase & Co., HSBC Holdings Plc and the Federal Reserve Bank of New York, have all been cyberjacked in some way in the past couple of years. In the second quarter of this year, there was a 50 percent jump in activity by cybercriminals injecting malware programs into financial companies worldwide from the same period in 2015, according to Kaspersky Lab, a global cybersecurity company.

“Banking fraud is unfortunately very prevalent, and has been for a while,” said Tom Kirchmaier, researcher at the financial markets group at the London School of Economics. “The industry is not very forthcoming with sharing data with the police, and so we only hear about the worst cases, and Tesco’s can be considered one such instance.”

 

Eoin Treacy's view -

Inventory shrinkage (shoplifting) costs the retail sector about 1.5% of revenue per annum. When businesses move online they have to account for other kinds of theft such as when a buyer claims the item did not arrive and demands a refund. Online retailers often fear negative reviews so they put up with this petty theft as a matter of course and rarely talk about it.  



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October 28 2016

Commentary by Eoin Treacy

Chip Makers Cut Deals as Cars Get Smarter

This article from the Wall Street Journal may be of interest to subscribers. Here is a section:

Ford Motor Co.,  BMW AG and others have said they would have self-driving cars on the road in the next few years, while Tesla Motors has a semiautonomous system already on the road. Tesla last week began shipping vehicles that include hardware that could one day be empowered by software, which must be validated and approved by regulators, to operate in a fully autonomous mode. Tesla Chief Executive Officer Elon Musk aims to demonstrate fully autonomous cross-country drive by the end of next year.

Analog Devices Inc. cited auto applications as a key motivation in a deal announced in July to buy Linear Technology Corp. in a cash-and-stock deal valued at $14.8 billion. NXP became the top auto chip supplier by striking a deal valued at nearly $12 billion last year to buy Freescale Semiconductor Inc.

But the market for years has been fragmented among many suppliers with different specialties competing on price. Where an iPhone has one central chip to power its computing functions, many parts of cars have long used separate chips—a situation that could become even more complex as car makers add more features for safety and other purposes.

“Those will all require more processing capability and likely will be supplied by different suppliers who are not exactly working together,” said Dave Sullivan, an automotive industry analyst at AutoPacific, in an interview.

The push toward autonomous driving is a countervailing force, requiring more powerful chips and software that can analyze feeds from cameras, radar and other sensors using technologies such as deep learning. Tesla Motors Inc. has moved toward a central computing system, announcing last week it had picked chip maker Nvidia Corp. as part of the self-driving hardware it has vowed to include in all its new vehicles.

 

Eoin Treacy's view -

There is not going to be a single day when someone turns a switch and the global vehicle fleet becomes autonomous. Rather it is going to happen in a piecemeal fashion and regulators will hopefully pay attention to what is happening in other parts of the world to come up with an idea of best practice. 

If we set aside the timeline for when cars are likely to be fully autonomous for a moment, the big question for auto manufacturers is still how to make new cars attractive enough to encourage people to pay up but not so attractive that they will cannibalise next year’s sales. The answer would appear to offer more added extras in the form of electronics and connectivity regardless of whether cars are autonomous. 

 



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October 26 2016

Commentary by Eoin Treacy

Tesla Earnings: The Moment of Truth

This article by Stephen Russolillo for The Wall Street Journal may be of interest to subscribers. Here is a section:

Using generally accepted accounting principles, Tesla is expected to log a loss of 59 cents a share. Since going public in 2010, Tesla only has reported one profitable quarter under this basis. That came in 2013, when the stock surged from the mid-$30s to nearly $200. It has been volatile ever since, currently still trading around $200 with a silly valuation.

Whether or not the quarter is profitable, investors will want to hear about future production, which they are counting on to justify Tesla’s share price. Earlier this month, Tesla reported third-quarter deliveries of its vehicles more than doubled from a year earlier to 24,500. It also reiterated its forecast earlier this month that it would produce 50,000 vehicles in the second half of 2016. And it maintains it will deliver 500,000 cars by 2018, thanks to the Model 3 mass-market sedan.

But Tesla has repeatedly overpromised and underdelivered. In the past five years, Tesla has failed to meet more than 20 of Mr. Musk’s projections, according to an analysis by The Wall Street Journal.

 

Eoin Treacy's view -

This is a big week for earnings with Apple yesterday, Tesla today, Alphabet tomorrow and Amazon on Friday. Tesla makes cars people aspire to own and want to be seen driving. That’s something not many car manufacturers can brag about. However there is nothing easy about starting a car company from scratch even if electrc cars have nearly two thirds fewer parts than conventional vehicles.



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October 26 2016

Commentary by Eoin Treacy

Email of the day on virtual reality and augmented reality

The Gartner curve you posted indicates that Augmented Reality and VR are approaching or in 'payback' phase. If so this ETF could be a good investment vehicle. Purefunds Video Game Technology ETF (GAMR) Can you please add it to the Chart Library. Grateful thanks

Eoin Treacy's view -

Thank you for this suggestion and I agree that the video gaming sector is a growth engine quite apart from the evolution of virtual and augmented reality gaming. The question is no longer about whether people will play games, regardless of gender, age or ethnicity, but rather which will be the most effective platforms to deliver the media. Right now mobile apps are by far the most popular because everyone has a phone. 



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October 24 2016

Commentary by Eoin Treacy

DDOS Attack Map: What Websites & Areas Are Affected?

This article from Heavy.com dated Friday and written as if in real time may be of interest to subscribers. Here is a section:

A huge DDOS attack has been under way off and on since this morning, sending hundreds of popular websites offline. A third DDOS attack of the day was reported around 4:30 p.m. Eastern. The Distributed Denial of Service wasn’t against specific websites, but against Dyn, Inc., which provides Domain Name Server services. At the time of publication, Dyn was still investigating and mitigating attacks against their infrastructure. A number of outage and attack maps have been shared online, including the one above, which can give you a better idea of just how widespread the problem has been.

As of 4 p.m. Eastern, there were still numerous outages being reported. DownDetector shared a map of outages from Level3 Communications, which offers telecommunications services to business customers, on its website here. the map shows outages all across the United States.

A live outage map for Twitter shows the problems decreasing in the United States, but building in other parts of the world. Netflix, another company reporting problems, is showing similar results.

Eoin Treacy's view -

It took longer than usual to upload the audio on Friday because this denial of service attack was underway and service providers were struggling to combat the attack. You might have had difficulty accessing sites, not least this one, and will understand how aggravating the whole experience is from a customer’s perspective. The effect of course is magnified for companies that rely on the internet to conduct their business and is even more of a nuisance for those attempting to manage servers. 



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October 21 2016

Commentary by Eoin Treacy

MIT EmTech Conference

Eoin Treacy's view -

I spent the last couple of days in Boston at the MIT Technology Review’s EmTech conference and some of my immediate takeaways are:

Artificial Intelligence might be a catchall phrase for machine learning, linguistic programing, advances in one shot learning and automated interpretation of optical data among others but all these strands are experiencing enhanced growth. The field of artificial intelligence has been gestating for decades but the evolution of large data sets gives many of the theoretical applications that have been confined to universities room to grow and reach commercial utility. 

 



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October 14 2016

Commentary by Eoin Treacy

Google and 3D Printing Buildings

This article by Katie Armstrong from 3D Printing Industry dated May 3rd may be of interest to subscribers. Here it is in full:

3D printed buildings are the way of the future! At least that’s what Eric Schmidt, executive chairman of Google’s parent company, Alphabet, says.

Imagine you could walk onto an empty block of land one day, and have a house built on it a few days later. Sounds like science fiction, doesn’t it? What if I told you it was already happening?
A recent conference in Los Angeles saw Schmidt predict the technologies that would be game changers. The Milken Institute’s Global Conference, which brings together leaders from diverse sectors and industries around the world, explores solutions to today’s most pressing challenges in financial markets, industry sectors, health, government and education. Schmidt talked about synthetic meat made from plants, VR, self-driving cars, and 3D printing for buildings.

Schmidt points out that constructing buildings, both residential and commercial, is time consuming, energy intensive, and costly. He said that construction represented 5% of the economy, but that homes and buildings built in an industrial environment could be cheaper, more efficient and built on 100% recyclable material.

This isn’t the first time Schmidt has sung the praises of 3D printing technology and its potential applications. Back in 2013 he predicted the rise in the use of 3D printing, and he wasn’t wrong.
The implications of 3D printed houses and infrastructure are incredible. Instead of a home taking months to build, it could take just days. A company in China claimed to have built 10 houses in under 24 hours in 2014, with all their materials coming from recycled waste materials.

With the UN estimating that three billion people will need housing by 2030, large scale 3D printers are being suggested as a solution to this. They could be the solution to cheap, reliable housing which would replace slums in developing countries.

 

Eoin Treacy's view -

It occurs to me that homebuilding is a sector ripe for disruption. It is totally reliant on individuals who specialise in one set of skills. Carpenters, roofers, block layers, masons, plumbers, and electricians are all needed on a building site and because of designated duties one cannot start until the other has finished. In addition each of these trades tends to have a negotiated pay rate which is rather generous and has no bearing on what work is being done. 



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October 13 2016

Commentary by Eoin Treacy

Email of the day on medical innovation

Here's an intriguing finding - silkworms  can produce silk with graphene embedded, which gives material with electrical conductivity! With further development, materials with these properties moves us closer to the day when we may be wearing 'ordinary' clothing which gathers and transmits information in real time about our health. So all of us can then have a longitudinal personal health record assessed constantly by AI systems which feedback instantly any concerns being noted. No need to visit a doctor for diagnosis, AI will be much faster and much more accurate. Comparison of our personal health longitudinal record with the collected human database will give much more accurate diagnosis and prediction than is possible today. 

This vision is one of the reasons I noted in an email a few days ago that healthcare will generate the biggest of big data, and why we need blockchain technology to secure it. 

 

Eoin Treacy's view -

Thank you for this interesting article highlighting the success of a Chinese team in improving the conductivity of silk. Wearable technology is advancing in leaps and bounds so within the decade it is entirely possible that we have 24/7 monitoring of our vital signs available from a host of different products.

In addition the number of metrics examined will also increase as our collective understanding of body chemistry and interactions improves. In fact as the quantity of data and the number of metrics that need to be assessed, both in isolation and in unison, increases it will be impossible for any human to keep track of it all, so artificial intelligence will be a necessity rather than a luxury.

 



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October 13 2016

Commentary by Eoin Treacy

Email of the day on the influence of mega-caps on the performance of the S&P 500:

Given that (apparently) the FANGS account for about 50% of the total gains in the S&P500 over the last 2 years, it would be interesting to see what a chart of the S&P500 minus the FANGS would look like. Does such a chart exist?

My gut feel is that the chart would look more like the Dow Jones Industrial Index

 

Eoin Treacy's view -

Thank you for raising this important question. I don’t have a chart that removes Apple, Alphabet, Microsoft, Amazon and Facebook from the performance of the overall index but I did create this spreadsheet ranking the constituents of the Index by market cap. 



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October 12 2016

Commentary by Eoin Treacy

Baidu is bringing AI chatbots to healthcare

This article by Selena Larson for Bloomberg may be of interest to subscribers. Here is a section:

The Chinese search engine launched "Melody" on Tuesday, a chatbot that uses artificial intelligence to help doctors care for patients over text.

Baidu (BIDU, Tech30) aims to make medical consults more accessible and help patients determine whether or not they should see a doctor in person.

For instance, if you tell Melody your child is sick, it might ask whether she has a fever or is jaundiced and follow up with additional questions.

Melody integrates with the Baidu Doctor app, which already lets patients ask doctors questions, make appointments and search for health information. Melody asks the patient preliminary questions and pulls data from digitized textbooks, research papers, online forums and other healthcare sources.

The app produces a hypothesis regarding treatment options that a human doctor edits and sends to the patient. The self-learning bot will continue to sponge up information and improve conversation as time goes on.

 

Eoin Treacy's view -

Ray Kurzweil made clear in his talk at the ExMed conference earlier this week that “life begins at a billion impressions” when it comes to artificial intelligence (AI). In other words if you want to teach a computer how to recognise an image you need to feed it a billion examples before it can make the leap to recognition. 



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October 11 2016

Commentary by Eoin Treacy

Illumina Dives as Quarterly Revenue Falls Short of Forecast

This article by Doni Bloomfield Bloomberg may be of interest to subscribers. Here is a section:

llumina Inc. plunged as much as 28 percent, the most in five years, after saying third-quarter sales were lower than it previously anticipated because of declining demand for its high-speed genetic sequencers.

Sales were about $607 million last quarter, the company said Monday in a statement after the markets closed. That’s below Illumina’s July forecast of $625 million to $630 million, and the $628 million average of analysts’ estimates compiled by Bloomberg.

“We are clearly disappointed by the preliminary revenue result,” Chief Executive Officer Francis DeSouza said Monday in a short call with investors. Revenue from sequencing instruments declined 26 percent year-over-year, a bigger drop than anticipated at the start of the quarter, he said.

 

Eoin Treacy's view -

From what I learned by talking to people at the ExMed conference over the last four days has been that there is enormous disruption emerging in the sequencing of DNA. The method used over the last 50 years is being superseded by new technology and that represents a challenge for Illumina because it is the leader in providing the machines used today to sequence DNA. 



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October 10 2016

Commentary by Eoin Treacy

Exmed Conference 2016

Eoin Treacy's view -

It was a pleasure to spend the weekend and much of today at the ExMed conference in Coronado San Diego not least because there are so many people in attendance both as speakers and attendees who are at the forefront of their respective sectors.

It’s been something of a data overload so it will take some time to process the information and I will need to do some background research to check out the credibility of some of the claims made and what the possible investment implications are.

Here are some of the themes that are evolving:



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October 10 2016

Commentary by Eoin Treacy

Email of the day on blockchain and healthcare

Thanks for sharing this article and I look forward to reading your comments after attending the healthcare-focused conference in San Diego. 

Regarding blockchain, I was surprised by this statement in the article quoted:
...' an elegant but costly technology in search of real world relevance beyond the initial application of digital cash exchange.'

I am deeply involved in the hi-tech healthcare sector in the UK. Blockchain is beginning to impact the sector. By chance, the CEO of a startup in Cambridge UK sent this information to me today:
"At ***** we are developing a platform for storing and sharing genomic data based on Blockchain technology. Our platform exploits the power of a distributed ledger enabling the secure storing of genomic data and also, thanks to a series of smart contracts, enables sharing of specific parts of a genome with doctors, family members and researchers around the world without compromising the entire genomic information and therefore respecting the privacy of the owner."

I gave a presentation last October at a Big Data in Healthcare conference in Luxembourg at which I made the case that the scale of data requirements in healthcare will exceed all other sectors. Security of that data will be essential and I believe blockchain may be an essential piece of the puzzle.

And

I posted a comment under your article about blockchain. In it I mentioned a presentation I gave in October 2015 at a conference on Big Data in Healthcare. It was about the best conference I ever attended. I have attached the slides I presented. If you want to share these with subscribers please feel free to do so. They make the case for the scale of healthcare data on-line being absolutely massive.  With the inevitable security implications, blockchain may become very important in the healthcare sector and startups here in the UK are beginning to focus on the opportunity as I mentioned in my comment.

Eoin Treacy's view -

Thank you for the  comment added to the article I posted on Friday as well as the above email and PowerPoint presentation you attached to the above email.

In order for blockchain to represent the kind of financial innovation required to truly represent a transformative effect on the financial sector I believe its link to bitcoin has to be completely unwound. 



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October 07 2016

Commentary by Eoin Treacy

Follow Your Nose

Thanks to a subscriber for this interesting report from Deutsche Bank. Here is a section:

Key Themes to Drive Industry Shift
Minimally Invasive Treatment is Large and Underpenetrated: Balloon sinus dilation (BSD) is a minimally invasive alternative to functional endoscopic sinus surgery (FESS). The procedure was introduced in 2005, but remains underpenetrated (we estimate 20% today). We view penetration increasing to 26% in 2021 lead primarily by continued economic and clinical data.

From the Operating Room to the Physician’s Office: We believe an increasing number of chronic sinusitis procedures will shift from the operating room to the physician’s office setting moving forward. This shift provides benefits to all: patients, physicians, and payors.

DB Survey Supports View of Market Growth and Penetration
We conducted a survey of 30 US based, board certified otolaryngologists. We asked our survey respondents to comment on volume expectations, procedure settings, and market share trends. Our results indicate increased volume across procedure types, a move toward office based procedures, and further penetration of minimally invasive treatment options.

Opportunities for Technologies that Lower Costs and Improve Outcomes
New technologies that further enable minimally invasive procedures and the shift to physician’s office based care are also garnering more attention. Medical supplies and devices companies have taken note with recent launches of more compact navigation systems, steroid eluting stents, and more compact surgical tools and technologies.

 

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

Technology is evolving at a pace that is difficult for many people to keep up. That is the challenge of living in a time where exponential growth in understanding innovation, technology and science are competing and complimenting one another. I’m heading to San Diego this afternoon for Singularity University’s ExMed conference where the primary topic of conversation will be what the future holds for the healthcare sector. I look forward to sharing any insights I gain with you when I get back. 



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October 05 2016

Commentary by Eoin Treacy

Musings from the Oil Patch October 4th 2016

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB which may be of interest. Here is a section

What we found surprising in the EIA’s forecast was the lack of penetration by EVs into the vehicle fleet. Based on the bars shown in Exhibit 8 (prior page) for plug-in and all-electric vehicles, the EIA’s sales total is less than one million units in 2040. To be honest, we find that acceptance rate to be extremely low given what the automobile industry is planning, at least based on their rhetoric. As a result, we are not sure what to make of the EIA’s outlook for gasoline consumption, which is shown in Exhibit 9. 

We will be working in the future to improve our forecasting model, but the conclusion we derive from our work is that the growth of the EV segment of the vehicle fleet will have an impact on gasoline consumption. The question is how much that impact will be. By 2025, according to our forecast, the impact may be anywhere from 500,000 barrels a day (b/d) to 1.0 million barrels a day (mmb/d) of reduced gasoline consumption. That is the equivalent of one to two huge refineries in this country. Moreover, the destruction of gasoline demand in later years becomes even more meaningful – nearly 2.5 mmb/d to 4.6 mmb/d - a huge impact on the refining industry let alone overall oil consumption in America. If we extrapolate the U.S. experience to the rest of the world, there will be a noticeable impact in transportation fuel markets. Regardless of whether our forecasts are right or not, the issue of EVs, and the associated issue of self-driving cars, will have an impact on oil demand, forcing the oil producing and refining sectors to have to re-examine their long-term strategies. 

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

I’ve been thinking recently about the manner in which people buy their cars and how this could influence their decisions on whether to buy electric vehicles. This article from Bloomberg carries some important statistics on leases. Here is a section: 

Leases accounted for 28 percent of new-car sales in September, up from 20 percent in 2012, according to car-sales tracker Edmunds.com. GM, Ford and Fiat all have reported strong sales in the latest quarter. As the chart above shows, they and Toyota have all ramped up their leasing in recent years.



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September 29 2016

Commentary by Eoin Treacy

D-Wave Systems previews 2000-qubit quantum processor

This press release from D-Wave Systems may be of interest to subscribers. Here is a section:

“As the only company to have developed and commercialized a scalable quantum computer, we’re continuing our record of rapid increases in the power of our systems, now up to 2000 qubits.  Our growing user base provides real world experience that helps us design features and capabilities that provide quantifiable benefits,” said Jeremy Hilton, senior vice president, Systems at D-Wave. “A good example of this is giving users the ability to tune the quantum algorithm to improve application performance."

“Our focus is on delivering quantum technology for customers in the real world,” said Vern Brownell, D-Wave’s CEO. “As we scale our processors, we’re adding features and capabilities that give users new ways to solve problems. These new features can enable machine learning applications that we believe are not available on classical systems. We are also developing software tools and training the first generation of quantum programmers, which will push forward the development of practical commercial applications for quantum systems.

Eoin Treacy's view -

D-Wave Systems has received investment from companies like Google and Lockheed Martin as well as NASA but its press releases have tended to trend towards exaggeration. There is considerable debate about the efficacy of the solutions they propose and if one is keeping up with the news there is obviously a chasm between the size of the computers D-Wave claims to be producing and those created by other more conservative companies. 



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September 27 2016

Commentary by Eoin Treacy

Iger's Legacy at Stake in Possible Disney Deal for Twitter

This article by Christopher Palmeri for Bloomberg may be of interest to subscribers. Here is a section:

The 65-year-old chairman and chief executive officer of Walt Disney Co. is scheduled to retire in June 2018. He’s already achieved a number of milestones, including Disney’s revival of the “Star Wars” film series and the opening in June of the company’s $5.5 billion Shanghai resort. But one issue bedevils him and most other media executives: how to transition to a world where mobile devices, not TV screens, dominate news and entertainment.

The question underscores Disney’s interest in Twitter Inc. The Burbank, California-based company has hired an investment bank to advise on a possible Twitter merger, Bloomberg News reported Monday. A deal would unite the world’s largest entertainment company, the home of ABC, ESPN and Mickey Mouse, with the technology pioneer that created the 140-character tweet. It could let Iger leave knowing he’s given Disney a big presence in digital media and advertising.

“That would be his final stamp on Disney,” said Tim Galpin, a professor of management at Colorado State University and co- author of “The Complete Guide to Mergers and Acquisitions.” “If he could get that behind him, he could walk off with a final major success story.”

Twitter, whose co-founder and CEO Jack Dorsey sits on the Disney board, has already been dipping his toes in live sports, airing National Football League’s night games. That’s a business that Disney, the parent of the leading sports TV network ESPN, knows well and that clearly intrigues Iger

Eoin Treacy's view -

The acquisition and successful reboot of Star Wars coupled with the opening of the Shanghai resort were major successes for Disney. However that does not obscure the fact that the company’s broadcasting and cable divisions represent almost half of revenues and face challenges from interlopers like Netflix, Hulu and YouTube. These challenges have yet to be addressed. 



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September 21 2016

Commentary by Eoin Treacy

Self-driving vehicles in China, Europe, Japan, Korea, and the United States

This report by Darrell M. West for the Brookings Institute may be of interest to subscribers. Here is a section:

Vehicles equipped with sensors and cameras navigate the streets of Mountain View, California; Austin, Texas; Kirkland, Washington; Dearborn, Michigan; Pittsburgh, Pennsylvania; Beijing, China; Wuhu, China; Gothenburg, Sweden; Rotterdam, Netherlands; Suzu, Japan; Fujisawa, Japan; and Seoul, South Korea, among other places. Sophisticated on-board software integrates data from dozens of sources, analyzes this information in real-time, and automatically guides the car using high definition maps around possible dangers. 

People are used to thinking about vehicles from a transportation standpoint, but increasingly they have become large mobile devices with tremendous processing power.2 Experts estimate that “more than 100,000 data points” are generated by technology in a contemporary automobile.3 Advances in artificial intelligence (software that applies advanced computing to problem-solving) and deep learning (software analytics that learn from past experience) allow on-board computers connected to cloud processing platforms to integrate data instantly and proceed to desired destinations. With the emergence of 5G networks and the Internet of Things, these trends will harbor a new era of vehicle development.

Between now and 2021, driverless cars will move into the marketplace and usher in a novel period.4 The World Economic Forum estimates that the digital transformation of the automotive industry will generate $67 billion in value for that sector and $3.1 trillion in societal benefits.5 That includes improvements from autonomous vehicles, connected travelers, and the transportation enterprise ecosystem as a whole.

 

Eoin Treacy's view -

A link to the full report is posted in the Subcsriber's Area.

There are two very big questions when it comes to the viability of self- driving cars. The first is whether it is technologically feasible to let a fleet of autonomous vehicles loose on the roads where the actions of unpredictable pedestrians, animals and weather will test an artificial intelligence to the limit. The second is the extent to which governments will successfully regulate for these vehicles so that insurance considerations can be ameliorated. 



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September 21 2016

Commentary by Eoin Treacy

September 20 2016

Commentary by Eoin Treacy

Tesla Wins Massive Contract to Help Power the California Grid

This article by Tom Randall for Bloomberg may be of interest to subscribers. Here is a section:

Tesla Motors Inc. will supply 20 megawatts (80 megawatt-hours) of energy storage to Southern California Edison as part of a wider effort to prevent blackouts by replacing fossil-fuel electricity generation with lithium-ion batteries. Tesla's contribution is enough to power about 2,500 homes for a full day, the company said in a blog post on Thursday. But the real significance of the deal is the speed with which lithium-ion battery packs are being deployed. 

"The storage is being procured in a record time frame," months instead of years, said Yayoi Sekine, a battery analyst at Bloomberg New Energy Finance. "It highlights the maturity of advanced technologies like energy storage to be contracted as a reliable resource in an emergency situation."

 

Eoin Treacy's view -

Tesla is essentially a battery company which also happens to produce electric cars. It has been my argument for quite some time that the only way solar can achieve grid parity is if it is used in conjunction with batteries. As long as solar power is subject to intermittency which forces utilities to maintain excess capacity it will not be taken seriously as a viable alternative to fossil fuels. 



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September 19 2016

Commentary by Eoin Treacy

Taiwan Stocks Jump Most in a Year as Apple Suppliers Lead Surge

This article by Kyoungwha Kim for Bloomberg may be of interest to subscribers. Here is a section:

Taiwanese shares jumped the most in a year amid speculation Apple Inc.’s latest iPhone model will prove popular, boosting earnings for the island’s suppliers.

The Taiex index advanced 2.8 percent at the close, its biggest gain since September 2015. Taiwan Semiconductor Manufacturing Co., a major Apple supplier, posted its biggest gain in a year, while Hon Hai Precision Industry Co., the main assembler of iPhones, added 3.9 percent. Apple has jumped 6.5 percent since Taiwan’s markets last traded on Wednesday amid holidays. The island’s dollar strengthened by the most since Aug. 1 against the greenback.

“It’s the Apple story again,” said Michael On, president of Beyond Asset Management in Taipei. “There’s a revived optimism that Apple will increase orders for Taiwanese suppliers after better-than-expected sales of the iPhone 7.”

T-Mobile US Inc. and Sprint Corp. said they’d received almost four times as many orders for the iPhone 7 as previous models, fueling speculation that the new product is off to a faster start than usual. Expectations for the iPhone 7 line had been muted before it was unveiled in San Francisco this month amid slowing growth in global smartphone sales.

 

Eoin Treacy's view -

As the world’s largest company Apple outsources all of its manufacturing which means it has a vast ecosystem of suppliers that are responding favourably to the release of the company’s new products as well as to the relative difficulties being experienced by Samsung. 



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September 15 2016

Commentary by Eoin Treacy

U.S. Stocks Rise on Apple Rally as Oil Advances; Bonds Mixed

This article by Oliver Renick and Jeremy Herron for Bloomberg may be of interest to subscribers. Here is a section: 

U.S. stocks rose from a two-month low as Apple Inc. extended a rally, while a rebound in crude boosted shares of energy producers. The selloff in longer-dated bonds eased amid data showing the American economy is on uneven footing.

The S&P 500 Index jumped as Apple pushed its four-day gain past 11 percent. The index slipped toward its 100-day moving average before pushing higher as the level held for a fourth day. Industrial production contracted more than forecast and retail sales unexpectedly slid, sending the odds for a rate increase next week below 20 percent. The dollar was little changed after initially turning lower on the sales data.

Sterling slid after the Bank of England said another rate cut this year is possible. Oil erased gains to fall back below $44 a barrel. 

Equities continued to whipsaw investors after Friday’s rout jolted markets from a two-month torpor and wiped almost $2 trillion in value from stocks amid concern that central banks would deliver smaller doses of stimulus even as the global economy sputters along. Apple’s advance has buttressed U.S. equity indexes, as consumers snapped up the new iPhone model.

 

Eoin Treacy's view -

Apple still has the world’s largest market cap at $620 billion so its underperformance over the last year has represented a drag on the wider market. In fact the drag has been compounded by the impact Apple’s decline in sales growth has had on its suppliers. 



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September 15 2016

Commentary by Eoin Treacy

September 13 2016

Commentary by Eoin Treacy

Bugs on Screen

This article by Ekaterina Pesheva for the Harvard Medical School may be of interest to subscribers. Here is a section:

Over two weeks, a camera mounted on the ceiling above the dish took periodic snapshots that the researchers spliced into a time-lapsed montage. The result? A powerful, unvarnished visualization of bacterial movement, death and survival; evolution at work, visible to the naked eye.

The device, dubbed the Microbial Evolution and Growth Arena (MEGA) plate, represents a simple, and more realistic, platform to explore the interplay between space and evolutionary challenges that force organisms to change and adapt or die, the researchers said.

“We know quite a bit about the internal defense mechanisms bacteria use to evade antibiotics but we don’t really know much about their physical movements across space as they adapt to survive in different environments,” said study first author Michael Baym, a research fellow in systems biology at HMS.

The researchers caution that their giant petri dish is not intended to perfectly mirror how bacteria adapt and thrive in the real world and in hospital settings, but it does mimic more closely the real-world environments bacteria encounter than traditional lab cultures. This is because, the researchers say, in bacterial evolution, space, size and geography matter. Moving across environments with varying antibiotic strengths poses a different challenge for organisms than they face in traditional lab experiments that involve tiny plates with homogeneously mixed doses of drugs.

 

Eoin Treacy's view -

There are encouraging advances occurring in the development of antibacterial medicines using new kinds of antibiotics, phages and genetics. Considering the rates at which bacteria can mutate we are going to need them all. 

 



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September 08 2016

Commentary by Eoin Treacy

GW Pharmaceuticals Jumps on Report It May Be Acquisition Target

This article by Caroline Chen for Bloomberg may be of interest to subscribers. Here it is in full:

GW Pharmaceuticals Plc jumped after Reuters reported that the company had hired Morgan Stanley as an adviser after being approached by several drugmakers interested in an acquisition.

GW gained 20 percent to $101.47 at 3:31 p.m. in New York trading, its biggest intraday gain since March. Reuters cited people familiar with the matter in its report.

The U.K. company, with a market value of $2.56 billion, develops drugs derived from cannabis. Its leading asset is an experimental treatment for epilepsy, and it’s also working on candidates for cancer, type 2 diabetes and schizophrenia. GW has one approved drug, Sativex, which is used to control involuntary muscle spasms from multiple sclerosis.

Insys Therapeutics Inc., which develops drugs based on synthetic cannabis, rose 5 percent to $15.67.

GW, based in Cambridge, England, isn’t currently interested in a sale, Reuters reported, citing people familiar with the matter. A representative for GW declined to comment.

 

Eoin Treacy's view -

Cannabis is increasingly being recognised for its uses as a pain reliever and mood stabiliser; confirming what millions of users in the illicit market have testified to for decades. With the tide of public opinion turning there is a race on to secure interests in the sector as companies bet on the potential for further legalisation to be approved in the USA, not least during the November ballot. 



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September 01 2016

Commentary by Eoin Treacy

IBM's Watson supercomputer creates a movie trailer

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

But perhaps the most beguiling, and subversive, aspect of Watson's trailer was how much it de-emphasised the monstrous nature of the human/nanotech hybrid. The irony of this entire project is that we have a film where a form of AI turns violent and kills humans, but the AI tasked with making the film's trailer ends up playing down that entire facet of the narrative.

Aside from being a fun experiment in computer-generated creativity, this project also proposes a speedy alternative to a generally costly and time-consuming process. The construction of a film trailer is usually an intensive practice taking several weeks to produce, but this trailer took only 24 hours to construct, from Watson "watching" the film to a human editor delivering the final product.

Making a good film trailer is a delicate balance between art and commerce. If anything this experiment still goes to show that a strong human hand is necessary even when producing what many would determine to be a disposable advertisement. Still, I wouldn't mind getting Watson's perspective on a few sci-fi films that vilify artificial intelligence. Maybe there is a Terminator trailer on the cards that sympathizes with Skynet or a view on 2001: A Space Odyssey where HAL 9000 is the film's hero?

 

Eoin Treacy's view -

IBM is in the midst of redeploying its knowhow from a company that delivered hardware to one almost entirely focused on software/computing as a service and Watson represents a big part of that. Meanwhile IBM is also advancing the development of quantum computers where it already has a 5-qubit prototype that it hopes to offer third party access too shortly. 



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August 31 2016

Commentary by Eoin Treacy

SWIFT discloses more cyber thefts, pressures banks on security

This article by Jim Finkle for Reuters may be of interest to subscribers. Here is a section:

A SWIFT spokeswoman declined to elaborate on the recently uncovered incidents or the security issues detailed in the letter, saying the firm does not discuss affairs of specific customers.
All the victims shared one thing in common: Weaknesses in local security that attackers exploited to compromise local networks and send fraudulent messages requesting money transfers, according to the letter.

Accounts of the attack on Bangladesh Bank suggest that weak security procedures there made it easier to hack into computers used to send SWIFT messages requesting large money transfers. The bank lacked a firewall and used second-hand, $10 electronic switches to network those computers, according to the Bangladesh police.

SWIFT has repeatedly pushed banks to implement new security measures rolled out after the Bangladesh heist, including stronger systems for authenticating users and updates to its software for sending and receiving messages. But it has been difficult for SWIFT to force banks to comply because the nonprofit cooperative lacks regulatory authority over its members.

SWIFT told banks Tuesday that it might report them to regulators and banking partners if they failed to meet a November 19 deadline for installing the latest version of its software, which includes new security features designed to thwart the type of attacks described in its letter.

The security features include technology for verifying credentials of people accessing a bank's SWIFT system; stronger rules for password management; and better tools for identifying attempts to hack the software. 

 

Eoin Treacy's view -

The vulnerability of central banks and financial institutions to cybercrime is truly worrying and the fact the Bangladesh central bank didn’t have so much as a firewall exemplifies just how big the problem is. Swift is a global network with huge vulnerabilities. The problem is the penalty for laxity is so low that governments have been slow to act. It is questionable whether anyone will even lose their job because of the Bangladesh scandal. 



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August 30 2016

Commentary by Eoin Treacy

How the European Commission calculated 13bn tax bill

This article by Suzanne Lynch for the Irish Times may be of interest to subscribers. Here is a section:

Ms Vestager said on Tuesday that the commission had concluded that the splitting of Apple’s profits between the two parts of the AOE and ASI companies “did not have any factual or economic justification.”

In short, the commission has concluded that Ireland gave illegal state aid to Apple, in breach of EU law.

It will now fall to lawyers for the accused to contest this.

The refrain from Government circles has long been that the EU may not have liked the tax structures that were in place at the time when the Apple deal was struck but that does not mean that they were illegal.

It may be some years before a definitive answer on this question will be reached.

 

Eoin Treacy's view -

The European Commission has raised important issues for Ireland not least because without its sovereign ability to set taxation there is very little reason for such a large number of Silicon Valley’s best and brightest companies to choose the little island in the North Atlantic as their favoured destination for European headquarters. 



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August 30 2016

Commentary by Eoin Treacy

Ports, a Sign of Altered Supply Chains

This article from the Wall Street Journal may be of interest to subscribers. Here is a section:

“The running joke going around is that flat is the new growth,” said Jett McCandless, chief executive of transportation-technology startup project44.

Freight volumes are stagnating despite strong consumer spending, which rose for a fourth-straight month in July. The problem for traditional retailers: More of those dollars are being spent online, or on entertainment and services such as health care.

Many retailers are stuck with large amounts of unsold goods as a result, reducing their need to import more merchandise. Even after a year of attempting to slim down inventories, retailers’ ratio of inventories to sales, a measure of excess stocks, touched 1.5 in June, close to a seven-year high, according to the Census Bureau. In their most recent earnings reports, Target and Lowe’s reported inventories up more than 4% over the same period last year.

J.C. Penney is placing “slightly smaller orders…or holding back quite a bit” to reduce inventories, Mike Robbins, J.C. Penney’s executive vice president for supply chain, told investors in June. The company has reduced the size of some orders at the beginning of major shopping seasons by as much as 70%.

The focus on reducing inventories is proving to be a drag on growth because it signals that businesses are spending less, and might be pessimistic about future demand. Inventory drawdowns cut second-quarter growth by 1.26 percentage points, to just 1.1%.

Shipping lines are struggling to plan their routes as order volumes become more difficult to predict, said Niels Erich, spokesman for a group of 15 major shipping lines known as the Transpacific Stabilization Agreement. In the past, carriers could count on the peak summer months to make up for slower winter trade.

 

Eoin Treacy's view -

There is no doubt that the disintermediation which characterises online retail has a deflationary impact on how economic growth is measured because it inhibits the velocity of money. I do not view it as a coincidence that the Velocity of M2 has been contracting since 1997 when the internet began to have an impact on the retail sector. 



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August 26 2016

Commentary by Eoin Treacy

Mylan CEO Blamed Obamacare for EpiPen Sticker Shock

This article by Jen Wieczner for Fortune.com may be of interest to subscribers. Here is a section:

Now Mylan appears to be learning the same hard lesson this week that Martin Shkreli and Valeant  VRX -0.51%  learned last year: Investors love when pharmaceutical companies raise drug prices—until everybody else gets really upset about it. Shares of Mylan  MYL 1.66%  have dropped more than 11% this week, down more than 5% on Wednesday alone.

And the EpiPen controversy is drawing comments from some high-profile figures, including Hillary Clinton and Martin Shkreli himself, who tweeted that he thought the EpiPen’s price should even be higher. On Wednesday, Clinton said there was no justification for the price hikes. Her comments came shortly after the Senate Committee on Aging asked Mylan to provide information on the reasoning behind what it called the “drastic” price increase of EpiPen, and the American Medical Association “urge[d]” Mylan to “rein in these exorbitant costs.”

The pricing scandal is happening at the worst possible time for Mylan. This is typically the company’s biggest season, driven by EpiPen sales, which peak during back-to-school shopping as parents and schools equip for the coming year.

Eoin Treacy's view -

Biotechnology companies justify the high price of new drugs with the argument that it is the only way to recoup the cost of developing them. Without high prices there would be no incentive to invest in the uncertainty of R&D and lengthy clinical trials. 



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August 24 2016

Commentary by Eoin Treacy

Delphi, Mobileye Join Forces to Develop Self-Drive System

This article by Mike Colias for the Wall Street Journal may be of interest to subscribers. Here is a section: 

We’re able to pool the investment as well as the technology and execution risk in one place so it doesn’t have to be duplicated by multiple [auto makers] over and over again,” Mr. Clark said.
The pair will jointly invest “several hundred million dollars” in the effort, but a spokesman declined to provide other details.

In January, Delphi and Mobileye expect to demonstrate a system that can navigate tough road conditions, such as entering a roundabout, merging into highway traffic, or making left turns across multiple traffic lanes.

Both companies have deep relationships with car makers, but their system won’t be ready until 2019. Integrating their tech in future vehicles could take as much as two years, the companies concede, making it unlikely to hit the market until 2021 or 2022.

Mobileye Chairman and Chief Technology Officer Amnon Shashua said the pair hope to overcome any timing hurdles by offering “a new level of driving intelligence,” mimicking a driver’s decision making behind the wheel in complex situations. “If we don’t want to clog a city with robotic systems that get stuck in busy traffic, you must endow these systems with intelligence.”

 

Eoin Treacy's view -

Automotive manufacturers have an incentive to deliver on autonomous vehicles because they believe it would have the same effect on car ownership as the introduction of smart phones did for hand held mobile devices. Prior to the introduction of the iPhone most people already had a mobile phone yet they felt compelled to upgrade when the additional benefits of a smartphone were revealed, For companies trying to differentiate themselves in an increasingly competitive market autonomous vehicles represent a compelling vision for the future. 



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August 11 2016

Commentary by Eoin Treacy

Alibaba's revenue beats estimates; mobile revenue soars

This article from Reuters may be of interest to subscribers. Here is a section: 

Alibaba's total revenue rose to 32.15 billion yuan, or $4.84 billion, in the quarter ended June 30 from 20.25 billion yuan a year earlier. Analysts on average had expected revenue of 30.17 billion yuan, according to Thomson Reuters I/B/E/S.

Mobile revenue from the company's China commerce retail business increased 119.3 percent to 17.51 billion yuan, while monthly mobile active users increased 39 percent.

"We passed an important milestone this quarter in achieving higher monetization of mobile users than non-mobile users for the first time," Chief Financial Officer Maggie Wu said.

The company said its gross merchandise volume (GMV) - the value of transactions carried out by third-party sellers on the company's platforms - rose 24.4 percent to 837 billion yuan.

Alibaba said in June it would in the future only release GMV figures on an annual basis. The change followed the disclosure that the U.S. Securities and Exchange Commission was looking into the company's accounting practices. 

 

Eoin Treacy's view -

Mobile is quickly becoming the dominant force in internet search, retail and advertising not least because of the heavy focus users of social media have on their handheld devices. That trend is even more pronounced in emerging markets; where many consumers first experience of the internet is via their mobile device. That represents a significant growth trajectory for companies that have dominant positions in the respective social media and mobile advertising markets. 



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August 09 2016

Commentary by Eoin Treacy

Email of the day on cybersecurity threats

This article in the Guardian, on line, clearly demonstrates the sense in your focus over many articles and audios, on cyber security and why we need to pay attention to it - both for our own security and for the potential of a growth market.

If the cyber experts and hacker communities are worried, maybe we should very very scared - most of us are only suspicious, wary of ghosts in the cupboard because we are not really sure - these guys should know - and they are worried!

Take heed, and, maybe take profit! - following your advice from several comments in the last months at the very least.

 

Eoin Treacy's view -

Thank you for this interesting article but there is not a great deal that is new in its content. Ransomware is a growing global threat and the number of small businesses being targeted is expanding exponentially. The criminals concerned have a particular penchant for targeting hospitals and police departments because they have access to public cash and can’t function without their databases not least because lives are literally on the line. However they are also going after smaller targets. 



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August 05 2016

Commentary by Eoin Treacy

Bristol-Myers Plummets as Drug Misses Key Lung-Cancer Goal

This article by Cynthia Koons for Bloomberg may be of interest to subscribers. Here is a section:

“This is a major surprise -- possibly the biggest clinical surprise of my career,” Evercore ISI analyst Mark Schoenebaum, who recommends holding Bristol-Myers stock, wrote in a note. “Investors had high expectations for this trial.”

The results reflected a risky but potentially lucrative bet by Bristol-Myers, highlighting a difference in strategy with Merck. By designing its study to include patients with lower levels of a key biomarker thought to predict response to the drug, Bristol-Myers was aiming at a far larger market for Opdivo. Merck’s Keytruda trial, meanwhile, focused on a smaller subset with high levels of the biomarker, called PD-L1 -- fewer patients, but a better chance of success.

Opdivo didn’t meet its primary goal of lengthening progression-free survival in patients with previously untreated advanced non-small cell lung cancer, compared with chemotherapy, Bristol-Myers said in a statement. The New York-based company is working on completing an evaluation of the late-stage trial’s results.

Bristol-Myers Chief Executive Officer Giovanni Caforio said the company is now focused on combination therapies, which could potentially create a better outcome for the group of patients that don’t get results on drugs like Opdivo alone.

“We have a very broad development program in lung cancer and we are answering a number of very important questions,”

Caforio said in a phone interview Friday. “The role of monotherapy might be limited to a very small subset of patients in the first-line setting, which makes our program now ideally suited to address the next question, which is: ‘What is the role of combination therapy?”’ That will come from a study that analysts said would likely read out in 2018.

 

Eoin Treacy's view -

As a major Biotechnology company Bristol Myers Squibb benefitted enormously from being in a position to acquire promising research in the aftermath of the TMT bubble in the 1990s. That has led it to develop a broad spectrum product range that is cash flow positive and has allowed the share to hold a progression of higher reaction lows despite the turmoil that has affected the biotech sector from last year. 



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August 04 2016

Commentary by Eoin Treacy

This Time, 3D Printer Makers Think They Found a Sweet Spot

This article by Olga Kharif for Bloomberg may be of interest to subscribers. Here is a section: 

HP’s technology may usher in a new era for the industry. Production applications for 3D printing could eventually grab at least 5 percent of the worldwide manufacturing economy, and translate into $640 billion in annual sales, according to Wohlers Associates, which has tracked the 3D printing market for 28 years.

Evolving Business
“It’s one of our anchor businesses we’ll divert money on,” HP Chief Technology Officer Shane Wall said in an interview. “It’s a very high strategic value for us.”

3D Systems Chief Executive Officer Vyomesh Joshi, who joined the Rock Hill, South Carolina-based company in April after more than three decades at HP, said on a conference call Wednesday that his business is evolving from prototyping to “light production.” The shares rallied 18 percent after the company posted second-quarter earnings that beat analysts’ estimates and said its profit margin increased from a year earlier partly as it shifted away from consumer products.

A few years ago, the industry had banked on putting a 3D printer in every home -- yet that market never materialized as consumers found the devices fragile, expensive and snail slow. That bet proved torturous to 3D Systems and Stratasys, both of whose shares plunged about 85 percent since the beginning of 2014. More recently, the stocks have been under pressure by a slowdown in sales for prototyping applications as customers delay purchases to evaluate new products from companies like HP, said Robert Burleson, an analyst at Canaccord Genuity.

 

Eoin Treacy's view -

3-D Systems and Stratasys went on a buying spree between 2012 and 2014 that saw them become the dominant players in the sector. It also left them with the problem of how to integrate all the competing pieces of technology into a cohesive product offering. At same time rapid demand growth for their products from the retail segment has not evolved as quickly as anticipated and their shares collapsed. The entry of much larger companies like HP and Autodesk represent additional threats.  



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August 03 2016

Commentary by Eoin Treacy

Bitcoin worth $72 million stolen from Bitfinex exchange in Hong Kong

This article by Claire Baldwin for Reuters may be of interest to subscribers. Here is a section:

"The bitcoin was stolen from users' segregated wallets," he said.

The company said it had reported the theft to law enforcement and was cooperating with top blockchain analytic companies to track the stolen coins.

Last year, Bitfinex announced a tie-up with Palo Alto-based BitGo, which uses multiple-signature security to store user deposits online, allowing for faster withdrawals.

"Our investigation has found no evidence of a breach to any BitGo servers," BitGo said in a Tweet.
"With users' funds secured using multi-signature technology in partnership with BitGo, a lot more is at stake for the backbone of the bitcoin industry, with its stalwarts and prided tech under fire," said Charles Hayter, chief executive and founder of digital currency website CryptoCompare.

The security breach comes two months after Bitfinex was ordered to pay a $75,000 fine by the U.S. Commodity and Futures Trading Commission in part for offering illegal off-exchange financed commodity transactions in bitcoin and other digital currencies. 

 

Eoin Treacy's view -

Even the biggest lock in the world can be opened if you have the key. What’s inside is not influenced by that simple fact and neither is the supply of whatever it is. At over $500 per bitcoin the cryptocurrency has value and the blockchain equation solving process which mints bitcoins has real world applications because it is so difficult to tamper with. However the warehouses people use to trade in bitcoins do not appear to have solved the problem of securing client accounts and access keys. With such rich pickings they are targets for criminals, which represent a problem for investors seeking to participate directly in the market. 



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August 01 2016

Commentary by Eoin Treacy

Amazon Takes on Alibaba With Japan Portal for Chinese Shoppers

This article by Grace Huang and Reed Stevenson for Bloomberg may be of interest to subscribers. Here is a section: 

“The opportunity is huge,” said Jasper Cheung, president of Amazon Japan. “We have already increased the selection that we can export by the millions over the last several weeks.”

Chinese shoppers are looking for authentic Made-in-Japan products, spooked by tainted baby milk and fake merchandise proffered on web stores in China. While that’s helping to drive an influx of shoppers to Japan -- 3.08 million Chinese tourists have visited the archipelago so far this year, up 41 percent -- it’s also boosting demand for Amazon.co.jp, Wandou and other web outlets featuring Japanese goods.

Rakuten Inc., the Japanese online store, also lets people shop for stuff from Japan in Chinese, as well as in Korean and English. Amazon’s Japan website has been available in English for years.

The new iteration of Amazon Japan’s shopping portal, in simplified Chinese, offers millions of products with more coming, the company said. Consumers in Asia’s biggest economy are demanding access to authentic brands and quality, from clothing and cosmetics to baby products and health goods. That’s why Costco Wholesale Corp. has a shop on Alibaba’s Tmall.com, while Macy’s Inc. and other U.S. retailers are tapping into China’s dominant online-payments system by accepting Alipay on their sites.

 

Eoin Treacy's view -

For billions of new consumers entering the middle classes their first taste of consumerism is likely to be via their mobile phones where they are aggressively marketed to via Wechat, Facebook, Instagram and a host of other social media sites. That puts dominant online marketplaces like Amazon, Alibaba, Ebay and Rakuten in a favourable position to compete for their business and China represents a major battleground. Uber’s experience in China highlights the difficulty of doing business in that country where one is competing with a domestic copycat operation. Amazon’s strategy of building out its Japanese operation may act as a hedge to domestic Chinese operations where it competes directly with JD.com and Alibaba.  



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July 28 2016

Commentary by Eoin Treacy

Biotechnology

Eoin Treacy's view -

This sector was the darling of the investment community until about a year ago when Biogen had a disappointing quarter, Valeant’s business model blew  up shortly afterwards and despite the fact it is not a biotech company, the sector was hit by the same selling pressure. When politicians took aim at the high charges of drugs and new treatments, it contributed to additional selling pressure. 



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July 27 2016

Commentary by Eoin Treacy

Security Landscape Continues to Evolve

Thanks to a subscriber for this report from Level 3 Communications which may be of interest. Here is a section:

431 million new malware variants seen in 2015, an increase of 36% Source: Symantec Internet Security Report, April 2016

The mean number of days to resolve cyber-attacks is 46, with an average cost of $21,155/day (global, standardized into U.S. dollars) Source: Ponemon 2015 Global Cost of Cyber Crime Study, October 2015

9 breaches in 2015 with more than 10 million identities exposed: a total of 429 million exposed Source: Symantec Internet Security Report, April 2016

The mean annualized cost of cybercrime to global organizations is $7.7 million/year (standardized into U.S. dollars) Source: Ponemon 2015 Global Cost of Cyber Crime Study, October 2015

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

The growth of cybercrime is nothing short of exponential not least because it is comparatively cheap to develop, it is global in nature, prosecution rates are woefully low and the rewards are highly attractive. Combatting the threat requires a war footing to be adopted by corporations and outside of the high tech sector many companies have proven ill-equipped to deal with the challenge. 



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July 26 2016

Commentary by Eoin Treacy

US to create nationwide network of EV charging stations

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

The US government has announced "an unprecedented set of actions" to pump up the country's plug-in electric vehicle market, including US$4.5 billion in loan guarantees to create a nationwide network of commercial scale and fast charging stations. The initiative to push for greater electric car adoption calls for a collaboration between federal and state agencies, utilities, major automakers and other groups.

The initiative will identify zero emission and alternative fuel corridors across the country, to determine the best locations to put in fast charging stations, as part of the Fixing America's Surface Transportation (FAST) Act.

As part of a partnership between the US departments of energy and transportation, a 2020 vision for a national fast charging network will be developed, with potential longer-term innovations that include up to 350 kW of direct current fast charging. According to the administration, a 350 kW DC system could charge a 200-mile-range battery in less than 10 minutes. For comparison, Tesla just boosted some of its Superchargers' power capacity to 145 kW, which is claimed the fastest currently available.

Eoin Treacy's view -

Governments are getting behind the need for a jump in the efficiency of batteries. If electric vehicle range anxiety is truly to be overcome batteries that can power a car all day, with the air conditioning on, while charging my phone and iPad as I listen to the radio are required. Many people feel they need a workhorse that can fulfil just about any task rather than just commuting. Continued high demand for light trucks is testament to that which is probably why Elon Musk gave a nod to heavier vehicles when announcing his latest growth plan last week. 



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July 22 2016

Commentary by Eoin Treacy

Apple Watch Sales Fall 55% in Second Quarter, IDC Report Says

This article by Nicole Piper for Bloomberg may be of interest to subscribers. Here is a section:

Apple Inc. sold 1.6 million watches in the second quarter of this year, down from 3.6 million units a year earlier, IDC said. Global smartwatch sales fell 32 percent to 3.5 million units.

While Apple held on to its position as the industry leader, with 47 percent of the market, it was the only company in the top five to see a decline. Samsung Electronics Co. saw its market share more than double to 16 percent.

“Consumers have held off on smartwatch purchases since early 2016 in anticipation of a hardware refresh, and improvements in WatchOS are not expected until later this year, effectively stalling existing Apple Watch sales," IDC analyst Jitesh Ubrani wrote in the report. “Apple still maintains a significant lead in the market and unfortunately a decline for Apple leads to a decline in the entire market.”

Apple Watch is the company’s first new hardware product since the iPad’s 2010 debut and is a key part of Chief Executive Officer Tim Cook’s strategy to find new areas of growth as sales of the iPhone slow. Apple is expected to introduce an updated operating system and an Apple Watch 2 this fall, promising new features and better performance.

IDC said despite Apple’s sharp drop it expects growth in 2017, as continued development appeals to a broader market.

“Every vendor faces similar challenges related to fashion and functionality, and though we expect improvements next year, growth in the remainder of 2016 will likely be muted,” said Ubrani.

 

Eoin Treacy's view -

Smart watches can measure steps, constantly record heart rate, display text messages, alert us to incoming calls and act as payment mechanisms when we don’t have our wallets. While each of these functions might have been the preserve of a single company when they were debuted most providers now offer some variation on all of them. That suggests the premium price point commanded by Apple Watch isn’t justified not least as a widely expected reboot of the product is expected later this year. That is likely to at least include enhancements to battery life that might allow for some of the more ambitious health related apps to be introduced.



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July 21 2016

Commentary by Eoin Treacy

Email of the day on Chinese international acquisitions

Have a look at this deal:    

My son is COO of this business.  Keith is 35 years of age with a PhD in Molecular Biology plus a number of years at Merrill Lynch.

I understand the sale price was very sweet. Seems to be yet another example of many eager buyers when "money has no cost". I am told the Chinese are eager to access Genesis IP. The buyers are also discussing ambitious new business targets for Genesis going forward.  I understand these new business opportunities have already been identified.    

This deal is not one of our Prime Minister's new sexy IT business opportunities.  A message our PM incessantly preaches to the electorate. Perhaps our PM should stop trying to pick winners. There are many areas of the local economy where Australia demonstrates very competitive global business skills.  This includes but is not exclusive to medical services. Sadly this message from our business leaders has been repeatedly and firmly ignored by both the Canberra bureaucracy and our nation's political elite.

 

Eoin Treacy's view -

Thank you for this email and congratulations to your son on playing a pivotal role in such a successful company. I agree we would likely all be better off if politicians left running companies to the companies themselves rather than assuming they have specialist knowledge in areas they have no experience of. 



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July 20 2016

Commentary by Eoin Treacy

TerraForm Global Rises amid Talks with SunEdison to Sell Stake

This article by Christopher Martin for Bloomberg may be of interest to subscribers. Here is a section:

TerraForm Global and SunEdison are in talks regarding “a jointly managed sales process and accompanying protocol for managing the marketing process,” according to a presentation posted on TerraForm Global’s website Tuesday. SunEdison is currently involved in the biggest ever sale of clean energy assets after filing for bankruptcy protection in April with $16.1 billion in liabilities. It has not announced a process for selling its controlling stake in TerraForm Global or its sister yieldco TerraForm Power Inc.

TerraForm Global, a yield company formed by SunEdison to buy clean power plants built by SunEdison outside of the U.S., owns 917 megawatts of solar and wind energy plants, mostly in southeast Asia and South America. The company had revenue of as much as $52 million in the first quarter, according to the presentation.

It also reported preliminary losses of as much as $350 million for the second half of last year, and a preliminary loss of as much as $8 million for the first quarter of this year.

TerraForm Global has not filed results since the third quarter because it relies on SunEdison for some accounting systems, and the parent company’s results are also delinquent.

Eoin Treacy's view -

Financial engineering contributed to SunEdison’s demise because it divested itself of income producing assets while holding onto liabilities. That worked fine while oil prices were high, demand for solar plants was surging and credit was easy to come by. The decline in oil, natural gas and particularly coal prices questioned the profitability of solar plants and the share collapsed. 



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July 19 2016

Commentary by Eoin Treacy

Poorer than their parents? A new perspective on income inequality

Thanks to a subscriber for this article by Richard Dobbs and colleagues at McKinsey. Here is a section:

The economic and social impact is potentially corrosive. A survey we conducted as part of our research found that a significant number of those whose incomes have not been advancing are losing faith in aspects of the global economic system. Nearly one-third of those who are not advancing said they think their children will also advance more slowly in the future, and they expressed negative opinions about free trade and immigration.

If the low economic growth of the past decade continues, the proportion of households in income segments with flat or falling incomes could rise as high as 70 to 80 percent over the next decade. Even if economic growth accelerates, the issue will not go away: the proportion of households affected would decrease, to between about 10 and 20 percent—but that share could double if the growth is accompanied by a rapid uptake of workplace automation.

The encouraging news is that it is possible to reduce the number of people not advancing. Labor-market practices can make a difference, as can government taxes and transfers—although the latter may not be sustainable at a time when many governments have high debt levels. For example, in Sweden, where the government intervened to preserve jobs during the global downturn, market incomes fell or were flat for only 20 percent of households, while disposable income advanced for almost everyone. In the United States, lower tax rates and higher transfers turned a decline in market incomes for four-fifths of income segments into an increase in disposable income for nearly all households. Efforts such as these—along with additional measures such as encouraging business leaders to adopt long-term thinking—can make a real difference. The trend of flat and falling real incomes merits bold measures on the part of government and business alike.

 

Eoin Treacy's view -

With so many voters, internationally, expressing dissatisfaction with the economy and their role within it, there is already evidence this is going to become an election issue in almost all upcoming elections whether in the USA or Europe. 

The populist answer to inequality is to support protectionism and there are already signs of electorate unease with additional international trade harmonisation. However despite likely support for protectionism the march of automation means these types of policies are unlikely to result in significant additional jobs in developed economies. It is no exaggeration that China and other Asian counties are engaged in the equivalent of an arms race to boost automation in order to make sure the jobs that moved there in search of lower labour costs stay there as wages rise. 

 



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July 15 2016

Commentary by Eoin Treacy

Samsung in Talks With BYD to Buy Stake in Electric-Car Maker

This article from Bloomberg may be of interest to subscribers. Here is a section: 

BYD said Samsung has been actively pushing forward talks about buying its shares in a private placement. Talks are still underway, the Chinese company said, denying a report by the Korea Economic Daily that an agreement was reached to acquire a 4 percent stake.

Samsung is pursuing the investment after its affiliate was among foreign battery makers left off a list of suppliers approved by China, where sales of electric vehicles are surging and the government has sped up construction of charging points.

The talks with BYD also add to the global trend of technology companies and automakers collaborating as car buyers increasingly demand more advanced powertrains and features that improve connectivity and safety.

“It puts Samsung into the electric-vehicle subsystem supply chain for a key Chinese electric vehicle and battery manufacturer,” said Bill Russo, a Shanghai-based managing director at Gao Feng Advisory Co. “BYD gets a technology innovation pipeline partner with a reputable brand.”

 

Eoin Treacy's view -

China is the world’s largest car market. With a concerted government backed push into electric vehicles any company seeking to ride the wave to emerging automotive technology cannot afford to lose access to the market. Therefore BYD represents an attractive avenue for foreign investors. While in the USA Tesla sets the pace for what other companies are expected to provide, China’s state mandated vision for zero emissions represents an even more important influence on the market. Car companies have to try and build products for a global audience in order to keep costs under control. Therefore any company seeking to compete globally needs to have a foothold in China. 



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July 14 2016

Commentary by Eoin Treacy

Nest's new outdoor camera is smarter at spotting people

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

Talking and listening functions are built-in, too, so you can chat with the postman or listen to the pitch of a door-to-door salesman without leaving your chair.

At the same time, Nest is upgrading its Nest Aware service, the cloud subscription plan available as an optional extra if you buy one of the company's indoor or outdoor cameras. While the free Nest app lets you tune into a camera at any time and get basic motion and sound alerts, Nest Aware (starting at US$10/month) enables you to also look back through several days of recorded footage saved to the cloud, and set up "zones" in the camera's field of view.

If you do decide to subscribe to Nest Aware, you'll be able to take advantage of the new Person Alerts feature. Nest says it uses advanced, cloud-based algorithms (presumably borrowed from parent company Alphabet/Google) to more accurately tell the difference between actual people and everything else (like dogs or a cars).

 

Eoin Treacy's view -

Intelligent home security and monitoring functionality is a big business. Anyone who has ever had a quote for a home security system to be installed will be familiar with how the agent can ramp up costs depending on how much they believe you have available to spend. It was eye opening for me when we had quotes ranging from $300 to $1500 for installation with an embedded commitment to a monthly subscription for monitoring.



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July 11 2016

Commentary by Eoin Treacy

Google Plans to Train 2 Million Indian Developers on Android

This article by Saritha Rai for Bloomberg may be of interest to subscribers. Here is a section: 

Google launched a program to train 2 million developers in India for its Android platform as its fires up a race with Apple Inc. for the country’s developers to create innovative mobile apps.

The Android Skilling program will be introduced for free across hundreds of public and private universities and training schools through a specially designed, in-person program this year. The program would also be available through the government’s National Skills Development Corporation of India, the company said in a statement.

India is expected to have the largest developer population with 4 million people by 2018, overtaking the U.S., but only a quarter are building for mobile, said Caesar Sengupta, vice president of product management at Google.

“We believe India is uniquely placed to innovate and shape the internet experience of billions of users who are and will come online on the mobile platform,” he said in the statement.

Google plans to make the curriculum accessible to millions for free to help make India a global leader in mobile development.

 

Eoin Treacy's view -

Silicon Valley technology companies have been vocal in their desire to see more people take up coding as a profession and most particularly with a focus on their own operating systems. Google’s decision to facilitate more people learning how to code apps in Android is a direct attempt to challenge Apple’s dominance of the App market. Considering how much each of us use apps on a daily basis, and the insights they offer into the various facets of our lives, growth among operating system developers like Google, Apple and Microsoft is likely predicated on continued dominance of their niche within the wider technology sector and the high barrier to entry it offers.   



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July 08 2016

Commentary by Eoin Treacy

Nvidia's GTX 1060 is VR-ready and affordable

This article from Gizmag may be of interest to subscribers. Here is a section: 

The GTX 1060 is also fully VR-ready, meaning you can expect a smooth experience using it with the Oculus Rift or HTC Vive. The card is also a lot more energy efficient for VR gaming, consuming just 120 watts of power during use.

Perhaps the biggest news is the price point of the GTX 1060, which is set at US$249 – less than half the $549 launch price of the performance-comparable GTX 980.

Alongside rival AMD's just-launched RX 480 GPU, the cost of building a VR-ready PC is significantly lower than it was at the launch of the Rift and Vive, dropping from roughly $950 to around $800 or less. That's still a hefty sum, but it'll likely make VR more appealing for PC gamers who have been holding off until now.

 

Eoin Treacy's view -

Virtual reality applications require major upgrades in both graphics cards and processing power. Gaining access to the enhanced sensory experiences on offer therefore means spending on new phones for a basic version or new computers and other hardware for the best in class. 



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June 23 2016

Commentary by Eoin Treacy

IBM to deliver 200-petaflop supercomputer by early 2018

This article from ExtremeTech may be of interest to subscribers. Here is a section: 

More supercomputer news this week: The US is responding to China’s new Sunway TiahuLight system that was announced Monday, and fast. First, the Department of Energy’s (DOE) Oak Ridge National Laboratory is expected to take delivery of a new IBM system, named Summit, in early 2018 that will now be capable of 200 peak petaflops, Computerworld reports. That would make it almost twice as fast as TaihuLight if the claim proves true. (We had originally reported in 2014 that both Summit and Sierra would achieve roughly 150 petaflops.)

TaihuLight (pictured below) now sits at number one on the twice-yearly TOP500 list of the fastest supercomputers in the world, with a Linpack benchmark score of 93 petaflops and a claimed peak of 124.5 petaflops. The latest TOP500 announcement Monday caused a bit of a stir. Not only is TaihuLight roughly three times faster than China’s Tianhe-2, the prior champion, but it also uses no US-sourced parts at all for the first time, as it’s powered by Sunway 260-core SW26010 processors that are roughly on par with Intel Xeon Phi, as well as custom proprietary interconnect.

 

Eoin Treacy's view -

Supercomputers might be a somewhat esoteric topic but the fact China has developed the fastest computer in the world without requiring US sourced components is a major testament to the technological competence it has achieved. In turn that should help Chinese researchers to further develop artificial intelligence and big data projects. 



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June 21 2016

Commentary by Eoin Treacy

Robots on Track to Bump Humans From Call-Center Jobs

This article by Trefor Moss for the Wall Street Journal may be of interest to subscribers. Here is a section:

Industry insiders say the outlook depends on whether the incoming government of President-elect Rodrigo Duterte can help develop enough of the tailored education programs needed to produce skilled for a more sophisticated range of tasks.

Climbing the value ladder won’t be easy. TaskUs, a U.S.-based outsourcing with operations here, is among those that are trying. Innovation is the key to survival, said Bryce Maddock, chief executive of the company, which provides a range of back-office functions for tech startups, including the mobile dating site Tinder and the message service Whisper.

“We’re trying to ‘un-call center’ the call center,” said Mr. Maddock, who tries to battle the endemic turnover in industry hotspots like Manila by offering a modern workspace modeled on the casual vibe of Silicon Valley.

He says just a tenth of the company’s 5,000 employees are actually answering phones. Most are managing content on websites or handling customer relations via online chat.

The shift reflects an industrywide trend. TaskUS reflects an industrywide trend. A decade ago, nearly all Philippine outsourcing work was phone-based. Now, it’s just 60%, a figure that’s bound to keep declining, outsourcing executives say, even as the industry as a whole continues to expand.

 

Eoin Treacy's view -

It takes a village to run a successful ecommerce site so while automated systems are increasingly taking over the phone lines we still need humans to conduct search engine optimisation (SEO) and manage website content. These tasks are still heavily labour dependent so demand for call centre operatives is likely to remain on an upward trajectory but the sophistication of the work is likely to increase. 



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June 20 2016

Commentary by Eoin Treacy

U.S. Gasoline Demand Is Likely to Slide

This article by Lynn Cook for the Wall Street Journal may be of interest to subscribers. Here is a section:

Even the low end of the forecast by Wood Mackenzie, which provides in-depth analysis for a wide range of clients including large oil companies, utilities and banks, is a more bullish outlook for electric-car adoption than many oil-and-gas companies have espoused.

Spencer Dale, the chief economist of energy company BP PLC, said last week in Houston that while he expects electric cars to start gaining traction, the internal-combustion engine still has significant advantages over electric alternatives and widespread adoption won’t happen in the next two decades.

“It will still take some time,” Mr. Dale said. “Electric vehicles will happen. It is a sort of when, not if, story.”

The electrification of the automobile has evolved more slowly than some expected, in part thanks to low fuel prices and limited battery life that meant drivers had to recharge every 100 miles. But more capable cars are coming to market as tightening air-pollution regulations in places such as Europe and China force auto makers to engineer better electric vehicles.

The U.S. market today remains tiny, with pure electric cars amounting to less than 1% of total sales so far this year. But Tesla’s decision to build cars with sizable batteries that can run for more than 200 miles before recharging has led a number of competitors to double down on their own electric-car designs.

 

Eoin Treacy's view -

Tesla remains the standard bearer for electric cars because, more than any other company, it has succeeded in marketing a car people aspire to own. However it is not the only, or even the biggest company manufacturing electric vehicles. In fact Tesla’s success ensures it will deal with a lot more competition as incumbent manufacturers release their own models. 



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June 17 2016

Commentary by Eoin Treacy

BASF Joins Chemical Deal Rush in $3.2 Billion Albemarle Deal

This article by Andrew Marc Noel and Phil Serafino for Bloomberg may be of interest to subscribers. Here is a section:

For Albemarle, the deal is a means to pay down debt from its acquisition of Rockwood Holdings Inc. for $6 billion in 2015. It bought Rockwood’s lithium business to take advantage of demand for the lightweight metal used in rechargeable batteries in smartphones and electric cars.

"The sale of Chemetall reflects Albemarle’s continued commitment to maximizing shareholder value by investing in the future growth of our high priority businesses, reducing leverage and returning capital to shareholders,” Albemarle CEO Luke Kissam said in the statement.

The transaction value may be reduced for underfunded and unfunded pension obligations and other reasons, Albemarle said. Bank of America Merrill Lynch is advising Albemarle while Shearman & Sterling LLP is legal adviser. BASF worked with Citigroup, with legal help from Morgan, Lewis & Bockius.

 

Eoin Treacy's view -

BASF will gain an important foothold in North America through this acquisition but the price it is paying would appear to be rather expensive and is a further testament to the asset price inflation ultra-low interest rates have contributed to. 



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June 13 2016

Commentary by Eoin Treacy

Microsoft to Buy LinkedIn in Deal Valued at $26.2 Billion

This article by Molly Schuetz for Bloomberg may be of interest to subscribers. Here is a section: 

The deal is the largest under the tenure of Microsoft CEO Satya Nadella, who has been reshaping Microsoft since taking over in 2014 to appeal more to business customers with cloud-based services and productivity tools. LinkedIn isn’t an obvious fit in the ongoing restructuring, but gives Microsoft the biggest global social network for professional that’s used by job seekers, recruiters and human resources teams. In a statement, Nadella said the acquisition could drive growth for LinkedIn as well as Microsoft’s Office 365 and Dynamics services.

“Just as we have changed the way the world connects to opportunity, this relationship with Microsoft, and the combination of their cloud and LinkedIn’s network, now gives us a chance to also change the way the world works,” Weiner said in the statement.

 

Eoin Treacy's view -

It is very questionable whether Microsoft will get their money back following such a large outlay on a company like LinkedIn and the valuations on the sector generally are not exactly cheap. With the notable exception of Facebook social media/new economy services companies have been underperforming for quite some time. Today’s announcement of a major takeover in the sector has the potential to revitalise perceptions subject to sound fundamentals. 



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June 13 2016

Commentary by Eoin Treacy

Batteries Storing Power Seen as Big as Rooftop Solar in 12 Years

This article by Anna Hirtenstein for Bloomberg may be of interest to subscribers. Here is a section: 

The spread of electric cars is driving up demand for lithium-ion batteries, the main technology for storage devices that are attached to utility grids and rooftop solar units.

That’s allowing manufactures to scale up production and slash costs. BNEF expects the technology to cost $120 a kilowatt-hour by 2030 compared with more than $300 now and $1,000 in 2010.
That would help grid managers solve the intermittency problem that comes with renewables -- wind and solar plants don’t work in calm weather or at night, creating a need for baseload supplies to fill the gaps. Today, that’s done by natural gas and coal plants, but the role could eventually be passed
to power-storage units.

The researcher estimates 35 percent of all light vehicles sold will be electric in 2040, equivalent to 41 million cars.

That’s about 90 times the figure in 2015. Investment in renewables is expected to rise to $7.8 trillion by then, compared with $2.1 trillion going into fossil-fuel generation.

“The battery industry today is driven by consumer products like computers and mobile phones,” said Claire Curry, an analyst at Bloomberg New Energy Finance in New York. “Electric vehicles will be the driver of battery technology change, and that will drive down costs significantly.”

The industry still has a long way to go. About 95 percent of the world’s grid-connected energy storage today is still pumped hydro, according to the U.S. Energy Department. That’s when surplus energy is used to shift large amounts of water uphill to a reservoir so it can be used to produce electricity later at a hydropower plant. The technology only works in areas with specific topographies.

There are several larger-scale battery projects in the works, according to S&P Global. They include a 90-megawatt system in Germany being built by Essen-based STEAG Energy Services GmbH and Edison International’s 100-megawatt facility in Long Beach, California.

“Utility-scale storage is the new emerging market for batteries, kind of where electric vehicles were five years ago,” said Simon Moores, managing director at Benchmark Mineral Intelligence, a battery researcher based in London. “EVs are now coming of age.”

 

Eoin Treacy's view -

Innovation in the chemistry that supports batteries has been a lot more difficult to achieve than the Moore’s law related enhancements that have been commonplace in chip manufacturing and increasingly in solar technologies. Nevertheless as the requirement for storage grows increasingly urgent, the capital expended on R&D is expanding and innovations are being achieved. In the meantime economies of scale through larger manufacturing plants are helping to drive efficiencies. 



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June 10 2016

Commentary by Eoin Treacy

Energy in 2015: A year of plenty

Thanks to a subscriber for this edition of BP’s annual report by Spencer Dale which may be of interest. Here is a section:

The increasing importance of renewable energy continued to be led by wind power (17.4%, 125 TWh). But solar power is catching up fast, expanding by almost a third in 2015 (32.6%, 62 TWh), with China overtaking Germany and the US as the largest generator of solar power.

The older stalwarts of non-fossil fuels – hydro and nuclear energy – grew more modestly. Global hydro power increased by just 1.0% (38 TWh), held back by drought conditions in parts of the Americas and Central Europe. Nuclear energy increased by 1.3% (34 TWh), as rapid expansion in China offset secular declines within mainland Europe. This gradual shift of nuclear energy away from the traditional centres of North America and Europe towards Asia, particularly China, looks set to continue over the next 10-20 years.

And

The key lesson from history is that it takes considerable time for new types of energy to penetrate the global market. Starting the clock at the point at which new fuels reached 1% share of primary energy, it took more than 40 years for oil to expand to 10% of primary energy; and even after 50 years, natural gas had reached a share of only 8%.

Some of that slow rate of penetration reflects the time it takes for resources and funding to be devoted in scale to new energy sources. But equally important, the highly capital intensive nature of the energy eco-system, with many long-lived assets, provides a natural brake on the pace at which new energies can gain ground.

The growth rates achieved by renewable energy over the past 8 or 9 years have been broadly comparable to those recorded by other energies at the same early stage of development. Indeed, thus far, renewable energy has followed a similar path to nuclear energy.

The penetration of nuclear energy plateaued relatively quickly, however, as the pace of learning slowed and unit costs stopped falling. In contrast, in BP’s Energy Outlook, we assume that the costs of both wind and solar power will continue to fall as they move down their learning curve, underpinning continued robust growth in renewable energy.

Indeed, the path of renewable energy in the base case of the Energy Outlook implies a quicker pace of penetration than any other fuel source in modern history. But even in that case, renewable power within primary energy barely reaches 8% in 20 years’ time.

The simple message from history is that it takes a long time – numbering several decades – for new energies to gain a substantial foothold within global energy.

 

Eoin Treacy's view -

A link to the full report is posted in the Subcsriber's Area.

The evolution of renewable energy technology represents a major paradigm shift for the energy sector not least because the cost of production continues to decrease independently of the oil price and environmental concerns result in a compelling case for adoption. In tandem with wind and solar, the rollout of electric vehicles is a related but separate development which is likely to represent a continued headwind for demand growth.



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June 09 2016

Commentary by Eoin Treacy

Are the Robots Taking Over? The Emergence of Automated Digital Wealth Management Solutions

The heavyweight report from Financial Technology partners may be of interest to subscribers. Here is a section: 

With the advent of Automated Digital Wealth Management solutions (aka robo advisors), the traditional wealth management industry is facing perhaps its most disruptive threat since low-cost online stock trading emerged in the mid 1990’s

The combination of highly credible digital wealth management solutions, the Millennial generation’s predisposition to “do-it-yourself-through-an-app” and the pending transfer of trillions of dollars of wealth to and eventually from Baby Boomers is forcing participants across the wealth management industry to reevaluate their product and distribution strategies

Already suffering from the relative shift in appetite towards ETFs and other passive investment vehicles, the mutual fund industry in particular appears further threatened by digital wealth management solutions since most of the solution providers utilize ETFs as their underlying investment vehicles; this movement may force firms that have traditionally only focused on providing financial services products to focus on providing scalable advice as well – the new Department of Labor rules around fiduciary duty for retirement service provides will likely exacerbate this trend

At a minimum, all wealth managers should be highly focused on “digitizing” their businesses as consumers of all ages and demographics will increasingly expect an “Amazon and Uber-like” experience from all of their financial service providers

Similar to the online trading playbook, new consumer brands are emerging in the digital wealth management industry (such as Betterment, Wealthfront and Personal Capital) while traditional firms are striking back by either offering their own in-house solutions (such as Charles Schwab and Vanguard) or partnering or acquiring to speed time to market

Recent M&A includes BlackRock’s acquisition of FutureAdvisor, Invesco’s acquisition of Jemstep and Northwestern Mutual’s acquisition of LearnVest

A handful of different business models have materialized in the digital wealth management space including 1) new direct-to-consumer brands with limited advisor assistance, 2) new direct-to-consumer brands with heavier advisor assistance, 3) traditional firms with in-house digital wealth management solutions, 4) business-to-business and white label providers enabling others to offer their own digital wealth management solutions and 5) retirement specific providers including both direct-to-consumer and business-to business providers

Similar to other recent FinTech innovations, digital wealth solution providers are quickly emerging around the globe – in fact, we have identified more international direct-to-consumer players than in the U.S.

As capital continues to flow into the digital wealth management space and traditional investment management firms evaluate their strategies, we expect to see a notable increase in partnership and M&A activity in the space
over the next 12-18 months

A number of newer firms are likely to be acquired by larger organizations that are looking to add or deepen their digital wealth management capabilities while only a relatively small number of new consumer brands are likely to achieve the level of scale (and funding) they need to survive on their own over the long-ter

Eoin Treacy's view -

A link to the full report is posted the Subscriber's Area.

The risk of litigation for financial advisors means the majority of investors are presented with what might be described as a plain vanilla 60/40 bonds to equities blend for their portfolios. Depending on whether the investor is categorised as conservative or risk tolerant that basic formula might be altered somewhat but the long-term nature of the strategy means the majority of clients will be invested in the model portfolio. 



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June 09 2016

Commentary by Eoin Treacy

Email of the day on viruses representing a greater risk than bacteria

I remain interested in your commentary on health issues, in part because that is the area in which I work. I do not share your fear that antibiotic resistance will be a black swan event, capable of disrupting markets. Bacterial pathogens are nowhere near as transmissible as respiratory viruses; transformation of viral pathogenicity is a far greater concern than bacterial multi drug resistance as a game changer, mainly because of the rate of spread of viral infection such as influenza, Ebola etc. Witness the influenza pandemic of 1919 which killed more people than WW1. We have had multidrug resistant TB in countries such as Indonesia for many years, yet no markets have collapsed. There is less risk of catching the latter for one. MDR bacteria are more a risk to patients in hospital; yet when there are outbreaks, they are usually contained by better contact precautions. From a QI perspective we should not be complacent about bacterial antibiotic resistance, yet in contrast with AB therapy for many bacterial infections, we have very few effective antiviral agents, a situation that has changed little for ages. One bright light though is nanotechnology (seems to be a catchier name than molecular biology). Nanoviricides is one company in that space. Their product line is preclinical trial but getting close. Are you aware of any others with similar potential?

Eoin Treacy's view -

Thank you for this informative email and I agree that a new virus would have an instant effect relative to the slowly developing problem of antibiotic resistance. The threat from the latter is not that we have a pandemic like influenza in 1919 but rather that bacteria become a future threat that saps growth potential because people stay sicker for longer or die because the drugs to treat them do not exist. In that scenario it could be a slow burn crisis that would drag on economic potential and is a particular risk to high population emerging markets. 



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June 08 2016

Commentary by Eoin Treacy

Email of the day on antibiotic resistance

I agree totally Eoin. Which is why (apart from my investing activities) trying to solve the problem takes much of my time. Two years ago we founded a charity (non-profit) named Antibiotic Research UK. (www.antibioticresearch.org.uk) to bring together national experts to find solutions. Just as we have the well-known charity Cancer Research UK, we now have Antibiotic Research UK. Why? Well, the predictions from the UK Government's AMR Review indicate that bacteria will soon be killing more people than cancer. The AMR review papers are worth reading at http://amr-review.org/ Lord Jim O'Neill was of course ex Chair of Goldman Sachs Asset Management, and he was able to call on all global experts when compiling his review conclusions. If his review is even half correct, the horrible truth is that a good percentage of readers of these words are likely to die eventually from bacterial infection.

I am a founding Trustee of Antibiotic Research UK and also chair of the Science and Technology Advisory Committee. You can see the other members on the website. It is a highly expert group. Some of my ideas on how to beat the resistance problem were published last year by the leading science publisher Nature (Antibiotic resistance breakers: can repurposed drugs fill the antibiotic discovery void? URL http://www.nature.com/nrd/journal/v14/n12/full/nrd4675.html. On request, I can send a pdf to any reader interested). We have raised a bit of money from donations from the public, and are now just beginning the experimental work to test the ideas. Initial results should be available by end 2016. 

Fingers crossed, as we need to save our antibiotics. This was brought home to me the hard way in March this year when my father died from antibiotic-resistant MRSA infection. 5 antibiotics failed to save him. Frankly, even with my expertise, if I had caught MRSA from him I could not be sure which antibiotics to choose to treat myself. The situation is getting serious very quickly. 

I am speaking at Markets Now on July 11, and I will use my hour for investment discussions, but if anyone wants to discuss antibiotic resistance in the bar afterwards I will be there. And if anyone has any good ideas, I will gladly buy them a drink!

 

Eoin Treacy's view -

Thank you for sharing your expertise and please accept both my and the Collective’s condolences on the death of your father. Your presentations are always well received at the Markets Now events and I suspect more than a few will take you up on your offer to chat in the bar afterwards. 



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June 07 2016

Commentary by Eoin Treacy

New antimicrobial material joins fight against antibiotic-resistant bacteria

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

"Our unique material can kill bacteria rapidly and inhibit the development of antibiotic-resistant bacteria," says IBN Group Leader, Dr Yugen Zhang. "Computational chemistry studies supported our experimental findings that the chain-like compound works by attacking the cell membrane. This material is also safe for use because it carries a positive charge that targets the more negatively charged bacteria, without destroying red blood cells."

The team's compound was developed as an alternative to triclosan, a common ingredient in hygiene products like soap and toothpaste which has been shown to aid antibiotic resistance. The team says the new material, which takes the form of a water-soluble white powder, could be a viable replacement in these applications and could be used in alcoholic sprays used for sterilization in homes and hospitals.

"The global threat of drug-resistant bacteria has given rise to the urgent need for new materials that can kill and prevent the growth of harmful bacteria," says IBN Executive Director, Professor Jackie Y. Ying. "Our new antimicrobial material could be used in consumer and personal care products to support good personal hygiene practices and prevent the spread of infectious diseases."

 

Eoin Treacy's view -

If you had to name one black swan event that could derail the trajectory of global growth it is antibiotic resistance. It’s not a challenge to growth right now but there is an inevitability to the problem which gives urgency to the search for a solution. I’m an optimist so I believe a solution will be found but I tend to read every article I see on the subject because the stakes are high and the potential rewards for both companies and society are very large. 



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June 07 2016

Commentary by Eoin Treacy

Sushi Robots and Vending-Machine Pizza Will Reinvent the Automat

This article by Leslie Patton for Bloomberg may be of interest to subscribers. Here is a section: 

“I get it. But this is not a vending machine, it’s an automated restaurant,” he said. “There are real humans making the burritos. Everything is handmade.”

No, those humans are not super-small and no, they don’t toil in the machines. The burritos are made in kitchens that also supply restaurants, sometimes flash-frozen, and then shipped to the boxes. They’re defrosted before going into the machines. An employee checks the boxes once a day to make sure there’s fresh inventory.

The vending machines harken back to the Automat, a 20th- century fast-food restaurant that featured cubbyholes with food items behind glass doors. Put coins in a slot and the door would open for a gratuity-free snack or meal.

The bright orange Burritoboxes are higher tech. They have a touch screen, mobile-phone charging station and live-chat customer service in case there’s an issue. It takes about 90 seconds to heat a complete meal, including Cinnabon-brand gooey bites for dessert. Customers can watch music videos on the touch screen while waiting.

Unlike Burritoboxes, the pizza machines are unbranded so local pizzerias and packaged-food companies can label and fill the machines with their own pies. Pizzerias in Sarasota, Florida, and Chicago are experimenting with them. Each one holds 108 slices and reheats them in a conveyor oven in about one minute and 40 seconds.

Lynnie Cook, 65, the founder of 24/7 Pizza Box, said he has orders for more than 100 of the $29,920 machines. He expects to sell 2,500 in 2017.

“Our time is getting more precious,” Cook said. “You’re going to have people bringing food to where the businesspeople are working, or just making it more convenient.”

Robotics have made their way into the back of restaurants.

Sushi Station, a conveyor-belt-style sushi restaurant in Elgin, Illinois, has two sushi-roll makers from manufacturer Autec. Add rice paper, press a button, add a filling, and voila. The robot costs $19,000. There’s also a machine that makes perfectly shaped rice for nigiri. The robotics help the restaurant supply the roughly 1,000 rolls it sells each day.

 

Eoin Treacy's view -

On Star Trek everybody just went to the hole in the wall to order whatever they wished from the replicator. Vending machines defrosting burritos and pizzas isn’t quite on that level but the convenience of obtaining snack foods without having to spend time inside the restaurant will have appeal for a broad swathe of the population. 



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June 06 2016

Commentary by Eoin Treacy

Could Blockchain Have Prevented Bangladesh's Central Bank Hack?

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

In the case of Bangladesh’s central bank, hackers used the Swift system to send messages to the New York Federal Reserve, instructing it to move the Bangladeshi bank’s cash into accounts in the Philippines. They impersonated bank officials to send the messages.

Skulduggery
Hackers also used malware to compromise the bank’s records, covering their tracks. That type of skulduggery, blockchain advocates say, would be immensely difficult using the encrypted ledger.
With blockchain, the statement of transactions is not kept in one place. Instead, the information is held on a network of computers that verify the data and keep each other honest.

Hackers would have to break into the majority of computers on the network to cover their trail rather than just exploiting a single computer. For the biggest blockchains, such as bitcoin’s, that would mean hacking thousands of computers.

Swift has insisted that its core messaging service is secure and that the vulnerabilities are on the machines that interface with the network. Those computers are its members’ responsibility, the bank-owned cooperative says. Swift says its data center’s “golden copies” of transactions remained intact and could have been used to verify what had gone missing from the Bangladesh central bank.

 

Eoin Treacy's view -

The Bangladesh central bank hack was possible because sophisticated actors were able to take advantage of a comparatively unprepared institution to gain access to a global network of banks. It’s a classic Trojan strategy just on a much larger scale. 



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June 02 2016

Commentary by Eoin Treacy

Email of the day on autonomous rail

What puzzles me is if autonomous vehicles are such a "no-brainer", then why haven't all phases of rail movement not been fully automated? Compared to rail traffic the open road seems like a free-for-all!

Eoin Treacy's view -

Thank you for a relevant question and this is something I have also been pondering. This article from Wired.com tackles the issue and their answer comes down to line of sight, unions and lack of desire to upset the status quo rather than any particular deficiency in the technology. . 



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June 01 2016

Commentary by Eoin Treacy

Musings from the Oil Patch June 1st 2016

Thanks to a subscriber for this edition of Allen Brooks' energy report for PPHB. Here is a particularly interesting section on autonomous trucking: 

The new topic being opened by efforts such as Otto and the platooning demonstration in Europe is the impact on fuel and labor costs within the trucking industry. In the United States, trucks drive 5.6% of all vehicle miles and are responsible for 9.5% of highway fatalities, according to Department of Transportation data. Because heavy-duty trucks have a significantly lower fuel-efficiency performance, they account for a larger share of diesel fuel consumption than diesel cars or other types of equipment. Because diesel fuel is included in distillates, we cannot determine the exact weekly volumes. However, we know that for the week ending May 20, distillate volumes of slightly over 4 million barrels a day represented 20% of total fuel supplied in the U.S. By examining the latest inventory data, distillates are broken down by the amount of sulfur in the fuel. Diesel fuel for vehicle use needs to be low sulfur – 15 parts per million or less. That fuel category accounted for 88% of all the distillate in storage, therefore we would think this is a reasonably close approximation of the highway quality diesel fuel being supplied to the U.S. market. If 62% is used by over-the-highway trucks, then the daily consumption is approximately 2.2 million barrels. Improved fuel savings from autonomous technology could eventually account for upwards of 200,000 barrels a day in savings. 

Autonomous vehicle technology is being hailed as a way to reduce the number of accidents. The largest impact of the technology, however, may be on the employment of truck drivers. There are more than three million truck drivers in this country. According to the American Trucking Associations, the truck industry accounts for one of every 15 jobs in the United States. By eliminating the need for second drivers on many trucks due to the ability of the primary driver to fulfill his rest obligations while the truck drives itself, there will be a negative employment impact from autonomous technology. 

Although perceived as a negative, autonomous technology might actually become a positive as the trucking industry deals with an aging workforce and a less-than-attractive employment career as long-haul driving can be tedious and keeps drivers away from home for extended time periods. While younger drivers enjoy the first and last miles of truck driving, they wish to avoid the boring portion, which autonomous technology would eliminate. In the U.S., according to consultant Oliver Wyman, by 2023 it is projected that there will be shortfall of 240,000 drivers, or approximately 8% of the estimated current number of truck drivers. 

Canada has a similar employment outlook for its highway trucking industry. According to the Canadian Trucking Alliance there are about 300,000 long-haul truck drivers. Similarly, the Canadian Trucking Alliance estimates that the Canadian industry will have a shortfall of 48,000 drivers by 2024 — about 15 per cent of the total driving force – due to an aging workforce and a less-attractive employment career. 

Another impact of autonomous technology for trucks is that vehicles can be kept on the highway for more hours per day. That could not only reduce the need for additional drivers, but it could also reduce the cost for transporting goods, further contributing to deflationary forces in the economy. 

All of these considerations influenced our previous article’s conclusion that autonomous trucks were more likely to be on the roads before autonomous cars. That may be why Mr. Levandowski left Google. He said that his decision to leave was motivated by being eager to commercialize a self-driving vehicle as quickly as possible. At Google, he was responsible for drafting legislation to permit self-driving vehicles, which ultimately became law in Nevada. While certain states such as California have motor vehicle regulations that would prohibit the idea of trucks traveling on the freeway with only a sleeping driver in the cab, other states currently do allow it. “Right now, if you want to drive across Texas with nobody at the wheel, you’re 100 percent legal,” said Mr. Levandowski. Stay tuned for self-driving trucks on a freeway near you. 

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

The technology behind autonomous vehicles is progressing towards greater utility and it makes sense that haulage vehicles represent the primary source of demand considering the high cost of fuel, personnel and regulations. It represents an additional example of the deflationary role technology has and the benefits that accrue to consumers as a result. 



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May 31 2016

Commentary by Eoin Treacy

Consumer Spending in U.S. Rises Most in Almost Seven Years

This article by Victoria Stilwell for Bloomberg may be of interest to subscribers. Here is a section: 

“There was a lot of presumably pent up spending given that the last few months were quite soft for consumption,” said Michelle Meyer, deputy head of U.S. economist at Bank of America Corp. in New York, whose forecast for spending was among the closest in the Bloomberg survey. “The consumer should be a fairly bright spot for the economy.”

“You definitely want to see that pickup in April to fit into the story of a second-quarter rebound,” Sophia Kearney- Lederman, an economic analyst at FTN Financial in New York, said before the report. Supporting the increase, “we have seen strong payrolls and incomes coming up, we’ve seen vehicle sales rebound, and we saw housing had a pretty good month.”

Eoin Treacy's view -

The Fed can only take heart from this news that they are correct to continue in their efforts to very gradually normalise monetary policy. 12-month yields are now testing the upper side of the six-month range and some steadying in this area is to be expected which would at least partially unwind the short-term overbought condition. 



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May 26 2016

Commentary by Eoin Treacy

Miner Sees Silver Price Surging Ninefold as Global Gadgets Boom

This article by Natalie Obiko Pearson for Bloomberg may be of interest to subscribers. Here is a section:

While long coveted for use in jewelry, coins and utensils, silver is increasingly in demand for its industrial applications. Last year, about half of global silver consumption came from such use, including mobile phones, flat-panel TVs, solar panels and alloys and solders, according to data compiled by GFMS for the Washington-based Silver Institute.

“Silver is not a precious metal, it’s a strategic metal,” Neumeyer said in an interview in Vancouver, where the company is based. “Silver is the most electrically conductive material on the planet other than gold, and gold is too expensive to use in circuit boards, solar panels, electric cars. As we electrify the planet, we require more and more silver. There’s no substitute for it.”

Industrial demand is set to increase, driven by rising incomes and growing penetration of technology in populous, developing nations, as well as thanks to new uses being found for silver’s anti-bacterial and reflective properties in everything from hospital paints to Band-Aids to windows.
“Over the next 10 or 20 years, more and more people are going to be using these devices, and silver is a very limited commodity,” Neumeyer said. “There’s just not a lot of it around.”

Use of silver, including investment demand, coin sales and what goes into inventories to settle trades, has outstripped annual supply of the metal in every year since 2000, according to data from GFMS, a research unit of Thomson Reuters Corp.

Still, not everyone agrees that the world is headed for a shortage of the metal.

“I would tend to disagree that silver is rarer than thought,” David Lennox, a resource analyst at Fat Prophets in Sydney. “Silver cannot be easily substituted but there’s been no need as it’s in abundance. I’d expect the search for silver would intensify and the search for substitutions would happen long before silver got to” $140 an ounce.

 

Eoin Treacy's view -

The uses for silver in the high technology sector are likely to increase over time but the quantity of silver used in each item is likely to decrease. Production efficiencies and the evolving nanotechnology sector where silver will have a great deal of utility help to explain that view. Therefore to postulate prices are going to $140 any time soon would appear wildly ambitious. 



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May 20 2016

Commentary by Eoin Treacy

What you should know about China's new energy vehicle (NEV) market

Thanks to a subscriber for this report from Deutsche Bank which may be of interest. Here is a section:

About two-thirds of Chinese cities exceed the air pollution limits specified by the Environmental Air Quality Standards, according to China’s State Information Center. Rapid increase in internal combustion engine (ICE) vehicle ownership and the consequent traffic congestion, especially in large Chinese cities, are perceived to contribute significantly to carbon dioxide and other harmful gas emissions, and the level of inhalable particulate matter (PM). This makes China one of the most polluted countries in the world.

To curb environmental pollution and improve air quality, various countries have implemented or tightened policies to gradually reduce fuel consumption and/or harmful gas emission. China also has tightened requirements for emission and fuel consumption. Since the country had a slower start in emission controls (Figure 6), it should be one of the fastest to tighten emission controls to catch up with developed countries (e.g. the EU and Japan) (Figure 7).
While countries have multiple means to lower auto emission, e.g. diesel adoption and using conventional hybrid engine technologies, China has placed a greater emphasis on using electric vehicle (EV) or plug-in electric vehicle (PHEV) technologies. To this effect, the State Council in 2012 issued a roadmap for China’s NEV industry development, The 2012-2020

Development Plan for Fuel-efficient and New Energy Vehicle Industry. 
According to the plan, the government targets an accumulated NEV (including EVs and PHEVs) sales volume of 500k units by 2015 and 5m units by 2020E, with an annual NEV production capacity of 2m units by 2020E. Despite rapid growth in NEV sales volume in 2012-14, the absolute sales volume was meager in China, making up less than 0.2% of its vehicle sales during the period and falling way short of its 2015 target ownership level. However, NEV sales catapulted in 2015 at a 3.4x YoY growth rate and made up 1.3% of China vehicle sales (Figure 8). Aggregate NEV sales also approached closer the 2015 target NEV fleet size. In our view, soaring demand for NEVs in China is fueled by massive government subsidies and policy support (to be discussed in the next section).

 

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area. 

China has a massive pollution problem and perhaps more importantly it is now a political liability as an increasingly vocal middle class demand a healthier standard of living. Additionally China’s geopolitical considerations are never far from the minds of its leadership. The fact China does not have the domestic energy resources necessary to fuel its economic growth represents a challenge for policy markets. 



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May 19 2016

Commentary by Eoin Treacy

Buy Robot. Silicon Valley Misses a Trick as China Nabs Kuka

This article by Chris Bryant and Nisha Gopalan for Bloomberg may be of interest to subscribers. Here is a section: 

Adding robotics exposure makes sense, as rising Chinese labor costs are expected to drive a big increase in factory automation there. At present, China uses much less automated manufacturing than more developed economies such as South Korea and Germany. 
China's robot sales rose 16 percent last year, according to the International Federation of Robotics, which predicts that by 2018 it will account for more than one third of industrial robots installed worldwide. 

So you can see the strategic sense of a Kuka deal. But it still begs the question: why didn't Silicon Valley jump in here? Midea's offer values Kuka's equity at 4.5 billion euros ($5 billion), chump change for the likes of Google, Apple or Amazon.

And yes, that whacking great premium is surely designed to see off any potential white knights, but -- just like China -- the U.S. tech giants aren't restricted by the usual rules of corporate finance.

There's been a lot of big talk there about robotics, but besides Amazon's clever acquisition of Kiva, which makes robots that whizz around its logistics centers, we've seen little fruitful action. In March, Google beat a partial retreat by putting its Boston Dynamics unit up for sale.

Of course, the U.S. reigns supreme in software, increasingly central to the success of robotics. But if you want to own the future, you'll have to marry that expertise to intelligent hardware. And it's here where Kuka excels.

The German company has branched out beyond its car-plant robot roots to other sectors, including electronics and medical applications. It's taking a run at the so-called "internet of things" by making its machines easier to program. Its lightweight model called the iiwa is a technological wonder that can work side-by-side with humans, without a safety cage.

 

Eoin Treacy's view -

China is investing heavily in automation because having achieved the moniker “workshop of the world” it intends to hold onto it as labour costs rise. However there is another reason China Inc. is on such a buying spree; acquiring everything from luxury hotels and food companies to robotics in the last year. 



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May 17 2016

Commentary by Eoin Treacy

Global Lenders on Edge as Cyber Attacks Embroil More Banks

This article by Michael Riley, Jordan Robertson and Alan Katz for Bloomberg may be of interest to subscribers. Here is a section: 

While Swift has for decades made sure its own financial messaging network was secured, less attention was paid to the security surrounding how member banks -- each with their own codes and varying levels of technology -- were connecting. Even today, when it discusses the cyber attacks, Swift emphasizes that its own network wasn’t breached and says its members are responsible for their own system interfaces.

Some U.S. banks are pushing to open discussions with Swift about whether it should have responded more quickly to the breaches and should now help member banks better secure their systems, according to one of the people familiar with the thinking within a large U.S. bank. BITS, the section of the Financial Services Roundtable aimed at combating cyberfraud and other technological issues, could be tapped to broker those discussions, the person said.

More broadly, some U.S. banks expect Swift to come up with a technological solution that could apply to all connected institutions and would help reduce these risks, another person said.

 

Eoin Treacy's view -

As more banking is conducted online the need for all counterparties to beef up security, and on a global basis, is no longer about choice but necessity. Cyber criminals both private and government-backed have ample resources to probe the global financial infrastructure for weaknesses they can exploit. Therefore it is necessary to insist on greater security across the network to ensure the thefts seen in Bangladesh and now Vietnam do not become common place. 



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May 09 2016

Commentary by Eoin Treacy

Lithium 101

Thanks to a subscriber for this comprehensive heavyweight 170-page report on lithium. If you have questions on the lithium sector the chances are they will be answered by this report. Here is a section: 

Global lithium S&D analysis highlights opportunity for high-quality assets
The emergence of the Electric Vehicle and Energy Storage markets is being driven by a global desire to reduce carbon emissions and break away from traditional infrastructure networks. This shift in energy use is supported by the improving economics of lithium-ion batteries. Global battery consumption is set to increase 5x over the next 10 years, placing pressure on the battery supply chain & lithium market. We expect global lithium demand will increase from 181kt Lithium Carbonate Equivalent (LCE) in 2015 to 535kt LCE by 2025. In this Lithium 101 report, we analyse key demand drivers and identify the lithium players best-positioned to capitalise on the emerging battery thematic. 

Global lithium demand to triple over the next 10 years
The dramatic fall in lithium-ion costs over the last five years from US$900/kWh to US$225/kWh has improved the economics of Electric Vehicles and Energy Storage products as well as opening up new demand markets. Global battery consumption has increased 80% in two years to 70GWh in 2015, of which EV accounted for 35%. We expect global battery demand will reach 210GWh in 2018 across Electric Vehicles, Energy Storage & traditional markets. By 2025, global battery consumption should exceed 535GWh. This has major impacts on lithium. Global demand increased to 184kt LCE in 2015 (+18%), leading to a market deficit and rapid price increases. We expect lithium demand will reach 280kt LCE by 2018 (+18% 3-year CAGR) and 535kt LCE by 2025 (+11% CAGR). 

Supply late to respond but wave of projects coming; prices are coming down 
Global lithium production was 171kt LCE in 2015, with 83% of supply from four producers: Albemarle, SQM, FMC and Sichuan Tianqi. Supply has not responded fast enough to demand, and recent price hikes have incentivized new assets to enter the market. Orocobre (17.5ktpa), Mt. Marion (27ktpa), Mt. Cattlin (13ktpa), La Negra (20ktpa), Chinese restarts (17ktpa) and production creep should take supply to 280kt LCE by 2018, in line with demand. While the market will be in deficit in 2016, it should rebalance by mid-2017, which should see pricing normalize. Our lithium price forecasts are on page 9.

 

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

The cost of lithium ion batteries falling rapidly and the fact this is occurring at the same time solar cells costs have been trending lower is a major incentive for installations of both technologies; increasingly in parallel. With costs coming down and technology improving growth in demand is a major consideration as factories achieve scale and miners invest in additional supply. 



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May 06 2016

Commentary by Eoin Treacy

IBM brings quantum computing to the masses

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

Though not a full-blown quantum computer (the IBM processor comprises just five superconducting qubits) it does represent the latest advances in IBM's quantum architecture that the company claims may one day scale up to create very much larger, more complex quantum processors and eventually lead to the development of a universal quantum computer, which could solve some of the problems that simply can't be solved using classical computers.

"Quantum computers are very different from today's computers, not only in what they look like and are made of, but more importantly in what they can do," says Arvind Krishna, senior vice president and director, IBM Research. "Quantum computing is becoming a reality and it will extend computation far beyond what is imaginable with today's computers. This moment represents the birth of quantum cloud computing. By giving hands-on access to IBM's experimental quantum systems, the IBM Quantum Experience will make it easier for researchers and the scientific community to accelerate innovations in the quantum field, and help discover new applications for this technology."

Housed in the IBM T.J. Watson Research Center in New York, the processor uses five qubits formed by superconducting metals embedded on a silicon chip. As Gizmag reported last year, IBM researchers showed that breakthroughs in detecting quantum errors were possible by bringing superconducting qubits together in a lattice arrangement, and it is this quantum circuit design that is brought to bear in IBM's cloud-connected processor with advanced parity measurement error correction protocols.

Although universal quantum computers do not yet exist, IBM believes that medium-sized quantum processors of 50-100 qubits will be a reality within the next decade. A quantum computer created with just 50 qubits would already be more powerful than any of the world's top 500 supercomputers.

 

Eoin Treacy's view -

As silicon transistors get progressively smaller and draw closer to the absolute limit of one atom thick the race has been on to develop alternatives. So far there is no clear winner but there are a number of potential technologies that could hold the answer. Among these are quantum computing, DNA computing, optical or light based computing and graphene based chips.  



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April 26 2016

Commentary by Eoin Treacy

Genetic Superheroes?

This article from 23andMe may be of interest to subscribers. Here is a section: 

A Few Examples Of How Resilient Individuals Have Already Helped Researchers
Human Knockout Project — Daniel MacArthur started this project out of his lab at Massachusetts General Hospital and the Broad Institute. He’s looking for healthy individuals with so-called loss function variants, genes that do not code for a protein. Researchers routinely “knock-out” the function of a gene in mice when studying what a gene does.

PCSK9 — The gene regulates the level of LDL cholesterol, but researchers found that certain individuals with loss function variants in the gene were protected against high lipid levels. Since the discovery several pharmaceutical companies have used this discovery to develop new therapies for combating high cholesterol.

Alzheimer’s Escapers  — “Escapers” are individuals who have the genetic variants that put them at very high risk for disease, but for whatever reason never develop it. The Washington University School of Medicine is looking at families that are genetically predisposed to
Alzheimer’s Disease looking for individuals who have “escaped” getting the disease for insights into new treatments. 23andMe has also found escapers.

HIV — By identifying rare mutations in the gene CCR5 that provide resistance to HIV infection, researchers hope to find a vaccine against AIDS.

Diabetes — A few years ago researchers discovered that a variant in the gene ZNT8 protects even obese people from diabetes. Since then researchers have been using this as a possible drug target to protect against diabetes.

 

Eoin Treacy's view -

The movement to study healthy people as a way to identify how to treat illness is quickly gaining ground in the technology community. After all when you go to hospital it is full of sick people but the wider world is full of people who are healthy.  Doesn’t it make sense to find out why some people get sick and others don’t? 



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April 25 2016

Commentary by Eoin Treacy

Cloudy with a chance of monetization

Thanks to a subscriber for this report from Deutsche Bank which many of interest. Here is a section

US colleagues Karl Keirstead and Ross Sandler describe public cloud services as "the biggest and most disruptive trend impacting the technology industry." DB estimates the total addressable market for cloud to be USD500b. Cloud service providers have captured only a low-single-digit piece of this TAM. In China, the opportunity is even younger and less penetrated. AliCloud is the clear hometown favorite, with 65% of DB survey respondents using its solutions. Alibaba is our preferred play on cloud over Tencent and Baidu, which have much smaller cloud businesses that should also grow appreciably.

China: catching the “growth story” even earlier on; both public and private
The value proposition of the public cloud is simple: enabling deep cost savings and freeing up resources for enterprises to pursue more core business activities. While public cloud revenues at AliCloud and others continue to grow in the triple digits, China is also seeing strong growth in private cloud, as government bureaus, SOE’s and large private companies heed government exhortations to reform their hidebound IT regimes behind its “Internet+” initiative. Before the introduction of the cloud, about 70-80% of companies’ IT budgets and time were spent on low-value-added areas such as infrastructure maintenance, upgrades and integration. With external cloud operators taking over these burdens, management is able to concentrate on growth-centered initiatives, with cloud assisting in saving time and expense. Some 72% of respondents to our survey indicate that they are reducing significantly their IT spend through the use of cloud computing services. Alibaba Research Institute, for instance, estimates that 70% of computing costs can be saved.

China's CIO speaks: results of DB proprietary survey
As part of our overview of China's nascent cloud industry, we surveyed more than 50 CIO's, CTO’s, Directors and VPs of IT. Results revealed cloud computing to be the #1 priority this year, followed by security services at #2, and IT infrastructure and datacenters at #3. These companies expect to spend approximately 27% and 30% on cloud computing services in 2016 and 2017, respectively, compared to 20% in 2015. Over 50% of the respondents stated that they were able to save up to 40% of their IT spending thanks to cloud computing. 

Eoin Treacy's view -

A link to the full report is posted in the Subscriber/s Area.

Making the state owned sector more nimble is a primary policy objective of the Chinese administration. Under Xi Jinping, the desire to have an all-encompassing database, with greater visibility over the affairs of various agencies has reached new heights and the expansion of cloud services gels with that ambition. That’s is likely to fuel growth in both the private and public sectors.  



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April 25 2016

Commentary by Eoin Treacy

For Counterfeit Fighters on Social Media, Fake Profiles Are a Real Ally

This article by Kathy Chu for the Wall Street Journal may be of interest to subscribers. Here is a section: 

Globally, sales of fake goods amount to between $250 billion and $600 billion each year, as products made mostly in China are dispersed through brick-and-mortar shops as well as online platforms from the Philippines to the U.S., government and industry groups say.

More than half of counterfeiters now use social media to sell their products, up from about 10% three years ago, estimates Ken Gamble, who tracks fake goods for global brands. Brands now want monitoring of counterfeit sales extended to social media, he said.

Ugg, the maker of sheepskin boots, created anticounterfeiting pageson Facebook and Twitter last year to alert consumers to the growing problem.

“You hear these stories about how they’re being duped and losing their money,” said Graham Thatcher, brand protection associate at Deckers Outdoor Corp., Ugg’s parent company.

Eoin Treacy's view -

Counterfeiting is big business and there is a well-trodden route for getting the goods in question out of China. It’s an issue that will always be with us because demand is steady and the profits than can be made, often in a short period of time, are large. Certainly, China is a major source of counterfeit goods and is unlikely to begin really enforcing patents until it has a vested interest in doing so. However even then, respect for patents is likely to remain spotty. Where counterfeiters becomes a problem for investors is when manufacturers can latch onto a large target to get a high profile win in their efforts to combat the practice. 



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April 13 2016

Commentary by Eoin Treacy

About 40,000 Verizon unionized workers walk off the job

This article by Malathis Nayak may be of interest to subscribers. Here is a section: 

Tens of thousands of Verizon Communications Inc (VZ.N) workers walked off the job on Wednesday in one of the largest U.S. strikes in recent years after contract talks hit an impasse.

The strike could affect service in Verizon's Fios Internet, telephone and TV services businesses across several U.S. East Coast states, including New York, Massachusetts and Virginia.

The strike was called by the Communications Workers of America and the International Brotherhood of Electrical Workers that jointly represent nearly 40,000 employees, such as customer services representatives and network technicians in Verizon's traditional wireline phone operations.

 

Eoin Treacy's view -

Verizon has in the region of 170,000 employees so this strike action is specific to what might be described as legacy business units relating to fixed line and by extension its Fios fibre optic network. Unions are under increasing pressure as fewer employees are covered by them and those that are represent businesses at risk of offshoring and/or automation. 



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April 13 2016

Commentary by Eoin Treacy

Fitbit Rises; Citi Raises 1Q Ests. on 'Encouraging' Device Sales

This note by Stephen Sweeney for Bloomberg may be of interest to subscribers. Here is a section:

Fitbit’s initial Alta, Blaze device sales are “encouraging” and app rankings are improving, says Citi analyst Stanley Kovler in note; reiterates buy, PT $30.

Citi raises adj. EPS est. to 4c from 1c, rev. est. to $460m from $430m

Avg ests. adj. EPS 2c, rev. $432.7m: Bloomberg data

Cleveland Research analyst Ben Bollin says in note “research suggests FIT sales finished ahead of partner expectations for 1Q16, driven by strong Blaze demand”

FIT rises as much as 8.5% to highest since Feb. 22 on 0.7x 3-month avg daily vol.

 

Eoin Treacy's view -

Fitness trackers and wearables generally remains a fast growing but highly competitive sector. Fitbit is the dominant player not least because of the appeal of its mobile app. 



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April 11 2016

Commentary by Eoin Treacy

How retail stores are using virtual reality to make shopping more fun

This article by Shan Li for The Los Angeles Times may be of interest to subscribers. Here is a section:

Virtual reality is also being used to add an experiential aspect to in-store shopping, unrelated to the actual buying of products. Retailers are dabbling in virtual reality for the same reason they are adding other conveniences like curbside pickup — to lure people back into stores. They figure that the sci-fi aspect of VR is a form of entertainment that can't be replicated from behind a computer screen.

"Retailers have been down for so long, they have got to differentiate themselves to get people to shop," said Ron Friedman, a retail expert at advisory and accounting firm Marcum in Los Angeles.

Toms, which started as a shoe company before branching into eyewear and coffee, put virtual reality headsets from Samsung into more than 100 stores around the world last year. The video shown depicts a trip to Peru as part of the company's popular one-for-one campaign, in which it donates a pair of shoes for every pair it sells; viewers can see a video with panoramic views of a schoolyard as children are handed boxes of shoes.

On a recent weekday, Tyler Costin, 32, slipped on a Samsung Gear VR headset while shopping at the Toms store on Abbot Kinney Boulevard in Venice.

"That's amazing," he said, swiveling in his chair to take in the 360-degree views. At one point, Costin lifted his hand to greet the students before quickly putting it back down. "You want to wave back," he said sheepishly.

The Westwood producer, who had never used a VR headset before, said the experience was "pretty incredible."

"It's like you're there," Costin said, joking that "Peru was lovely that time of the year."

That kind of immediacy is why virtual reality trumps photographs and traditional videos, Toms founder Blake Mycoskie said.

"It just touches more of your senses," Mycoskie said. "It gives you a more immersive experience — you really get the feel of motion."

Sensory drama doesn't come cheap. Filming was about $250,000, and outfitting each store costs about $1,000 each, Mycoskie said. The biggest expense was training at least one employee per shop to operate the equipment and walk shoppers through the process.

 

Eoin Treacy's view -

Virtual Reality is launching now and the availability of content on the main platforms is expanding rapidly. The cost of new technology is almost always high but the speed with which this is rolling out and the potential for a company to differentiate its offering by reaching customers, in a wholly new way, means there will be ample supply of VR content not least advertising. The major growth trend is dependent the total cost of ownership coming down and people investing in domestic systems. 



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April 05 2016

Commentary by Eoin Treacy

Email of day on the long-term outlook for energy resources

Yer man, while I often feel like I am part of the new old economy. I am not concerned in the near term that electric vehicles will have mass adoption. I am puzzled how the electrical grid will power all these new super cars? Coal which is the worst emitter of GHG's is the primary source of electrical generation in North America and that is being phased out for natural gas as you know. The environmental movement is flawed with hypocrisy and makes no economic sense. In Canada the govt has chosen to demonize the oil and gas industry which funds the majority of our social services and yet we bail out Bombardier and the auto industry. I sound like a grumpy old man.

Eoin Treacy's view -

Thanks for this topical comment to a piece I posted on Friday. It’s been a long time since we shared an apartment in London; when we were both new to London, and I’m glad you’re still in the heat of the action in Calgary. I think everyone finds it hard not to be grumpy when things are not going one’s way at any age. 

This article from the state.com from 2014 estimates that if every car in America was an electric vehicle it would represent only about a 30% increase in electricity demand because electric vehicles are more efficient. 



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April 01 2016

Commentary by Eoin Treacy

Lithium Story is (Quietly) Taking Off

Thanks to a subscriber for this report from Deutsche Bank which may be of interest. Here is a section:

Key takeaways 
1) Q1 is firmly on track led by good growth in Lithium and solid growth in Surface Treatment, including in China, where auto/industrial demand is above expectations. The weakest region is Latin America where hydroprocessing catalyst demand is down as refiners in Brazil and Venezuela have sharply curtailed purchases. 2) Spot lithium carbonate prices in China of $21,000/m.t. are “fiction” with no relation to prices Albemarle receives or its large battery customers pay. Albemarle sells no spot lithium in China. The vast majority of Albemarle's lithium is sold under annual contracts. We estimate Albemarle’s battery grade lithium carbonate prices will be up ~15% in '16 to ~$6,.900 (vs $6,000 in '15). 3) All options for Bromine have been explored. A spin does not work as it would increase Albemarle's leverage at a time when it is trying to reduce leverage. A sale does not work as there are no strategic buyers and private equity would likely only pay 7x. A JV does not work due to required divestitures. As such, Albemarle is focused on running Bromine for cash for the next 3-5 years and using the cash to fund organic growth in lithium. 4) A sale of Surface Treatment would be much easier (and valuable) as evidenced by last week’s acquisition of Valspar for 15x EBITDA. However, with an onerous tax clawback until 2H'17 (stemming from the tax free separation of the business in '12), a sale before then is unlikely. 5) Assuming the recently announced MOU with Chile is formalized, Albemarle’s next lithium capacity will be a 20k m.t. plant in Chile. If it is built in La Negra, where Albemarle’s new 20k m.t. lithium carbonate plant is ramping (commercial sales ’17), the cost would be <$200MM versus $220MM spent on the new plant. This next increment of capacity should be on-stream in ‘20 and will increase Albemarle’s Chilean lithium carbonate capacity to 64k m.t. (70k m.t. with debottlenecking) plus 6k m.t. of US capacity. After Chile, Albemarle intends to bring on a 25k m.t. lithium hydroxide (from spodumene) plant in ’22-‘23 at a cost or ~$300M.

 

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

With Tesla reportedly taking 180,000 pre-orders for its anticipated $35,000 Model C yesterday it is perhaps a good time to think about where the batteries to power these vehicles are going to come from. Tesla’s gigafactory is expected to begin production next year and factories in China, Japan and South Korea are ramping up production for their own EV solutions. This all requires lithium. 



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April 01 2016

Commentary by Eoin Treacy

March 22 2016

Commentary by Eoin Treacy

New York Fed Had `Major Lapse' in Theft, Bangladesh Says

This article by Arun Devnath for Bloomberg may be of interest to subscribers. Here is a section: 

About $81 million ended up in the Philippines and most has disappeared. Philippine authorities have accused a branch manager at Rizal Commercial Banking Corp. of laundering money, a charge she has denied. Another $20 million sent to Sri Lanka was returned by Pan Asian Banking Corp. after it spotted a spelling error in the beneficiary’s name and flagged that to Bangladesh authorities.

The suspect transfers were made on Thursday, Feb. 4. Bangladesh’s central bank -- with limited staffing on the Friday-Saturday weekend -- didn’t detect the fraud until two days later, in part because of a printer error. It also received two SWIFT messages from the New York Fed dated Feb. 4 “mentioning about ‘doubtful’ Payment Instructions," according to the document.

On Feb. 6, a Saturday, Bangladesh Bank immediately contacted SWIFT about the issue and was advised to “cordon off" the local server while damage assessments were carried out, according to the document. Bank officials also called the New York Fed on a phone number that appeared on its website, but couldn’t connect with anyone, it said. Central bank officials sent four e-mails and a fax to the New York Fed to try and get them to stop payment, it said.

 

Eoin Treacy's view -

This is one of the most high profile cybercrime attacks I’ve heard of and demonstrates that the issues are real, anyone can be targeted and the defensive capabilities of major organisations require a great deal of attention. 



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March 18 2016

Commentary by Eoin Treacy

On perceived deficits in the lithium market

This interview between Peter Epstein and Joe Lowry for Mineweb may be of interest to subscribers. Here is a section: 

One point I find extremely interesting is that the countries that always were low price buyers, trying to secure the cheapest Chinese product, have now been shut out due the price run-up in China and the VAT penalty creating a disincentive for exports.

I have been approached for help in securing product by companies in India and in similar markets, who in the past always sought the lowest price. These companies, faced with shutting down their plants, have offered US$28,000 – US$30,000/Mt, in advance, for lithium hydroxide.

Unfortunately, since they have no relationships, supply for these companies is hard to come by. What we considered the bottom of the market appears to prove that demand destruction is not a major concern. On the other hand, the Japanese have contracts at low prices for much of their 2016 volumes and seem to be in denial that they will have to pay much higher prices in 2017.
I see a return to a normalized global price range as a major theme for 2017. 

Any thoughts on how Tesla’s (under construction) giga-factory fits into global battery markets?

Yes, good question. The western press seems fixated on the Tesla giga-factory; however Tesla is really just one of many large battery projects worldwide. China has multiple projects, some of which, although smaller than Tesla’s planned operation, are already in production and will grow in phases.
I think what Tesla is doing is great, but it’s only part of the global story. 

Based on extensive meetings around the globe, are there critical events on the horizon that could shake things up?

As long as China continues a reasonable level of support for battery related initiatives and there is not a major global recession, I think lithium ion battery demand for non-consumer applications has reached a tipping-point, ensuring robust lithium demand for the next several years.

 

Eoin Treacy's view -

Until quite recently the market for lithium batteries was confined to the impressive growth rate for hand held devices. The increasing penetration of electric vehicles into the passenger transport sector represents an additional growth trajectory not least because major car manufacturers plan to have vehicles in the $30,000 bracket on the road within two years. A third strand for growth is represented by industrials and utilities seeking to smooth the pattern of supply and demand or to employ remote power generation facilities. 



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March 15 2016

Commentary by Eoin Treacy

Valeant Plunges Most Ever on Forecast Cut, Warning Over Debt

This article by Cynthia Koons and Caroline Chen for Bloomberg may be of interest to subscribers. Here is a section: 

“We have to earn back the credibility,” Pearson said in his first public remarks since returning from a medical leave two weeks ago. “We have to deliver on results. We have to meet or exceed this guidance,” Pearson said during the call. “It’s a bit of a starting over point for me and this company.”

Laval, Quebec-based Valeant is at risk of violating its debt agreements, putting it at the mercy of its creditors, since it will be late filing its annual report. Valeant said it must file its 10-K by March 30 to avoid triggering cross-defaults that would restrict it from being able to further tap its credit line. It won’t be able to meet that deadline and will begin asking lenders next week to amend the credit agreement so that a default is waived.

 

Eoin Treacy's view -

in the lengthy conference call this morning Valeant corrected what they called a typo in the press release which had overstated earnings, they announced they were changing the way they calculated the tax they paid and announced that guidance would be lower. Investors took flight and the share fell 51.80%. 



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March 09 2016

Commentary by Eoin Treacy

US agency reaches 'holy grail' of battery storage sought by Elon Musk and Gates

Thanks to a subscriber for this article from the guardian which may be of interest. Here is a section: 

But the biggest breakthrough is in the area of energy storage. “I think that’s one area where we have delivered big time,” Williams told the Guardian.

The battery storage systems developed with Arpa-E’s support are on the verge of transforming America’s electrical grid, a transformation that could unfold within the next five to 10 years, Williams said.

The most promising developments are in the realm of large-scale energy storage systems, which electricity companies need to put in place to bring more solar and wind power on to the grid.

She said projects funded by Arpa-E had the potential to transform utility-scale storage, and expand the use of micro-grids by the military and for disaster relief. Projects were also developing faster and more efficient super conductors, and relying on new materials beyond current lithium-ion batteries.

The companies incubated at Arpa-E have developed new designs for batteries, and new chemistries, which are rapidly bringing down the costs of energy storage, she said.
“Our battery teams have developed new approaches to grid-scale batteries and moved them out,” Williams said. Three companies now have batteries on the market, selling grid-scale and back-up batteries. Half a dozen other companies are developing new batteries, she added.

 

Eoin Treacy's view -

Battery technology is the missing link in the supply chain between generating electricity via wind and solar and meeting requirements for base load. Until the last decade investment in batteries was puny compared to what has gone into other sectors. However the high oil price environment created an incentive to develop more efficient ways of generating and storing energy. Some of that is now coming to fruition and it is likely to have a transformative effect on electricity costs and the potential for electric cars. 



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March 07 2016

Commentary by Eoin Treacy

Apple users targeted in first known Mac ransomware campaign

This article by Jim Finkle for Reuters may be of interest to subscribers. Here is a section:

"This is the first one in the wild that is definitely functional, encrypts your files and seeks a ransom," Olson said in a telephone interview.

Hackers infected Macs through a tainted copy of a popular program known as Transmission, which is used to transfer data through the BitTorrent peer-to-peer file sharing network, Palo Alto said on a blog posted on Sunday afternoon.

When users downloaded version 2.90 of Transmission, which was released on Friday, their Macs were infected with the ransomware, the blog said.  

 

Eoin Treacy's view -

Ransomware is an increasing threat and is likely to remain an issue as more of our personal data and experiences are stored on line. It’s an even bigger issue for companies. Last week news items commented on the first hospital that had been held to ransom and I’ve met business owners who have been ripped off by such scams. With the prospect of losing your records, proprietary information and everything else that identifies you or your business, increasing spend on security and encryption is now a necessity rather than a choice. 



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March 04 2016

Commentary by Eoin Treacy

Tesla's Getting More Rivals as VW Scandal Clouds Diesel Outlook

This article from Bloomberg may be of interest to subscribers. Here is a section: 

Volkswagen, meanwhile, has made electric vehicles a linchpin of its plan for recovering from the crisis, accelerating a push to add 20 additional plug-in hybrid and battery-powered cars to its lineup by 2020. That includes the first battery-powered vehicle for the Porsche sports-car brand as well as an electric Audi crossover. And it’s promising new leaps in technology, including ranges of more than 500 kilometers (310 miles) by the end of the decade.

“Charging will only take as long as a coffee break,” instead of hours, Volkswagen CEO Matthias Mueller said in Geneva. “And in the long term, an electric car will cost less than a car with an internal combustion engine.”

Such technology advances will help electric cars eventually. But in the meantime, demand is tepid, with the clean-running vehicles accounting for just 0.68 percent of sales in western Europe, according to Automotive Industry Data Ltd. Much of that demand comes from Norway, where electric cars enjoy generous perks such as tax exemptions and free charging. In Germany, where there are limited benefits, just over 30,000 have been sold to date. Cheap oil prices provide little incentive for consumers to take the leap.

Eoin Treacy's view -

Tesla, more than any other company, has succeeded in making electric vehicles desirable. I personally have very little interest in cars but I have to admit that their marketing is having an effect on me and there is no denying I see a lot more Tesla’s on the road today than a year ago. News last week that Tesla is outselling other luxury cars in the USA is a wake-up call for its German competitors. This lends additional support for the argument that companies need to compete in the electric vehicle sector.  



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February 25 2016

Commentary by Eoin Treacy

Email of the day on cyanobacteria and biofuel

Have you' received any comments on developments with Cyanobacteria? The website of Joule Unlimited is intriguing. There is a short video which is worth watching. It is early days with this technology but I wonder if any of your subscribers have any realistic ideas about the potential

Eoin Treacy's view -

Thank you for this question which I suspect is of general interest to the Collective. If subscribers have any additional information we would be glad to see it.

You might remember Exxon Mobil invested about $600 billion in algae experiments in 2009 only to lose interest after a couple of years, as fears about peak oil faded. Using algae as the catalyst for producing biofuels was a popular idea almost a decade ago but the problem for companies like Joule is their process is only efficient when oil is above $50. That is just not low enough for widespread roll out in the current environment. 



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February 24 2016

Commentary by Eoin Treacy

Boston Dynamics' Atlas The Next Generation

This video is worth watching because it gives us an idea of just how much progress robotics companies have made. 

Eoin Treacy's view -

The Atlas robot is not production ready but we can see from the above video that it is capable of doing at least some of the work currently done by teamsters. That suggests, a decade from now, when better robots are both cheaper and more intelligent the role to played by humans in labour related jobs will be under even greater stress. Stay in school kids!
 

 



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February 12 2016

Commentary by Eoin Treacy

China Could Have a Meltdown-Proof Nuclear Reactor Next Year

This article by Richard Martin for the MIT Technology Review may be of interest to subscribers. Here is a section:

Construction of the plant is nearly complete, and the next 18 months will be spent installing the reactor components, running tests, and loading the fuel before the reactors go critical in November 2017, said Zhang Zuoyi, director of the Institute of Nuclear and New Energy Technology, a division of Tsinghua University that has developed the technology over the last decade and a half, in an interview at the institute’s campus 30 miles south of Beijing. If it’s successful, Shandong plant would generate a total of 210 megawatts and will be followed by a 600-megawatt facility in Jiangxi province. Beyond that, China plans to sell these reactors internationally; in January, Chinese president Xi Jinping signed an agreement with King Salman bin Abdulaziz to construct a high-temperature gas-cooled reactor in Saudi Arabia.

“This technology is going to be on the world market within the next five years,” Zhang predicts. “We are developing these reactors to belong to the world.”

Pebble-bed reactors that use helium gas as the heat transfer medium and run at very high temperatures—up to 950 °C—have been in development for decades. The Chinese reactor is based on a design originally developed in Germany, and the German company SGL Group is supplying the billiard-ball-size graphite spheres that encase thousands of tiny “pebbles” of uranium fuel. Seven high-temperature gas-cooled reactors have been built, but only two units remain in operation, both relatively small: an experimental 10-megawatt pebble-bed reactor at the Tsinghua Institute campus, which reached full power in 2003, and a similar reactor in Japan.

Eoin Treacy's view -

Regardless of the cost, China needs to import fossil fuels. From a national security perspective that’s a problem. Despite the fact the pace of growth is moderating the requirement the country is going to have for energy means they have little choice but to fund any and every potential technology to supply their market. Nuclear is a big part of that and China is now the largest test bed for new reactor designs in the world. They will inevitably seek to capitalise on that investment and China is going to be a major competitor in the construction of nuclear reactors globally. 



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February 11 2016

Commentary by Eoin Treacy

Tesla Boosts Shares By Putting BMW-Fighting Model 3 on Calendar

This article by Dana Hull for Bloomberg may be of interest to subscribers. Here is a section:

Chief Executive Officer Elon Musk needed some good news for stockholders, who had been shedding shares amid fear that cheap gasoline and competing electric cars would undercut sales. While affirming that the Model 3 is on schedule, Musk also said that sales will be better than expected this year and that money- losing Tesla is “in striking distance” of positive cash flow.

“We’re really looking forward to the unveiling of the Model 3 at the end of next month,” Musk said during the fourth-quarter earnings call Wednesday. “I think it will be well received, and then getting into production and delivery at the end of next year.”

Musk said in a tweet last night that Tesla will take deposits of $1,000 for a Model 3 starting in showrooms on March 31 and online on April 1.~

Tesla is pinning its hopes of getting out of the red and into sustainable profitability on the Model 3, whose lower price will broaden its appeal to more buyers. The Model 3 will have a price tag of roughly $35,000 before incentives like the federal tax credits or state rebates, but Tesla will initially roll out a highly optioned version, as it did with its Model S sedan and Model X SUV.

 

Eoin Treacy's view -

At its current valuation, even after the two-month slide, Tesla cannot afford to get anything wrong. The announcement that it is within striking distance of positive cash flow is certainly welcome and the expectation that it will deliver more cars than forecast this year is also beneficial. The fact that the loss widening in the last quarter is a further indication that the company cannot simply rely on hype and popularity to drive performance. It needs results. 



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January 29 2016

Commentary by Eoin Treacy

Microsoft Cloud-Fueled Revival Persists as Azure Sales Jump

This article by Dina Bass for Bloomberg may be of interest to subscribers. Here is a section: 

The gains add to optimism that Chief Executive Officer Nadella can revitalize growth by focusing on Web-based services and productivity applications. More than 70 percent of Fortune 500 companies are now using at least two different Microsoft cloud services, Nadella said on Thursday. His plan to focus on apps for rival platforms is also attracting users, with 340 million downloads of Office apps on Apple Inc.’s iOS and Google’s Android.

While Nadella pushes expansion, Chief Financial Officer Amy Hood is reining in costs.

“They have two things going for them -- one, the belief that Nadella is driving innovation towards the cloud, and No. 2, Amy Hood has had a blowtorch out on expenses," said Brent Thill, an analyst at UBS AG, referring to Microsoft’s chief financial officer. “It’s a totally different vibe coming out of that place that it was three years ago."

 

Eoin Treacy's view -

Governance is everything has been a refrain veteran subscribers will be familiar with. Microsoft offers a powerful example of how a newly energised board can have a transformative effect on earnings and perhaps more importantly perceptions of further potential. 



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January 28 2016

Commentary by Eoin Treacy

The Agony & The Ecstasy

Thanks to a subscriber for this report from JP Morgan Asset Management which may be of interest. Here is a section:

As mentioned in the Health Care section on page 23, while 2000-2001 was the peak distress period for biotech and life science companies, there has been a steady drumbeat since, with over 100 biotech and life science catastrophic loss events since 2002 (see bar chart). We referenced earlier research showing that even when a drug finally gets to Phase 3 trials, the probability of failure can still be as high as 50%. One possible emerging challenge for the biotech industry: patent trolls. For funding and other reasons, some universities are under pressure to monetize their patents by transferring rights to “assertion entities”. As per a 2014 paper from the University of California Hastings College of Law, as these patent sales take place, the risk to biotech and pharmaceutical companies with existing products on the market increases dramatically. Such patents can cover active ingredients of drugs, methods of treatment, screening methods to identify new drugs, manufacturing methods and dosage forms.

In the table, we show some of the more recent catastrophic losses (companies reaching the 70% decline threshold in 2012 or 2013). Biotech companies can experience periods of depressed stock prices as trials fail or have to be rerun, with some surging when/if success eventually occurs, or when they are bought by larger companies. As a result, the table below captures catastrophic loss at a point in time (Spring 2014), and does not represent a final assessment of each firm’s future prospects.

 

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area. 

This is a useful report laying out the argument for a diversified approach to long-term investing while also highlighting just how much leaders outperform. A central part of the thesis we developed following the credit crisis was to rely on leadership and to favour pre-eminent companies within their respective sectors. Part of the reason for this is because capitalism trends towards concentration. This favours large companies that have the wherewithal to acquire emerging technology and the best assets of troubled competitors. As the report details, the majority of shares perform unremarkably while the leaders lead by a considerable margin. That is why we created the Autonomies theme. 



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