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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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January 25 2016

Commentary by Eoin Treacy

Bill Gates - GMO's Will End Starvation in Africa

I saw this interview with Bill and Melinda Gates on the Wall Street Journal’s website over the weekend and thought it might be of interest to subscribers. 

Eoin Treacy's view -

Regardless of whether one agrees or disagrees with the merits of road building it is incontrovertible that plans for a Pan American Highway began in early 1920s while Pan African roadways are still a long way from being complete. That alone helps to exemplify how underdeveloped infrastructure and intragovernmental cooperation is on the continent.  



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January 22 2016

Commentary by Eoin Treacy

Mean reversion and the Autonomies

Eoin Treacy's view -

Yes, breadth has deteriorated, stock market indices have pulled back violently, volatility has been troublesome for most and market commentary has been bordering on apocalyptic. However there are still shares trading above their respective 200-day MAs with all of these negative factors contributing to mean reversion. That would suggest they are marching to a very different beat. 



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January 20 2016

Commentary by Eoin Treacy

Email of the day on new nuclear

This article recently published by Bloomberg caught my eye.   Do you have any insight into the technology and its potential? 

Eoin Treacy's view -

I’ve been watching the Small Modular Reactors (SMR) sector for a number of years because it has the potential to drastically change the way the nuclear sector is perceived. With smaller designs and generation IV technology many of the issues associated with nuclear can be avoided. In additional the plan to build them in a factory in a process that can be repeated should help to control costs. 



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January 19 2016

Commentary by Eoin Treacy

Email of the day on lithium and miners

Following up on your 12th Dec piece on the lithium production from Elementis' hectorite mining in the US the consensus amongst those who know appears to be that we have adequate globally and in the West. The person to speak to (as Elementis doesn't answer emails!) is R Keith Evans who is globally the world expert. A Google search will show up previous articles from this gentleman on the same theme. There's probably a reason why Elementis aren't making a song and dance about it! 

Eoin Treacy's view -

Thank you for this informative email and for the link to R.Keith Evans’ article which it should be noted is dated 2008. Lithium prices have been static for approximately four years suggesting that supply and demand are in relative equilibrium, that the market is dominated by long-term contracts and is not very liquid. 



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January 13 2016

Commentary by Eoin Treacy

Email of the day on robotics

I know you have earlier followed the robotics market, in line with your monitoring of technological advances around the globe. I have an investment in Fanuc, but am wondering if it would be better to invest through a fund or ETF. Do you or any of the collective have a view on the best ways to invest in this theme?

Eoin Treacy's view -

Thank you for this question which may be of interest to subscribers. An argument can be made for owning a sector ETF when one wishes to diversify exposure but this is dependent on the sector’s constituents exhibiting commonality and market breadth. In a stock picker’s market, such as we are currently presented with, an ETF might just as easily diversify away any gain the leaders in the sector enjoy.



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January 12 2016

Commentary by Eoin Treacy

CES 2016

Eoin Treacy's view -

I was in Las Vegas over the weekend checking out the Consumer Electronics Show and thought subscribers might be interested in a review. My first impression was that while it is a large show, (I walked about 12 kilometres) it is nothing compared to the size of the permanent wholesale markets in Shenzhen where a great many of the products showcased are manufactured. The CES, at least to my mind, offers us a window on what is popular right now and if that is true a lot of companies are betting on drones and fitness. 



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January 05 2016

Commentary by Eoin Treacy

Gene-Editing Drugmaker Backed by Google, Gates Files for IPO

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

Editas Medicine Inc., the drugmaker whose backers include Bill Gates and Google Ventures, filed to become the first publicly traded company to specialize in a new technology to edit flaws in genes.

The company, which uses a gene-editing technique called Crispr, filed Monday for the IPO with an initial size of $100 million. That’s a placeholder amount used to calculate fees and will probably change.

Gene-editing startups have drawn more than $1 billion in private venture-capital investments since 2013, according to Boston Consulting Group, with investors hopeful that new, more precise DNA-editing capabilities will yield treatments for conditions as diverse as blood diseases, cancers, auto-immune disorders and inherited eye disorders. 

Cambridge, Massachusetts-based Editas has raised $163.3 million from selling preferred stock, its filing said. Venture capital firms Flagship Ventures and Polaris Partners each hold more than 15 percent of the company before the offering. Google Ventures -- the unit of Alphabet Inc. that goes by GV for short -- has also bought private shares, along with Gates and Khosla Ventures.

Rodger Novak, chief executive officer of Basel, Switzerland-based Crispr Therapeutics Ltd., has said he would consider an IPO this year. Both companies have said their first in-human trials won’t start until 2017. Other closely-held gene editing firms include Intellia Therapeutics Inc. and Poseida Therapeutics Inc. Bayer AG and Crispr Therapeutics also started a joint venture in December with a $335 million investment from Bayer.

 

Eoin Treacy's view -

There is still an ongoing emotive debate about the virtues of genetically modified food with North America championing the sector while Europe has taken a much more cautious and often aggressive opposing view. Despite fear of the unknown, which would appear to inspire much of the emotive commentary on genetics, the potential for truly life changing innovation is undiminished. 



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January 04 2016

Commentary by Eoin Treacy

Nevada Regulators Eliminate Retail Rate Net Metering for New and Existing Solar Customers

This article by Julia Pyper for GreenTechMedia may be of interest to subscribers. Here is a section:

The Nevada Public Utility Commission voted unanimously in favor of a new solar tariff structure on Tuesday that industry groups say will destroy the Nevada solar market, one of the fastest-growing markets in the country.

The decision increases the fixed service charge for net-metered solar customers, and gradually lowers compensation for net excess solar generation from the retail rate to the wholesale rate for electricity, over the next four years. The changes will take effect on January 1 and will apply retroactively to all net-metered solar customers.

The broad application of the policy sets a precedent for future net-metering and rate-design debates. To date, no other state considering net-metering reforms has proposed to implement changes on pre-existing customers that would take effect right away. Changes are typically grandfathered in over a decade or more.

 

Eoin Treacy's view -

Renewable energy and distributed generation are two of the greatest threats to established utilities in the sun-belt. If people can generate their own electricity at home, sell excess onto the grid at a favourable rate and only take from the base load provider when necessary, they are put in a highly advantageous position relative to the utility. On the other hand utilities are accustomed to a highly regulated market but not to competition. 



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January 04 2016

Commentary by Eoin Treacy

8 Tech Breakthroughs of 2015 That Could Help Power the World

Thanks to a subscriber for this article by Wendy Koch for National Geographic which may be of interest. Here is a section: 

7. Better Batteries
Solar and wind power have seemingly limitless potential, but since they're intermittent sources of energy, they need to be stored. That’s why there’s a race to build a better battery. The lithium-ion standard bearer, introduced by Sony two-plus decades ago for personal electronics, can be pricey—especially for large uses—and flammable. So every few weeks comes an announcement of a new idea.

Harvard researchers unveiled a flow battery made with cheap, non-toxic, high-performance materials that they say won’t catch fire. “It is a huge step forward. It opens this up for anyone to use,” says Michael Aziz, Harvard University engineering professor and co-author of a study in the journal Science. (Find out how this flow battery works.) Also this year, MIT and DOE announced promising advances that could make batteries better and cheaper.

The battery push has gone beyond the lab. In May, Tesla’s Musk unveiled battery products that he plans to mass-produce in his $5 billion Gigafactory in Nevada. The products include the sleek, mountable Powerwall unit that SolarCity, a company he chairs, is putting in homes. This month, in the first such offering from a U.S. utility, Vermont’s Green Mountain Power began selling or leasing the Powerwall to customers. (Here are five reasons this battery is a big deal.)

Other companies are challenging Musk. Pittsburgh-based Aquion Energy, a spinoff from Carnegie Mellon University, began selling its saltwater battery stacks last year. German storage developer Sonnen said this month that it’s ramping up production of its lithium-ion battery at its facility in San Jose, California, for use in U.S. homes.

 

Eoin Treacy's view -

Symbiosis is popular in nature but it is becoming increasingly clear that it also has a role to play in sustaining the pace of technological innovation. Renewable energy technologies such as wind and solar are progressing rapidly but they will always suffer from intermittency without corresponding innovation in storage for both consumer and industrial uses. This has been painfully slow to follow because it takes time for capital invested in research to deliver results and yet the signs are promising that the next really big enabler with occur among chemical companies. 



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December 30 2015

Commentary by Eoin Treacy

Few Computers Are Powerful Enough to Support Virtual Reality

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

But making the virtual seem so real is highly hardware-intensive, and most computers struggle to meet the needs of VR. Facebook recommends that Oculus Rift owners have a computer with an Nvidia GeForce 970 or AMD Radeon 290 graphics card. Each costs at least $300, which is almost as much as an Xbox One or PlayStation 4. While the graphics card is the big-ticket item, the Oculus Rift will also require other bells and whistles, including an Intel i5-class processor, more than 8 gigabytes of memory, and two USB 3.0 ports.

There’s a very good reason why VR demands such processing power: Anything less, and you might hurl. Early VR prototypes caused many testers to suffer from motion sickness due to slight delays in the screen’s responses to the user’s movements. A standard PC game runs at 30 frames per second. But to deliver the fluid, natural motion our brains need to be convinced an image is real, VR needs to achieve 90 frames per second on two video projections (one for each eye). Right now, that means a $1,500 laptop.

 

Eoin Treacy's view -

The PlayStation 4 and Xbox 1 were both selling at fairly substantial discounts this holiday season in order to clear inventory ahead of beefed up product releases in the first quarter of 2016. Virtual reality is a big deal for the gaming industry and expected demand has contributed to Nvidia’s outperformance this year. 



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December 29 2015

Commentary by Eoin Treacy

Musings From The Oil Patch December 29th 2015

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. Here is a section: 

California’s proposed rule that a driverless vehicle must contain a steering wheel and a brake pedal for emergencies, goes against the grain of the technology industry that has been leading the development of these vehicles and cannot imagine a situation where the specified equipment would be necessary. It is akin to the continued existence of the emergency brake, a seldom used feature on a car, or directional signals, which many people seem to consider as unnecessary. The mandated equipment will certainly alter a passenger’s experience from that of a 21st Century, space-age vehicle to merely being a passenger riding in a modern automobile.

And   

Stretching out the transition time to a totally driverless vehicle fleet will also delay some of the anticipated economic and energy benefits envisioned. The world of a complete fleet of autonomous vehicles would allow them to be smaller and lighter, reducing the energy needed to produce them and power them. The absence of accidents would reduce the economic impact of injuries, physical damage and deaths, along with limiting or even ending the need for personal automobile insurance and the costs of accident litigation. If driverless vehicles could operate without human drivers, many families might also eliminate the need for second or third cars by being able to overlap their use of one vehicle, even though it would mean that vehicle would drive considerably more miles per year than the typical family’s current vehicles do. Net-net there should be an energy savings. Lastly, fewer vehicles would mean less need for expanded highways and parking spaces, freeing up urban land for alternative uses. California’s stance on driverless vehicles would seem to be slowing down the shift to our transportation nirvana and actually extending the petroleum age.

 

Eoin Treacy's view -

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

California’s laws on what need to be inside an autonomous vehicle, including a driver for example, are likely to represent a brake on the sector’s progress. However as anyone who actually drives a car knows there is a difference between what the law says and what the experience of driving is. 



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December 29 2015

Commentary by Eoin Treacy

Email of the day on Bitcoin

The Reuters' report is encouraging but you say "Bitcoin may succeed or fail". I have heard that it is just another Ponzi scheme that will leave investors holding an empty bag. How likely is a failure? Does anybody know?

Eoin Treacy's view -

Thank you for this question as it helps to separate the ideas of how closely Bitcoin resembles a currency from the technology that underlies it, which is called the blockchain. This is important from the perspective of an investor because while the value of bitcoin varies with supply and demand, the blockchain can be developed independently of the value of bitcoins. This is what major financial institutions are now doing and Nasdaq is already testing how to record ownership of some shares via blockchain protocols. . 



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December 28 2015

Commentary by Eoin Treacy

Hon Hai proposes deal to buy Sharp

This article from Taipei Times may be of interest to subscribers. Here is a section

According to the report, while Hon Hai — known as Foxconn Technology Group (???) outside Taiwan — has proposed acquiring Sharp at a high premium, it also wants Sharp’s current management team, including president and chief executive officer Kozo Takahashi, to step down.
Hon Hai would send a team to Sharp to manage the firm, the report said.

Hon Hai also plans to take over the debt shouldered by Sharp to help the firm address its financial problems, the report said.

However, the report also said that Hon Hai has yet to talk with Sharp’s bank creditors.

The report said that Sharp was shouldering about ?760 billion in debt as of the end of September.
Hon Hai is not the only potential suitor seeking to buy Sharp, the report said, adding that the Innovation Network Corp of Japan (INCJ), which is sponsored by the Japanese government, is studying a buyout of Sharp.

The report said that the INCJ still needs some time to map out a concrete acquisition deal, and the proposal is unlikely to come out until next year, so Hon Hai is taking advantage of the vacuum created to make a deal.

 

Eoin Treacy's view -

Hon Hai Precision is best known for assembling Apple’s iPhone as well as being one of the world’s largest employers. As a fabless manufacturer it generally does not promote its own brands so the potential acquisition of a manufacturer with global brand recognition such as Sharp is an interesting development. 



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December 22 2015

Commentary by Eoin Treacy

New compound triggers immune response to range of RNA viruses, including Ebola and hep C

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

So a team led by scientists from the University of Washington set out to better equip the body's immune system to fight off viral RNA. It has developed a compound that targets a molecule contained in the body's cells called RIG-1. This molecule is a pathogen recognition receptor, which means that it detects the presence of viral RNA and sets off an innate immune response inside the cell.

This includes the expression of antiviral genes, pro-inflammatory cytokines, chemokines and interferons, which work in collaboration to suppress and control the viral infection. By activating this immune response and promoting these weapons against infection, the team was able to "significantly decrease" viral RNA in cells and suppress infectious virus reproduction.

"Our compound has an antiviral effect against all these viruses," says Michael Gale Jr., University of Washington professor of immunology, referring to a range of RNA viruses, including West Nile, dengue, hepatitis C, influenza A, respiratory syncytial, Nipah, Lassa and Ebola.

 

Eoin Treacy's view -

Low interest rates, abundant credit and tight spreads have definitely had an impact on how successful small companies have been in raising capital to fund expansion and in seeking listings. A jump in high yield borrowing costs is likely to weigh on the ability of such companies to thrive and may offer larger, better capitalised companies, the opportunity to acquire promising technologies at reasonable prices. In any case the pace of technological innovation is unlikely to be affected by interest rates.  



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December 21 2015

Commentary by Eoin Treacy

December 11 2015

Commentary by Eoin Treacy

Nasdaq leadership #2

Eoin Treacy's view -

On Monday I led off with a piece highlighting the fact seven of the largest companies on the Nasdaq also had among the largest overextensions relative to the respective trend means. With so much of the Index’s weighting already having performed so well and with such narrow breadth it was looking unlikely that a move to new highs could be sustained before those shares went through a process of mean reversion. It’s been an interesting week but I thought it was worth re-highlighting some of those charts today so subscribers could see updated charts.



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December 07 2015

Commentary by Eoin Treacy

December 07 2015

Commentary by Eoin Treacy

Cisco Midyear Security Report

This report covering a number of cybersecurity threats currently assailing corporate networks obviously focuses on Cisco’s response but may be of interest to subscribers. Here is the conclusion: 

The threats discussed in this report represent only a small sample of the cybersecurity challenges that organizations, their security teams, and individual users face. So far, 2015 is proving to be a year of unprecedented speed in the innovation, resiliency, and evasiveness of cyberattacks. Adversaries are intent on overcoming all barriers to their success. As fast as the security industry can develop technologies to block and detect threats, miscreants pivot or change their tactics altogether.

The innovation race between adversaries and security vendors is only accelerating, and organizations are at risk of becoming more vulnerable to attack if they sit back and watch. They need to be proactive about identifying and addressing cybersecurity risks that can affect their business and aligning the right people, processes, and technology to help them meet those challenges.

“Security needs to be part of the way organizations think—holistically—about their business,” says David Goeckeler, senior vice president and general manager for the Security business group at Cisco. “There is a great deal at stake: their brand, their reputation, their intellectual property, and their customers’ data. All of these things are at risk. Organizations need to take a systemic approach to minimizing that risk through an appropriate security posture.”

Trustworthy products are an essential component of an effective security posture, says John N. Stewart, chief security and trust officer for Cisco. “Organizations no longer want to accept that compromise is inevitable,” he says. “They are looking to the security industry to provide them with products that are reliable and resilient, and capable of deflecting even the most sophisticated threats.

 

Eoin Treacy's view -

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

Cybersecurity is a cause celebre for those of us who have had our credit card details stolen or had to endure letters from corporations telling us our most personal data “may” have been included in that which was stolen during a multi-month breach they previously knew nothing about. The investment crowd has priced in a substantial amount of good news already and valuations have increased particularly for those spearheading the sector’s advance. 



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December 01 2015

Commentary by Eoin Treacy

The Silicon Valley Idea That's Driving Solar Use Worldwide

This article by Mark Chediak and Chris Martin for Bloomberg may be of interest to subscribers. Here is a section: 

SolarCity took the leasing model that SunEdison Inc. first developed for the solar industry by a graduate student named Jigar Shah. He founded the company and sold its first power purchase agreement with Whole Foods Market Inc. in 2003, according to his book, Creating Climate Wealth.
SolarCity adapted that model for residential consumers in 2008 and many more offered similar arrangements including Sunrun Inc., which developed the first one in September 2007, and Vivint Solar Inc. In August, SolarCity bought a developer in Mexico that was offering the first leases to businesses in that country and plans to expand it to homes there.

And now the idea is spreading to other industries trying to sell expensive capital equipment that reduce pollution and fossil fuel consumption. Cambrian Innovation, a startup out of Massachusetts Institute of Technology, has developed onsite wastewater treatment plants. While the high cost make them difficult to sell, when they combine all the benefits to a consumer like a brewery -- lower disposal fees, water use, energy use and carbon emissions -- they can finance leases and offer savings at no cost to the consumer.

“SunEdison developed the solar power-as-a-service that helped the industry take off,” Matthew Silver, chief executive officer of Boston-based Cambrian, said in an interview. “Now we’re offering clean water as a service that municipal utilities can or won’t do.”

 

Eoin Treacy's view -

With the COP21 conference beginning in Paris today, there are a large number of articles circulating on the advances already seen in the development of renewable sources of energy. Lease back agreements that have increased access to these solutions is certainly important, but I am curious how these will be structured when interest rates rise and the cost of funding such largesse rises. 

Renewable intermittency means industrial scale storage solutions need to get substantially cheaper and battery technology needs to improve. Progress has been made on both fronts but we are still a long way from replacing fossil fuels. 

 



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December 01 2015

Commentary by Eoin Treacy

Biggest Biotech Fund Expands Bet Amid 'Manic-Depressive' Market

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

“In the short term, biotech goes through these manic-depressive periods. It’s an extremely volatile group,” Kaul said Tuesday in a phone interview before the debate. “I’d like to really use this as an opportunity to upgrade names, to buy the better names at better prices.”

“Fear can turn into greed very quickly,” he said. “Some of these companies are approaching double-digit free cash flow yields, and you’re paying little for pipeline success.” Because the downturn was widespread, Kaul said he’s excited about his stakes in smaller companies that were especially hard hit over the past few weeks. He declined to discuss individual companies.

 

Eoin Treacy's view -

The Nasdaq-100 has been consolidating in the region of its year 2000 peak for the last few months and that pause may take a while longer to build support before a meaningful breakout can be sustained. At such an historic level it is worth considering that valuations today are nowhere near what they were at the height of the TMT mania. 

Biotech was among the sectors that surged in the late ‘90s as the promise of futuristic products and treatments ignited investor interest. It has taken more than a decade but we are now in sight of some of those promises being realised. That does not mean the sector was fairly priced earlier this year when it surged well above its trend mean but it does suggest meaningful pullbacks represent opportunities to participate in a major growth sector are more reasonable levels. 

 



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November 23 2015

Commentary by Eoin Treacy

Email of the day on GoPro

Are you able to comment on the recent price action of GoPro, Inc (GPRO)? What is the technical outlook for this stock? Thanks.

Eoin Treacy's view -

Many of the surfers on Manhattan Beach wear GoPro head cameras which results in a steady flow of YouTube videos as they encounter juvenile great white sharks. A fellow diver in Cancun last year had one that took continuous video and had a max depth rating of 40 metres/ It put my old heavy hand held housing to shame, although mine still had better power for lighting. The company has really great products and is certainly fashionable but it is also susceptible to copycatting not least from China and that is weighing on the share.   



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November 19 2015

Commentary by Eoin Treacy

Valeant New Overweight at Citi Research Credit; Fear 'Overdone'

This note by Cristin Flanagan for Bloomberg quoting a number of soundbites relating to Valeant. Here is a section: 

VRX initiated at overweight on diverse product lines, strong FCF

Highlights secured, shorter-dated unsecured tranches of capital structure as a means for investors to “opportunistically add risk”

NOTE: Valeant 6 3/4% note due Aug, 15, 2018 has dropped to 95 from 104.8 on Sept. 25 to yield 8.85%

Mallinckrodt new marketweight on “attractive yields, moderate leverage,” niche focus

Endo new marketweight on diverse rev., generic presence, leverage

 

Eoin Treacy's view -

Having been accused of accounting irregularities Valeant shares collapsed but the decline of over 70% from the August peak is extreme by any measure. The company still vehemently defends its accounting which it contends is not illegal and it is worth considering that the company posted positive earnings for each of the last five years and is trading on an Estimated P/E of 7.41. 



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November 18 2015

Commentary by Eoin Treacy

Best fitness trackers of 2015: Buying guide

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

This is the big one: you need to seriously consider what aspects of your fitness and activity you want this wearable to measure and track. It might be that you just want to keep an eye on how many steps you take per day, the distance you cover or the calories you are burning. Other trackers also offer built-in heart-rate tracking which can be a great indicator of how hard you're working, and let you work-out in different zones for fat-burning, endurance, or speed.

Another feature offered by some trackers is the ability to log location via GPS. This is good for users who want more precise measurements of the distances they have run or cycled. While some trackers have GPS built-in, others can use the information from your phone (if you have it with you while you work-out).

In terms of activity tracking, not all devices can monitor all activities. While most cover things like walking, running and cycling, you can't always select exercises like yoga, gym-equipment based activity or sleep quality, and you will need to check a tracker's compatibility with your fitness schedule.

Eoin Treacy's view -

Many of us who have been involved in athletic activities over the last thirty years will have tried out heart rate monitors. My own experience was that I found the chest strap uncomfortable while sculling and chaffing while running so I never really adopted heart rate monitoring into my workout despite the potential advantages.

Apple’s Watch incorporates the same technology as the Pulse Oximeter hospitals clip to your finger to measure oxygen in your blood. This has greatly increased interest in heart rate monitoring and while there are trade-offs with the chest strap variety, technology is improving all the time. The number of products offering this functionality is proliferating rapidly and apps incorporating the data are improving at an even faster pace. 

 



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November 17 2015

Commentary by Eoin Treacy

Liberty Global to Acquire Cable & Wireless in $5.3 Billion Deal

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

“We have seen Malone build out infrastructure first in Europe to create a distribution platform and now he’s adding content deals. He has both in the U.S. already,” Campling said. “He is repeating the tried-and-trusted approach in Latin America -- build out the distribution platform and then use the economic leverage of the same to drive financial leverage of content negotiations.”

Malone’s growing presence in Latin America also dims the hopes for a revival of talks to combine or swap assets in Europe with Vodafone Group Plc. The two sides in September ended their own negotiations. While Malone has said Vodafone’s assets in Europe would be attractive, he said the two companies had different corporate cultures that would make a combination difficult.

Malone, 74, has taken on mountains of debt in recent years to expand European operations as a plunge in interest rates allowed Liberty Global to borrow cheaply. Analysts predict he will turn his focus to content assets in Europe, such as U.K. television broadcaster and producer ITV Plc, in which Liberty Global owns 9.9 percent.

Liberty Global, which has been seeking growth from broadband subscriptions as streaming and on-demand TV services edge out traditional TV viewing, has also invested in TV-show production and mobile-phone services as new sources of revenue in Europe.

 

Eoin Treacy's view -

Broadband is viewed by most people today as a necessity. Regardless of whether we consume media via Netflix, Hulu, iTunes, YouTube, Facebook, Twitch or just plain television we need access to a network. There is an increasingly wide divergence between cable and mobile but mobile costs are still too high to represent a significant threat to cable in the short term. Companies controlling broadband network represent utility type cash flows provided they can keep infrastructure development costs under control. 



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November 16 2015

Commentary by Eoin Treacy

Experimental drug targeting Alzheimer's disease shows anti-aging effects

This press release from the Salk Institute may be of interest to subscribers. Here is a section: 

In this latest work, the researchers used a comprehensive set of assays to measure the expression of all genes in the brain, as well as over 500 small molecules involved with metabolism in the brains and blood of three groups of the rapidly aging mice. The three groups of rapidly aging mice included one set that was young, one set that was old and one set that was old but fed J147 as they aged.

The old mice that received J147 performed better on memory and other tests for cognition and also displayed more robust motor movements. The mice treated with J147 also had fewer pathological signs of Alzheimer's in their brains. Importantly, because of the large amount of data collected on the three groups of mice, it was possible to demonstrate that many aspects of gene expression and metabolism in the old mice fed J147 were very similar to those of young animals. These included markers for increased energy metabolism, reduced brain inflammation and reduced levels of oxidized fatty acids in the brain.

Another notable effect was that J147 prevented the leakage of blood from the microvessels in the brains of old mice. “Damaged blood vessels are a common feature of aging in general, and in Alzheimer's, it is frequently much worse,” says Currais.

Currais and Schubert note that while these studies represent a new and exciting approach to Alzheimer’s drug discovery and animal testing in the context of aging, the only way to demonstrate the clinical relevance of the work is to move J147 into human clinical trials for Alzheimer’s disease.
“If proven safe and effective for Alzheimer’s, the apparent anti-aging effect of J147 would be a welcome benefit,” adds Schubert. The team aims to begin human trials next year.

 

Eoin Treacy's view -

Health systems in most Western countries are under increasing stress not because of drug use or alcoholism but because people are living longer with chronic conditions. Diseases like diabetes and conditions exacerbated by obesity are expensive to treat and incredibly time consuming. People living longer but with deteriorating mental and physical function, often with complications, represent major cost centres for health systems. 



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November 12 2015

Commentary by Eoin Treacy

Google Just Open Sourced TensorFlow, Its Artificial Intelligence Engine

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

“This is really interesting,” says Chris Nicholson, who runs a deep learning startup called Skymind. “Google is five to seven years ahead of the rest of the world. If they open source their tools, this can make everybody else better at machine learning.”

To be sure, Google isn’t giving away all its secrets. At the moment, the company is only open sourcing part of this AI engine. It’s sharing only some of the algorithms that run atop the engine. And it’s not sharing access to the remarkably advanced hardware infrastructure that drives this engine (that would certainly come with a price tag). But Google is giving away at least some of its most important data center software, and that’s not something it has typically done in the past.

Google became the Internet’s most dominant force in large part because of the uniquely powerful software and hardware it built inside its computer data centers—software and hardware that could help run all its online services, that could juggle traffic and data from an unprecedented number of people across the globe. And typically, it didn’t share its designs with the rest of the world until it had moved on to other designs. Even then, it merely shared research papers describing its tech. The company didn’t open source its code. That’s how it kept an advantage.

 

Eoin Treacy's view -

Machine learning is a very big project and the trend of innovation is moving towards a situation where computers will be able to create solutions based on experience rather than following a formula alone. Humans have been working with tools for eons but the realm of creativity, innovation and art has never been outsourceable to machines. This is going to change in the next thirty years so we can expect the trend of technological innovation to continue to accelerate and the realm of possibility will not even be limited by human imagination. 



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November 11 2015

Commentary by Eoin Treacy

2016 Oil Market Outlook

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

In addition to a still over supplied global liquids balance it is of course bearish that OPEC does not look set to change their output policy in the December 4 meeting. The change in Saudi policy was one of the key reasons why we held the most bearish view to oil prices in the surveys one year ago. We were early to identify 1986 as the relevant comparison since this downturn is a supply led downturn and not a demand led downturn. Hence it made no sense to us that Saudi would defend oil prices this time, since the kingdom always has seen the 1980-86 cut period as a mistake. We do not foresee a change in the Saudi tactics in the December 4 OPEC meeting since there are very visible signs that the policy is working, first and foremost through the large global CAPEX cuts hitting shale, deepwater and Canadian oil sands.

It is also important to emphasize that we are still in a situation where there will be no contributions to a potential OPEC production cut from other than Saudi/UAE/Kuwait. Iran, Iraq and Libya is of course totally out of the picture to contribute, and how can Venezuela, Nigeria and the other OPEC countries cut back output voluntarily when their domestic economies needs the exports revenues? Since there is no sanctions on any OPEC country that does not follow the potential new quota, how can Venezuela trust that Nigeria is cutting any output?? The risk would be that Venezuela cuts and it is too small to affect the price and then revenues are falling as the exports volume is reduced. OPEC behaviour is still a lot of game theory… To us this means that the only way we could see an OPEC cut in the December meeting would be that Russia contributes to cutting production. We do not see this as very likely, noting the statements from for example the Russian Deputy Energy Minister in October where he said that Russian oil wells are mostly located in harsh climate in Siberia which means the wells will not be easy to restart after having been shut down and there is no storage capacity for the crude Russia would otherwise have exported.

On October 21 OPEC and some non-OPEC countries held a meeting with technical experts to discuss the oil market but the meeting gathered no interest from non-OPEC countries to contribute to any production cuts. Venezuela has proposed to reapply a new price band for OPEC where production should be reduced when the price is below a 70 $/b threshold but has seen little traction so far on this idea. The response from the Saudi “pump-king” Al-Naimi was that “only the market can decide on prices, no one else”, so it does not look promising for Venezuela which will just have to tighten their belts.

For OPEC it just makes it even more difficult that Iran is set to return to the market in 2016. IAEA must verify that Iran has implemented the nuclear agreement before sanctions can be removed. Iran must reduce the number of centrifuges from 9.500 to 5.060, move installed non-operating centrifuges into storage, dilute stock pile of low-enriched uranium from 10.000 kg to 300 kg, remove the core Arak heavy water reactor and establish verification systems across the supply chain. Iran’s supreme leader has stated that the process at Arak will not begin until the IAEA completes its investigation on past nuclear weapons work and that report is not due until December 15. We have hence factored in that the sanctions are not removed until the second quarter of 2016 in our global supply/demand balance.

 

Eoin Treacy's view -

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

There are large number of moving parts in the global energy sector and the number of potential wild cards that could have a major influence on prices has increased. At this stage it is a philosophical question whether the low price environment has led to increased risk but there is no denying that wars on the periphery of some of the world’s biggest oil producing areas is a risk. The piece in the above report focusing on the palace politics of Saudi Arabia is also worth keeping an eye on because of the influence regime change could have on energy policy. 



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November 10 2015

Commentary by Eoin Treacy

Oculus-powered consumer VR arrives later this month, as the Gear VR goes up for pre-order

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

The consumer Gear VR is compatible with all of Samsung's 2015 flagships: the Galaxy S6, Galaxy S6 edge, Galaxy Note 5 and Galaxy S6 edge+. The first two phones have smaller screens (5.1-inch compared to 5.7-inch on the last two) and will have a slightly smaller field of view, but they'll also have slightly higher pixel densities. It's a very similar experience either way, so buy the phone you prefer – not the one you think is going to be better in the Gear VR.

Oculus also announced some new content arriving in time for the consumer release. That includes atmospheric exploration puzzler Land's End (from the maker of Monument Valley). Twitch and Oculus Arcade, which puts you in a positively 80s-tastic arcade to play classics like Pac-Man and Gauntlet, are available today.

The new Gear VR costs US$99 – half what eager beavers paid for the Innovator Editions

 

Eoin Treacy's view -

Virtual reality is going to be a big story in 2016 as a range of product offerings hit the market designed for PC and game console use. Perhaps the primary benefit the Gear VR has over these upcoming solutions is that the target audience can quite easily finance the purchase of a phone and the $99 headset while the $350+ for a game console plus the VR headset cost will be more prohibitive. 



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October 26 2015

Commentary by Eoin Treacy

Email of the day on mass production of graphene

A very interesting article appeared in our local on-line newspaper here in Cambridge. It describes a breakthrough method for printing with graphene, at much lower cost and higher speed than current materials and methods. 

This is the kind of breakthrough that will lead to the advances in real-time connected health monitoring that I will be discussing as part of my presentation at Markets Now on January 18.

 

Eoin Treacy's view -

Thank you for this illuminating article and here is an important section: 

Developed by researchers at the Cambridge University in collaboration with city technology company Novalia, the method allows graphene and other electrically conducting materials to be added to conventional water-based inks and printed using typical commercial equipment. It is the first time that wonder material graphene has been used for printing on a large-scale commercial printing press at high speed.

 



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October 21 2015

Commentary by Eoin Treacy

Welcome to the future: Three things Back to the Future got right

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

Good morning and welcome to the "future." At approximately 4:29 p.m. Hill Valley time on Oct. 21, Doc Brown and Marty McFly arrive at the present day. For many millennials especially, the 1985 film series Back to the Future represented the far-flung fantastical future that many dreamed would come. But how does the Reagan-era vision of a future where we don't need roads compare to our daily lives today?

Sadly, you probably came to work today on the same street you may have trodden as a child back in 1985 without a hover board. But our future is still pretty fantastic, and many of the outlandish futuristic devices you saw in the 1989 film Back to the Future II are closer than you think—or already here. Here are three predictions that the film made that today might actually turn the head of an ‘80s time traveller 

 

Eoin Treacy's view -

Back to the Future was a fun franchise and growing up we all looked forward to owning a hoverboard. Despite Lexus’ rather cool demo product which they seem to have designed just for fun, we are still a long way from flying cars. Drones on the other hand are going from strength to strength as the cost of production continues to decline and GPS is integrated with progressively more products. We don’t have flying cars either but Stanford just releases a video of a DeLorean autonomously turning donuts on a test track which signals where scientists think the future will be.



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October 20 2015

Commentary by Eoin Treacy

NSA, Apple Chiefs Decode Encryption Views

This discussion highlighted by the Wall Street Journal may be of interest to subscribers. In particular, the second comment by Nathan LaFrance is in my view a good representation of how many consumers feel about the issue. Here is a section: 

Mr. Cook, appearing later, disagreed on the latter point. “I don’t know a way to protect people without encrypting,” he said. “You can’t have a backdoor that’s only for the good guys.”

Apple and federal officials have been at odds for more than a year, since Apple issued a new version of its mobile-operating system that it said safeguards user information, even from law enforcement. But the White House signaled recently that it won’t seek new laws to force tech companies to make products that allow law enforcement to eavesdrop.

 

Eoin Treacy's view -

The USA is finally introducing chip and PIN technology and not before time. My credit card details have been compromised at least four times in the last two years. I’ve now got identity protection from ULCA Health, Anthem, Target, Home Depot but the letter I received yesterday was the one I was most surprised about. Experian, the firm other companies use to check the credit of a customer has been hacked with the loss of untold quantities of client data. In many respects I hope its Chinese government backed hackers since they have little interest in me specifically but after so many incidents one simply has to assume that our most personal data is out there in the public domain. 



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October 16 2015

Commentary by Eoin Treacy

Virtual Reality

Eoin Treacy's view -

An incredibly crude form of virtual reality was proposed in 1963. When NASA and the Airforce tried to use it as a tool for training pilots they ran into a problem. The inner ear was getting disoriented and cadets were vomiting after only a few minutes using the headsets. It’s been more than 50 years and the kinks are pretty close to being worked out.

Gaming now makes more than twice what Hollywood takes in at the box office; $70 billion in 2013 alone. If you’re a 40-year old man you probably look back with fond memories at that Atari or Commodore 64 computer you had when you were a child. You might have upgraded over time or you’re waiting for your kids to be old enough so you can justify buying the latest X-Box or PlayStation. Today cinemas host gaming leagues on their big screens where kids compete for prizes. The emerging virtual reality sector is aiming squarely at this demographic. 10 years from now they’ll be in that attractive 18-34 year old consumer bracket.

In 2014 Facebook paid $2 billion for a start-up virtual reality company, Oculus Rift. Wall Street didn’t like it at the time because investors asked what on earth is a social media company doing with a virtual reality hardware manufacturer? Then only a couple of months later Microsoft paid $2.5 billion for Minecraft. That might sound like a lot of money but it works out at $125 for each one of the franchise’s 20 million tween customers and the promise of locking them into the company’s ecosystem for life.



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October 15 2015

Commentary by Eoin Treacy

Drivers Ride High on Trucking Boom

This article by Robbie Whelan and Brian Baskin for the Wall Street Journal may be of interest to subscribers. Here is a section: 

“Everyone is fighting over the same drivers,” said Dan Pallme, director of the Intermodal Freight Transportation Institute at the University of Memphis. “Eventually, what has to happen is salary has to rise, and the only way motor carriers can do that is by increasing the costs to their customers.”

The long-haul trucking industry, which employs about 800,000 people today, needs an additional 48,000 drivers, according to the American Trucking Associations, a trade group. That is a tall order at a time when unemployment is falling. Many who might have considered trucking are opting for construction work, a job that doesn’t involve long stretches away from home and pays competitive wages.

 

Eoin Treacy's view -

There is little commonality in the performance of trucking shares as they grapple with attracting more workers while also being required to carry lower cost items and facing competition from railroads. It’s still a number of years away but haulage is a prime target for autonomous vehicle manufacturers and the incentive to come up with a workable solution is all the more compelling with wage hikes such as those detailed in the above article. 



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October 14 2015

Commentary by Eoin Treacy

Toyota Maps Out Decline of Conventionally Fueled Cars

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

Yet for now, Toyota is still highly reliant on gasoline- and diesel-powered cars. Last year, around 14% of Toyota’s global sales were hybrid vehicles, including plug-ins. Most of the remaining sales were vehicles powered by gasoline and some diesel, though a detailed breakdown wasn’t available.

Toyota has posted record profits in recent years, partly thanks to growing sales of profitable but gas-guzzling sport-utility vehicles and pickup trucks in the U.S., backed by lower fuel prices.

The vision to eliminate gasoline- and diesel-powered cars was a part of Toyota’s wider green car strategy unveiled Wednesday.

By 2020, Toyota aims to cut carbon-dioxide emissions from new vehicles by more than 22% compared with its 2010 global average. It ultimately hopes to take that to a 90% reduction by 2050, the auto maker said.

To do so, Toyota plans to sell roughly 7 million gas-electric hybrid vehicles world-wide over the next five years, it said. Toyota has sold around 8 million hybrids since it started selling them 18 years ago.

Toyota also plans to sell at least 30,000 fuel-cell vehicles a year world-wide by around 2020, it said.

 

Eoin Treacy's view -

The fallout from Volkswagen’s diesel emissions scandal means other manufacturers, that had not focused on a “clean diesel” marketing campaign, are capitalising on the story by promoting their own innovations.  Toyota has made some big bets on hybrid and fuel cell cars and the debacle of Volkswagen’s fraud enhances the potential that these decisions will succeed in enticing consumers to try a new solution over the medium term. 



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October 12 2015

Commentary by Eoin Treacy

Cyberwar Ignites a New Arms Race

This article by Damian Paletta, Danny Yadron and Jennifer Valentino-Devries for the Wall Street Journal may be of interest to subscribers. Here is a section: 

“Cybercapability, especially offensive cybercapability, is a relatively inexpensive method that a country can exploit to ‘hit above its weight class,’ which North Korea is fully aware of and is attempting to leverage,” said Steve Sin, a former U.S. Army counterintelligence officer who now researches unconventional weapons and technology.

Defense contractor Northrop Grumman Corp., meanwhile, has advertised for a “cyber operations planner” to “facilitate” offensive computer attacks with the South Korean and U.S. governments, according to a job posting it listed online.

 

Eoin Treacy's view -

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

Cybersecurity is a multi-faceted theme where the majority of consumers and corporations focus on defensive capabilities. Governments on the other hand are much more interested in offensive cyber characteristics. Considering this an M1A2 Abrams tank cost about $6 million in 1999 and a Reaper drone costs about $12 million in hardware alone. So for the cost of one piece of high end military apparatus one could purchase a serious technological suite of tools and pay the programmers required to bring a project online. Against this background the relatively low barrier to entry means this represents a substantial growth trajectory. 



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October 09 2015

Commentary by Eoin Treacy

Indian Drugmakers Engineer Hep C Cocktails Impossible in West

This article by Ketaki Gokhale  Caroline Chen for Bloomberg may be of interest to subscribers. Here is a section: 

Patent applications in India for Sovaldi, also known as sofosbuvir, and Daklinza, also known as daclatasvir, are being challenged by groups of patients, lawyers and scientists. Decisions on whether Indian patents will be awarded to the two U.S. companies are pending. If they don’t win patents, it would pave the way for Indian generics and combination pills.

India’s patent office has rejected patents for drugs including Novartis AG’s cancer treatment Gleevec and Roche Holding AG’s HIV treatment Valcyte. In 2012, an Indian patent appeals board revoked patent protection for Roche’s hepatitis C injection Pegasys. The patent office didn’t answer calls seeking comment.

Generic Licenses
If the patent challenges on the Gilead and Bristol-Myers drugs fail, Indian companies would need to win licenses to copy the patented drugs and combine them. Bristol-Myers is in advanced discussions with Indian drugmakers for licenses to make and sell generic daclatasvir in 90 countries, spokesman Rob Perry said via e-mail. The intended agreements would allow the development of combination medicines if the licensee has rights to other drugs, Perry wrote.

Gilead last year licensed 11 generic drugmakers including Hetero Labs Ltd., Cipla and Aurobindo Pharma Ltd. to make and sell generic sofosbuvir in 101 developing countries. Those agreements also allow the development of combination medicines with other companies’ drugs, Cara Miller, a Gilead spokeswoman, wrote by e-mail. Spokespeople for Cipla, Hetero and Aurobindo didn’t respond to e-mails seeking comment.

 

Eoin Treacy's view -

Indian drug makers enjoy a charmed existence within a loose regulatory framework, large domestic population and international exposure to a host of countries with similar values and an inability to pay the same prices as North American and European customers. This has allowed a number of companies to develop significant positions within the global generic pharmaceuticals sector. 



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October 09 2015

Commentary by Eoin Treacy

3D-printed Adidas running shoe should fit like a glove

This article by Stu Robarts for GizMag may be of interest to subscribers. Here is a section:

The Futurecraft 3D midsole was developed in partnership with 3D printing specialist Materialise. It is designed to provide the cushioning needs of the wearer, matching contours and pressure points of each individual foot. Adidas describes it as a "flexible, fully breathable carbon-copy of the athlete’s own footprint."

Gizmag has requested some additional info from Adidas on the specific materials and processes used to create the Futurecraft 3D, but has yet to receive a response. The sportswear manufacturer does say in a press release, however, that its ultimate aim for the technology is for customers to be able to walk into a store, spend a short time running on a treadmill, then leave the store with a 3D-printed running shoe. 

Eoin Treacy's view -

There is nothing quite like finding a pair of shoes that fits just right. Nike was talking about scanning people’s feet in store and mailing them their shoes a few years ago but nothing has happened on that front just yet. Adidas’s solution would appear more workable because the consumer would be able to walk out of the store holding or wearing the product. It’s still in the future but it does help to exemplify the trend of customisation that physical locations need in order to encourage shoppers to leave their homes. 



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October 08 2015

Commentary by Eoin Treacy

Besties? Why Alibaba, Tencent Are Teaming Up in $15 Billion Deal

This article by Lulu Yilun Chen for Bloomberg may be of interest to subscribers. Here is a section:

An Alibaba-Tencent tie-up in local services would mirror the creation of Didi Kuaidi this year via a merger of competing taxi-hailing apps they separately backed. That marriage was intended to curtail an aggressive expansion by Uber and marked a rare cooperation between companies that still compete head-to-head in entertainment, e-commerce and finance.

As fundraising becomes more difficult in China, the current merger could provide advantages for both sides. It would let the Alibaba and Tencent-backed startups avoid competition with their closest rival, potentially saving money on subsidies and allowing them to collaborate on future efforts.
“The two companies merging would allow them to have absolute dominance of the group-buying market, and require less cash burn,” said Wang Weidong, an analyst at Internet consultancy IResearch in Beijing. “They will be putting a lot of pressure on competitors.”

 

Eoin Treacy's view -

China’s online businesses represent an interesting situation because they have evolved without the direct patronage of the Communist Party.  Of course they have to toe the line in terms of sustaining the political apparatus if they want to survive but that has not stopped them from developing into major private enterprises in a society that is among the most internet savvy in the world. 

Capitalism tends to trend towards concentration and this is especially true of the online sector where the barriers to entry are defined by the ability to pay for placement and broad spectrum advertising. The proposed co-operation between Alibaba and Tencent is a reflection of this fact as well as their intent to hold onto dominant positions with their sectors.  

 



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September 24 2015

Commentary by Eoin Treacy

Clinton Price Gouging Tweet Sends Drugmaker Hedges Surging

This article by Joseph Ciolli and Anna-Louise Jackson for Bloomberg may be of interest to subscribers. Here is a section:

Merger activity has underpinned gains for the sector. Valeant Pharmaceuticals International Inc., up 52 percent in 2015, has announced 10 acquisitions this year.

Managed-care companies, including insurers and hospitals, have also seen gains this year due to merger frenzy. Unlike their biotech peers, they’ve found strength since Clinton’s tweet, with HCA Holdings Inc., Aetna Inc., Anthem Inc. and Universal Health Services Inc. adding more than 1 percent over the past three days.

The best way forward for biotech investors may be to sell holdings, rather than hedge against potential losses, according to Walter “Bucky” Hellwig of BB&T Wealth Management.

Biotech stocks “substantially outperformed earlier in the year,” said Hellwig, who helps manage $17 billion as a senior vice president at BB&T Wealth Management in Birmingham, Alabama.
“It’s a logical place in the mind of investors as a place to start taking some profit.”

Clinton wasn’t the first influential public figure to criticize the industry. Federal Reserve Chair Janet Yellen called out the sector as overvalued on two occasions in the past 14 months, most notably in July 2014, when she referred to biotech valuations as “substantially stretched.”

 

Eoin Treacy's view -

A big question for the biotech and health insurance sectors is how likely is the feverish pace of merger activity to persist in an environment where the highest volatility levels in three years have been sustained for more than a month. Corporations were racing to close deals ahead of the Fed’s recent meeting in part because they anticipated they would lose access to cheap financing. The Fed might not have raised rates but confidence has deteriorated not least because of the extreme volatility experienced on August 24th. Politicians taking populist positions against companies also act as a disincentive to become so large as to become a target. 



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September 23 2015

Commentary by Eoin Treacy

VW Chief Winterkorn Steps Down After Emissions Scandal

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

The new CEO’s top priority will be getting to the bottom of a scheme intended to dupe regulators and consumers about emissions of diesel engines installed in 11 million cars worldwide -- more vehicles than VW sells in a year. The automaker set aside 6.5 billion euros ($7.3 billion) on Tuesday to cover potential costs.

VW’s Achilles heel remains the American market. Even before the revelations of the last week, the VW marque was struggling in the U.S., despite investing $1 billion on a new factory in Tennessee to build a stripped-down, cheaper version of the Passat sedan. The brand’s U.S. sales have dropped, in contrast to growth in the overall market, as VW delayed decisions on building sport utility vehicles that would appeal to American consumers. The automaker is also grappling with a slowdown in China, the company’s biggest national market.

Working in the new CEO’s favor is an automaker that for the moment is financially sound. Volkswagen’s automotive division had net liquidity of 21.5 billion euros at the end of June, and posted record profit of 12.7 billion euros in 2014, helped by its strong presence in China and the expansion of the Audi and Porsche nameplates in the lucrative luxury-car segment. VW surpassed Toyota Motor Corp. in the first half to take the top spot in worldwide vehicle sales -- a goal that Winterkorn set early in his tenure to reach in 2018.

 

Eoin Treacy's view -

Unfortunately this is not corporate Germany’s first corruption scandal. Over the last decade there have been a number not least at Siemens, Commerzbank, Deutsche Bank, Man AG, and Infineon among others. Often these have centred on faking expenses and bribery but this may be the first exhibiting outright fraud. These articles from NBS News in 2005, the New York Times in 2008 and the Economist in 2009 may be of interest for historical perspective. Despite these lapses in the standards of governance at large corporations the German stock market has been among the strongest in the region. 

The DAX has paused in the region of the August low but a sustained move below that level would be required to question scope for some additional steadying in this area which would at least allow the oversold condition relative to the trend mean to be unwound. 

As this article points out cheating on emissions isn’t exactly new either. 

 



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September 17 2015

Commentary by Eoin Treacy

Pure Energy Minerals drops the next lithium bombshell As Tesla seeks supply for its Gigafactory

This article by Peter Epstein for Mineweb may be of interest to subscribers. Here is a section: 

Stepping back for a moment, on September 3rd, Tesla’s Founder Elon Musk reiterated his commitment to source materials from Nevada. However, that pledge did not necessarily mean another sourcing deal, announced so soon, or that it would be for lithium. Other materials besides lithium will be required. Cobalt and graphite, (among others), will also be needed to feed Tesla’s massive giga-factory in Nevada. I find this agreement to be highly noteworthy in the sense that Tesla’s growing need for lithium, perhaps more so than that for cobalt and graphite, represents the single most important raw material need. I imagine that other lithium agreements will be signed in coming months. Without question, Nevada wants further lithium deals to come from Nevada.

Eoin Treacy's view -

The fall in oil prices has had a knock-on effect on most energy related sectors as the relative economics of various alternatives have changed. Lithium miners have been no exception and this has been despite the fact lithium prices have not fallen. Demand for lithium-ion batteries in everything from consumer goods to cars and planes has helped fuel major investment and a large number of explorers are now listed. However securing an agreement to supply Tesla’s factory is a major coup for Pure Energy.



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September 17 2015

Commentary by Eoin Treacy

Email of the day on Tesla

My hunch - but I may be wrong - is that electric cars are relatively easy to build... there is not much technology in an electric engine, no complexity; as for the batteries (which I understand are Panasonic's in the case of Tesla, which assembles them together in very large modules) I understand that the know how is not really in the hands of Tesla or any other producer (even Renault/Nissan stopped developing in house technology) and therefore someone else did the clever job. 

As a first mover Tesla has very competently built a good product, taking risk only where strictly necessary: luxury brand (low risk) with traditional, long bonnet, probably off the shelf design (low risk), an old chassis for the roadster, well tested batteries. Also, the complexity of electric power train - compared even with a small 1ltr engine - is little: there are fewer (almost none in fact) moving parts, no gear box. No way a new producer could enter the industry with its own internal combustion engines, but the electric car gives this opportunity.  A good demonstration of this is that Tesla's provisions for warranties are in line with those of a mature manufacturer with a well-tested line up of cars... probably Tesla know that there is so little in an electric car that can actually go wrong.

Traditional producers have held off from making a proper move into the sector not to cannibalize their current products and make all R&D and Capex in a probably obsolete technology completely worthless. After all they can catch up quickly: the difference between a Tesla, and a BMW or Nissan Leaf or 500e is purely the size of the battery, whose development risk is not theirs... On paper, a Leaf may have the range of a Tesla simply by doubling the size of the battery. In the meanwhile, no necessity of taking the risk of killing their current baroque business model, made of V12, V6, boxer, in line 4 or 3 or 2 cylinder hyper complex engines that you have to service all the time and last 300k when of exceptional quality.

Traditional car manufacturers will "tolerate" Tesla as far as it does not build a too strong brand (ludicrous speed is genius by the way: intrinsic of electric engine, easy to do, but presented as cool high tech stuff), then move in and with their economies of scale and less vertically integrated structure quickly catch up... it will be dear, but unavoidable as Tesla made clear it is possible to achieve a usable and fun product with no petrol engine.? VW making its move,? but I guess everyone if working on something. 

What I think could get ugly in this story - from the point of view of Tesla shareholders - is the excessive use of dodgy accounting (there are examples), the glorification of the CEO and its ideas (never good in a plc), just to get hold of capital for a venture that is extraordinarily risky and liable to competitive pressures from corporations much larger and much more sophisticated. How far will the individual Musk go to keep the business going? He is very successful, people love him, Tesla S has been voted best car ever. Difficult to give that up, right?

Did not look at the other businesses of his, with Space X he is against defence and/or state run companies... difficult.

Anyway, just a thought, I may be completely wrong...

 

Eoin Treacy's view -

Thank you for this detailed email and I agree that with valuations as they currently stand Tesla does not have a great deal of margin for error. The company has lost money in every quarter since 2013 but less than analysts estimated which has helped support the massive run-up in prices. 



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September 16 2015

Commentary by Eoin Treacy

As the World Gets Fatter, This Pharma Giant Gets Richer

This article by Makiko Kitamura Albertina Torsoli for Bloomberg may be of interest to subscribers. Here is a section:

After the Tresiba setback, Novo quickly began a heart safety trial demanded by the U.S. Food and Drug Administration. The company submitted a revised application in the U.S. this March -- almost a year ahead of plan. It will know around Oct. 1 whether interim trial results point toward the introduction of Tresiba in the U.S. next year.

Even without that, Soerensen insists Novo has enough products in the pipeline to sustain sales for years. The company in August said it would proceed with late-stage testing of an oral version of a GLP-1 -- until now only available as an injection. And it’s working on an oral insulin, a formidable challenge given the difficulty of regulating absorption through the gut and managing swings in blood glucose. Though even many of Novo’s top researchers doubted the idea of pills to treat diabetes, “I said: ‘Do it anyway! Try it!”’ Soerensen said. 

 

Eoin Treacy's view -

Unfortunately diabetes is a growth sector. It thrives in an environment where people eschew exercise and indulge in sugary, savoury and spicy foods. There have been some encouraging advances in treatment and awareness of the need for lifestyle change helps, but the fact that it is a chronic condition means demand for treatment remains on a growth trajectory. 



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September 15 2015

Commentary by Eoin Treacy

Kuka AG: Ride the wave of Industry 4.0

Thanks to a subscriber for this educative report from SocGen focusing on the industrial automation sector. Here are some sections:

The fusion of the digital world with the real world of manufacturing, known as the fourth industrial revolution, has just begun. For decades, Kuka has been setting milestones in factory and production automation, but we think the real breakthrough is just ahead with smart factories, for which Kuka is providing key technology that enables Industry 4.0. In our view, intelligent robotics, in particular human/robots collaboration is the heart of the digitised value creation chain as robots can be used as a versatile tool for unlimited production flexibility.

With its sensitive lightweight robots, mobile platforms, and smart platforms such as controllers and software, we think Kuka is well positioned to offer human/robot collaborative assistance systems, automation solutions, and production processes that mark the dawn of a new area for smart factories.

And 

Although industrial robots have been used for decades, their high cost only led to productivity improvements in industries that were using low skilled, but highly paid workers in the developed world, performing jobs that were dangerous, dirty and dull, like welding in auto production. In our view, we are now at a stage where robotics and the automation industry have started to “cross the chasm”, as early adopters such as the car industry have paved the way for a broader use of robots. Therefore, we think that other industries will catch up with the automotive industry to improve their efficiency and remain competitive, especially in regions of high wage inflation and an ageing workforce.

 

Eoin Treacy's view -

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

As the above report highlights the automotive sector is where the robotics sector took root. However the potential for robots to be employed in additional high margin sectors such as healthcare, pharmaceuticals and logistics is where the major growth thesis lies. Demands for high quality manufacturing, wage growth and an aging workforce all represent encouraging themes for the sector. 



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September 15 2015

Commentary by Eoin Treacy

Audi electric SUV concept quick off the mark, over 300 mile range

This article by Scott Collie for Gizmag and this promo page for Porsche’s all electric sports car due in 2020 may be of interest to subscribers. Here is a section from the former: 

In an attempt to improve manoeuvrability, the e-tron quattro is fitted with all-wheel steering similar to the system offered on Porsche's 911 GT3 RS, the rear wheels turning in the opposite direction to the front wheels at low speeds for a smaller turning circle and working in the same direction as the fronts at high speed for a sense of stability.

Audi has given its latest SUV concept a sleek and coupe-like sloping roofline and tapered glasshouse. At 4.88 m (16 ft) long and 1.93 m (6.3 ft) wide, the e-tron isn't a small car, but it looks far sharper than the bigger, more traditional Q7. With a drag coefficient of 0.25, it's also very aerodynamic for an SUV.

This is partially thanks to the sleek shape of the body and partly thanks to electronically-actuated aerodynamic elements in the bonnet, the side of the car and at the rear that activate at 80 km/h (50 mph). Just as it has done with the new A4, Audi has also worked hard on the underbody to cut down on drag. The e-tron has a fully enclosed floorpan.

 

Eoin Treacy's view -

Tesla was first to market with an attractive luxury electric car and continues to reap the benefits of being the best in class. However that success encourages competition and the company’s ability to be also the first to deliver an electric SUV will a major milestone. 



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September 08 2015

Commentary by Eoin Treacy

Email of the day on cybersecurity firms

I wonder if you would consider as one of your very erudite sector reviews looking at cyber security firms.  Most people would probably be investing in these through the ETF HACK. Like many other people I got pulled in when the sector was in the news recently after some high profile hacks, but since then it's performance has been terrible.

Is it sensible to invest in a sector like this just because of a feeling that more money will be put into it, without any knowledge of which firms will emerge triumphant? That is, can the profits from the few winners be expected to outweigh the losses of the many losers?


 

Eoin Treacy's view -

Thank you for an interesting question. Cyber security is a major growth sector but it’s a crowded field and not every company with a solution is going to make it. This is a good example of where investor demand has sought a diversified product but that the sector is not particularly suited to a diversified approach. In a competitive growth sector, such as this one, I believe stock picking with a reliance on relative strength is likely to be a more productive exercise.



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September 07 2015

Commentary by Eoin Treacy

Yingli Fights to Survive as Another Solar King Dethroned

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

One of those investments was the 2009 purchase of Cyber Power Group Ltd. for $77.6 million, a company that makes polysilicon, the main raw material in solar cells. Yingli’s founder and Chief Executive Officer Miao Liansheng invested another $270 million to upgrade the plant. The project made more sense then, when the material sold for $400 a kilogram; today, it can be bought for less than $20, said Angelo Zino, an S&P Capital IQ analyst in New York.

Yingli spent aggressively on marketing as well, including sponsoring the World Cup. Its logo was prominent during matches in Brazil last year. “They spent on capacity, they spent quite a bit on marketing,” Sanganeria said. “They took everything to the extreme.”

Suntech and Q-Cells faced similar issues, borrowing to expand capacity and then finding themselves constrained by debt, said Raymond James’ Molchanov. Both struggled to cut manufacturing costs fast enough to keep up with the market. The challenge was exacerbated starting in 2011 when slowing demand in Europe led to a global oversupply of panels and falling prices.

Eoin Treacy's view -

The problem for solar cell manufacturers is that the primary bullish case for solar is that Moore’s law can now be applied because it is a technology rather than an extractive resource. This means companies relying on producing legacy products, when technology is advancing rapidly are being left behind and often with high debt loads. 



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September 02 2015

Commentary by Eoin Treacy

Email of the day on Fanuc and robotics

“I would like to read your comments, if possible, about Fanuc, this leader Japanese company that, although its brilliant prospects it took a dive in the last weeks. Thank you.”

Eoin Treacy's view -

Thank you for this question which others may have an interest in. Industrial automation represents a growth theme dominated by companies supplying robots, software and optics. 

Robots are made from machined parts which is why Fanuc has refused to move manufacturing outside Japan due to the risk of imitation. Nevertheless, the growth of the sector acts as an incentive for other companies to compete not least by taking apart a finished product and reproducing the parts with small changes to avoid litigation. 



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September 02 2015

Commentary by Eoin Treacy

September 01 2015

Commentary by Eoin Treacy

Blythe Masters Tells Banks the Blockchain Changes Everything

This article by Edward Robinson and Matthew Leising for Bloomberg may be of interest to subscribers. Here is a section:  

She then plumbed why the ledger could transmit assets without an intermediary, which would change everything she knew about the way the markets completed trades. Buyers and sellers, of course, can’t automatically trust one another. In the fixed-income market, for example, we need middlemen to draw up contracts between buyers and sellers that cover interest payments, terms, and collateral, plus clearinghouses to guarantee the exchange of cash for securities.

Through her research, Masters understood how you could input all that information into a digital “smart contract” on a distributed ledger. Conceptually, it’s similar to the way you can embed video in an e-mail. But the difference is that when you send that smart contract along, it doesn’t just contain data, it transfers ownership of the security. The value belongs to whoever possesses it. So a trade could be settled in minutes instead of days or weeks, Hirani says.

Anyone with access to the ledger can read the contract with a click of a mouse. That means regulators, who depend primarily on self-regulatory organizations to police the markets, could easily verify that a securities transaction didn’t violate anti-money-laundering rules or other laws. The blockchain, in essence, automates trust, Hirani says.

The clincher for Masters was how the technology can affect risk. Every hour that a trade hangs suspended between sale and purchase, the chances mount that it won’t be fulfilled, she says. Institutions have to set aside capital to protect themselves from such failures. Since the 2008 crash, regulators in the U.S. and the European Union have directed banks to allocate ever-larger sums to cover their exposures. If the blockchain could shorten the settlement time for, say, syndicated loans, from 20 days to 10 minutes, this risk would be reduced and capital would be freed up.

Eoin Treacy's view -

Blockchain technology is still immature but is advancing rapidly and what it could mean for back office efficiency is truly mind blowing. When I worked at Bloomberg I would often visit back office operations in Luxembourg where people were tasked with pricing some pretty obscure fixed income instruments. In an illiquid market it’s difficult to keep track of pricing and often one has to use a best guess solution. The whole issue of different covenants on loans, deals and bond issues is an equally obscure sector. These all represent market inefficiencies that could be done away with using the blockchain. 



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August 27 2015

Commentary by Eoin Treacy

Email of the day on oil and oil shares

Hope isn’t a strategy – but what can you tell me about this chart?   It’s the Canadian energy index.  What signs should I be looking for?

Eoin Treacy's view -

This has been a very active week in just about all markets but the only emails from subscribers I received in the last two days were focused on the energy market. I chose to publish this one because it’s from a normally very calm person but the stress he is feeling is evident in the wording. 



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August 19 2015

Commentary by Eoin Treacy

Taiwan Stocks Fall to Two-Year Low on Economic, China Concerns

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

The wave of declines is rooted in the problems in Taiwan's economy, Alan Tseng, vice president at Capital Investment Management Corp. in Taipei, said on Wednesday. "The electronics industry is facing the toughest competition in 10 years because of China. The index will fall below 8,000."
     
There is a "looming new bear cycle" in emerging markets, with the weaker yuan adding competitive pressures to Taiwan, Malaysia, Thailand and Vietnam because of their dependence on exports, Lim Say Boon, the Singapore-based chief investment officer at the private banking unit of DBS Group, wrote in a report dated Aug. 17. The MSCI Emerging Markets Index entered a bear market on Aug. 12.

 

Eoin Treacy's view -

China's economy is transitioning away from fixed asset investment. If it is to be weaned away from infrastructure development and housing, the value of other sectors of the economy has to increase. This explains the concerted push to develop the service and high end manufacturing sectors. In this strategy China is following the same path tread by its neighbours in their development. 



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August 14 2015

Commentary by Eoin Treacy

Audi electric SUV to drive 300+ miles on LG/Samsung battery power

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

Today, Audi revealed that the 2018 production model will reach the 310-mile goal using a battery pack developed from high-performance cell modules from LG Chem and Samsung SDI. The companies will supply Audi from their European production plants.

"With our first battery-electric Audi-SUV, we are combining an emission-free drive system with driving pleasure," Hackenberg says. "We will optimally integrate the innovative cell modules developed with LG Chem and Samsung SDI into our vehicle architecture, thus achieving an attractive overall package of sportiness and range." 

 

Eoin Treacy's view -

Tesla has raised the stakes by developing new uses for batteries while simultaneously introducing innovations in manufacturing. Other companies are racing to catch up. Tesla in a many respects a battery company that also makes cars while companies like Volkswagen, and its subsidiary Audi, will need to generate cost efficiencies in the manufacturing process if they are to be competitive with the expected release of Tesla’s SUV. 



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August 03 2015

Commentary by Eoin Treacy

Virtual Reality Is Not Just About Games: Nongaming applications sneak up on an unsuspecting public

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

Imagine a version of Google Maps that doesn’t end at the front door of buildings, or an Instagram consisting of immersive experiences rather than snapshots.

“Immersive 3-D content is the obvious next thing after video,” Facebook CEO Mark Zuckerberg said during a recent earnings call.

All of this is possible because, like the PC and the smartphone, virtual reality isn’t so much a single technology as the happy coincidence of a bunch of related ones. Motion tracking, 3-D capture, ultra-high-resolution displays, fast graphics chips and a deep library of 3-D software developed for games and other applications are coming together at just the right time. Google, Facebook, Sony, HTC, Microsoft and countless smaller competitors have already made public their plans for VR, and given its hiring and patents in the area, it’s likely Apple is working on it too.

VR is a technology that is truly in its infancy, despite decades of work in academia, industry and the military. Rapid progress in frame rates, displays, interfaces and more realistic rendering are already in everyone’s development pipeline.

“Keep in mind, this is just the Atari 2600 of VR,” says Cymatic Bruce, head of developer relations at Altspace VR, as he helps me take off a bulky headset I wore to experiment inside the company’s VR play space.

 

Eoin Treacy's view -

Microsoft’s release of Windows 10 appears to represent a change of focus for the software company since the product is now free but comes with a suite of features aimed at encouraging spending. The purchase of Minecraft last year and bundling an Xbox controller with every Oculus Rift when they are eventually shipped represent additional insights suggesting Microsoft sees its future as a media enabling platform rather than simply a spreadsheet builder and user interface. 



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July 31 2015

Commentary by Eoin Treacy

Diageo Expects Return to Sales Growth After Two-Year Slump

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

The outlook reflects the prospect of stronger growth in selling volumes in the 12 months through June 2016, Chief Executive Officer Ivan Menezes said in a statement Thursday. He forecast “mid-single-digit” organic sales growth in the following financial years and a 1 percentage-point improvement in the operating margin within three years.

The guidance is “conservative and undemanding,” said Eddy Hargreaves, an analyst at Canaccord Genuity in London. “It’s below what we already have in our model and it’s a positive that they have reinstated guidance.”

As he starts his third year as CEO, Menezes has tried to gain more control over his sprawling liquor empire and restore sales growth after a two-year slump. He’s bought out India’s United Spirits Ltd., taken full ownership of Don Julio tequila and dissolved a South African joint venture. Diageo is also shifting to a model focused on purchases by consumers, rather than the amount of bottles it ships to distributors.

 

Eoin Treacy's view -

Premium distillers such as Diageo trended higher in 2010 and 2011 as Chinese demand surged not least on the back of Communist Party cadre largesse. They have subsequently had a more difficult time repeating those growth figures following Xi Jinping’s anti-corruption drive, contraction of the European economy and stagnant North American sales. Diageo is betting that India and Africa will represent its primary growth engines in future but it will take time to generate results large enough to move the needle in terms of earnings growth. 



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July 30 2015

Commentary by Eoin Treacy

Thync review: Where we just say yes to a drug-like, brain-zapping wearable

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

The key is the locations of the pads: Thync believes it's found the right target areas to tweak your brain's natural stress responses in one direction or the other. One strip is designed to produce a calming effect ("calm vibe") while the other strip makes you feel more alert ("energy vibe"). And each "vibe" also has three sub-categories within it, varying in intensity and length of time.

It's like choosing a workout program, only instead of doing squats or lunges, the technology does the work for you. You just sit there and enjoy the results.

If this all sounds pretty far-out, like something a burned-out space junkie would be using in an 80's-era sci-fi novel, we completely understand. But for me, it works exactly as advertised, either relaxing or energizing me (or both) – not only while I'm using it, but for several hours afterwards.

Skeptics will also be quick to question whether Thync is just an expensive placebo effect. And while this is only one person's experience and opinion – take it as you will – I don't see how there's any way that's the case with me. If this is a placebo, then all the pot, caffeine and meditation I've ever tried must be as well.

Eoin Treacy's view -

This product would appear to claim many of the same benefits as electroshock treatment but with more nuanced application and without the amnesia associated with the more violent treatment. Thync is still a privately held company but if the product does as it says and represents a non-chemical treatment for stress and lack of motivation then an IPO will be a potentially attractive proposition. 



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July 28 2015

Commentary by Eoin Treacy

Minimum Wage Wars

Thanks to a subscriber for this article by Sydney Williams at Monness, Crespi, Hardt & Co., Inc which may be of interest. Here is a section:

 

The numbers suggest that a large percentage of minimum wage jobs are the teen-age children of middle class and upper-income families. Many of the rest are starter jobs – the kind we all remember when first we went to work. Estimates are that an increase in the minimum wage to $15 per hour will cost 500,000 jobs. I suspect it may be more.

Technology has already replaced many service-sector jobs. In some restaurants, one can order on I-Pads. Technology has replaced many secretarial jobs. The internet has made it easier to form a corporation and it has reduced the time for research. Travel agents have become an endangered species. The President has suggested that the servicing of smaller 401K and IRA accounts should be automated. Three weeks ago, when my wife was recovering from a fall, robots delivered medicines to her hospital floor. Technology will continue to replace jobs. It is one reason why STEM jobs have been the best paying for recent college graduates. David Brooks wrote recently in the New York Times: “If you raise the price on a worker, employers will hire fewer and you’ll end up hurting the people you meant to help.”

When New York Governor Andrew Cuomo signaled his support for the higher minimum wage, he disingenuously said: “You cannot live and support a family of four on $18,000 a year in the state of New York.” (The State of New York’s minimum wage is $8.75 per hour.) His statement was purely political, as were similar endorsements from Hillary Clinton, Bernie Sanders and Martin O’Malley. There are few families of four dependent on a sole provider making the minimum wage. Those jobs, as I wrote, are mostly held by the young – teenagers or young people starting a career. It is jobs, not raising the minimum wage that will help the poor. Raising the minimum wage will not narrow the income gap. It will cost jobs and force some businesses to close. It is not the panacea it is claimed and it detracts from the real task – job creation.

 

Eoin Treacy's view -

I went to visit a sewing factory in the San Fernando Valley a few weeks ago. They have 15 workers and specialise in sewing which is still almost all done by hand. This is true of the industry globally. The garment industry is people intensive and wages are about $10 an hour which is above the minimum wage but less than the $15 that will need to be paid in Los Angeles County from 2018. The company survives by doing small runs for singers and YouTube stars who need the work done fast and have high margins. Los Angeles has a large garment district and there are a lot of factories. 



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July 27 2015

Commentary by Eoin Treacy

Teva to Buy Allergan Generic-Drug Unit for $40.5 Billion

This article by Chitra Somayaji and David Wainer for Bloomberg may be of interest to subscribers. Here is a section: 

Allergan, which makes the blockbuster wrinkle treatment Botox, said Sunday it would buy the biotech company Naurex Inc., which is developing a fast-acting antidepressant. The $560 million all-cash transaction is expected to close by year-end.

Teva expects its Allergan transaction, which both boards backed unanimously, to close in the first quarter of 2016 and boost earnings per share. Also today, the company raised its earnings per share estimate for 2015 to between $5.15 and $5.40, up from an earlier forecast of $5.05 to $5.35. Earnings per share were $1.43 in the second quarter, Teva said.

Teva had been pursuing a $40.1 billion deal to buy Mylan since April, a merger rejected by Mylan management as culturally unfit. Last week, Mylan’s independent foundation exercised an option to acquire shares that let it control half of the company in a move that rendered Teva’s attempt to win over a majority of its shareholders much more difficult. Abbott Laboratories, Mylan’s top shareholder, in June said it backed Mylan’s plan to avoid being taken over by Teva.

Bloomberg reported on July 25 that Allergan was exploring a breakup of the company, including the possible sale of its generics business.

Mylan is pursuing Dublin-based Perrigo, a campaign that may now get fresh impetus as pressure mounts to become bigger. Perrigo, which makes prescription and over-the-counter drugs, has thus far rebuffed Mylan’s $33 billion offer.

Mylan will continue its pursuit of Perrigo and expects that Mylan shareholders will vote “in the next several weeks” to support a purchase, the company said in a statement. Perrigo shares rose 2.4 percent in premarket trading as of 6:55 a.m. in New York.

Teva, which had accumulated a 4.6 percent stake in Mylan ahead of a potential legal battle, said today it will “review its options” on the holding.

Teva may have a key advantage in integrating Allergan’s generic business because its own head of generics, Siggi Olafsson, formerly led that business at Allergan. Olafsson was brought in to Teva after leaving Actavis Plc, which switched its name to Allergan after agreeing to buy the maker of Botox in November 2014 for $66 billion.

Eoin Treacy's view -

M&A activity both within the pharmaceutical sector and the health insurance sector has accelerated this year and particularly over the last month. Increasing competition to capture market share has been given fresh impetus by the risk that ultra-low borrowing costs might not be on offer indefinitely and that a failure to act now will result in companies becoming targets themselves.  



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July 27 2015

Commentary by Eoin Treacy

Japan Banks Seen Reporting Gains in Fees, Overseas Lending

This article by Gareth Allan and Shingo Kawamoto for Bloomberg may be of interest to subscribers. Here is a section: 

Prime Minister Shinzo Abe’s efforts to stimulate the economy through monetary easing helped to spur bank lending while also lowering borrowing costs. Loans at city banks have risen for 2 1/2 years, according to the Bank of Japan. The average interest rate on new loans was 0.801 percent in
May, close to a record-low 0.767 percent last August, BOJ data show.

“While domestic lending grew in the first quarter, tighter loan spreads will constrain profit growth,” Yasuhiro Sato, chairman of the Japanese Bankers Association, said at a news briefing on July 16. He expects overseas lending to keep expanding and doesn’t see any change in the direction of interest margins yet.

Overseas Expansion
Sato is also chief executive officer of Mizuho, which said this year that it’s buying North American loans from Royal Bank of Scotland Group Plc for $3.5 billion. Sumitomo Mitsui last month agreed to purchase General Electric Co.’s European buyout- lending unit for about $2.2 billion. Mitsubishi UFJ’s main lending arm is considering acquiring a bank in Indonesia, the Philippines or India, Asia-Pacific CEO Go Watanabe said in an interview last month.

 

Eoin Treacy's view -

Quantitative easing is positive for the banking sector because it creates an incentive to borrow and invest not least among banks themselves. Despite the loss of purchasing power in the Yen, the availability of credit has allowed Japanese banks to invest in their overseas operations which flatter consolidated earnings. This is likely to continue considering the Bank of Japan’s commitment to persistent easing. 



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July 24 2015

Commentary by Eoin Treacy

The Bacterial Origins of the CRISPR Genome-Editing Revolution

This report by Erik J Sontheimer and Rodolphe Barrangou may be of interest to subscribers. Here is a section: 

Like most of the tools that enable modern life science research, the recent genome-editing revolution has its biological roots in the world of bacteria and archaea. Clustered, regularly interspaced, short palindromic repeats (CRISPR) loci are found in the genomes of many bacteria and most archaea, and underlie an adaptive immune system that protects the host cell against invasive nucleic acids such as viral genomes. In recent years, engineered versions of these systems have enabled efficient DNA targeting in living cells from dozens of species (including humans and other eukaryotes), and the exploitation of the resulting endogenous DNA repair pathways has provided a route to fast, easy, and affordable genome editing. In only three years after RNA-guided DNA cleavage was first harnessed, the ability to edit genomes via simple, userdefined RNA sequences has already revolutionized nearly all areas of biological science. CRISPR-based technologies are now poised to similarly revolutionize many facets of clinical medicine, and even promise to advance the long-term goal of directly editing genomic sequences of patients with inherited disease. In this review, we describe the biological and mechanistic basis for these remarkable immune systems, and how their engineered derivatives are revolutionizing basic and clinical research.

Eoin Treacy's view -

Biotechnology represents a truly exiting story and has real potential to greatly enhance quality of life for millions if not billions of people over the coming decades. However related stocks are somewhat overbought at the present time and potential for mean reversion is looking more likely than not.  



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July 23 2015

Commentary by Eoin Treacy

New Japanese hotel has robot staff and no room keys

This article by Stu Roberts for GizMag may be of interest to subscribers. Here is a section: 

Robots are deployed at the front desk to help guests check-in and out. According to the Henn-na Hotel, it's possible to hold a conversation with the "warm" and "friendly" robots while they get on with their work. Alternatively, self-service check-in and check-out eliminates the need to go to the front desk or to wait in line.

There are porter robots employed to carry luggage to and from rooms, and cleaning robots employed to keep the hotel spotless of their own accord. There is also a robot employed in the cloak room. Objects up to the size of small bags can be handed over and the robot will put them away in secure lockers. When the belongings are needed, the robot will locate them in the correct locker and hand them back to the guest.

 

Eoin Treacy's view -

This Huffington Post article from more than a year ago highlights how technology that already exists can be combined to displace waiting staff at restaurants. Today’s news that New York has voted to increase fast food wages to $15 following Los Angeles’ decision to raise its minimum wage to $15 earlier this year will only accelerate the incentive for technological integration 



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July 21 2015

Commentary by Eoin Treacy

There is Hope Beyond Botox as Pharma Races for First Migraine Fix

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

An early look at the drugs Teva Pharmaceutical Industries Ltd., Amgen Inc., Eli Lilly & Co., and Alder Biopharmaceuticals have developed shows they work for about half of migraine victims tested, snuffing out some of the episodes that wreck their lives. The drugmakers are racing to cash in on a market that analysts say is worth between $4 billion and $8 billion and relieve the recurring spells that cost the U.S. economy an estimated $13 billion a year in lost work productivity.

“There’s very little recognition of the suffering migraine inflicts,” said Cathy Glaser, a 63-year-old patient advocate from New York City who started her own organization to fund research in 2006 because she was frustrated by the lack of relief options.

Glaser as a child recalls seeing her mother take to bed with a cloth over her eyes, and years later found she and her sister were migraine-prone as well. Her daughter suffers from a chronic version that has landed her in the emergency room.  

 

Eoin Treacy's view -

Migraine headaches are an affliction people who do not suffer from them have difficulty understanding but they are no less real. The potential for therapies that can prevent migraines is a great example of how the healthcare sector is capable of delivering solutions that directly enhance productivity. Think of everyone you know and the number of days-off taken because of headaches. If the first solutions on the market only cure half of the people affected the cost of the treatment will be outweighed by the economic benefit on aggregate. 



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July 15 2015

Commentary by Eoin Treacy

The Five Things Wall Street Wants From the New CFO at Google

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

“Most people aren’t expecting an official number, but they just want to see her talk about it -- that she’s focused on it,” said Robert Peck, an analyst with Suntrust Robinson Humphrey Inc. “It’s not that investors don’t necessarily want spending -- it’s investors want to know it’s being prudently done.”

Pichette had been talking up efforts to be careful with spending, pointing out the company pulled back on underperforming projects such as Google Glass. While operating expenses climbed 21 percent to $6.46 billion in the first quarter, it was less than the increases of more than 30 percent in the previous two periods.

The rate of hiring has slowed as well the past two quarters, even as the total workforce remains at more than 55,000 employees.

Unit Detail
Investors want more transparency around how much each business delivers to the company.

Porat could give more sales numbers around business units such as the video-sharing service YouTube, display advertising, mobile and Google Play, the digital store for buying applications and entertainment content, analysts said. She also could give specifics on the core business: search.

Analysts cited Amazon.com Inc.’s decision earlier this year to break out for the first time how much it makes in its cloud-computing business.

“Here is an easy opportunity for a new CFO to establish a fresh, constructive approach toward the market,” RBC Capital Markets analysts wrote in a note to clients earlier this month.

Eoin Treacy's view -

Google often succeeds in ranking as one of the companies most people would like to work for because it has such an inspiring message of optimism and innovation. However, it is worth remembering that despite forays into an array of additional fields advertising represents more than 90% of earnings. The introduction last year of its C class of shares makes sure that the company’s founders will continue to have wide discretion in how they choose to manage the company and particularly on direct investment in R&D. The performance of the share will depend on the company’s ability to grow profits. 



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July 13 2015

Commentary by Eoin Treacy

Gene therapy for cystic fibrosis shows encouraging results

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

Patients who received therapy showed a significant but modest benefit in lung function compared with those receiving a placebo. The trial is the first to show that repeated doses of gene therapy can have a meaningful effect on the disease, and change the lung function of patients. However, the team say more research is needed to improve the effectiveness before the therapy will be suitable for clinical use.

Cystic fibrosis (CF) is the commonest lethal inherited disease in the UK, affecting around 10,000 people nationally and over 90,000 worldwide. Patients' lungs become filled with thick sticky mucus and they are vulnerable to recurrent chest infections, which eventually destroy the lungs.

The trial, conducted in London and Edinburgh, compared the effects of inhaled gene therapy and a placebo on patients with CF aged 12 and over. Lung function was assessed using a common method of measuring the volume of air a patient can forcibly exhale in one second. Over the course of a year, patients were given 12 treatments at monthly intervals. The results, published in The Lancet Respiratory Medicine, showed that at the end of the trial lung function was 3.7% better in patients who received the 'active' treatment. Participants with the worst lung function at the start of the study experienced a much greater 6.4% gain compared with those in the placebo group.

 

Eoin Treacy's view -

Gene therapy has been a long time coming and still has a long way to go but the promising results from human trials is a major step forward in the commercialisation of decades of research. 



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July 13 2015

Commentary by Eoin Treacy

Hacked in the U.S.A.: China Not-So-Hidden Infiltration Op

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

Some investigators suspect the attacks were part of a sweeping campaign to create a database on Americans that could be used to obtain commercial and government secrets.

“China is building the Facebook of human intelligence capabilities,” said Adam Meyers, vice president of intelligence for cybersecurity company CrowdStrike Inc. “This appears to be a real maturity in the way they are using cyber to enable broader intelligence goals.”

The most serious breach of records occurred at the U.S. Office of Personnel Management, where records for every person given a government background check for the past 15 years may have been compromised.  The head of the government personnel office, Katherine Archuleta, resigned Friday as lawmakers demanded to know what went wrong.

The campaign began in early 2013 with the travel records, said Laura Galante, manager of threat intelligence for FireEye Inc., a private security company that has been investigating the cyber-attacks.

 

Eoin Treacy's view -

This article from the Financial Times focusing on Israel’s cyber security industry and this article from the Wall Street Journal focusing on encryption highlight just how much of an issue internet security has become. This is a rapidly evolving sector. There is a need for more security as data evolves to being available exclusively online. Despite, its utility the infrastructure we use today is deeply flawed when it comes to security. The uses to which even our most mundane data can be put are also evolving not least since we are increasingly reliant on our online presence tor real world utility. 



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June 18 2015

Commentary by Eoin Treacy

The Hunt for the Financial Industry's Most-Wanted Hacker

This article by Dune Lawrence may be of interest to subscribers. Here is a section: 

ZeuS, meanwhile, has become a permanent gift to the cyber underground. SecureWorks documented attacks that targeted more than 1,400 financial institutions across more than 80 countries—just from 2014 through March 2015. Since the ZeuS source code leak, almost all banking malware has incorporated its features, according to SecureWorks.

Eoin Treacy's view -

“We fight them over there so we don’t have to fight them here” is an outmoded mechanism for containing nefarious criminal elements regardless of whether their motivations are based on religion, greed or both. The fact that Bogachev released his program when he was 22 in 2005, has been free to sell it, post updates and was only identified in 2014 is a testament to the fact that other countries do not share the same concern for private property as we do in the West. This is particularly the case when criminal elements are targeting assets outside their respective countries. This story is based on a private enterprise with money as its goal but of course there are more sophisticated stat-run operations that have additional motivations. The world is quickly moving into a scenario where internet security will become more pervasive not least because the risks have increased.   



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June 16 2015

Commentary by Eoin Treacy

Musings From the Oil Patch June 15th 2015

Thanks to a subscriber for this report by Allen Brooks for PPHB. Here is a section: 

While Dr. Larsen believes the suburbs are not going away, he points out that they are not like the suburbs in the 1950s. Both parents are often working and school activities are no longer at the schools but miles away at soccer fields and violin teachers. As a result, there will be opportunities for different transportation solutions. Dr. Larsen pointed to Mercedes' Boost business, where minivans drive children after school, but rather than school buses they drive them door-to-door. Parents can track their children with smart phone apps and the minivans have both a driver and a concierge on board. The driver cannot leave the minivan but the concierge can walk children to the door or their after-school activity. In his view, Americans will not give up their own cars. “Americans like to do everything in cars.” He pointed out that Americans eat in cars, drink in cars, have entertainment in cars, change clothes and have sex in cars. People often sleep in their cars and spend a lot of time waiting for their children. As Dr. Larsen points out, “Driving is really the distracting thing we do in cars.”

While it would appear that little has changed about the desire, need and use of automobiles, what has changed is the inside of the vehicle. “Screens have become more important,” said Dr. Larsen. You can tell how old a car is by its screen, or absence. Leased vehicles may be refurbished more often in order to make them appear newer. Therefore, it is likely there will be fewer new models but more new screen updates. Computer controls within vehicles will become smarter and more intrusive. You won’t be able to enter long addresses into navigation systems while you are driving, but only when you are stopped. After a vehicle has stopped, seat controls will allow you to put your seat back further, letting you work, sleep or watch television from the driver’s seat. The issue will become balancing personalization versus privacy. Sensors in smart phones and vehicles will allow insurers to monitor how you drive and whether you are using your phone while driving. As the nation develops “pay as you drive” car businesses or fuel taxing, Dr. Larsen suggests there are legal issues needing to be resolved, suggesting that the pace of these technology transitions may not be as quick as assumed, then on the other hand they could happen faster.

 

Eoin Treacy's view -

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

Regardless of how one feels about the potential for autonomous vehicles, electric cars or even hydrogen fuel cells, consumers expect to see more technological gadgetry in their new cars, not least internet connectivity. Auto manufacturers have introduced a lot more added extras over the years with on-board self-diagnostic equipment now ubiquitous. It is reasonable to assume consumer expectations will only become more demanding as reliance on mobile interactivity becomes further ingrained in societal norms. 



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June 15 2015

Commentary by Eoin Treacy

Facebook's Oculus unveils final Rift headset, new controller

This article by Troy Wolverton for San Jose Mercury News may be of interest to subscribers. Here is a section: 

Company officials said the Rift headset will come with a stand-alone sensor that will sit on users' desks. That sensor will track users' head movements as they are wearing the device and their hands when they use the Touch sensors.

But the company held off on announcing many of the details that will be crucial to its success. Oculus has not yet said precisely how much the Rift will cost, which retailers will carry it, when exactly it will be hit store shelves, or how many games will be available when it launches.
Oculus officials said they plan to release more information about the device at the company's Connect conference in September.

The number and diversity of games available for the Rift could be a big potential trouble spot. Oculus only demonstrated three games at the event Thursday, none of which represents a blockbuster title like "Halo" or "Call of Duty." Although one of the games shown is being produced by Insomniac Games, the makers of the "Resistance" series of games, Oculus did not show off any games from any of the major game companies, like Electronic Arts or Activision.

The success of new game systems is frequently determined by the number and range of games available for them. Fledgling systems can often suffer from a chicken-and-egg type scenario: consumers won't buy them until more games are available, while developers won't create games for them until a significant number of units are in consumers' hands.

 

Eoin Treacy's view -

There is a wide range of potential applications for virtual reality devices from entertainment to exercise and shopping. This is an emerging technology which has been evolving for a long time but is only now reaching commercial scale. 

Three years ago Bloomingdales installed Facecake’s virtual dressing room and Swivel technology which has not yet gained widespread traction.   The virtual reality retail application pioneered by Context Solutions still has a long way to go if it is to represent an interactive product.  This article by Heather Somerville also from the San Jose Mercury News site dated 2012 is useful for context. 



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June 11 2015

Commentary by Eoin Treacy

The virtual reality revolution, if it's coming at all, starts tomorrow

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

Perhaps game consoles (appropriately) will be the most likely role models for VR platforms. As a child in the 80s, my first experiences with the Atari and NES kindled a wide-eyed sense of wonder that's harder to replicate as an adult. Though those same games only give me slight glimmers of that feeling today, VR rekindles that childlike sense more than any form of entertainment since (certainly more than today's cinematic AAA video games or fads like 3D movies ever did).

Gaming spent many years as a "kids' product," but as that first generation of child gamers grew up – and realized there was no reason for them to leave their hobby behind – it blew up as a lucrative industry that now knows no generational boundaries (well, almost no boundaries – gaming demographics do still lean more towards younger adults than older ones).

Perhaps, like gaming, VR will start with the most wide-eyed of users, and only gradually erode the stigmas and unfamiliarity that keeps the rest of the world from joining the party.

So what do we think? Well, in our eyes, any technology that can rekindle, and perhaps surpass, the pure joy and awe of playing Super Mario Bros. or Mike Tyson's Punch-Out for the first time – only 30 years later – has a great shot at widespread success. Whether it's in a year or a decade, it may simply be a matter of a) getting VR to a consumer-ready, high-quality stage and then b) getting enough people to try it. That first step began years ago, but the second step starts tomorrow.

Eoin Treacy's view -

As a child of the ‘80s and a watcher of Star Trek the Next Generation in the ‘90s I was one of those who was excited about the impending wide scale release of virtual reality technology that did not happen. It takes a long time for new technology to advance enough for it to become a major new consumer product. NASA was one of the primary early developers of the technology in the 1980s. They envisaged virtual reality as a way for astronauts to control robots remotely in order to reduce the risk to human operatives. The results of DARPA’s robotics competition earlier this week highlight how much robotics technology has improved but also how far it still has to go. 



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June 11 2015

Commentary by Eoin Treacy

Email of the day on the lack commonality in luxury goods companies

I read this article about luxury goods in today's FT  and then ran through your luxury goods section in your Favourites in the Chart Library. I cannot see a common pattern in the charts. Since this a major element of what you teach in the Chart Seminar, I would like your thoughts on this particular case.

Eoin Treacy's view -

Remy Cointreau was among the greatest beneficiaries of the largesse of Chinese officialdom since its expensive liquors were consumed at so many dinners. This all came to a halt in 2013 when Xi Jinping’s corruption crackdown gained traction. Conspicuous consumption suddenly became unfashionable as bloggers posted photos of cadres wearing luxury watches. This was highlighted most poignantly at this year’s annual Party meeting when a number of high profile wives of senior officials were seen holding cheap plastic handbags rather than the Chanel and Hermes bags of previous years. 



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June 10 2015

Commentary by Eoin Treacy

How big is the Internet of Things and how big will it get?

This article by Philip Howard for the Brookings Institute may be of interest to subscribers. Here is a section: 

First, knowing the default passwords for pieces of key equipment could give someone access to hundreds of thousands of consumer devices and tens of thousands of industrial devices around the world, from gaming platforms to industrial-control systems. So as the world’s security experts debate the impact of the latest sophisticated hacking attempts from China or the encryption possibilities of quantum computers, just knowing factory passwords means someone can access any device once it leaves the factory and is connected to the Internet.

Second and more concerning, the bot discovered other bots. Carna wasn’t the only unauthorized bot checking for open ports on devices around the globe. Carna was written as a public service for an exploratory project, and it built a botnet to do the census. But, the census taker found several competing botnets, and an enormous, sleeping, network of bots called Aidra, which had compromised as many as thirty thousand devices. Aidra had the power to hijack not just computers but gas meters, refrigerators, microwaves, car-management systems, and some mobile phones. The bots could attack any network infrastructure for a client with a denial-of-service attack. Carna Bot performed the public service of temporarily disabling any Aidra bots it found.

 

Eoin Treacy's view -

Just about every month there is news of another organisation that has had its data stolen. As a result the discovery last year of the theft of SIM card encryption keys from Gemalto that occurred in 2010 or 2011 tends to be forgotten. However, there is some pretty clear evidence that it was the USA’s NSA and UK’s GCHQ that colluded to steal the data.  It’s worth bearing this in mind when Chinese hacking is so publicly denounced. 



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June 02 2015

Commentary by Eoin Treacy

Platinum sector faces Kodak moment in fuel cell technology

This article by Clara Denina & Silvia Antonioli for Mineweb may be of interest to subscribers. Here is a section: 

The world’s three largest platinum producers Anglo American Platinum (Amplats), Impala Platinum and Lonmin are all investing in projects related to fuel cell technologies, which generate electricity that can power vehicles by combining hydrogen and oxygen over a platinum catalyst.

But analysts doubt fuel cell vehicles will rival the growth of their electric counterparts, mostly because battery recharging stations are less costly and already more widespread than hydrogen refuelling stations.

“As out of the two new technologies only fuel cells use platinum, I guess the miners think they have no choice,” Macquarie analyst Matthew Turner said. “But people are buying electric cars…and that’s not the case for fuel cells.”

Amplats, which has invested about $35 million in the last five years in companies developing new uses for platinum, mostly through fuel cell technology, is mindful of the stakes.

“I don’t want Anglo American Platinum, or any of our partners or customers to be a Kodak,” Amplats Chief Executive Chris Griffith said last week, referring to the once mighty photography pioneer that was slow to transition to digital photography.

 

Eoin Treacy's view -

Platinum miners are not the only companies making big bets on hydrogen fuel cells. Toyota’s decision to release its Mirai fuel cell vehicle later this year and to open its patents to developers highlights their efforts to pioneer new technologies. After all it was Toyota’s Prius that was the first mass market hybrid vehicle. 

Nevertheless, electric cars are gaining increasing traction as solar cell efficiency increases. There is also the potential for wind turbines to be smaller and less noisy. With the advent of home batteries the outlook for electric vehicles is looking even more promising. 



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June 01 2015

Commentary by Eoin Treacy

High Prices for Drugs Attacked at Meeting

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

Dr. Saltz said the combination regimen’s benefit was “truly, truly remarkable for a disease that five years ago we thought was virtually untreatable.” But he said that combining the drugs would cost around $295,000 a patient over nearly one year, which he called unsustainable. If all U.S. patients with metastatic cancer took drugs priced at $295,000 a year, it would cost $174 billion to treat them all for just one year, Dr. Saltz said.

“The unsustainably high prices of cancer drugs is a big problem, and it’s our problem,” Dr. Saltz said, calling on industry, physicians and insurers to work together with government to address the issue.

Dr. Saltz’s estimate of the combination’s cost was based on the average wholesale price of each drug individually and the average weight of a U.S. adult. Opdivo and Yervoy are already approved individually to treat melanoma patients, but not in combination with each other.

Eoin Treacy's view -

Biotechnology companies have in many respects taken over the risk of developing new therapies and medicines from the more established pharmaceutical companies. As a result their products have tended to be more expensive when first released as companies try to make the best commercial utility of their patents before they expire. Nevertheless, is it is seldom good for business when doctors make public comments on the expense of products not least by highlighting the conflict of interest in they receiving a commission for prescribing them. 



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May 28 2015

Commentary by Eoin Treacy

Avago Agrees to Buy Broadcom for $37 Billion

This article by Dana Mattioli, Dana Cimilluca and Shayndi Raice for the Wall Street Journal. Here is a section:

 

Neither Avago nor Broadcom has the kind of dominance over individual markets that better-known rivals such as Intel Corp. and Qualcomm Inc. enjoy, and a merger could help address that. In addition to consumer applications, Broadcom supplies the vast majority of chips used in the latest networking switches found in corporate data centers, a fast-growing business that could enhance Avago’s communications-focused revenue stream.

And

Researcher Dealogic estimated before the deal was announced that an acquisition of Broadcom valued at $35 billion would be one of the largest semiconductor takeovers ever, coming amid a burst of deals among such companies. So far this year, there have been more than $26 billion in semiconductor deals announced globally, not including the tie-up between Broadcom and Avago, according to Dealogic. That is more than double the volume in the same period last year and the largest year-to-date total since Dealogic started keeping records in 1995.

Eoin Treacy's view -

With interest rates so low and corporate spreads no longer contracting there has seldom been such an opportune time to borrow money. The flip side is that prices have increased in line with increased activity. Nevertheless demand for chips remains robust as the number of connected devices remains on a secular growth trajectory in line with the Internet of Everything theme.

Broadcom had been confined to an almost 15-year base and it took an acquisition to push it to new recovery highs. This helps to illustrate how focused the bull market has been on a select group of companies. As prices increase it is inevitable investors will look for promising companies that have not yet rallied which may represent catch-up potential.

Avago remains in a reasonably consistent uptrend and while somewhat overextended relative to the 200-day MA at present, a sustained move below $110 would be required to question medium-term scope for additional upside.

The results of this Chart Library Filter of the Nasdaq Composite Index highlight that there are a number of shares with similar long-term base formation completion characteristics. 



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May 28 2015

Commentary by Eoin Treacy

What Google Just Announced Is a Bombshell

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

For instance, while listening to music in Spotify you can search for more info on an artist, or if you're talking about a restaurant in WhatsApp, Google can pull up data on the place and even help you make reservations. And this is not a feature of the app itself, rather a helper that lives inside of the entire operating system.

This is a major move for two reasons. The first is that it really brings Google back to a place of dominance as the glue that holds your digital life together. The web has thrived and grown in no small part because of Google's ability to track, organize, and understand all of its disparate pieces. Now it's able to do the same thing with every app running on your phone. It allows Google to get back into the search game by speaking the common language of apps. It gives the company a second life with access to user behavior and needs.

But secondly, it starts to show how Google can be an interconnecting layer between the apps themselves — a kind of neutral staging ground between one action and another. This is a sea-change for how we use our mobile devices and how mobile apps interact with one another. Currently, we use OS-defined tools which let apps interact with each other (with rules defined by the OS-makers, not developers). But imagine if developers didn't have to think about how their work connects to the rest of your world? Imagine if Now on Tap is aware enough of the core functions of those apps that it can predict what you'd most likely want to do with them, and then execute on those needs?

Eoin Treacy's view -

We have become somewhat inured by Google’s announcements of what can realistically be described as vanity projects; plans for a massive new headquarters which had to be shelved being the most recent. However today’s release is important because it takes Google back into where it makes the vast majority of its money. I downloaded the Google search app onto my phone last week. The linking together of various different elements of search results is a positive development in my opinion. I’ve been using it more as a result and this type of user engagement should be beneficial for the company’s bottom line. 



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May 26 2015

Commentary by Eoin Treacy

Email of the day on robotics and the Eoins Favourites section of the Chart Library:

Regarding your optimism of the robotics and tech story and the prospects of the likes of FANUC in Japan, could you recommend a UK based investment vehicle to access FANUC and its peers? Also could you explain the criteria on the "Eoin’s favourites" section of the chart library?, I am assuming that they are favourites as in best of class as opposed to just favourites/watchlists from a both long and short perspective? Best regards

Eoin Treacy's view -

Thank you for these questions which I’m sure will be of interest to subscribers. Let me take them in reverse order. 

Over the years every time I have posted a review of a stock market sector I created a section in my Favourites so that I could easily return to the list in future. At The Chart Seminar I use my Favourites to go through examples of Commonality and to review sectors of interest to delegates. One of the most common requests in the feedback we get is that subscribers would like to have access to my Favourites list rather than recreating their own. With that in mind I started recreating the various sections from my Favourites in the main Chart Library about six months ago.

All of my lists of Dividend Aristocrats, Dividend Champions and Dividend Contenders can be found here.  

The Eoin’s Favourites section contains the lists I have so far entered. It’s not complete yet but it is meant to function as a resource rather than a recommendations list. 

 



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May 26 2015

Commentary by Eoin Treacy

Audi claims first synthetic gasoline made from plants

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

In late 2014, Global Bioenergies started up the fermentation unit for a pilot program to produce gaseous isobutane from renewable biomass sugars such as corn-derived glucose. Gaseous isobutane is a sort of raw material for the petrochemical industry that can then be refined into a variety of plastics, fuels and other applications.

The next step in the process was to run the material through a conditioning and purification process, allowing it to be collected and stored in liquid form under pressure. Some of it was then sent to Germany to be converted into isooctane fuel, creating a pure, 100 octane gasoline.
"To me this is a historic moment," says Global Bioenergies CEO Marc Delcourt. "It is the first time that we have produced real gasoline from plants."

Isooctane is currently used as an additive to improve fuel quality, but could also be used a stand-alone fuel. Audi calls the final, refined form of the fuel "e-benzin" and claims that it burns clean due to its lack of sulfur and benzene. Also, its high grade enables it to power engines using high compression ratios for more efficiency.

Audi will test the fuel composition and conduct engine tests to see how it performs before eventually trying it out in vehicle fleets. Delcourt says he could see it being used in consumer cars on a large scale "very soon."

"We thinking we're bringing green-ness to a field that desperately needs green-ness," says Rick Bockrath, vice president for chemical engineering at Global Bioenergies. "It's basically how we're moving away from an oil-based economy towards something that has a renewable, sustainable future to it."

 

Eoin Treacy's view -

This follows a story from a month ago talking about how Audi produced a diesel fuel from air and water through a chemical process. Today’s story is a further iteration of this concept.

In the last month we have also learned that artificial photosynthesis has been achieved. Here is a section from an article by Lynn Yarris for Lawrence Berkeley National Lab: 

Scientists with the U.S. Department of Energy (DOE)’s Lawrence Berkeley National Laboratory (Berkeley Lab) and the University of California (UC) Berkeley have created a hybrid system of semiconducting nanowires and bacteria that mimics the natural photosynthetic process by which plants use the energy in sunlight to synthesize carbohydrates from carbon dioxide and water. However, this new artificial photosynthetic system synthesizes the combination of carbon dioxide and water into acetate, the most common building block today for biosynthesis.

“We believe our system is a revolutionary leap forward in the field of artificial photosynthesis,” says Peidong Yang, a chemist with Berkeley Lab’s Materials Sciences Division and one of the leaders of this study. “Our system has the potential to fundamentally change the chemical and oil industry in that we can produce chemicals and fuels in a totally renewable way, rather than extracting them from deep below the ground.”



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May 21 2015

Commentary by Eoin Treacy

CalAmp and the Internet of Things

Thanks to a subscriber for this note from Canaccord Genuity on CalAmp which may be of interest to subscribers. Here is a section: 

We hosted upbeat investor meetings with CalAmp CEO Michael Burdiek on April 29th, in the mid-Atlantic region. Following our meetings, we maintain our belief CalAmp is well positioned for solid long-term growth in the Industrial IoT market through both organic initiatives that include entering new markets and through potential acquisitions. In fact, we believe CalAmp’s recent $150M low-interest rate convertible offering provides the company with increased financial flexibility for its M&A strategy focused on accretive acquisitions in targeted IoT verticals. We remain impressed with management’s longer-term strategy to build upon its strong hardware portfolio and offer an increasing mix of higher-margin recurring revenue solutions. Finally, as evidenced by the strong Q4/F2015 results, we believe CalAmp’s Wireless DataCom business is well positioned to drive strong F2016 and F2017 sales and earnings growth driven by ramping sales to Caterpillar, growing insurance telematics sales, ramping international sales, a growing product portfolio, an increasing list of new customer opportunities, and anticipated steady growth of higher-margin recurring revenue sales. We maintain our BUY rating and $26 PT. 

Eoin Treacy's view -

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

The Internet of Things represents a myriad group of themes often with little relation to one another. CalAmp for example focuses on automobile connectivity particularly for those with large fleets of vehicles they need to monitor. On the other hand Sensata Technologies produces the sensors that allow diesel vehicles in particular to run self-diagnostics. Both are leveraged to the auto sector and both are in the sensor and enhanced communication segments that contribute to the Internet of Things theme but they are not strictly related. 



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May 18 2015

Commentary by Eoin Treacy

Microsoft Windows 10 is on board the Spark Platform

This press release caught my attention over the weekend. Here is a section:

As a 3D printing platform, Spark brings the power of 3D printing into other technologies. By pairing with Microsoft, Spark will enable Windows 10 users to directly access optimized and more reliable 3D printing experiences. Additionally, Microsoft's worldwide developer community can freely access Spark's APIs and development platform to create 3D printing enabled applications for the Windows platform. 

Steve Guggenheimer, Corporate Vice President of Developer Platform & Evangelism and Chief Evangelist for Microsoft explains it this way:

"We’re approaching a tipping point with 3D printing, which means there is a huge market opportunity waiting for companies developing applications for Windows 10. By providing the 3D printing building blocks found in the Spark platform and optimizing it for Windows 10,

Autodesk has empowered our global developer community to confidently enter this new world of additive manufacturing.”

All of this means that the steps between ideation, design, and physical creation in additive manufacturing have just become quite a bit more streamlined. The future is now, and it’s powered by Spark.

 

Eoin Treacy's view -

Autodesk is making a big push to become the go-to company for 3-D printing. As a major manufacturer of Computer Aided Design (CAD) software one could argue that producing the tools necessary to take 3-D printing to the next level is a natural progression. Early 3-D printer manufacturers rallied impressively from 2012 and into 2013 but had to engage in an aggressive M&A battle to maintain their top position. Not only have they had difficulty integrating all of the companies they bought, but 3-D Systems and Stratasys now run of the risk of being left behind by evolving technological innovation they have no part in. 



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