Investment Themes - Technology

Search all article by their themes/tags in the search area
below for example “Energy” or “Technology”.

Search Results

Found 337 results in Technology
May 22 2017

Commentary by Eoin Treacy

If you bought $100 of bitcoin 7 years ago, you'd be sitting on $75 million now

This article from CNBC highlights the current spate of excitement about bitcoin. Here is a section:

On May 22, 2010, Hanyecz asked a fellow enthusiast on a bitcoin forum to accept 10,000 bitcoin for two Papa John's Pizzas. At the time, Hanyecz believed that the coins he had "mined" on his computer were worth around 0.003 cents each.

Bitcoin mining involves solving a complex mathematical solution with the miner being rewarded in bitcoin. This is how Hanyecz got his initial coins.

The cryptocurrency has many doubters as it continues to be associated with criminal activity, but it has still seen a stunning rally. Here are two facts, on Bitcoin Pizza Day, however, that highlight this:

While being worth $30 at the time, Hanyecz pizzas would now cost $22.5 million at current bitcoin prices.

If you bought $100 of bitcoin at the 0.003 cent price on May 22, 2010, you'd now be sitting on around $75 million.

A number of factors have been driving the rally:

Recently passed legislation in Japan that allows retailers to start accepting bitcoin as a legal currency has boosted trading in yen, which now accounts for over 40 percent of all bitcoin trade

Political uncertainty globally has driven demand for bitcoin as a safe haven asset

A debate within the bitcoin community about the future of the underlying technology behind bitcoin known as the blockchain has been taking place. There was fear at one point this could lead to the creation of two separate cryptocurrencies but those worries have largely subsided with an alternative, more palatable option now being put forward. 

Eoin Treacy's view -

At the Tech Symposium I spoke at in London last week Charlie Morris made a number of important points about bitcoin which I found very educative. The most important of these was his point relating to the fact that bitcoin is a digital asset rather than a currency so it is a misnomer to describe it as a cryptocurrency. The best way to value bitcoin is in the strength of the network supporting it and therefore it is a barometer for the prevalence and acceptance of blockchain. 



This section continues in the Subscriber's Area. Back to top
May 12 2017

Commentary by Eoin Treacy

Amazon Makes Major Push Into Furniture

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

The online retail giant is making a major push into furniture and appliances, including building at least four massive warehouses focused on fulfilling and delivering bulky items, according to people familiar with Amazon’s plans.

With that move, the Seattle-based retailer is taking on the two companies that dominate online furniture sales— Wayfair Inc. W -5.95% and Pottery Barn owner Williams-Sonoma Inc. Furniture is one of the fastest-growing segments of U.S. online retail, growing 18% in 2015, second only to groceries, according to Barclays. About 15% of the $70 billion U.S. furniture market has moved online, researcher IBISWorld says.

But even the biggest players in online furniture are struggling to get the market right. Unlike established categories such as books and music or even apparel, retailers are still hammering out basic concepts like how much variety to offer on their sites and the most efficient ways to deliver couches and dining sets to customers’ homes.

While Amazon has been selling furniture for years, it has lately decided to tackle the sector more forcefully.

“Furniture is one of the fastest-growing retail categories here at Amazon,” said Veenu Taneja, furniture general manager at Amazon, in a statement. He said the company is expanding its selection of products, with offerings including Ashley Furniture sofas and Jonathan Adler home décor, and it is adding custom-furniture design services. Amazon is also speeding up delivery to one or two days in some cities, he adde

Eoin Treacy's view -

Free returns and secure transactions make online shopping risk free and painless from the perspective of consumers. Amazon is employing that strategy in an increasing number of sectors but most particularly in furniture and fashion. The number of brands Amazon now carries as well as sporting its own designs represent not only a direct threat to Williams Sonoma but to departments stores generally. 



This section continues in the Subscriber's Area. Back to top
May 10 2017

Commentary by Eoin Treacy

China Stocks Still Adored Abroad as Losses Mount for Locals

This article by Sofia Horta e Costa for Bloomberg may be of interest to subscribers. Here is a section:

Mainland markets have struggled under the government’s campaign to trim risk in the financial sector, making stocks the least linked to the offshore index since 2006. With history showing sentiment can flip quarter to quarter, international traders are riding on a bet that solid corporate and economic data will continue to support the divergence.

“These investors don’t believe that any of this will lead to a crisis,” said Caroline Yu Maurer, the Hong Kong-based head of Greater China equities at BNP Paribas Investment Partners.
“For stocks, people are buying earnings growth rather than macro stories. The market is quite resilient as long as that holds.”

For a gauge that is rarely this expensive relative to the rest of the world, improving earnings are emerging as a key line of defense against worsening sentiment. While profit estimates are being upgraded at the fastest pace since 2010, they’re failing to keep pace with the index’s rally, which has pushed valuations toward the highest levels since 2015. The gauge gained another 0.4 percent on Wednesday, while the Shanghai Composite slumped 0.9 percent to its lowest level since October.

 

Eoin Treacy's view -

The mainland Shanghai Composite is heavily weighted by state owned enterprises like banks and infrastructure companies which are the primary focus of the clamp down on the shadow banking sector and financial leverage in “private lending clubs”. Privately owned companies, many of which are listed in Hong Kong or the USA continue to perform not least because they are not overly impacted by the financial sector tightening currently underway.



This section continues in the Subscriber's Area. Back to top
May 10 2017

Commentary by Eoin Treacy

Biotechnology Sector update

Thanks to a subscriber for this report from Oppenheimer dated in April which may be of interest. Here is a section:  

Industry’s sales/earnings growth and margin structure are enviable, M&A on-tap
1. With increases in sales and earnings power and improving product approval rates, large-cap biotech has stuck to its knitting, i.e., developing products for smaller, more focused disease areas with high unmet needs.
2. 2015 was a banner year for worldwide biopharma M&A. After downturns, such as seen in 2016, M&A typically picks up as valuations become realistic.
3. Drug pricing, recent slowdown in large-cap sales/earnings momentum, many companies between product cycles and some clinical disappointments, are all still overhangs.

And 

1. Sales/earnings growth deceleration following peak sales/earnings in 2014 for the large-cap companies.
2. Has led to generalist and momentum money reducing exposure/abandoning the sector.
3. This deceleration in sales/earnings growth to trough in 2017, then rapidly start accelerating again.
4. Currently GILD is the laggard in its peer group for expected sales/earnings growth over the next three years.

 

Eoin Treacy's view -

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

R&D is expensive, riddled with uncertainty and big bureaucracies tend to stifle the creativity necessary for the kind of out of the box thinking which leads to breakthroughs. The result is that large pharmaceuticals companies often buy promising biotechnology companies, usually at a premium, rather than invest in the uncertainty of in-house development. 



This section continues in the Subscriber's Area. Back to top
May 05 2017

Commentary by Eoin Treacy

Can Wal-Mart's Expensive New E-Commerce Operation Compete With Amazon?

This article by Brad Stone and Matthew Boyle for Bloomberg caught my attention. Here is a section:

The video worked exceedingly well. In August, Wal-Mart Stores Inc. announced it would acquire Jet.com for $3.3 billion in cash and stock. It was an extraordinary sum for a 15-month-old, purple-hued website that was struggling to retain customers and is still far from making a profit. Even more astonishing, Lore and his management team in Hoboken, N.J., were put in charge of Wal-Mart’s entire domestic e-commerce operation, overseeing more than 15,000 employees in Silicon Valley, Boston, Omaha, and its home office in Arkansas. They were assigned perhaps the most urgent rescue mission in business today: Repurpose Wal-Mart’s historically underachieving internet operation to compete in the age of Amazon. “Amazon has run away with it, and Wal-Mart has not executed well,” says Scot Wingo, chief executive officer of Channel Advisor Corp., which advises brands and merchants on how to sell online. “That’s what Marc Lore has inherited.”

Lore’s ascendancy at Wal-Mart adds bitter personal drama that wouldn’t seem out of place on Real Housewives of New Jersey to a battle between two of the most disruptive forces in the history of retail. In 2010, Wal-Mart tried to buy Lore’s first online retail company, Quidsi Inc., which operated websites such as Diapers.com for parents and Wag.com for pet owners. But it moved too slowly and lost out to a higher bid from Amazon.com Inc. Lore then toiled at Amazon for over two years before quitting, in part out of disappointment with its refusal to invest more in Quidsi and to integrate his team into the company, according to two people close to him.

 

Eoin Treacy's view -

You get a lot with your Amazon Prime membership from free 2-day shipping to photo storage and Amazon TV but you do not get the cheapest price on the majority of goods and Prime is not free. It costs $99 a year so you really need to shop, archive and watch Amazon to get your money’s worth and for many people that works out since it has built its subscriber base to 80 million people from 40. 



This section continues in the Subscriber's Area. Back to top
May 04 2017

Commentary by Eoin Treacy

Seeking a policy response to the robot takeover

This article by Alice M. Rivlin for Bloomberg may be of interest to subscribers. Here is a section:

If driverless deliveries prove faster, cheaper, safer, and more accurate, they would likely be adopted quickly and affect all parts of the country. Truck driving is much less concentrated in particular areas than, say, coal mining or steel making.

In 2016, there were 1.7 million heavy and tractor-trailer truck drivers, with a median annual wage of $43,590; 859 hundred thousand light-truck and delivery workers, who earned $34,700; and 426 hundred thousand driver/sales workers, who earned $28,449. So a rough estimate would be that driverless deliveries would put at least 2.5 million drivers out of work, not counting drivers’ helpers and a substantial number of workers in truck stops and roadside services patronized by truckers. Truck drivers drink a lot of coffee.

Like many lost manufacturing jobs, truck driving requires skill, some special training, hard work, and fortitude, but not much formal education. If you did not go beyond high school, but are a reliable, safe driver—especially if you are willing to work the demanding schedules of long-haul truckers—you can support a family and have decent benefits by driving a truck.

The transition to driverless deliveries would also create some new jobs, many of them technical jobs involving software development and programming that would command relatively high wages. Vehicle maintenance jobs would still be necessary, and would likely require enhanced electronic skills with higher pay than current truck maintenance jobs. Expanded demand for the cheaper delivered products would likely create additional jobs in the transportation sector. It is impossible to predict the ultimate effects of any major technological change, but in the short run it is a good bet that a lot of former drivers would be looking for work and finding their skills and experience ill-suited to available jobs at comparable wages.

Eoin Treacy's view -

The one question I get wherever I go to talk is what am I going to do when the robots take my job? It’s a big question but over the last year it has really moved into the public consciousness. The prospect of machines driving down our roads with no human behind the wheel has lent a sense of reality to the debate that was not present in years past. 



This section continues in the Subscriber's Area. Back to top
May 02 2017

Commentary by Eoin Treacy

Musings from the Oil Patch May 2nd 2017

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

As automobiles transition from being completely under the control of a human driver to being totally controlled by machines and computers, several things can happen. If cars can operate without having accidents, highway speeds can be increased, which could reduce vehicle fuel-efficiency, boosting fuel consumption. Fully-autonomous driving will also enable classes of the population currently unable to utilize vehicles, adding more vehicle miles traveled to the nation’s transportation system and increasing fuel consumption. Those classes of people include non-drivers, along with the elderly, disabled and young people. A study by Carnegie Mellon University estimates that this expansion of the driving population could increase vehicle miles traveled by 14%, or adding 295 billion miles of driving annually. That will mean more fuel consumed, regardless of how fuel-efficient the vehicles are that these classes of people utilize. A rough calculation based on vehicles with 30 miles per gallon ratings, means about 675,000 barrels a day of additional gasoline, or approximately a 7% increase on today’s gasoline consumption. Fully-autonomous driving suggests more vehicle use, more miles driven and more fuel consumed. The offset is if fully-autonomous vehicles dominate the growing car/ride-sharing segment of the transportation sector, which could act to reduce fuel consumption. 

Whether the vehicles of the future are ICE-powered or derive their power from some other fuel source will be influenced by the outcomes of the other two broad trends. For example, if we become a nation of car-sharers, there will be fewer vehicles needed, vehicle miles traveled might decline, although they just as easily could increase. A fully-autonomous vehicle provides the possibility of having a greater impact on fuel consumption than human-driven vehicles. First, cars that don’t have accidents can be made from lighter materials that facilitates more EVs since greater battery weight will be offset by lighter vehicle bodies and frames. That could help EVs overcome some of the range-anxiety challenges for many potential buyers. It could help accelerate the electrification of the automobile fleet, which would have a significant negative impact on vehicle fuel consumption. On the other hand, if ICE powered vehicles remain the popular option, fuel consumption might not be as impacted as in an EV-favored scenario. With fully-autonomous vehicles offering the potential for increased vehicle use, fuel consumption is likely to increase. 

Eoin Treacy's view -

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

The Jevons Paradox suggests that if the price of a vital commodity falls use will increase so that the greater efficiency achieved through advancing technology is absorbed by demand growth. In fact the only commodity I can think of that has been completely obviated from popular use is whale oil. In every other case uses might have changed and costs might collapse but we end up using more of it. 



This section continues in the Subscriber's Area. Back to top
May 01 2017

Commentary by Eoin Treacy

Market Leaders to Benefit from Industry Consolidation

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

Acceleration in market share gains: Our AlphaWise survey indicated that the low price course strategy is highly effective for leading players to gain market share, thanks to their strong brand name, well established systems, standardized teaching procedures, and strong teaching curriculum development capabilities. We expect the promotional environment in China's K-12 after-school tutoring market will become a new norm, and the low user stickiness in the market will benefit the leading players like TAL and New Oriental, as they're considered top providers for potential switchers. We believe New Oriental's roll out of its low price strategy to over 30 cities and TAL's acceleration in capacity expansion will accelerate their market shares in the coming quarters. Although this may bring some short-term uncertainty to revenue growth and margins when the summer course revenues are booked, we believe this strategy is value accretive to the leading players given they can manage to achieve high retention rate.

Market demand remains robust amid macro slowdown: According to our AlphaWise survey results, K-12 after school tutoring expenses are the last item to cut among major household expenses during weak financial conditions. Moreover, 24% of respondents intend to increase their spending on tutoring classes in the next 12 months. This shows that education is not only resilient during macro downturns, but also remains a structurally growing sector in China. 

Good potential for online education: The survey results also show that the acceptance level of online education is very high and 43% of respondents thought online education was as good as offline, but more convenient. We believe this bodes well for future demand for the leading players' online and O2O initiatives, which could bring in incremental revenue opportunities with better operating leverage.

 

Eoin Treacy's view -

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

For most families education is the surest and in many cases only way to climb out of poverty. Despite the fact there is a great deal of debate about the best way to impart knowledge and indeed what should be prioritised in the West, Chinese parents are under no illusion, their child has to perform well in the state exam. Competition is such that the only way to ensure your child is getting the grades they need when you do not have knowledge/time yourself is to employ a tutor. 



This section continues in the Subscriber's Area. Back to top
April 27 2017

Commentary by Eoin Treacy

Ford Sharpening Sales Pitch as Driverless Car Wager Underwhelms

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

Fields has struggled to generate enthusiasm for plans to pour billions into new technologies and take on upstarts like Uber Technologies Inc. and Waymo, Alphabet Inc.’s self-driving spinoff. The CEO has said earnings will rebound next year as new models including the redesigned Lincoln Navigator are expected to start paying off. Until then, earnings will continue to be pinched in a U.S. market that’s also seeing auto demand roll back following a seven-year growth spurt.

“This will be the toughest quarter,” Chief Financial Officer Bob Shanks told reporters at Ford’s headquarters in Dearborn, Michigan. “The balance of the year, in the aggregate, will be flat to better.”

Profit excluding some items was 39 cents a share during the first three months of the year, beating the 34-cent average estimate of analysts surveyed by Bloomberg as well as the company’s own projection given in March. Net income on that basis fell to $2.22 billion.

 

Eoin Treacy's view -

The key to any business is succeeding in giving people what they want. Recreational horseback riding is fun but horses as a mode of transport leave a lot to be desired. For many people recreational driving is fun but the slog of commuting on congested roads leaves a lot to be desired. The gap between the reality of driving and the idea of driving is just too wide. Incumbent companies have no choice than to invest in electrification and automation because the latter in particular gives everyone a chauffeur, which is something until now only the wealthiest individuals could afford. 



This section continues in the Subscriber's Area. Back to top
April 26 2017

Commentary by Eoin Treacy

Leveraging Platform Synergies to Break Adoption Barriers

Thanks to a subscriber for this heavyweight report from Deutsche Bank focusing on payments. Here is a section:

Although initial mobile payment developments were geared toward driving adoption and acceptance, focus has shifted to improving monetization. We believe Pay with Venmo remains a significant opportunity and conservatively estimate potential contribution to revenue growth in FY20 of ~3.5pts and given the higher transaction margins driven by cheaper funding sources (ACH, Balance), estimate potential EPS contribution of $0.28 in FY20. In addition, working capital loans to merchants and/or installment plans provided by PayPal, Square, and Alipay leveraging Big data offer high margin revenue opportunities. Providers are also emphasizing efforts on channels where adoption is easier as well as use cases which offer differentiated value propositions. Accordingly, we believe in-app and inbrowser will dominate mobile payments while in-store mobile payments will be predominantly focused on differentiated value propositions such as omni-channel support, order ahead, and offer/coupon redemption. 

Eoin Treacy's view -

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

One of the big questions for every online business is how to make it easier to take people’s money. Impatience, number of clicks, creating urgency, ensuring security and insuring purchases represent important considerations that have in many respects been solved by the various providers, with software and encryption getting better all the time. 



This section continues in the Subscriber's Area. Back to top
April 26 2017

Commentary by Eoin Treacy

Arizona trial thrusts autonomous Waymo cars into everyday life

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

Waymo will be purchasing an additional 500 Chrysler Pacifica minivans to support the 100 already doing the rounds.

The push to slot self-driving cars into the everyday reality of average Arizona families represents another significant step in autonomous driving development. Waymo has covered more than 3 million miles since its inception in 2009, and the benefits of that experience are beginning to show.

According to reports submitted to the Californian DMV earlier this year, Waymo cars covered 635,868 miles (1,023,330 km) last year, and human drivers only needed to intervene 124 times. That's a huge improvement over 2015, where self-driving systems disengaged 341 times in just 424,331 mi (682,895 km) of testing.

Eoin Treacy's view -

The rapid pace of technological innovation is transforming our world, economy and financial markets faster than is easily comprehendible. I find it to be a useful thought experiment to identify the most promising technologies and then to think about what they are going to displace. For example the evolution of electric vehicles is not great news for automotive parts suppliers since EVs have far fewer parts. 



This section continues in the Subscriber's Area. Back to top
April 25 2017

Commentary by Eoin Treacy

Inside China's Plans for World Robot Domination

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

Under a sweeping proposal called “Made in China 2025,” as well as a five-year robot plan launched last April, Beijing plans to focus on automating key sectors of the economy including car manufacturing, electronics, home appliances, logistics, and food production. At the same time, the government wants to increase the share of indigenous-branded robots in China to more than 50 percent of total sales volume by 2020 from 31 percent last year.

Robot makers and the companies that automate will be eligible for subsidies, low-interest loans, tax waivers, and rent-free land. “Fair or unfair, you can expect Chinese companies will get a lot of preferential treatment and funding,” said Rose with Boston Consulting. “They actually have a comprehensive plan to get there. And their track record isn’t terrible either.”

Industrial automation is crucial for China, home to an aging population and shrinking labor force. Manufacturing wages have more than doubled in the last decade. Also, younger Chinese workers, “don’t want to do repetitive work,” said James Li, President of ABB Robotics China, the local unit of Switzerland’s ABB Ltd. and one of the first robot companies to set up in China. It supplies machines that spray paint cars and man electronics assembly lines. “Robotics is hot,” said Li, who notes that local governments are investing heavily in industrial parks to develop the technology.

 

Eoin Treacy's view -

The big question for robot manufacturers is will China do for their sector what it did for the solar sector? My sense of the challenges involved is that Chinese dominance of the robotics sector is a medium-term rather than short-term possibility. The companies involved have a lot of progress than needs to be made in developing software, optics and interfaces to truly challenge incumbents. However we can be reasonably assured they will be get better every year.  



This section continues in the Subscriber's Area. Back to top
April 07 2017

Commentary by Eoin Treacy

Winners and losers of the Industrial Internet

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

Industrial end-markets are still at the beginning of their digitalization journey
The Industrial Internet is about optimizing entire manufacturing systems, including products, processes, supply chains and business models. We estimate digitized solutions could generate c.15% annual opex savings in industrial markets by making assets more efficient. This could reduce the addressable market size for traditional manufacturers of big iron machines. However, this should translate in a market opportunity of c.$200bn for IIoT suppliers in areas like predictive maintenance or operation optimization.

IIoT strategies are as much defensive as they are offensive 
Industrial companies will have to be good at software to remain successful as an increasing share of the manufacturing value chain could shift to providers of sensors, data analytics and industrial cloud architectures. For example, a key risk for the manufacturers of large pieces of equipment requiring maintenance/retrofit is that software companies specializing in analytics or 3D printing might take a growing share of the lucrative service business pie.

3 building blocks for success: Siemens and Schneider well placed
We believe successful companies in an IIoT world will combine an integrated platform of digital solutions; deep domain know-how to give context to data analytics and automation/control activities to in real-time the insights from data analysis on manufacturing processes. Siemens stands out for its comprehensive portfolio of automation and software tools but, the group faces significant digital disruption risks on servicing of its installed base. We rank Schneider and ABB highly. Both have relatively similar IIoT competencies but in different end-markets. We also estimate Schneider is running 5 years ahead of ABB in implementation of its group-wide digital platform and strategy.

 

Eoin Treacy's view -

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

China’s labour costs have been on an upward trajectory for some time and they have already lost many low cost manufacturing jobs to even cheaper locales. With more than a billion people they have an interest in enhancing productivity to ensure they retain the moniker of “workshop of the world”. 



This section continues in the Subscriber's Area. Back to top
April 06 2017

Commentary by Eoin Treacy

Bezos is selling $1 billion of Amazon stock a year to fund rocket venture

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

“My business model right now … for Blue Origin is I sell about $1 billion of Amazon stock a year and I use it to invest in Blue Origin," said Bezos, the chief executive of Amazon.com Inc (AMZN.O) and also the owner of The Washington Post newspaper.

Ultimately, the plan is for Blue Origin to become a profitable, self-sustaining enterprise, with a long-term goal to cut the cost of space flight so that millions of people can live and work off Earth, Bezos said.

Bezos is Amazon's largest shareholder, with 80.9 million shares, according to Thomson Reuters data. At Wednesday's closing share price of $909.28, Bezos would have to sell 1,099,771 shares to meet his pledge of selling $1 billion worth of Amazon stock. Bezos' total Amazon holdings, representing a 16.95 percent stake in the company, are worth $73.54 billion at Wednesday's closing price.

For now, Kent, Washington-based Blue Origin is working toward far shorter hops - 11 minute space rides that are not fast enough to put a spaceship into orbit around Earth.

 

Eoin Treacy's view -

Amazon is a behemoth which has benefitted enormously from Bezos’ stewardship over the last two decades. However it must raise the eyebrows of investors when they hear he is willing to dispense with a $1 billion in stock per annum to fund what is an interesting, potentially worthwhile but ultimately an expensive vanity project. 



This section continues in the Subscriber's Area. Back to top
April 06 2017

Commentary by Eoin Treacy

Cheap Indian engineers now have no place in Donald Trump's America

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

The National Association of Software and Services Companies (NASSCOM), a trade group that represents the Indian IT industry, played down the possible impact of the new USCIS memo. “The clarifying guidance should have little impact on NASSCOM members as this has been the adjudicatory practice for years and also, as several of our member executives have noted recently, they are applying for visas for higher-level professionals this year,” the association said in an emailed statement.

The Indian IT sector has been preparing for this sort of tightening for some time now. For instance, TCS, India’s largest IT services company, has sharply reduced the number of US visa applications: In 2016, it filed only 4,000 compared to 14,000 the year before. In 2015, the company also began tweaking its business model to effectively operate in “a visa-constraint regime,” former TCS CEO N Chandrasekaran explained in January.

Late last year, Infosys, the second-largest in the sector, too, signalled that it would look to hire local talent more aggressively in the US, a far cry from the turn of the decade when such companies were infamously called out for “body shopping“—i.e, hiring Indian software professionals to use them on short-term projects elsewhere.

Despite all such evasive action, though, the US clampdown will hurt the sector. “It’ll be a short-term jolt,” said Sanjoy Sen, a former Deloitte partner and doctoral researcher at UK’s Aston Business School, although the exact magnitude of the impact will depend on the size of the companies and their levels of preparation. Smaller firms with a headcount in the hundreds, in particular, may be harder hit, Sen said.

 

Eoin Treacy's view -

The Indian outsourcing sector is one of the country’s primary foreign revenue generators  and the ability to send workers to the US for medium-term project work has been an important support for that business model. The new US administration is already changing how the foreign worker program function and that represents a challenge for outsourcing companies. However if time differences could be overcome the evolution of cloud computing and distributed work environments mean that the absolute requirement to have programmers based in Silicon valley could be reduced. 



This section continues in the Subscriber's Area. Back to top
April 04 2017

Commentary by Eoin Treacy

What does the evolution of Tesla mean for everyone else?

Eoin Treacy's view -

Tesla broke out to new highs yesterday. The share’s stratospheric advance stopped three years ago when it announced it was going to build a battery “gigafactory” which would cost billions of Dollars it didn’t have. That investment is now over and the company is ramping up production. That’s great news for Tesla’s long suffering investors but what does it say about all the other car companies. 



This section continues in the Subscriber's Area. Back to top
March 31 2017

Commentary by Eoin Treacy

The Mad Rush to Undo Online Privacy Rules

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

Republicans in Senate and then House did the opposite this past week, voting along party lines to reverse the consumer protections. Comcast, AT&T, Verizon, and other companies have long wished to leverage personal data, seeing Google and Facebook making billions from it through customized advertising revenue. Most web sites, including Bloomberg.com, track Web use in order to deliver relevant advertisements to users.

The ISP’s could not win a policy argument before the FCC, but Congress was willing to act quickly amid the flurry of big issues confronting the public in the first 100 days of the new administration.

Once President Trump signs this bill into law, as he has pledged to do as part of his assault on Obama-era regulation regardless of their value, these telecommunication companies will be able to monitor all sorts of data use and cross-reference it with a user’s location, the time of day, and even the concentration of other service users. As more commerce occurs through phones, these companies could launch payment applications that muscle out similar services from Apple or Google. That kind of consumer data is especially valuable. Then, telecommunication companies could sell ads on the locked or home screen of a phone -- something even Google and Facebook can’t do.

Beyond that, Congress is also removing regulations that made telecommunication companies responsible for the leads of valuable -- and possibly dangerous -- private information through security breaches.

 

Eoin Treacy's view -

I can imagine that many US citizens are not particularly happy with the move to allow internet service providers to sell our household’s browsing history. Nevertheless, if this does in fact pass into law it will afford a number of, what are otherwise considered rather staid, companies the opportunity to compete for ad revenue with the likes of Google and Facebook. 



This section continues in the Subscriber's Area. Back to top
March 29 2017

Commentary by Eoin Treacy

Email of the day on hydrogen versus electric vehicles

I hope you are well. I was wondering what you thought of this article (Japan gambles on Toyota’s hydrogen powered car) about Toyota’s lack of faith in electric vehicles because 'a battery breakthrough is not in prospect'

Eoin Treacy's view -

Thank you for this email raising an important issue regarding energy density. Here is a section from the article:

Fuel cell vehicles, by contrast, need all the manufacturing skills of a car company. “From the industrial strategy point of view, fuel cell technology is extremely difficult, it’s in the world of chemistry not machinery,” says Hiroshi Katayama at the advanced energy systems and structure division of the ministry of economy, trade and industry (METI). If auto technology goes down the hydrogen path, Japan will be well placed. But if it doesn’t, Tokyo will have made a major miscalculation.

Toyota’s faith in hydrogen is best understood by looking at a car it never made: a pure electric vehicle. For the 20 years since it invented the Prius hybrid, Toyota has been the carmaker best-placed to launch a fully electric vehicle. It had the batteries, the motors and the power electronics but chose not to deploy them because of concerns about range limits, refuelling time and the risk of batteries degrading as they age.

It has announced plans for its own electric vehicle to exploit the demand from the premium segment opened up by Tesla and to meet emissions standards in the US and China. Yet Toyota’s fundamental doubts about battery-powered vehicles have not gone away.

The long dreamt-of Sakichi battery would store energy at the same density as the chemical bonds in petrol: roughly 10,000 watt-hours per litre — enough to power a family car for hundreds of kilometres on a single tank. The low energy density of the best batteries, about one-twentieth that of petrol, is why today’s electric cars have limited range.



This section continues in the Subscriber's Area. Back to top
March 27 2017

Commentary by Eoin Treacy

Growing International Opportunity for Drug Development

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

We believe estimated prevalence is the best measure of the overall cancer market’s size. We have estimated future prevalence for 2014-2018 (Tables 3, 6, 9). To arrive at these estimates, we used the 2012 or 2013 estimate and added estimated incidence (Tables 1, 4, 7) and subtracted estimated deaths (Tables 2, 5, 8) for each year. Exceptions included cancers that did not have prevalence data for 2012 or 2013. In cases where 2013 prevalence was not available for US patients, we used the 2009 prevalence estimate for 2013 or the incidence estimate. For these same exceptions outside the United States, we estimated 2012 or 2013 prevalence as a ratio to incidence that was consistent with US data.

Based on prevalence, we estimate the overall market for cancer therapies in the United States is slightly over 14 million patients growing at 7% per year. In Europe, we estimate the overall market is composed of 8 million patients and is growing at 16% per year. In Japan, we estimate the market is nearly 2 million patients and is growing 13% per year. We believe incidence is the best measure of front-line (newly treated) cancer market’s size (Tables 1, 4, 7). Therefore, we conclude the market for front-line therapies in the US is currently 2 million patients and is decreasing at 8% per year. In Europe, we estimate the market for front-line therapies is approximately 3.1 million patients and is growing at 4.5% per year. In Japan, we estimate the market for front-line therapies is currently 680,000 patients and is growing at 2% per year.

We believe the best measure of the market size for second-line and greater (relapsed/refractory) therapies is prevalence less incidence, which should account for all living patients who are not newly diagnosed. Therefore, we conclude the market for relapsed therapies in the US is currently 15 million patients and is growing at 10% per year. In Europe, we estimate the market for relapsed therapies is approximately 10.8 million patients and is growing at 11% per year. In Japan, we estimate the market for relapsed therapies is currently 2.1 million patients and is growing at 8% per year. 

Eoin Treacy's view -

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

Cancer is a blight on humanity. Because it is based on what is in many respects a random mutation of genes, it avoids notice by the body’s immune system. The net result is that there are many different types of cancer but even within individual groups no two are the same. That represents an acute challenge for drug therapies because while the total market is large, individual therapies are required to treat every patient. Therefore personalised medicine is likely to emerge first in cancer treatment which means oncology represents an important market to monitor. 



This section continues in the Subscriber's Area. Back to top
March 23 2017

Commentary by Eoin Treacy

Dow's Merck Swipes Immuno-Oncology Share From Heavyweight Rivals

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

Four immuno-oncology drugs from Merck, Bristol-Myers and Roche brought in $464 million in February, declining 4% from $483 million in January, Leerink analyst Seamus Fernandez said, citing data from tracker Symphony Health.

But February was a shorter month, which could be partly responsible for the decrease, Fernandez said in a research report. Despite the slowdown, Merck's Keytruda sales grew 2% in February vs. the prior month.

Meanwhile, Bristol-Myers' drugs Opdivo and Yervoy held on to a collective 69% market share, falling 1% vs. January. Merck's Keytruda now has 24% of the market, up from 23% the prior month. Roche's Tecentriq was flat at 7% share.

Immuno-oncology drugs fight cancer by teaching the body's immune system to identify cancer cells hiding behind specific proteins. Those proteins are called checkpoints.

 

Eoin Treacy's view -

CRISPR-Cas9 gene editing is quickly revolutionising the genetics sector by reducing the cost and increasing the speed of innovation. That is particularly good news for cancer treatments because there are so many different mutations and each needs a tailored approach. In fact the end point of research and another area receiving a great deal of interest is the synthetic biology sector where custom viruses can be written to attack a patient’s personal cancer. 



This section continues in the Subscriber's Area. Back to top
March 21 2017

Commentary by Eoin Treacy

Musings from the Oil Patch March 21st 2017

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. Here is a section comparing the efficiency of a Tesla to a BMW 7 Series:

“Liberals frequently care more about feelings than facts, and your smug Tesla-owning frenemy will never admit it, but in day to day usage, the big BMW is actually 18% more efficient, and 18% kinder to the planet. (Don’t get too cocky, Mr. 7 Series: at a US average 12 cents per KwH, the electricity cost to the Tesla owner for 1000 miles works out in total to about $81, as opposed to $98 for the gasoline. The reason the Tesla is less efficient, but still cheaper to run, is that the power company pays a lot less for fuel than the automobile driver does. But when the issue is green impact, not greenbacks, the BMW wins handily.)

And

“Of course, no self-respecting Green Weenie would settle for powering his car by the sun, but his house by Con Edison. And with the average efficient house using 1 KwH per hour, i.e., 24 KwH per day, the house needs 4.8 KwH capacity, and considering efficiency losses and reserve requirements, that means 6.9 KwH for the house. So to power both the Tesla and the house, Green Man needs at least 1,443 square feet of power production, at a cost of $115,000. But even using a Tesla-only setup, $60k would buy 25,641 gallons of gasoline (at the current US average price of $2.34 per gallon). The Big BMW could travel, on that much fuel, 24,000 x 24 MPG = 615,384 miles. Game, set and match – Munich and Detroit. Sad!” 

While we didn’t do the analysis, all of Mr. Karo’s numbers were sourced, which was not a surprise, given that he is a Philadelphia lawyer, and the math works. Although Mr. Karo expresses disdain for braggadocios Tesla owners, presumably because of his experiences with some owners he has encountered, the economics in this analysis suggest that gasoline-powered vehicles will have a longer future than EV-proponents suggest, or would like to see happen. Tesla owners will not be swayed by Mr. Karo’s analysis. Instead, they will declare that with falling battery and solar panel costs coupled with their improving efficiencies, the cost advantage will soon swing in favor of EVs. However, the inability of EVs to be swapped for gasoline-powered vehicles in a one-to-one exchange for all applications means there is an extensive convincing period ahead before the public fully embraces them. Just how long that convincing period will be is anyone’s guess. 

Eoin Treacy's view -

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

There are four major themes in transportation at the present time. These are electric vehicles, automation, connectivity and sharing. Let’s for a moment take the environmental question out of the argument for electric vehicles. Many people buy them because they are cheaper to run and have fewer moving parts so they tend to be reasonably reliable. 



This section continues in the Subscriber's Area. Back to top
March 20 2017

Commentary by Eoin Treacy

Google Might Run the Power Grid More Efficiently

This article by Diego Marquina and Jahn Olsen for Bloomberg may be of interest to subscribers. Here is a section:

The best way to send the right economic signals that reflect constraints is through locational marginal pricing – having different power prices in different parts of the grid.

This is a politically unpopular mechanism, as it would see prices go up in zones of large demand – potentially industrial areas.

The alternative is grid investment. But the costs are huge, as is the case for the bottleneck between Scottish wind farms and English demand centers. The 2.2 gigawatt HVDC cable currently being built there has an estimated cost of 1 billion pounds. Yet National Grid estimates as much as 8GW of additional transmission capacity could be required by 2030, on that particular border alone.

Less human involvement might be part of the solution. Google’s DeepMind recently announced they are exploring opportunities to collaborate with National Grid. It has been successful elsewhere -- DeepMind demonstrated its immense potential by reducing cooling costs in an already human- optimized datacenter by 40 percent.

Setting it loose on the extremely complex and quite probably over-engineered National Grid, with its many overlapping services and mechanisms, its rules of thumb and its safety margins, could provide novel ways to ensure system reliability cheaply and efficiently. DeepMind’s CEO conservatively hinted that it might be able to save up to 10 percent of the U.K.’s energy usage without any new infrastructure. Step aside, humans.

 

Eoin Treacy's view -

Artificial Intelligence (AI) is rapidly finding its way into systems which had previously always been managed by humans. You might have heard of the Google Deep Mind team’s victory against the Go world champion. It represented a landmark not so much because it overcame a human; we’ve seen that in chess before. It was the manner in which the victory was achieved that is so important. 



This section continues in the Subscriber's Area. Back to top
March 14 2017

Commentary by Eoin Treacy

Email of the day - on vapes and e-cigarettes

Hope you are keeping well.

We are getting loads of orders for Vape labels at the moment and talking to other guys in our industry they are all getting the same - we are talking millions of labels. The industry is seriously expanding, at this time it appears to be multi small to medium players but there must be some serious money to be made somewhere!

The label, bottle, liquid etc. can't come to more than £1.50 so potential profit is there.
I know you've probably already had a look but thought I'd mention it!

 

Eoin Treacy's view -

Thank you for this insightful email. The market for e-cigarettes has been somewhat overshadowed by the hoopla surrounding the evolution of the cannabis industry in the USA. Part of the reason for this is because there has been considerable controversy about the safety of the chemicals used in the vapourising process and the fact that some of the flavours such as bubble gum appear to be directly aimed at children. That resulted in related shares initially surging but subsequently collapsing because the cost of getting new products approved by regulatory authorities surged. 



This section continues in the Subscriber's Area. Back to top
March 13 2017

Commentary by Eoin Treacy

Intel to Acquire Mobileye

This press release may be of interest to subscribers. Here is a section:

“As cars progress from assisted driving to fully autonomous, they are increasingly becoming data centers on wheels. Intel expects that by 2020, autonomous vehicles will generate 4,000 GB of data per day, which plays to Intel’s strengths in high-performance computing and network connectivity. The complexity and computing power of highly and fully autonomous cars creates large-scale opportunities for high-end Intel® Xeon® processors and high-performance EyeQ®4 and EyeQ®5 SoCs, high-performance FPGAs, memory, high-bandwidth connectivity, and computer vision technology.

Eoin Treacy's view -

Intel missed a trick when mobile phones took off. It had simply ignored the market for years, preferring instead to concentrate on desktops where it has a strong lead in what is a declining market. When mobile phone demand exploded in popularity companies like ARM Holdings and Qualcomm took the initiative and the bulk of the profits. Since the market for desktop computers is shrinking Intel can’t afford to miss out on the evolution of autonomous vehicles since it is likely to become a major destination for both chips and sensors over the next decades. 



This section continues in the Subscriber's Area. Back to top
March 10 2017

Commentary by Eoin Treacy

New Infrastructure Themes and Top Ideas

Thanks to a subscriber for this report from Deutsche Bank highlighting the growth potential in new technology infrastructure. Here is a section:

A core insight in our theme report is the meaningful shift in spending priorities that our primary research notes at Hyperscale Clouds, Enterprises, and Service Providers. In particular, we highlight +50% Y/Y capex intensity at major Clouds for Terabit Scale Optical Interconnects; required for running Web Scale Applications such as Google Maps, Azure Cloud, AWS, GCP, etc.

A corollary insight is the accelerating IT demand for Software and SaaS based tools for Network and Application Analytics, AI and Machine Learning, and Automation tools – for “structurally lowering” the costs of running complex IT infrastructures at Hyperscale Clouds, Large Enterprises, and Carriers.

A case in point is CSCO “doubling down” on Security, Analytics, AI/ML, and Automation Software capabilities (Meraki, AppDynamics, Jasper, Tetration, etc) to drive incremental Top Line and EPS growth through a “recurring revenue” model – laddering upon CSCO’s +250B networking installed base.

 

Eoin Treacy's view -

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

There is a lot of tech-speak in this report but the three main themes it is promulgating are the growth and increasing sophistication of cloud computing, the growth of fibre optics where Terabit speeds are potentially possible and the rollout of 5G mobile networks. 

Most of what has made headlines in the technology sector over the last decade has been software related. In fact the pinnacle of this reliance on other company’s infrastructure might be Snap’s IPO. The company runs none of its own infrastructure, at least so far, and has instead chosen to outsource everything from managing the backend to client acquisition to third parties like Google and Amazon. However software relies on hardware and infrastructure to grow and if the aspirations of companies that depend on it like Netflix and Facebook are going to be realised then major connectivity investment needs to take place. 

 



This section continues in the Subscriber's Area. Back to top
March 08 2017

Commentary by Eoin Treacy

New Research Could Turn Water Into the Fuel of Tomorrow

This article from Futurism.com caught my attention and I thought it may be of interest to subscribers. Here is a section:

“What is particularly significant about this study, which combines experiment and theory, is that in addition to identifying several new compounds for solar fuel applications, we were also able to learn something new about the underlying electronic structure of the materials themselves,” Neaton said in a Caltech press release.

To discover these new photoanodes, the team combined computational and experimental approaches. A Materials Project database was mined for potentially useful compounds. Hundreds of theoretical calculations were performed using computational resources at the National Energy Research Scientific Computing Center (NERSC), together with software and expertise from the Molecular Foundry. Once the best candidates for photoanode activity were identified, it was time to test those materials in the laboratory.

The materials were simultaneously tested for anode activity under different conditions using high-throughput experimentation. This was the first time these kinds of experiments had been run this way, according to Gregoire.

“The key advance made by the team was to combine the best capabilities enabled by theory and supercomputers with novel high throughput experiments to generate scientific knowledge at an unprecedented rate,” Gregoire said in the press release.

 

Eoin Treacy's view -

There has been great deal of commentary in the media about the advances in artificial intelligence and how it is represents a threat to employment across a number of fields. A broader perspective to the easy application of massive computing power is the scale that can be brought to experiments through computer simulation and data analysis. Artificial intelligence represents a major facilitator for technological innovation. Coupled with rapid prototyping and CRISPR the potential for unprecedented change in a range of sectors, stretching from materials to healthcare, is looking increasingly like the base case.  



This section continues in the Subscriber's Area. Back to top
March 06 2017

Commentary by Eoin Treacy

IBM thinks it's ready to turn quantum computing into an actual business

This article by Mike Murphy for Quartz may be of interest to subscribers. Here is a section: 

As it stands, IBM’s largest quantum computer has five qubits. By contrast the average laptop has hundreds of millions of bits in its processors, although the two types of computers are not directly comparable. IBM hopes, however, to continue its research with the aim of building quantum computers with roughly 50 qubits. For comparison, an IBM spokesperson told Quartz, you can simulate the computational power of a 25-qubit quantum computer on a regular laptop. At about 45 qubits, you’d need the world’s fastest supercomputers, and above 50, “you couldn’t build large enough classical computing systems to simulate that size of a quantum system.”

In IBM’s vision of the future, quantum computers could be used for discovering new drugs, securing the internet, modeling the economy, or potentially even building far more powerful artificial intelligence systems—all sorts of exceedingly complicated tasks. One area the company is looking at right now is in chemistry, attempting to simulate what’s going on in a molecule. “Even for simple molecules like caffeine, the number of quantum states in the molecule can be astoundingly large,” the spokesperson said, “so large that all the conventional computing memory and processing power scientists could ever build could not handle the problem.”

When Quartz visited IBM’s quantum computing lab in Yorktown Heights in 2015, the work being done was viewed as fundamental—research for the sake of research—rather than anything tied to specific business goals. But then again, so was the research that has since led to the creation of Watson. Originally conceived of to take on the question-as-answers gameshow of Jeopardy!, which researchers saw as a “unique and compelling AI question,” Watson has become a set of machine-learning and AI services that IBM sells, and intends to invest $1 billion into.

 

Eoin Treacy's view -

IBM is still in the throes of a major transition from physical hardware manufacturing to an almost total focus on knowledge based services. Artificial intelligence (Watson), and the tools to leverage that technology (massive & fast processing power) represent the key areas of focus in what is a new era for the company. 



This section continues in the Subscriber's Area. Back to top
March 01 2017

Commentary by Eoin Treacy

A Patent Decision on Crispr Gene Editing Favors MIT

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

Someone is going to make a lot of money licensing Crispr. And someone is going to make lot of money on therapies based on Crispr. That’s why, the day before the decision, the National Academy of Sciences released a long document laying out what kind of Crispr-based human therapies were kosher—so no one goes the full Gattaca.

In fact, the moneymaking part has already begun. Startups are getting funding based on Crispr-based business plans. Editas Medicine, which licenses the Broad patents to work on treatments for genetic disorders in human beings, had a 30 percent stock bump on word of the patent decision. “It certainly caused some concerns, because depending on how the courts were going to rule on the two claims, if you went with one, you could lose, right?” says Edison Liu, CEO of the Jackson Laboratory, a major source of genetically modified mice used in research. Jackson Labs has licenses from both sides, and since it aims at academic uses, gets better terms than a Silicon Valley biotech startup might.

 

Eoin Treacy's view -

The acrimonious patent battle over exactly who controls the intellectual property relating to CRISPR-Cas9 DNA editing has been dragging on for a year. Since the three main protagonists are well funded there is ample scope for additional suits and counter suits since the potential rewards are so large. 



This section continues in the Subscriber's Area. Back to top
March 01 2017

Commentary by Eoin Treacy

Email of the day on the rollout of 5G

I would very much appreciate your thoughts about Sierra Wireless (NASDAQ:SWIR) who are also involved in this space.

I continue to be a big fan of your service and your daily video commentary is a welcome addition.

 

Eoin Treacy's view -

Internet connectivity is as essential to the modern economy as electricity and water and bandwidth needs to increase in order to cater to the number of additional connected devices coming on stream. 

If you think about how many devices in your home connect to your modem and compare that to how many used it a decade ago you’ll likely notice a big change. My children barely watch TV. When they want to see something they go on YouTube or Netflix both of which are streaming services. 

 



This section continues in the Subscriber's Area. Back to top
February 27 2017

Commentary by Eoin Treacy

Super-smart robots will outnumber humans by FOUR BILLION within three decades, Softbank CEO says

This article appeared on the Daily Mail’s site today and may be of interest. Here is a section:

Mr Son said the growing number of microchip 'brain cells' opens up a huge opportunity for smart and connected objects.

'This is why I spent $32 billion (£26 billion) to acquire ARM,' Mr Son said, explaining his 30-year-vision of a world where the artificial computer brain will have 10,000 intelligence quotient (IQ) capabilities compared with 100 for the average human.

Jennifer Belissent, an analyst at Forrester Research who attended Son's keynote speech, said the numbers he mentioned were very dramatic.

'The greater connectivity and new artificial IQ capabilities offer so much potential. It sets the scene for a Marvel movie,' she said.
'Now, the key question is how to make that new technology available to everyone.

'It's not the number of new devices that is relevant but what you make out of it in terms of analytical capabilities.

Eoin Treacy's view -

Connectivity remains a secular theme. 4G has just been rolled out in India, enabling the economy to jump several stages of web development and Verizon is now introducing 5G in the USA. As the speed with which we can access the internet increases the range of potential applications for web-enabled functions multiplies.  The Internet of Things is a logical iteration of that evolution and suggests the number of connected devices is only going to increase as the relative cost of connectivity trends lower. 



This section continues in the Subscriber's Area. Back to top
February 24 2017

Commentary by Eoin Treacy

The second stage of disruption

This article by Alex Pollak for Loftus Peak appeared in Australia’s Livewire letter and may be of interest to subscribers. Here is a section:

But it’s what inside that counts. Autos and components are a significant part of consumer discretionary, as are media, retail and staples including food. A major component of Industrials is transport – road, rail, marine, airline, construction material and heavy trucks.

Virtually all the automakers have electric and self-driving models in the works. But, as we have noted before, the more successful they are with these, the more the potential for write-offs in their internal combustion engine business – which is basically the whole business.

Banking disruption has started but hasn’t hit the mainstream – yet.

But fund managers typically invest looking to the existing make-up of the global economy, through the GIC’s sectors, which are composed of the companies in those industries. So the fund manager will have investment in oil, automakers, energy and transport, at time when those sectors are heading for massive disruption. In essence, the fund manager is investing by looking backwards!
This is a poor long-term strategy, and one which has already begun to cause drag in portfolios which are underweight ‘technology’ shares (because they form a small part of the index, at the expense of sectors like basic materials and utilities, which are large now but are de-weighting as disruption takes hold.)

We are at a particular point in the economic history where disruptive companies are moving into industries which were previously considered inviolable, companies which couldn’t be damaged because demand for the underlying physical good was thought to stretch out to the horizon. In fact, the demand may still be there, but the way it is delivered, because of technological change, is affecting virtually all industries.

It's why we invest in disruption, and the reason our returns have been solid.

 

Eoin Treacy's view -

Technological innovation is accelerating at an exponential rate and it is having a transformative effect on just about everything. That is why we concentrate so heavily on the sector. Technology is deflationary in many respects but it is perhaps better to think about that influence in terms of lower costs contributing to better margins. That gives a clear advantage to the originators of disruptive technology as well as early adopters. 



This section continues in the Subscriber's Area. Back to top
February 23 2017

Commentary by Eoin Treacy

NVidia to fall nearly 20% on increasing competition from AMD, high valuation, analyst says

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

Instinet lowered its rating on NVidia to reduce from buy, saying the company's earnings will come in below expectations this year due to a more difficult gaming graphics market.

"We believe consensus is underappreciating a slowdown in gaming and the potential negative impact to the multiple," analyst Romit Shah wrote in a note to clients Wednesday. "We recommend investors take profits."

NVidia shares are up 251 percent in the past 12 months due to better-than-expected sales results from its graphics card segment.

 

Eoin Treacy's view -

Acceleration is a trend ending and NVidia definitely accelerated last year so reversion towards the mean, at least, is a distinct possibility. 



This section continues in the Subscriber's Area. Back to top
February 22 2017

Commentary by Eoin Treacy

Big Batteries Coming of Age Prompt Bankers to Place Bets

This article by Joe Ryan and Brian Eckhouse for Bloomberg may be of interest to subscribers. Here is a section: 

“Having big money come in is the first step to widespread deployment,” Brad Meikle, a San Francisco-based analyst for Craig-Hallum Capital Group LLC, said in an interview.

That’s a shift from many of the storage projects we’ve seen to date as expensive components and unproven revenue potential made commercial lenders leery. Developers typically have financed systems from their own balance sheets, cobbling together revenue from short-term utility contracts or wholesale electricity markets.

“We see an opportunity in the space,” Ralph Cho, Investec’s co-head of power for North America in New York, said in an interview. “We’re attempting to be a first mover.”

Storage contracts to date in the U.S. and Canada rarely exceeded three years, said Bryan Urban, head of North American operations for the Yverdon-les-Bains, Switzerland-based storage developer Leclanche SA. Now utilities are signing agreements for three to seven years, and sometimes as long at 10 years, he said. And in the U.K., National Grid Plc is signing four-year contracts for storage services

 

Eoin Treacy's view -

One of the most popular statistics quoted is that solar cells are rapidly approaching competitiveness even with coal. However that does not solve the intermittency problem. A better question is when will batteries be competitive with the cost of maintaining coal fired backup supply for inevitable demand surges? That is a question we should be able to answer soon as the number of utility scale batteries in operation increases. 



This section continues in the Subscriber's Area. Back to top
February 22 2017

Commentary by Eoin Treacy

The Mark Zuckerberg Manifesto Is a Blueprint for Destroying Journalism

This article by Adrienne Lafrance for The Atlantic may be of interest to subscribers. Here is a section:

In other words, Facebook is building a global newsroom run by robot editors and its own readers.

This strategy may be right for Facebook, which has a strong track record of predicting what its users want. You certainly don’t rake in nearly $9 billion a quarter by building something people aren’t interested in. But if journalism is an indispensable component of the global community Zuckerberg is trying to build, he must also realize that what he’s building is a grave threat to journalism.

“A strong news industry is also critical to building an informed community,” Zuckerberg wrote in his manifesto. “There is more we must do to support the news industry to make sure this vital social function is sustainable—from growing local news, to developing formats best suited to mobile devices, to improving the range of business models news organizations rely on.”

There is more Facebook must do. But what? Lip service to the crucial function of the Fourth Estate is not enough to sustain it. All of this is the news industry’s problem; not Zuckerberg’s. But it’s also a problem for anyone who believes in and relies on quality journalism to make sense of the world.

 

Eoin Treacy's view -

I’ve been ruminating over the last couple of weeks on the role of journalism in modern society. This bell curve of where news organisations fall on the political spectrum is a testament to the tendency of journalists to write for well-defined demographics in service to the maxim “Give the people what they want”, or at least some of the people. 



This section continues in the Subscriber's Area. Back to top
February 20 2017

Commentary by Eoin Treacy

Email of the day on the cost of gold mining

Thank you for another very well done Friday audio. Your comments on gold were very interesting for me. I wonder if you or the collective have an idea about the possibility of technological innovation that might make gold production cheaper, the way oil production has become cheaper.. Thanks in advance

Eoin Treacy's view -

Thank you for your kind words and I am delighted you are enjoying the new format of videos and audios. Anglogold Ashanti have been pioneering a number of new technologies not least reef boring and thermal spawning. Both are designed to economically extract gold from previously uneconomic regions such as very thin reefs or the supporting walls of old mines. As with any new technology, development takes time but the company is hopeful about the prospects for future production. This informative section from Anglogold Ashanti’s site may also be of interest. 



This section continues in the Subscriber's Area. Back to top
February 17 2017

Commentary by Eoin Treacy

Biotechnology rotation

Eoin Treacy's view -

The Nasdaq Biotechnology Index is going through a significant rotation. Some of the biggest companies that led on the breakout from the long-term base in 2012 are now trending lower. Gilead Sciences is representative. It was among the best performers on the breakout but peaked in 2015 and has continued to trend lower while many of the other major constituents have spent a year ranging. 

The focus thrown on drug pricing during the US Presidential Election has long lasting repercussions because it has highlighted the practice of raising prices for legacy drugs. That is the exact opposite of what we see in other sectors where competition forces prices lower over time. The Trump administration is now talking about bringing down drug prices and enhancing the ability of Medicare to negotiate bulk prices and allow consumers to buy drugs overseas. These issues represents a significant issue for legacy pharmaceutical companies and established biotech companies without the compensating factor of a promising drug pipeline. It also means demand for M&A is likely to continue to increase. 

 



This section continues in the Subscriber's Area. Back to top
February 13 2017

Commentary by Eoin Treacy

Silicon will blow lithium batteries out of water, says Adelaide firm

Thanks for a subscriber for this article by Benn Potter for the Australian Financial Review. Here is a section:

Chairman Kevin Moriarty says 1414 Degrees' process can store 500 kilowatt hours of energy in a 70-centimetre cube of molten silicon – about 36 times as much energy as Tesla's 14KWh Powerwall 2 lithium ion home storage battery in about the same space.

Put another way, he says the company can build a 10MWh storage device for about $700,000. The 714 Tesla Powerwall 2s that would be needed to store the same amount of energy would cost $7 million before volume discounts.

 

Eoin Treacy's view -

A race is underway to develop new types of batteries and, for the foreseeable future, there is room for a number of competing technologies. The reason for this is the pace of innovation is slower than in other sectors but also because energy storage is required for widely differing sectors. Batteries need to be small and light for handheld devices, big and have almost infinite recharging capabilities for utilities and need highly efficient power to weight ratios for transportation. That suggests there is ample potential for a number of different technologies to play roles in all of these sectors. 
 

 



This section continues in the Subscriber's Area. Back to top
February 09 2017

Commentary by Eoin Treacy

Musings from the Oil Patch February 7th 2017

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

Prior to OPEC’s Vienna Agreement last November, putting oil in storage because of its higher future value was a strong motivation for growing storage volumes. Now the curve is much flatter, and for oil priced three years in the future, that price is lower than the current one, providing a strong disincentive for putting oil in storage. Backwardation plays a significant role in oil producers’ decisions to hedge their production since they risk the potential of the price moving higher if the more traditional contango environment returns. As Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors LLC put it, "What happens to the curve does depend on how the OPEC cuts will be carried out. The oil futures curve is indicating that the current OPEC cuts are here to stay for a while." U.S. oil producers will be very happy if that proves to be the case. While history would suggest otherwise, the pending (early 2018) initial public offering for Saudi Arabia’s state oil company, Saudi Aramco, an important component of its domestic economic restructuring effort, might force the country to hold its output down much longer than it has indicated. The reality may be that hundreds of small U.S. oil producers may screw up Saudi Arabia’s grand plan while hurting speculating oil traders with their record bullish oil price bet. A lower future oil price after a record bullish oil futures bet would be consistent with our recent history.

Eoin Treacy's view -

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

BP and Exxon Mobil spend a great deal of time and effort producing annual reports on energy use and issue predictions on how it will evolve over the time. That helps keep investors informed on how the companies plan to mobilise capital to take best advantage of how they see events unfolding. Saudi Arabia, as the world’s largest low cost producer, does not issue public annual reports. However its plans to IPO the company tell us more than any report ever could about the conclusions the Saudi Arabian administration has reached about the future of the oil market.



This section continues in the Subscriber's Area. Back to top
February 09 2017

Commentary by Eoin Treacy

Machines Can Replace Millions of Bureaucrats

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

In some countries, some of the people in these jobs -- such as postal employees -- are public sector workers. But government clerks who do predictable, rule-based, often mechanical work also are in danger of displacement by machines. In a recent collaboration with Deloitte U.K., Profs. Osborne and Frey estimated that about a quarter of public sector workers are employed in administrative and operative roles which have a high probability of automation. In the U.K., they estimated some 861,000 such jobs could be eliminated by 2030, creating 17 billion pounds ($21.4 billion) in savings for the taxpayer.

These would include people like underground train operators -- but mainly local government paper pushers.

This week, Reform, the London-based think tank dedicated to improving public service efficiency, published a paper on automating the public sector. It applied methodology developed by Osborne and Frey to the U.K.'s central government departments and calculated that almost 132,000 workers could be replaced by machines in the next 10 to 15 years, using currently known automation methods. Only 20 percent of government employees do strategic, cognitive work that requires human thinking -- at least for now, while artificial intelligence is as imperfect as it is. Most of the rest are what the Reform report calls the "frozen middle" -- levels of hierarchy where bureaucrats won't budge without approval from above.

Almost all British government departments have 10 employee grades or more. The department for environment, food and rural affairs has 13. Most of the middle-level tasks are routine and rigidly regulated and motivation is low: Only 38 percent of middle-level bureaucrats say they feel good about what they do.

In the U.K., the average civil servant takes 8 sick days a year, while a private sector worker takes 5. In the last two decades public sector spending rose by an average 3.1 percent a year, about 16 times faster than productivity.

 

Eoin Treacy's view -

The majority of commentary is focusing on the how, what and when of Brexit but there also needs to be some thought for how the UK is going to enhance its competitive position in a post EU world. Tax structures, trade deals and deregulation all need to be high on the agenda but so does limiting needless spending in government. 



This section continues in the Subscriber's Area. Back to top
February 06 2017

Commentary by Eoin Treacy

Why Hollywood As We Know It Is Already Over

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

When Netflix started creating its own content, in 2013, it shook the industry. The scariest part for entertainment executives wasn’t simply that Netflix was shooting and bankrolling TV and film projects, essentially rendering irrelevant the line between the two. (Indeed, what’s a movie without a theater? Or a show that comes available in a set of a dozen episodes?) The real threat was that Netflix was doing it all with the power of computing. Soon after House of Cards’ remarkable debut, the late David Carr presciently noted in the Times, “The spooky part . . . ? Executives at the company knew it would be a hit before anyone shouted ‘action.’ Big bets are now being informed by Big Data.”

Carr’s point underscores a larger, more significant trend. Netflix is competing not so much with the established Hollywood infrastructure as with its real nemeses: Facebook, Apple, Google (the parent company of YouTube), and others. There was a time not long ago when technology companies appeared to stay in their lanes, so to speak: Apple made computers; Google engineered search; Microsoft focused on office software. It was all genial enough that the C.E.O. of one tech giant could sit on the board of another, as Google’s Eric Schmidt did at Apple.

These days, however, all the major tech companies are competing viciously for the same thing: your attention. Four years after the debut of House of Cards, Netflix, which earned an astounding 54 Emmy nominations in 2016, is spending $6 billion a year on original content. Amazon isn’t far behind. Apple, Facebook, Twitter, and Snapchat are all experimenting with original content of their own. Microsoft owns one of the most profitable products in your living room, the Xbox, a gaming platform that is also a hub for TV, film, and social media. As The Hollywood Reporter noted this year, traditional TV executives are petrified that Netflix and its ilk will continue to pour money into original shows and films and continue to lap up the small puddle of creative talent in the industry. In July, at a meeting of the Television Critics Association in Beverly Hills, FX Networks’ president, John Landgraf, said, “I think it would be bad for storytellers in general if one company was able to seize a 40, 50, 60 percent share in storytelling.”

 

Eoin Treacy's view -

The march of technology enabled content creation is undeniable and irreversible. The simple reason from a business perspective is that relying on human beings to be individually creative is fraught with uncertainty, ambiguity and time management issues. Computers on the other hand excel at getting the job done on time and within budget. The challenge has always been to try and teach computers how to be creative. 



This section continues in the Subscriber's Area. Back to top
February 02 2017

Commentary by Eoin Treacy

The latest "nightmare inducing" Boston Dynamics robots

This YouTube video highlights a presentation from Boston Dynamics at a recent Singularity University event. The newest robot is previewed 3:53 minutes into the video. 

Eoin Treacy's view -

Boston Dynamics was an aspiring defence contractor when it was acquired by Google. Since Google’s long held mantra is to do no evil that pretty much precluded the company from selling robots that might one day be designed to kill people. The problem is that it’s hard to design robots to displace manual labour outside of strictly controlled environments. The company is making rapid strides in that field but the primary growth avenue is in places where humans would be in danger, not least from other humans. That is at least part of the reason Alphabet is looking for a buyer for the company.   



This section continues in the Subscriber's Area. Back to top
January 23 2017

Commentary by Eoin Treacy

Woman dies from antibiotic-resistant bacteria when no antibiotics worked

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

The death of a hospitalized patient in Reno Nevada for whom no available antibiotics worked highlights what World Health Organization and other public-health experts have been warning: antibiotic resistance is a serious threat and has gone global.

The patient — a female in her 70s — was admitted in for an infection and died in September 2016 from septic shock the CDC announced on Jan. 13. The patient had been treated for multiple infections in India before traveling to the United States. The infection that led to her hospitalization in Reno was caused by a strain of carbapenem-resistant Enterobacteriaceae (CRE)* bacteria known as Klebsiella pneumoniae. Although not all strains of Klebsiella pneumonia are CRE, the strain that infected this patient was resistant to all available antibiotics, according to the CDC. (Carbapeneum is a “drug of last resort.”)

In a paper in The Lancet in October, researchers reported that more than a third of blood infections in newborn babies involving Klebsiella pneumoniae and similar bacteria were resistant to multiple drugs to the point they were virtually untreatable and “threaten the return of a pre-antibiotic era in Indian neonatal intensive care units,” the study’s authors warned.

 

Eoin Treacy's view -

Antibiotic resistance is a vital topic of conversation because it affects all of us and represents perhaps the single biggest risk to general health we can fathom. The pace of technological innovation is perhaps the greatest hope we have of finding a solution that does not rely on fighting a losing war against an enemy capable of changing tactics to overcome conventional responses. This article from NewAtlas highlights one such solution. Here is a section: 

The study combined the new PPMO with meropenem, a type of carbapenem antibiotic that's effective against a broad range of bugs, and pitted it against three different types of bacteria that make use of NDM-1. In all cases, the PPMO restored meropenem's ability to kill the bacteria in vitro, and also managed to kill off an NDM-1-expressing strain of E. coli in tests in mice.

"We're targeting a resistance mechanism that's shared by a whole bunch of pathogens," says Geller. "It's the same gene in different types of bacteria, so you only have to have one PPMO that's effective for all of them, which is different than other PPMOs that are genus specific." Geller says the new drug should be ready for human testing in about three years.


There is every reason for optimism that this problem can be overcome but it requires constant vigilance and technology represents our best chance to overcome it. It is not a problem that will just go away.  

 



This section continues in the Subscriber's Area. Back to top
January 20 2017

Commentary by Eoin Treacy

The Tech Bubble Year 5+

This very well-illustrated presentation by Anand Sanwal from CBInsights for the benefit of attendees at the CanTech Conference in Toronto may be of interest to subscribers. 

Eoin Treacy's view -

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

The pace of technological innovation is graphically illustrated in this report. What becomes very clear is how start-ups view the all-in-one businesses of companies like Starwood, Proctor & Gamble and the car manufacturers and pharmaceutical companies as ripe for disruption. They could be right and there is certainly a great deal of venture capital money willing to make that bet. However we should not expect established companies to go down without a fight.



This section continues in the Subscriber's Area. Back to top
January 19 2017

Commentary by Eoin Treacy

FANG was so 2015

Eoin Treacy's view -

Remember 2015 when the F.A.N.G, stocks were all the rage and media pundits were falling over themselves to tell us how you had to own them if you were to have any chance of outperforming the major indices. 2016 was predictably a tamer year for those shares with some spending much of their time consolidating 2015’s powerful gain. However with Netflix making headlines today on successfully boosting subscribers, following an international expansion, I thought it might be worthwhile to revisit this acronym. 



This section continues in the Subscriber's Area. Back to top
January 16 2017

Commentary by Eoin Treacy

Email of the day on the secular bull market in bonds

Enjoy watching the video presentations. Thought you may be interested in the following interview of Gary Shilling

Eoin Treacy's view -

Thank you for you kind words and this interesting interview which may be of interest to subscribers. 

Gary Shilling’s view that technological innovation is inherently deflationary is very much in tune with our view. The increasing commercial applications of biotechnology, automation, artificial intelligence, the internet and mobile technology are all likely to enhance productivity and could very well represent a deflationary influence. On the other hand, the increasing calls for free money (universal social payments) lower taxes, more spending and deregulation have the capacity to stoke inflation.

 



This section continues in the Subscriber's Area. Back to top
January 16 2017

Commentary by Eoin Treacy

Email of the day on MOOCs

On your piece about MOOCs I couldn't help but observe that you did not mention FutureLearn

This service is UK based and is an offshoot of the Open University.

It claims to be the largest MOOC. See below. I've used it and it's very good. I particularly like the fact that many courses are short - 6 weeks and typically 2 - 3 hrs per week.  
All the best

 

Eoin Treacy's view -

Thank you for highlighting FutureLearn.com which, as you point out, is another major centre of online learning and builds on Open University’s long history of distance learning. This article from May last year highlights how a number of universities will allow students to earn as many as 30 credits towards a degree using FutureLearn’s portal. That’s a powerful method to help reduce the cost of earning a primary degree and enhances even further our ability to enjoy learning throughout our lives.



This section continues in the Subscriber's Area. Back to top
January 16 2017

Commentary by Eoin Treacy

Email of the day on reshoring and automation

This is indeed well under way and generally government-supported trend globally, with Germany (as always) at the forefront, but also the US and the rest of Europe promoting and facilitating the process.

The article below is interesting I think

It gives an idea of how easily these processes are implemented (2 weeks to start production) and the advantages offered to producers (design innovation + shorter time to market + customisation). €2 million investment for being able to produce a total of 200k pieces every year seems very low.

Shima Seiki (6222) - that provided the machinery to Benetton - is a company worth looking into, and the recent rally in share price confirms what you mentioned re the growth potential from clothing manufacturers in Asia.

This is also confirmed on their IR page
 

 

Eoin Treacy's view -

Thank you for this above article expounding upon the seamless garment manufacturing being pioneered by Shima Seiki. Seamless garment manufacture has been around in the hosiery business for a long time but finishing was always required to sew the legs on the gusset. Introducing seamless manufacture to outer wear is a major innovation and as you point represents an additional sign of increasing interest in automation in the garment industry. 



This section continues in the Subscriber's Area. Back to top
January 11 2017

Commentary by Eoin Treacy

Samsung Proves Its Business Remains Sound Despite Note 7 Fiasco

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

Samsung is emerging from its biggest corporate crisis, when reports of incendiary Note 7s forced the Korean company to kill its most profitable gadget. It still hasn’t revealed the results of a subsequent investigation into an episode that cost Samsung more than $6 billion and assured Apple Inc. of the lead in premium devices over the holidays. It’s now counting on its next marquee phone to repair its reputation.

“Despite the Note 7’s vacuum, Samsung acquitted itself well on the back of sound S7 sales,” said Lee Seung-woo, an analyst with IBK Securities Co. in Seoul. “After a softer landing in the first quarter, Samsung is on track for record June quarter profit with the new S8 coming to market.”

Operating income rose to 9.2 trillion won ($7.8 billion) in the quarter ended December, its biggest profit in three years, the Suwon, South Korea-based company said in preliminary results Friday. That compares with the 8.29 trillion-won average of analysts’ estimates compiled by Bloomberg in the past four weeks.

 

Eoin Treacy's view -

The heir to Samsung’s empire is being accused of taking part in a bribery scandal yet the share continues to outperform suggesting this news was already priced in. Perhaps more important is the fact Samsung was awarded more US patents last year than any other company. That suggests it at least has the potential to improve on its product line even after the Note 7 debacle. 



This section continues in the Subscriber's Area. Back to top
January 11 2017

Commentary by Eoin Treacy

Illumina Introduces the NovaSeq Series a New Architecture Designed to Usher in the $100 Genome

This is an important press release. Here is a section:

The introduction of NovaSeq marks one of the most important inflection points of innovation in Illumina’s history. In the same way that HiSeq X enabled the $1,000 genome with the HiSeq® architecture first announced in 2010, we believe that future systems derived from the NovaSeq architecture we are launching today one day will enable the $100 genome and propel discoveries that will enable a deeper understanding and better treatments for complex disease,” said Francis deSouza, President and CEO of Illumina. “The NovaSeq Systems enable the study of genetic links between health and disease at an unprecedented scale by making it possible to sequence more samples at greater depth and take on projects that would otherwise be cost-prohibitive. By accelerating the trajectory of genomics with these systems, Illumina is making it possible to envision a future in which all people can benefit from precision medicine.”

The NovaSeq Series includes the NovaSeq 5000 and 6000 Systems. These instruments offer ease of use features similar to those found in Illumina’s desktop sequencing portfolio, including automated onboard cluster generation, cartridge-based reagents, and streamlined workflows. With scalable throughput, users will have the flexibility to perform sequencing applications requiring different levels of output by simultaneously running one or two flow cells from up to four different flow cell types.

The NovaSeq 5000 and 6000 Systems are priced at $850,000 and $985,000 respectively. Compared with other Illumina sequencing systems, both have lower per sample consumable costs for most sequencing applications. They provide laboratories that cannot afford the capital cost of a HiSeq X Five or HiSeq X Ten System with a roadmap to completing human whole-genome sequencing projects at a cost of $1,000 per genome.

 

Eoin Treacy's view -

It will be a few years before we have a $100 genome sequencer but the announcement that it is a possible iteration of the new architecture is a major development. 

Falling from $100 million in 2001 to $1000 last year and $100 within the next few years represents an exponential decline which will have ground breaking repercussions for the genetics industry. 

 



This section continues in the Subscriber's Area. Back to top
January 09 2017

Commentary by Eoin Treacy

Ariad Enters into Definitive Agreement to Be Acquired by Takeda for $5.2 Billion

This press release from Ariad Pharmaceuticals may be of interest to subscribers. Here is a section:

Dr. Denner continued, “The transaction also underscores the tremendous value that shareholder activism can create for shareholders, patients and society. While ARIAD’s stock price was collapsing and many investors were abandoning the company, Sarissa Capital saw a company with important drugs and innovation and stepped in to become one of ARIAD’s largest shareholders. However, many things needed to be fixed before the value could be realized. With a new board and management team, ARIAD was able to focus on optimal capital allocation and operational excellence. As a result, the company created meaningful shareholder value and advance the options for those suffering from rare cancers.”

“The acquisition of ARIAD is a unique opportunity that will enable us to positively impact the lives of more patients worldwide, advance our strategic priorities and generate attractive returns for our shareholders,” said Christophe Weber, president and chief executive officer of Takeda. “This is a very exciting time for Takeda as we will broaden our hematology portfolio and transform our global solid tumor franchise through the addition of two innovative targeted therapies. Opportunities to acquire such high-quality, complementary targeted therapies do not come often, and we are very excited about the potential for this transaction to benefit patients, our shareholders and other stakeholders.”

 

Eoin Treacy's view -

Developing new drugs is prohibitively expensive. With no guarantee of success large pharmaceutical companies have in many respects outsourced the bulk of R&D to small biotech companies. The result is that these smaller companies spend a great deal of time and effort developing new drugs and become takeover candidates when they develop high probability solutions. Considering the fact that the cost of developing new drugs continues to increase the biotech ecosystem is likely to remain in this condition for the foreseeable future. 



This section continues in the Subscriber's Area. Back to top
January 04 2017

Commentary by Eoin Treacy

The Ugly Unethical Underside of Silicon Valley

This article by Erin Griffith for Fortune may be of interest to subscribers. Here is a section:

No industry is immune to fraud, and the hotter the business, the more hucksters flock to it. But Silicon Valley has always seen itself as the virtuous outlier, a place where altruistic nerds tolerate capitalism in order to make the world a better place. Suddenly the Valley looks as crooked and greedy as the rest of the business world. And the growing roster of scandal-tainted startups share a theme. Faking it, from marketing exaggerations to outright fraud, feels more prevalent than ever—so much so that it’s time to ask whether startup culture itself is becoming a problem.

Fraud is not new in tech, of course. Longtime investors remember when MiniScribe shipped actual bricks inside its hard-disk boxes in an inventory accounting scam in the 1980s. The ’90s and early aughts brought WorldCom, Enron, and the dot-bombs. But today more money is sloshing around ($73 billion in venture capital invested in U.S. startups in 2016, compared with $45 billion at the peak of the dotcom boom, according to PitchBook), there’s less transparency as companies stay private longer (174 private companies are each worth $1 billion or more), and there’s an endless supply of legal gray areas to exploit as technology invades every sector, from fintech and med-tech to auto-tech and ed-tech.

The drama has some investors predicting more disasters. “What if Theranos is the canary in the coal mine?” says Roger McNamee, a 40-year VC veteran and managing director at Elevation Partners. “Everyone is looking at Theranos as an outlier. We may discover it’s not an outlier at all.” That would be bad news, because without trust, the tech industry’s intertwined ecosystem of money, products, and people can’t function. Investors may find the full version of the old proverb is more accurate: “One bad apple spoils the whole barrel.”

 

Eoin Treacy's view -

Fraud isn’t generally identified immediately because it takes time for such contrivances to be discovered. The impetus for investigation doesn’t generally arise until someone goes looking for the money that was invested, when the expected return does not materialise. It took the credit crisis to reveal problems with Madoff’s Ponzi scheme, yet it had functioned unperturbed by regulators for years before that event. The above article does an excellent job of identifying the frauds which have occurred in Silicon Valley as well as the culture that promotes exaggeration.



This section continues in the Subscriber's Area. Back to top
January 03 2017

Commentary by Eoin Treacy

China to become net importer of some rare earths

This article by Frik Els for Mining.com may be of interest to subscribers. Here is a section:

According to the Adamas outlook for rare earth demand from 2016 through 2025 over the past five years upwards of 30,000 tonnes of annual rare earth oxide demand were lost due end-users’ growing concerns over supply security. On top of that more than 20,000 tonnes were lost as a result of the ongoing phase out of several mature technologies, such as fluorescent lamps, NiMH batteries, and hard disk drives used in PCs.

According to the authors following the lengthy and painful adjustment, the REE market will return to strong global demand growth for a number of rare earth elements including neodymium, praseodymium, dysprosium, and lanthanum. The resulting rise in price will help "sustain the profitability and growth of today’s dominant producers, and incentivize continued investment in exploration and resource development globally":

REE demand will boom from 2020 onwards as growth rates of top end-use categories including electric vehicles, wind turbines and other hi-tech applications accelerate.

 

Eoin Treacy's view -

Rare earth miners went through a crushing bear market and it is arguable whether it has ended. The growth of new sources of demand is a potential medium-term bullish catalyst. However it is unlikely China will surrender its dominance of the global supply chain not least because it wishes to attract and support advanced manufacturing companies. 



This section continues in the Subscriber's Area. Back to top
December 30 2016

Commentary by Eoin Treacy

Solar Panels Now So Cheap Manufacturers Probably Selling at Loss

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

“Certainly it would be a challenge for anyone to make money at that price,” Osborne said in an e-mail. “The blended cost for most last quarter was about 36 cents to 38 cents.”

The current price is also lower than cost estimates from Trina. The biggest supplier of 2015 expected to reduce costs to about 40 cents a watt by the end of the year, from 45 cents in the second quarter, Chief Financial Officer Merry Xu said in an August conference call. The Changzhou, China-based company’s shareholders on Dec. 16 agreed to a $1.1 billion deal to take the company private. A spokesman declined to comment Friday.

Some companies’ cost structures remain competitive, even with prices this low. Canadian Solar Inc., the second-biggest supplier, reported costs of 37 cents in the third quarter, down from 39 cents in the second quarter. The company has said its costs are among the lowest in the industry, and it expects to reach 29 cents a watt by the fourth quarter of 2017. Many of its competitors expect costs in the low 30s by then, Osborne said.

 

Eoin Treacy's view -

Producing solar cells in an environment where prices are falling and likely to continue to fall as new technologies are integrated into the manufacturing process is a highly competitive business. Companies unable to compete will go bankrupt and even the most successful face the threat of obsolescence. Consumers are the primary beneficiaries. 



This section continues in the Subscriber's Area. Back to top
December 30 2016

Commentary by Eoin Treacy

Pharma's Pricing Troubles Will Get Worse in 2017

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

A structural decline in U.S. pricing power is ominous for every pharmaceutical company -- particularly if it extends to brand-new drugs, or to areas, such as cancer, that traditionally have strong pricing power. Highly effective new cholesterol-lowering drugs from Amgen and Sanofi/Regeneron have had notably sluggish launches since being approved in 2015, as a result of cost-driven roadblocks to patient access. Meanwhile, the market for expensive, immune-boosting cancer drugs -- dominated by Merck & Co. Inc. and Bristol-Myers Squibb Co. when 2016 began -- gained a new entrant this year in Roche Holding AG. Pfizer Inc. and AstraZeneca PLC may join next year. Having five similar drugs on the market would make pricing pressure all but inevitable. These trends quietly gathered strength in 2016, and 2017 will give us more of a sense of just how far they will go. This, regardless of what Donald Trump decides to do, could well be the defining biopharma story of the year.

Eoin Treacy's view -

The pharmaceutical industry has led a charmed existence for a long time because it has been able to increase prices for legacy drugs because of little to no competition. It is the antithesis of what we see in the consumer electronics sector where price pressure is enormous and demand for constant improvements and ever lower costs is the norm. 



This section continues in the Subscriber's Area. Back to top
December 29 2016

Commentary by Eoin Treacy

Musings from the Oil Patch December 28th 2016

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

With the election of Donald Trump as the nation’s 45th president, there are signs environmental restrictions on fossil fuels will be loosened and more room will be made for fossil fuels. That will be a significant shift in the recent trends for environmental and energy regulation. Whether it significantly alters the current trajectory for the dirtiest of our fossil fuels – coal – remains to be seen. Clearly, short of an outright ban on renewable energy plants, the current backlog of new, cleaner power plants will not change, so our near-term energy mix will continue to shift toward more renewable fuels. The issue for the energy industry is whether the economic trends in place boosting renewable fuels are altered and slow down the pace of additions of new renewable fuel plants. That will partially depend on whether current renewable fuel mandates and subsidies are renewed once they reach their expiration dates, or even if they are outright cancelled early.

At the present time, businessmen, energy executives and consumers are struggling to understand the true economics of electricity. Analysts have strived to produce cost estimates for electricity produced by different fuels in such a way that they can be analyzed on the same basis. Standardized cost estimates provide a means to assess the impact on different fuel sources of various environmental policies. The process is called levelized cost of electricity. This tool enables direct comparison of electricity costs from power plants fueled by either fossil fuels or renewables. One drawback from this tool is that it assumes every kilowatt of power generated has the same value to consumers regardless of when during the day it is produced. It ignores the reality that during summer days in the southern regions of the United States, electricity to power air conditioners in the afternoon when temperature reach their highest levels is of greater value to consumers than during the middle of the night when temperatures drop.

 

Eoin Treacy's view -

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

Electricity pricing is a moving target for both energy companies and environmentalists alike. The challenge is to deliver energy when it is most required rather than when it is easiest to produce and the only way of solving that issue for renewables is with storage or back-up conventional capacity. 



This section continues in the Subscriber's Area. Back to top
December 23 2016

Commentary by Eoin Treacy

The bizarre business of intentional product failure: planned obsolescence

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

Today built-in obsolescence is used in many different products. There is, however, the potential backlash of consumers who learn that the manufacturer intentionally make the product obsolete faster. Such consumers might turn to an alternative producer (if any exists) that offers a more durable alternative. In other words, this nasty strategy is not available for small companies who would only lose customers.

Given today’s tremendous increase of international corporate power and severely reduced competition, planned obsolescence has become an attractive possibility for products than ever in human history.

Built-in obsolescence was already used in the 1920s and 1930s when global mass production became possible and rigorously optimized. 

 

Eoin Treacy's view -

I have to have my car smog tested soon and coincidentally the check engine light came on just ahead of when the test was due. In talks with the chaps at the dealership and with other customers while I was waiting the scale of obsolescence by design is quite astounding. 

For example, one of the technicians recounted how he bought a manufacturer’s original part for his Audi Q7 on eBay. He thought he had gotten a wonderful deal only to find that Audi’s computers will not code any part that is more than three years old; even if it is unused, one of their own and appropriate for the car in the question. 

 



This section continues in the Subscriber's Area. Back to top
December 23 2016

Commentary by Eoin Treacy

Email of the day on back pain, lifestyle and emotional reserves:

I had lots of back problems as I was a dancer until I had my operation. 1 fusion and 1 plastic disc that give a little movement. One interesting thing was that they put in synthetic bone of some description for the fusion, and within 6 months, it would all be replaced by growth bone and the synthetic would have disappeared! Yes, key hole if it's just a disc snip!

And 

I’ve had the same myself – also see if you can get Bowen Therapy over there. I tried this 3 years ago and I haven’t had a problem since (touch wood). I wish Lily a very speedy recovery. 

And 

Add swimming to your wife's list of options for a longterm solution. It is medically recognized as a very effective remedial method and it helped me combat lower back pain (brought on by muscle spasm, not a herniated disc) some years ago. A caveat: avoid breast stroke as it arches the back. Do the crawl or back stroke, instead. Incidentally, even walking lengths of the pool is beneficial.

 

Eoin Treacy's view -

Thank you all for these informative emails. Lifestyle, diet and exercise all contribute to wellbeing and help restore the emotion reserve we require to participate in markets. I have made a conscious decision over the last couple of weeks to avoid trading because of the multiple tasks I am focusing on at home but as the situation calms down I look forward to exploiting developing opportunities not least as there a considerable number of oversold and overbought conditions evident in a large number of markets. I intend to spend most of next week identifying these charts and sharing them with subscribers. 



This section continues in the Subscriber's Area. Back to top
December 22 2016

Commentary by Eoin Treacy

Apple's Search for Better iPhone Screens Leads to Japan's Rice Fields

This article by Pavel Alpeyev  and Takashi Amano for Bloomberg may be of interest to subscribers. Here is a section:

That push has also put a spotlight on suppliers of previously obscure technologies, testing their capacity to satisfy demand that drives sales of more than 200 million iPhones each year. A couple of years ago, Apple sought to use strong sapphire glass for iPhones, only to abandon the effort when a manufacturer couldn't deliver enough of acceptable quality and went bankrupt. The scratch-resistant material is now featured on the Apple Watch.

Now OLED is the big goal. The technology has been included on top-end smartphones for years, including almost all of Samsung Electronics Co.'s high-end phones. While LCDs rely on a backlight panel, OLED pixels can glow on their own, resulting in thinner displays, better battery life and improved contrast. OLED screens can also be made on flexible plastic, allowing for a wider variety of shapes and applications.

"OLEDs aren't just for flat areas, but can be used on edges, so smartphone makers will challenge themselves by building displays with new shapes," Tsugami said. "These qualities in OLED will give it an advantage."

 

Eoin Treacy's view -

Delivering advances in technology to the masses has a long lead time considering how long it takes to build new factories and indeed the machines to fill them. The story of how long it takes to build a single OLED production line is a testament both to impressive innovation and precision engineering as well as the ability of companies to survive until their products hit the big time. 



This section continues in the Subscriber's Area. Back to top
December 19 2016

Commentary by Eoin Treacy

Welcome to Uberville

This article from The Verge by Spencer Woodman may be of interest to subscribers. Here is a section:

These companies are arriving at an opportune time for cities, many of which are struggling just to fund existing transit service, much less expand it to meet the needs of growing numbers of urban commuters. Both Uber and Lyft tell The Verge that the past year has seen a surge in public officials interested in giving the companies taxpayer dollars for public transit contracts. For the companies, it’s an appealing new way to establish themselves as vital infrastructure, especially in low-density communities like Altamonte where running traditional mass transit can be expensive. Given the pace at which these partnerships are coming together, it’s possible to imagine ride-hail companies taking on the role of all-encompassing, smartphone-driven public transit providers, one town at a time.

But for some transit advocates, the embrace of Uber and its competitors risks undermining civic ideals of accessibility and transparency. In Altamonte, there are already signs that these concerns could be warranted. The pilot program is unusable for people without a smartphone or credit card, and the company attempted to have the city sign an unusually far-reaching nondisclosure agreement.

Ultimately, critics worry that if these programs succeed, they could pluck the affluent commuters who wield real political influence off trains and busses, leading to a crisis of declining ridership and decreasing clout for traditional public transportation.

Uber has so far been pitching itself as a supplement to existing transit programs rather than a replacement. But in June of last year, for the company’s five-year anniversary, Uber CEO Travis Kalanick envisioned a future where increasing efficiency would make Uber cost-competitive not just with owning a car, but with traditional mass transit. When drivers drop off a customer only to pick up another, chained together in a "perpetual trip," Kalanick said, "not only is it much less expensive than taking a cab or owning a car, it has the potential to be as affordable as taking a subway, or a bus, or other means of transportation. And that’s what we believe is the real game-changer. Those are the things we’ll be working on in years to come."

 

Eoin Treacy's view -

Uber and to a much lesser extent Lyft are increasingly ubiquitous. More than a few people I know make use of Uber for their teenagers’ school run rather than buy them a car. Many airports allow pickups and many business travellers no longer rent cars. Ride sharing/hailing apps are comparatively cheap, quick and easy to use provided of course you have a smartphone and a credit card. 



This section continues in the Subscriber's Area. Back to top
December 14 2016

Commentary by Eoin Treacy

Musings from the Oil Patch December 13th 2016

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

From GM’s viewpoint, it needs to generate sufficient ZEV credits to avoid sharp fines or being shut out of the California market entirely. One analysis went as follows: In 2015, GM sold 219,962 vehicles in California. To avoid fines, it needs state-awarded ZEV credits equal to 14% of the units sold, or 30,794. That can be achieved by selling 7,698 Bolts that earn GM four credits each, or 10,082 Chevy Volt plug-in hybrids, or a combination of the two. What GM understands is that ZEVs are compliance vehicles, so pricing the Bolt to both achieve its ZEV credit needs and take market share from other auto manufacturers can be a smart strategy, even if they are losing so much money per unit. If GM can earn more ZEV credits than it needs, those can be sold to other manufacturers who are falling behind their ZEV credit goals. This is all part of the clean air gambit in which companies that are “doing more than they need to” in meeting certain thresholds find that they hold pieces of paper that increase in value over time and can be successfully monetized. Selling $139 million of excess ZEV credits was what enabled Tesla Motors (TSLA-Nasdaq) to achieve third quarter profits on a GAAP basis. 

But what are the economics of electric vehicles for buyers? The Associated Press’ automobile writer recently test drove the GM Bolt and interviewed the executive in charge of marketing it. Virtually everyone acknowledges that the car lacks outstanding design, but the word the GM exec uses to describe the Bolt is “practical.” For tech-savvy Millennials that sounds more like their grandma’s car. However, the Bolt is the first electric vehicle to get over 200 miles per charge (238 miles, exactly). It does have lots of interior space, a near-silent ride and emits no tailpipe emissions. Moreover, the Bolt can go from zero to 60 miles per hour in 6.5 seconds, out-muscling some muscle cars. Even more important, the Bolt is now at showrooms in California and Oregon, while its prime competitor – the Tesla Model 3 – will not be available until the end of 2017.

The problem for the Bolt is its cost. The list price is $37,495 including shipping. After the federal tax credit of $7,500, the purchase price drops to $29,995, to which you need to add roughly $1,200 for a 240-volt home charging station, bringing your out of pocket expense to own a Bolt to $31,195. For comparison, a comparably equipped, gasoline-powered Chevy Cruze compact hatchback with automatic transmission costs $23,670 with shipping, a difference of $7,525. 

Eoin Treacy's view -

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

For a car GM is losing $9000 on, the price of $37,500 is still steep even if someone is dedicated to the ideal of an emission free future. That cost is going to have to come down if predictions of widespread uptake are to prove credible. The pace at which the energy density of batteries is doubling (around 5 years) is too slow to suggest the cost is going to come down quickly through technology alone. That is part of the reason Tesla is investing so heavily in economies of scale when building its battery manufacturing capacity. 



This section continues in the Subscriber's Area. Back to top
December 07 2016

Commentary by Eoin Treacy

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

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

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

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

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

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

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

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

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

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
December 06 2016

Commentary by Eoin Treacy

Parkinson's May Actually Originate From Microbes in the Gut

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
December 05 2016

Commentary by Eoin Treacy

New efficiency record for large perovskite solar cell

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

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

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

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

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

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
December 01 2016

Commentary by Eoin Treacy

OPEC Meeting Review

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

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

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

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

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

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

 

Eoin Treacy's view -

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

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



This section continues in the Subscriber's Area. Back to top
December 01 2016

Commentary by Eoin Treacy

Email of the day on technology shares underperforming

Any idea why NASDAQ 100 dropped 50+ points yesterday?

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
November 28 2016

Commentary by Eoin Treacy

Email of the day on electric cars and overall pollution

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

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
November 17 2016

Commentary by Eoin Treacy

Is the EV finally coming of age?

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

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
November 14 2016

Commentary by Eoin Treacy

Siemens boosts software business with $4.5 billion deal

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

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

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

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

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
November 11 2016

Commentary by Eoin Treacy

Mosquito War: Voters Approve the Release of Genetically Modified Organisms

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
November 07 2016

Commentary by Eoin Treacy

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

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
October 28 2016

Commentary by Eoin Treacy

Chip Makers Cut Deals as Cars Get Smarter

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

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

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

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

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

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

 

Eoin Treacy's view -

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

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

 



This section continues in the Subscriber's Area. Back to top
October 26 2016

Commentary by Eoin Treacy

Tesla Earnings: The Moment of Truth

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
October 26 2016

Commentary by Eoin Treacy

Email of the day on virtual reality and augmented reality

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

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
October 24 2016

Commentary by Eoin Treacy

DDOS Attack Map: What Websites & Areas Are Affected?

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

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

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

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

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
October 21 2016

Commentary by Eoin Treacy

MIT EmTech Conference

Eoin Treacy's view -

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

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

 



This section continues in the Subscriber's Area. Back to top
October 14 2016

Commentary by Eoin Treacy

Google and 3D Printing Buildings

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

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

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
October 13 2016

Commentary by Eoin Treacy

Email of the day on medical innovation

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

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

 

Eoin Treacy's view -

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

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

 



This section continues in the Subscriber's Area. Back to top
October 13 2016

Commentary by Eoin Treacy

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
October 12 2016

Commentary by Eoin Treacy

Baidu is bringing AI chatbots to healthcare

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

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

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
October 11 2016

Commentary by Eoin Treacy

Illumina Dives as Quarterly Revenue Falls Short of Forecast

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
October 10 2016

Commentary by Eoin Treacy

Exmed Conference 2016

Eoin Treacy's view -

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

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

Here are some of the themes that are evolving:



This section continues in the Subscriber's Area. Back to top
October 10 2016

Commentary by Eoin Treacy

Email of the day on blockchain and healthcare

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

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

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

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

And

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

Eoin Treacy's view -

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

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



This section continues in the Subscriber's Area. Back to top
October 07 2016

Commentary by Eoin Treacy

Follow Your Nose

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

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

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

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

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

 

Eoin Treacy's view -

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

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



This section continues in the Subscriber's Area. Back to top
October 05 2016

Commentary by Eoin Treacy

Musings from the Oil Patch October 4th 2016

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

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

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

Eoin Treacy's view -

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

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

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



This section continues in the Subscriber's Area. Back to top
September 29 2016

Commentary by Eoin Treacy

D-Wave Systems previews 2000-qubit quantum processor

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

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

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

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
September 27 2016

Commentary by Eoin Treacy

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

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

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

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

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

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

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
September 21 2016

Commentary by Eoin Treacy

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

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

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

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

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

 

Eoin Treacy's view -

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

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



This section continues in the Subscriber's Area. Back to top
September 21 2016

Commentary by Eoin Treacy

September 20 2016

Commentary by Eoin Treacy

Tesla Wins Massive Contract to Help Power the California Grid

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
September 19 2016

Commentary by Eoin Treacy

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

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

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
September 15 2016

Commentary by Eoin Treacy

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

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

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
September 15 2016

Commentary by Eoin Treacy

September 13 2016

Commentary by Eoin Treacy

Bugs on Screen

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

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

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

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

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

 

Eoin Treacy's view -

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

 



This section continues in the Subscriber's Area. Back to top
September 08 2016

Commentary by Eoin Treacy

GW Pharmaceuticals Jumps on Report It May Be Acquisition Target

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

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

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
September 01 2016

Commentary by Eoin Treacy

IBM's Watson supercomputer creates a movie trailer

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
August 31 2016

Commentary by Eoin Treacy

SWIFT discloses more cyber thefts, pressures banks on security

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

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

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
August 30 2016

Commentary by Eoin Treacy

How the European Commission calculated 13bn tax bill

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

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

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
August 30 2016

Commentary by Eoin Treacy

Ports, a Sign of Altered Supply Chains

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

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

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

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
August 26 2016

Commentary by Eoin Treacy

Mylan CEO Blamed Obamacare for EpiPen Sticker Shock

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

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

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

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

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top
August 24 2016

Commentary by Eoin Treacy

Delphi, Mobileye Join Forces to Develop Self-Drive System

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

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

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

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

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

 

Eoin Treacy's view -

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



This section continues in the Subscriber's Area. Back to top