Friday, January 30, 2015
Tuesday, January 27, 2015
Thoughts from the Frontline - How Global Interest Rates Deceive Markets - btbirkett@gmail.com - Gmail
Thoughts from the Frontline - How Global Interest Rates Deceive Markets - btbirkett@gmail.com - Gmail
This next chart, from a Societe Generale report, seems to show that the Japanese are financing 40% of their budget. I say “seems” because there is a quirk in the way the Japanese do their fiscal accounting. Pay attention, class. This is important to understand. If you do not grasp this, you will not understand Japanese budgets and how they deal with their debt.
Under a Japanese law called the “60-year redemption rule,” the government is required to retire its bonds in cash over a period of 60 years, irrespective of bond duration. In the case of 10-year bonds, this would mean that one-sixth of all 10-year bonds would have to be redeemed every 10 years for cash.
In the US and Europe (and to my knowledge everywhere else in the world), we simply roll those bonds over, and they are not part of the budget. When we adjust the Japanese budget for this redemption expenditure, we find that the primary expense (the proportion of the budget that is not interest expense and deficit financing) is “only” 87.8% for the 2015 budget. Given that the current budget estimates a 1.8% 10-year bond yield and that the government is rolling over those bonds at 0.22%, interest-rate expenses are likely to fall over the coming years. That is especially true when a significant portion of those rollover bonds will show up on the balance sheet of the Bank of Japan, which will remit the interest charges back to the government. Nice work if you can get it.
Tuesday, January 20, 2015
The Single Most Important Economic Statistic that the White House Never Talks About
The Single Most Important Economic Statistic that the White House Never Talks About
For the first time in 35 years, American business deaths now outnumber business births. —Jim Clifton, CEO, Gallup Polls
I’ve been self-employed since 1998, and let me tell you, the life of a business owner isn’t easy. It’s filled with long hours, a relentless amount of paperwork, and uncertainty of where your next paycheck will come from. If you’ve ever owned a business, you know exactly what I’m talking about.
Difficult or not, self-employment is extremely rewarding, and I wouldn’t have it any other way. Nor would the other 6 million business owners in the United States. Of those 6 million businesses, the vast majority are small “Mom and Pop” businesses. Here are more statistics on businesses in the US:
- 3.8 million have four or fewer employees. That’s me!
- 1 million with 5-9 employees;
- 600,000 with 10-19 employees;
- 500,000 with 20-99 employees;
- 90,000 with 100-499 employees;
- 18,000 with 500 employees or more; and
- 1,000 companies with 10,000 employees or more.
Those small businesses are the backbone of our economy and responsible for employing roughly half of all Americans. Moreover, while estimates vary, small business create roughly two-thirds of all new jobs in our country.
For those reasons, the health (or lack thereof) of small business is the single most important long-term indicator of America’s economic health. Warning: new data suggest that small businesses are in deep trouble.
For the first time in 35 years, the number of business deaths outnumbers the number of business births.
The US Census Bureau reported that the birth and death rates of American businesses crossed for the first time ever! 400,000 new businesses were born last year, but 470,000 died.
Yup, business deaths now outnumber business births.
Pay attention, because this part is important.
The problem isn’t so much that businesses are failing, but that American entrepreneurs are simply not starting as many new businesses as they used to.
We like to think of America has the hotbed of capitalism, but the US actually is number 12 among developed nations for new business startups.
Number 12!
You know what countries are ahead of us? Hungary, Denmark, Finland, New Zealand, Sweden, Israel, and even financially troubled Italy are creating new businesses faster than us!
The reasons for the capitalist pessimism are many, but my guess is that the root of the problem comes down to three issues: (1) difficulty of accessing capital (loans); (2) excessive and burdensome government regulations; and (3) an overall malaise about our economic future.
Business owners are permanently smitten with an entrepreneurial bug, and the only thing that prevents them from seeking business success is the expectation that they’ll lose money.
Sadly, the lack of new business startups is confirmation that American’s free enterprise system is broken.
"There is nobody in this country who got rich on their own. Nobody. You built a factory out there—good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory... Now look. You built a factory and it turned into something terrific or a great idea—God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along."
รข€•Elizabeth Warren |
“When small and medium-sized businesses are dying faster than they’re being born, so is free enterprise. And when free enterprise dies, America dies with it,” warns Gallup CEO Jim Clifton.
I don’t believe for a second that America’s free-enterprise system is permanently broken. The pendulum will eventually swing the other way, but our economy will not enjoy boom times until the birth/death trends are reversed.
That won’t happen next week or next month. It will take serious, fundamental changes in tax, regulatory, and judicial rules, and I sadly fear that it will take several years for that to happen.
Until then, our economy is going to struggle and will pull our high-flying stock market down with it. Are you prepared?
If you’re not familiar with inverse ETFs, you’re ignoring one of your best defenses against tough times. An inverse ETF is an exchange-traded fund that’s designed to perform as the inverse of whatever index or benchmark it’s designed to track.
By providing performance opposite to their benchmark, inverse ETFs prosper when stock prices are falling. An inverse S&P 500 ETF, for example, seeks a daily percentage movement opposite that of the S&P. If the S&P 500 rises by 1%, the inverse ETF is designed to fall by 1%; and if the S&P falls by 1%, the inverse ETF should rise by 1%.
There are inverse ETFs for most major indices and even sectors and commodities (like oil and gold), as well as specialty ETFs for things like the VIX Volatility Index.
I’m not suggesting that you rush out and buy a bunch of inverse ETFs tomorrowmorning. As always, timing is critical, so I recommend that you wait for my buy signals in my Rational Bear service.
But make no mistake, the birth/death ratio is signaling serious trouble ahead. Any investor who doesn’t prepare for it is going to get run over and flattened like a pancake.
Tony Sagami
Thursday, January 15, 2015
The Morning Download: Facebook Eyes Workplace Amid Debate Over Future of Email - btbirkett@gmail.com - Gmail
The Morning Download: Facebook Eyes Workplace Amid Debate Over Future of Email - btbirkett@gmail.com - Gmail
he rise of automated analytics. You have heard of descriptive analytics, predictive analytics and prescriptive analytics. Now there’s a fourth category, automated analytics, CIO Journal Columnist Thomas H. Davenport writes. Analysis-driven systems that take action “automatically” have been around for years–you don’t think humans review price changes for airline seats, do you?—but they are becoming increasingly necessary in a world in which customers demand real-time responses.
he rise of automated analytics. You have heard of descriptive analytics, predictive analytics and prescriptive analytics. Now there’s a fourth category, automated analytics, CIO Journal Columnist Thomas H. Davenport writes. Analysis-driven systems that take action “automatically” have been around for years–you don’t think humans review price changes for airline seats, do you?—but they are becoming increasingly necessary in a world in which customers demand real-time responses.
Brexit to UKIP -- Acronyms That Pound Traders Dread - Bloomberg
Brexit to UKIP -- Acronyms That Pound Traders Dread - Bloomberg
Britain’s budget deficit was 5.3 percent of gross domestic product in 2014, the highest in Europe after Spain and Ukraine, International Monetary Fund data show. Both main political parties promise to balance the books, though they differ on how quickly they’ll achieve this.
Britain’s budget deficit was 5.3 percent of gross domestic product in 2014, the highest in Europe after Spain and Ukraine, International Monetary Fund data show. Both main political parties promise to balance the books, though they differ on how quickly they’ll achieve this.
Friday, January 9, 2015
Tuesday, January 6, 2015
Whining Harvard Professors Discover Obamacare - Bloomberg View
Whining Harvard Professors Discover Obamacare - Bloomberg View
The economic logic is impeccable. Milton Friedman famously divided spending into four kinds, which P.J. O'Rourke once summarized as follows:
1. You spend your money on yourself. You're motivated to get the thing you want most at the best price. This is the way middle-aged men haggle with Porsche dealers.2. You spend your money on other people. You still want a bargain, but you're less interested in pleasing the recipient of your largesse. This is why children get underwear at Christmas.3. You spend other people's money on yourself. You get what you want but price no longer matters. The second wives who ride around with the middle-aged men in the Porsches do this kind of spending at Neiman Marcus.4. You spend other people's money on other people. And in this case, who gives a [damn]?
Most health-care spending in the U.S. falls into category three. In theory, the people who are funding our expenses--the proverbial middle-aged men in Porsches, except that they're actually insurance executives and government bureaucrats--have every incentive to step in, cut up the charge cards, and substitute a gift-wrapped box of Hanes briefs with the comfort-soft waistband. In practice, legislators frequently intervene to stop them from exercising much cost-control. The managed care revolution of the 1990s died when patients complained to their representatives, and the representatives ran down to their offices to pass laws making it very hard to deny coverage for anything anyone wanted. Medicare cost-controls, such as the famed Sustainable Growth Rate, fell prey to similar maneuvers. The only system that exhibits sustained cost control is Medicaid, because poor people don't vote, or exit the system for better insurance.
The Morning Download: Connected Homes, Cars Top Agenda at CES - btbirkett@gmail.com - Gmail
The Morning Download: Connected Homes, Cars Top Agenda at CES - btbirkett@gmail.com - Gmail
Snapchat cracks top 10 largest U.S. venture-capital deals. Messaging firmSnapchat disclosed in a filing on New Year’s Eve that it raised a $486 million investment, the 10th largest deal among U.S. venture capital-backed companies in history. As venture investors fight over the brightest startups, valuations are expanding at unprecedented rates, the WSJ’s Scott Austin reports. Investors now have to ante up more money to get an adequate stake in a company.
Snapchat cracks top 10 largest U.S. venture-capital deals. Messaging firmSnapchat disclosed in a filing on New Year’s Eve that it raised a $486 million investment, the 10th largest deal among U.S. venture capital-backed companies in history. As venture investors fight over the brightest startups, valuations are expanding at unprecedented rates, the WSJ’s Scott Austin reports. Investors now have to ante up more money to get an adequate stake in a company.
Sunday, January 4, 2015
Saturday, January 3, 2015
Friday, January 2, 2015
The Tech That Will Change Your Life in 2015 - WSJ
The Tech That Will Change Your Life in 2015 - WSJ
The Tech That Will Change Your Life in 2015
Gadgets and Ideas With the Best Chance of Making an Impact … and What You Can Do to Prepare for Them
Apple Watch, Windows 10, biometric passwords and more—WSJ Personal Technology columnists Geoffrey A. Fowler and Joanna Stern take a look at the key tech trends of 2015.
This was a year of big technology promises—2015 is the year we find out how many live up to the hype.
We looked into our crystal ball for the gadgets, upgrades and ideas we think have the greatest chance to change—and hopefully improve—your life in the year ahead. Will this be the year you actually wear a smartwatch, drop cable TV and love Windows again?
The new year may not bring you a shatterproof phone or a truly smart home, but here is what’s coming and what you can do to be ready for it.
Windows Strikes Back
The international calamity that was Windows 8 will finally end in 2015 with the fall release of Windows 10. (No, you didn’t miss 9: Microsoft skipped right over that number.) The OS still has a traditional mouse-and-keyboard desktop plus a tablet touch interface, but it now aims to prioritize these better based on what device you’re using. That’s huge for people on laptops or desktop PCs. The beloved Start menu is resurrected and modernized, and multiple virtual desktops will improve multitasking.
How to get ready: Microsoft has yet to release Windows 10 launch details and system requirements. We’re betting there’ll be an easy upgrade path for many computers still running Windows 7. (Others may need extra memory or a faster processor.) On the other hand, you may want to wait for the great assortment of new Windows 10 PCs that will appear in late 2015.
Apple Watches APPLE
An Apple for Your Wrist
When the Apple Watch debuts in the coming months, you won’t be able to avoid the hype—Apple’s entering its first new product category since the death of Steve Jobs . While Apple has yet to establish why a wrist computer is as essential as a smartphone or tablet,the Apple Watch is clearly more than a Dick Tracy gadget. It will undoubtedly kick-start a new wave of ideas about how to stay connected with your friends, work and fitness through a device that’s literally always on you.
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How to get ready: Don’t buy one of the smartwatches already on the market. Most don’t look great and aren’t especially useful. Even if you favor Android, Apple’s entry will likely stimulate the competition to build better, sleeker wrist-tops.
Fitness Trackers That Actually Help You
Two big advances may, when they finally reach maturity, make us healthier humans. First, fitness bands and smartwatches—even connected workout clothing—are getting packed with sensors to track everything from heart rate to sun exposure. Second, instead of just saying you walked 4,382 steps today, cloud-connected apps are gaining increasing powers to interpret this data to provide meaningful workout and lifestyle feedback.
How to get ready: With Google, Apple, Microsoft and countless startups vying to win your heart (or at least your heart-rate data), the best thing you can do, ironically, is sit back and see which devices and platforms start living up to their lofty promises. If you’re wondering if a fitness tracker is something you’d want at all, try a cheap, dependable one like the $50 Jawbone UpMove.
Streaming Netflix from a tablet. NETFLIX
Stream More, Pay Less
It’s finally time to break up with your overpriced cable TV service, or at least seriously rethink the relationship. It’s easier, and often cheaper, to stream movies and TV shows from Internet services with vast libraries such as Netflix, Amazon Prime and Hulu. Some things you still can’t stream, like live sports and cable news, but even those walls are tumbling. This year, a lot more of the stuff you really want, including HBO, will be available online without a cable TV subscription.
How to get ready: Find a home broadband service that offers downloads of at least 5 megabits per second. (Yes, you might have to make a new deal with your cable provider.) Then buy a streaming box or stick for your TV. The best is the $100 Roku 3, which supports the widest array of movie and music sources and has universal search. If you live in an all-Apple home, check out the $100 Apple TV first, since it’s the only box that plays iTunes videos.
Virtual Assistants You Won’t Want to Fire
“You have an 8:30 a.m. meeting with your supervisor. Last time you met, your heart rate was high. Go to bed early tonight, don’t drink coffee before the meeting and leave home early—traffic will be heavy.”
That’s how much smarter predictive personal assistants like Google Now and Microsoft’s Cortana will begin to get, thanks to increased information coming from our bodies, cars, Web searches, calendars, GPS location and more. For some reason, Apple has yet to endow Siri with predictive powers. Perhaps that, too, will change in 2015.
How to get ready: In order for predictive intelligence to work, you have to buy into a specific platform or ecosystem. Google Now centers around Gmail and the calendar, and it’s coming to cars, via Android, in 2015. Cortana will be integrated into Windows 10. But because they get more intelligent (and useful) by finding out more about you, you’ll want to pick a system that you trust.
LG's 4K quantum-dot TV LG ELECTRONICS
It’s a 4K World
This year, 4K TVs will become standard at 65 inches or higher. These Ultra HD TVs pack four times the resolution of HD, so you can see every bead of sweat on the actors’ brows. The cost of making these TVs has fallen dramatically, and 4K video has arrived via streaming from Netflix, Amazon and others. Those extra pixels aren’t worthwhile on smaller TVs, but if you’re finally buying a big set, you’d be mistaken not to consider 4K.
How to get ready: By next fall, quality 4K TVs will be available for laughably low prices. (But since the tech is evolving fast, never ever buy last year’s model.) And for better color, keep an eye out for “quantum dot” technology.
Android and iOS Take the Wheel
This may be the first year you pick your car based on the type of phone you use—or vice versa. Apple has partnerships with over 20 car makers, such as Volvo and BMW, to extend iOS to the dashboard with CarPlay. Many of those same car makers, including Audi, Dodge and Ford, have teamed up with Google to roll out Android Auto, which similarly brings phone functions, messaging, music and navigation to the front seat.
How to get ready: Many auto makers will offer CarPlay and Android Auto on top of their own dashboard systems. In some cases, all of these options may be found in the same car. As the first models are introduced, there will be confusion, so ask your dealer a lot of questions, and don’t take “I’m not sure” for an answer.
A shopper for Instacart shops for a customer at Whole Foods in Denver. DENVER POST/GETTY IMAGES
People-Powered Apps
The app that most changed urban life in 2014 was Uber, the car service. Beyond making a night on the town easier, Uber has proved that smartphones are effective at connecting customers with nearby workers. Now that model is multiplying into a zillion services, like the “Uber” for grocery delivery (Instacart), chores (TaskRabbit), parking (Luxe Valet), laundry (Washio) ... even massages (Zeel).
How to get ready: Not every service treats workers or customers equally well, so ask around. The good news is you’ve got choices because these services are easily (and often) cloned.
Cheap Smartphones Worth Buying
The arrival of a lot of cheap, powerful smartphones from China could mean it’s the year we finally stand up to our cellular carriers. Instead of paying $200 upfront and agreeing to pay down the rest of a phone for two years with high monthly service and data fees, you could buy an unlocked Android phone from OnePlus, Xiaomi, Huawei and perhaps even the Lenovo-owned Motorola for that much sans contract. That could spell trouble for Samsung and HTC, which will be forced to lower prices (as Moto already has).
How to get ready: When your contract is next up, break the habit of running to your carrier’s website or store for a subsidized handset. Shop around for one of these new, ultra-affordable unlocked phones, and see how much your carrier will charge for talk and data off contract. It could be very liberating!
Apple Pay APPLE
Your Phone Replaces Your Wallet
It will become possible to step out of the house with nothing but your smartphone (and pants) this year. Apple Pay, the credit-card replacement that made its debut in the fall, has so far shown that using an iPhone to pay at a store can be simple and secure. Now your phone is out to conquer the rest of your overstuffed wallet—an app to replace your driver’s license is already on its way in Iowa. More and more apps are replacing door keys (like the August smart lock), loyalty cards and even proof of insurance.
How to get ready: You’ll need a recent phone with a technology called NFC to use Apple or Google mobile payment services. And since your phone contains even more sensitive information than ever, be sure to secure it with a screen lock and remote-wipe capabilities.
Not-So-Social Social Networking
This year marked the beginning of public social networking fatigue. Now, it’s about enhancing your more personal, private communications. Facebook broke off its Messenger app, and Twitter is strengthening its direct messaging with the ability to share and discuss tweets privately, among other tools. Meanwhile, anonymous communicationwithin smaller groups, using apps like Whisper, Secret and Yik Yak, will remain popular.
How to get ready: A messaging service is only as good as the people on it. Talk to your friends and family about what they are using for private, day-to-day communications. (You may use different apps for different social clusters.) And when it comes to anonymous apps, be safe and remember: None of the apps can fully guarantee anonymity.
EyeLock's Myris uses your eye to unlock passwords. EYELOCK
The Password Is You
When it comes to the annoyances of digital life, typing in a million different passwords all the time is second only to trying to remember them all. What if your body could be the password? Biometric readers have been around for some time, but now they’re found in devices we carry around. Fingerprint readers on high-end phones and tablets can unlock their home screens—and an increasingly wide range of apps. And your finger is just the beginning. The coming year will bring 007-style gadgets that scan your eye, listen to your voice or just recognize your heartbeat.
How to get ready: Start with a fingerprint scanner, available today on a number of phones including the Samsung Galaxy S5 and iPhone 6. Apps for iOS that already accept finger scans include American Express, Amazon and Mint; if you have a new Samsung phone, try PayPal and the password manager LastPass.
Write to Geoffrey A. Fowler at Geoffrey.Fowler@wsj.com or on Twitter @geoffreyfowlerand Joanna Stern at Joanna.Stern@wsj.com or on Twitter @joannstern
Thursday, January 1, 2015
overwhelmed consumers and Other 2015 Predictions - Bloomberg View
Climate Change Cools, 'Star Wars' and Other 2015 Predictions - Bloomberg View
Recent high valuations for tech startups will turn out to be a bubbleafter all, as a maturing industry begins to face an analogue of the problem that has plagued, for instance, book publishers: the difficulty of getting overwhelmed consumers even to notice a new product or service, no matter how excellent it might be.
Recent high valuations for tech startups will turn out to be a bubbleafter all, as a maturing industry begins to face an analogue of the problem that has plagued, for instance, book publishers: the difficulty of getting overwhelmed consumers even to notice a new product or service, no matter how excellent it might be.
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