Tech Review (TR 2018-11-17)--Domain Mondo's weekly review of tech investing news with commentary, analysis and opinion: Features • 1)Priyanka Chopra: Technology Gives Us Freedom, 2) Fintech: The Business Case For Financial Inclusion,3)Investing: The Week, Investing Notes,4)ICYMI Tech News: Facebook, Nvidia, IBM, SAP, Alibaba, FCC, SpaceX, Cloudflare.
1) Priyanka Chopra: Technology Gives Us Freedom
Priyanka Chopra may be known for acting, but now she's investing in tech companies. In an interview with CNN, Chopra tells Laurie Segall why she's investing in Bumble (bumble.com). CNN.com businesss video above published Nov 5, 2018.
2) Fintech: The Business Case For Financial Inclusion
1.7 billion adults across the globe do not have a bank account. The data revolution and innovations in digital finance have the potential to provide access to financial services for everyone and offer huge growth opportunities.Video above published Nov 2, 2018, by FT.com.
iShares Automation & Robot ETF is now listed on the Tokyo Stock Exchange. This #ETF tracks our iSTOXX FactSet Automation & Robotics index, which is composed of companies related to automation and robotics around the globe. https://t.co/2EqrzzWOPG#investing
Meltdown at Facebook$FB? More than 50 interviews conducted by the New York Times reveal Facebook's failures in dealing with multiple crises, which Zuckerberg and Sandberg initially tried to obscure. "Delay, Deny and Deflect: How Facebook’s Leaders Fought Through Crisis"--NYTimes.com. Facebook's Sheryl Sandberg replied. See also Facebook Board and this on "Facebook Fights Dirty."
Nvidia$NVDA: Supply glut mars Turing effect for Nvidia shares--reuters.com.
IBM$IBM: Why There Will Never Be Another Red Hat: The Economics of Open Source--a16z.com.
Alibaba$BABA sets new Singles’ Day record with $31B in sales, but growth is slowing--techcrunch.com.
FCC approves expansion of satellite-based internet services: Telesat, Kepler Communications Inc and LeoSat MA, Inc. approved for high-speed internet service and connectivity for sensors and other intelligence devices a/k/a IoT (Internet of Things). SpaceX approved for access to additional frequency and to operate some satellites at low-Earth altitudes--FCC Boosts Satellite Broadband Connectivity And Competition In The United States | fcc.gov (pdf).
Personal tech:Cloudflare's 1.1.1.1 DNS resolver app--cloudflare.com.
Tech Review (TR 2018-10-20)--Domain Mondo's weekly review of tech investing news with commentary, analysis and opinion: Features • 1)Future Finance: Smart Contracts on the Blockchain, 2) Bitcoin Detectives: Cracking the Blockchain, 3)Investing: The Week, Investing Notes: US, Europe, China,4) ICYMI Tech News: Amazon AWS JEDI & HQ2, Facebook, Google, Apple, Twitter, Wirecard.
1) "Future Finance" Forum 2018: Smart Contracts on the Blockchain
A lively panel discussion on the divergence in the blockchain ecosystem between cryptocurrencies and other private permission systems and how smart contracts are evolving, moderated by Ray Chan, Senior Correspondent, FinanceAsia, with Panelists: Paul Sin, Consulting Partner, Deloitte, Angelina Kwan, Managing Director, Head of Regulatory Compliance, HKEX, Joshua Kroeker, Blockchain/DLT Lead, Global Commercial Banking, HSBC, Lawrence Ma, President, HK Blockchain Society, Douglas W. Arner, Professor, Faculty of Law, The University of Hong Kong. The session was filmed at the "Future Finance - Adapting to Disruption" Forum held at Island Shangri-La Hong Kong on Wednesday, 7th February 2018. Thomson Reuters video published Oct 5, 2018.
The cryptocurrency Bitcoin has a problem as old as money itself -- theft. And that's giving rise to a new profession: bitcoin detectives like Kim Nilsson, a victim of the massive Mt. Gox exchange hack.
USis the most competitive country in the world--regaining the No. 1 spot for the first time since 2008 in an index produced by the World Economic Forum--WSJ.com.
Eurozone: ECB's"Bubble” Warning--WolfStreet.com: "After it Caused the Most Absurd Bond Bubble Ever." See also: Bavaria election (video) clear signal the center is moving to the fringes in Germany.
EU: VC investment in European startups plunged 21% in Q3 2018--even with Brexit looming, startups in the United Kingdom were still number one, raising 43 percent ($2.3 billion) of the total capital in Q3, accounting for 32 percent (215) of the deals. France ranked a distant second in terms of venture capital raised, $679 million, and third in number of deals (78). Germany was third in amount raised, $631 million, and second in number of deals (83).--Dow Jones VentureSource Venture Capital Report - Europe Q3 2018 (pdf).
China: "Most surveyed companies are now experiencing unprecedented difficulties and have become increasingly pessimistic about business prospects for the next six months ... For most, business has never been worse."--Li Wei, economics professor at CKGSB. See also: China May Have $5.8 Trillion in Hidden Debt With ‘Titanic’ Risks--Bloomberg.com.
4) ICYMI Tech News:
• Amazon$AMZN: Amazon Web Services (AWS) is widely seen as front-runner in the race to win the US DOD $10 billion cloud-computing contract [JEDI]. Alphabet Inc. a/k/a Google withdrew last week, leaving AWS, IBM, Oracle, and Microsoft vying for the contract. Amazon Chairman & CEO Jeff Bezos said Monday at the Wired 25 Summit in San Francisco:
"If U.S. tech companies turn their backs on the Department of Defense, this country is in trouble. This is a great country and it does need to be defended."
[Editor's note: most likely outcome? AWS wins JEDI contract, and a suburban Washington, D.C., location (northern Virginia) is chosen for Amazon HQ2.]
Facebook $FB:Fb.gg online gaming hub expands to mobile with the launch of the beta version of a standalone Android app--techcrunch.com.
Google$GOOGL: Google's real-time translations now available on Android phones and all Assistant-optimized headphones, not just Google Pixel Buds--droid-life.com. See also Android is dirty word? ‘Android’ wasn’t said a single time during the Google Pixel 3 event--9to5google.com.
Apple$AAPLreportedly cut Chinese iPhone repair fraud with hidden dyes and software.
Twitter$TWTR under formal GDPR investigation for how it tracks users--fortune.com. See also--Twitter: Is Engagement Enough? Nope--SeekingAlpha.com.
Wirecard (WDIG.DE), German fintech company expects core profits to grow sixfold by the middle of the next decade thanks to a boom in e-commerce and digital payments--reuters.com.
Fintech Regulation in the UK: What It Can Teach The World
FT Transact (ft.com) video above published Aug 13, 2018: "The Financial Conduct Authority (FCA) (fca.org.uk) has won praise around the world with a so-called sandbox, where UK fintech companies can test products with temporary authorisation. Now, it's being widely copied and there are plans to start a global sandbox. It has even caught the eye of major players, with Microsoft urging the US regulator to be more like its UK counterpart. counterpart. But should we be worried that the twin forces of big tech and banking are now praising the body that is their watchdog?"
See also: UK is expected to keep the door open for European Union banks and investors after Brexit--reuters.com.
"Through our Innovation Hub we want new and established businesses - both regulated and non-regulated - to be able to introduce innovative financial products and services to the market."--FCA
LIVE Wednesday, Dec 13, 2017: Fed Chair Janet Yellen's FOMC press conference scheduled for 2:30 pm EST. Her previous FOMC Press Conference was September 20, 2017 (pdf), video available here.
UPDATE: The U.S. central bank--the Federal Reserve (domain: federalreserve.gov) or "the Fed"--started its two-day monetary policy meeting on Tuesday and its FOMC (Federal Open Market Committee) and on Wednesday made its announcement on interest rates:
"The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate paid on required and excess reserve balances to 1.50 percent, effective December 14, 2017 ... Effective December 14, 2017, the Federal Open Market Committee directs the Desk to undertake open market operations as necessary to maintain the federal funds rate in a target range of 1-1/4 to 1-1/2 percent, including overnight reverse repurchase operations (and reverse repurchase operations with maturities of more than one day when necessary to accommodate weekend, holiday, or similar trading conventions) at an offering rate of 1.25 percent, in amounts limited only by the value of Treasury securities held outright in the System Open Market Account that are available for such operations and by a per-counterparty limit of $30 billion per day."--source: Dec 13 Implementation Note
Voting for the FOMC monetary policy action were Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Patrick Harker; Robert S. Kaplan; Jerome H. Powell; and Randal K. Quarles. Voting against the action were Charles L. Evans and Neel Kashkari, who preferred at this meeting to maintain the existing target range for the federal funds rate. Read more: FOMC Statement:PDF | HTML; Implementation Note; Projection Materials PDF | HTML
Note: The Fed was expected to hike near-term interest rates, especially after last Friday's strong jobs report.
Roach: Fed Should Move Aggressively to Normalize Rates
Bloomberg.com video above published Dec 11, 2017: Stephen Roach, senior fellow at Yale University, discusses debt levels in Asia, including China, and his outlook for interest rate hikes from the Fed. He speaks on "Bloomberg Daybreak: Asia."
President Trump's nominee, Jerome Powell, will take over as Chair of the Board of Governors of the Federal Reserve System at the end of Janet Yellen's term, subject to confirmation by vote of the full U.S. Senate. On December 5, 2017, the Senate Banking Committee approved Powell's nomination to be Fed Chair in a 22-1 vote, with Senator Elizabeth Warren casting the lone dissenting vote, and therefore his nomination is expected to be confirmed before the next meeting of the FOMC.
Fed Functions: Promoting Financial System Stability (video): Federal Reserve Board video published Aug 29, 2017: The Federal Reserve performs five key economic functions in the public interest to help promote a healthy economy, including promoting the stability of a financial system that is crucial to the well-being of the U.S. and global economy.
"The term "monetary policy" refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals. The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy.
"The Federal Reserve controls the three tools of monetary policy--open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations. Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.
"Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services."--source: federalreserve.gov.
Financial Times (ft.com) video above published Oct 9, 2017: Outgoing German finance chief says central bank policies risk forming ‘new bubbles’--Wolfgang Schäuble has warned that spiralling levels of global debt and liquidity present a serious risk to the world economy, in his parting shot as Germany’s finance minister.
See also:
Austria election 2017 results 15 Oct 2017: Eurosceptic Conservative Millennial Sebastian Kurz, age 31, declares victory--Europe's youngest leader--'Brussels Nightmare'
FT.com: Paris and Berlin at odds over key plank of eurozone reform plans
Merkel's Party Suffers Vote Setback in Germany's Lower Saxony on Sunday, Oct 15, 2017, with the poorest showing in 58 years for Angela Merkel's party, the CDU, in Lower Saxony (a German state larger than the Netherlands), further weakening Merkel as she tries to form an "awkward" alliance with pro-business Free Democrats (FDP) and environmentalist Greens. Negotiations could well drag into 2018, reports Reuters.com.
What Tulips and the Great Recession Have in Common
Bloomberg.com video above published Oct 9, 2017: Most people would agree that the bond market is expensive. But is it in a bubble? Alan Greenspan thinks so. So will this bubble be popping anytime soon? Bloomberg's Jonathan Ferro explains. #BondBubble
Video above published May 16, 2017: London's euro clearing dominance has been in the spotlight since the Brexit vote, as Europe would like this returned. The FT.com's Philip Stafford and Daniel Hodson, chairman of FSNForum (domain: fsnf.uk) and Board Member of Vote Leave, discuss the merits of such a move. Slides below:
Deutsche Bank is in serious trouble, with some hedge funds pulling business and the US Department of Justice seeking $14 billion to settle its probe on mortgage securities. Why are people so worried about the bank’s fate? FT.com's Martin Arnold explains in five charts. Published Sep 30, 2016
What Do Deutsche Bank Clients, Investors Fear?
As Deutsche Bank shares fell to a record low last week, concerns grew about the bank's mounting legal costs. Bloomberg's Michael Moore examines the bank's challenges on "Bloomberg Surveillance" September 30, 2016.
Video above published August 18, 2016, by L2inc.com. Host is Scott Galloway, Marketing Professor at NYU Stern. Video transcript below. Winners: 2016's Tech Billionaires
Chart source: Statista Chart above shows the net worth and main source of wealth of the ten richest tech billionaires in the world. While individuals associated with U.S. companies dominate, Chinese e-commerce giant Alibaba and its executive chairman Jack Ma (net worth of almost 26 billion dollars) ranks eighth and ninth is Tencent CEO, Ma Huateng with 22 billion dollars.
Transcript of video above via YouTube: 0:02 A winner: finance. 0:03 The complexion of wealth in the US has changed dramatically over the last two decades. 0:06 More billionaires are earning their money versus inheriting it. 0:09 That's a nice fact, but that isn't necessarily a victory for entrepreneurship. 0:13 Almost half the growth in the billionaire class comes from the financial sector, compared with 14% in Europe. 0:19 How do you become a billionaire in America? 0:21 If you don't start the next Facebook, you need to work at a hedge fund. 0:25 Over 80% of hedge fund billionaires are American. 0:27 It's easy to hate hedge fund managers. I work with a lot of them, and I find they're just like you and me - 0:33 just smarter and harder working. 0:35 Who can you hate? Congressmen and senators. 0:37 In exchange for a few thousand bucks, they continue to give these guys carried interest tax deduction, which is immoral and plain stupid. 0:46 A loser: Snapchat. You don't hear that often. 0:48 The brand's quest for global domination has met a roadblock in Asia, where American social platforms face major challenges from homegrown alternatives. 0:57 Korean app Snow has similar functionality to Snapchat but targets Asian users 1:01 with filters including bottles of soju and fried chicken. 1:05 Snow's popularity in Asia underscores a new reality for American app makers: 1:09 popularity in the US does not guarantee success overseas. 1:14 A winner: Ben & Jerry's, whose oversized investment in Instagram is paying off. 1:18 Ben & Jerry's accounts for 4% of posts but generates 38% of interactions. 1:23 The lesson here? 1:24 Consumers want to see the product they love. Keep it simple. 1:28 Following the success of the brand's Bernie's Yearning flavor, we're campaigning for a new flavor. 1:32 My personal favorite: Guatemalan Syphilis ExperiMINT. 1:38 What's the greatest concentration of IQ in history? NASA? The Manhattan Project? 1:41 No, it's Google. 1:42 Now that the search engine has made the world's surface visible with Street View, 1:47 Google is setting its sights on the other 70% of the planet. 1:51 Maps just added its first underwater images, letting users explore the depths of the oceans. 1:57 We leave you with video on how some of those maps were made. 2:00 We'll see you next week.
Known as a “key creator of modern venture capital,” Janeway helped to created BEA Systems, which connected software applications to databases across much of the Internet. The initial cash investment of $54 million became a payout of $6.5 billion within six years. His work operates at the intersection of technology, finance, and economics. Janeway funded the Cambridge Endowment for Research in Finance in 2001 and funded the annual Princeton-Cambridge Finance Seminars in 2004.
The Transformation of Finance, Davos 2016 WEF Video: What trends and uncertainties are shaping the future of financial services? Transformations to be addressed:
Digitization and new business models
Regulatory requirements and new client needs
Data privacy and systemic connectedness
Speakers:
Dan Schulman - President and CEO of PayPal and Chairman of Symantec
Gillian R. Tett - author and journalist at the Financial Times
John Cryan - businessman and co-chief executive of Deutsche Bank AG in Frankfurt am Main
James P. Gorman - Chairman and Chief Executive Officer of Morgan Stanley
Tom de Swaan - Chairman, Interim Chief Executive Officer, Zurich Insurance Group AG
Christine Lagarde - Managing Director of the International Monetary Fund (IMF)
The parallels between the financial industry and the domain name industry are interesting--take note particularly (begins @37:00) the public role of banks and financial institutions as regulated utilities, with duties to act as extensions of law enforcement, required to collect and analyze data, report "suspicious" patterns and transactions, even closing customer accounts, etc.--if you want an insight into the future of the domain name industry and internet governance, watch this video.
Notes: What is the future of finance? What are the trends and uncertainties that are disrupting financial services, and how should we react? Panel member Christine Lagarde addressed this topic on the WEF website, Agenda. The Managing Director of the International Monetary Fund (IMF) looked ahead to what 2016 might hold for the global economy. She wrote:
“One reason that the global economy is so sluggish is that, seven years after the collapse of Lehman Brothers, financial stability is not yet assured. Financial-sector weaknesses linger in many countries – and financial risks are growing in emerging markets.”
“Putting all of this together, global growth in 2016 will be disappointing and uneven. The global economy’s medium-term growth prospects have weakened as well, because potential growth is being held back by low productivity, aging populations, and the legacies of the global financial crisis. High debt, low investment, and weak banks continue to burden some advanced economies, especially in Europe; and many emerging economies continue to face adjustments after their post-crisis credit and investment boom.
“This outlook is heavily affected by some major economic transitions that are creating global spillovers and spillbacks, particularly China’s transition to a new growth model and the normalization of US monetary policy. Both shifts are necessary and healthy. They are good for China, good for the US, and good for the world. The challenge is to manage them as efficiently and as smoothly as possible.”
“Our lives are being shaken to their very core by technological change, with the Fourth Industrial Revolution transforming economies as never before. The unprecedented speed of change, as well as the breadth and the depth of many radical changes unleashed by new digital, robotic and 3D technologies, is having major impacts on what we produce and do, how and where we do it and indeed how we earn a living. And while the transformation will proceed differently in advanced and developing parts of the world, no country or market will be spared from the tidal wave of change.”
It’s an interesting time for finance, says moderator Gillian R Tett. In 2007, bankers were on top of the world, holding their heads up high. Then, the crash, and since then many of the panels here in Davos have been dominated by what went wrong and what could be done to make things safer. Now, the discussions are forward looking, with less focus on regulation and more attention on fintech and the changes – both positive and negative – that are happening in the world of finance. The biggest challenge, argues Tett, isn’t a crisis in regulation, but the new players. Although regulation has moved out of the spotlight, there is still work to be done in this area, argues Christine Lagarde. There are issues between the US and Europe around over-the-counter derivatives and clearing systems which are not progressing at the speed at which they should. These areas need more regulation, says the IMF head. Basic retail banking is changing, Lagarde goes on to say. It’s being disrupted by innovations and there are people now who have never been – never had to – go into a bank. But this is merely another way of doing business. Virtual currencies and blockchains, on the other hand, can cause deeper disruptions. They may be relatively small (the current value of virtual currencies is around $7 billion), and may be nothing to worry about. They could also turn out to be beneficial – in reducing costs, providing better value and reaching the unbanked. But they could also a great instrument for crime. There is the potential for financing terrorism and the illicit economy, and they could disrupt monetary policy. The IMF has today released a report on this topic: Virtual Currencies and Beyond.
Will cash exist in the future?
The consensus is that, in 10 years, cash will no longer exist. Why? Because it’s inefficient, unnecessary and plays a key role in the illicit economy. Tom de Swaan believes that insurance will be the most affected of all the finance industries. Life at the top of a financial group was not, is not and will not be easy, because it is disruptive. “You have to find alliances with disruptors,” he says. “I haven’t met one who wants the insurance liability on their balance sheet.”
Dan Schulman, who heads perhaps one of the biggest disruptors in the industy – PayPal – says the biggest impediment to future success, is past success. “A lot of big companies extrapolate from what was and don’t imagine what could be. And this is a big danger.” His five key trends:
Money is definitely digitizing, cheques are disappearing. But let’s not forget that 85% of global transactions are still made with cash.
Mobile is exploding across the world. Soon everyone will have a smartphone and hold the power of a bank branch in one hand. This allows the industry to think about consumer transactions in an entirely different way, and it brings in billions of people.
The amount of data is exploding, and it’s not going to stop. Algorithms are the weapons of the digital company, and the ammunition is data. The better the quality of this data, the more value it is to the consumer. Security and privacy are genuine concerns, but data is going to change value propositions.
Industry lines are blurring, and product lines are blurring. Take digital payments – which involve tech companies, mobile carriers, handset manufacturers and merchants.
Security – something Schulman thinks about every day. There is so much data, and authentication is therefore very challenging.
Are regulators ready for this transformation?Tom de Swaan argues that regulators first need to define, what are they going to regulate? Privacy? The movement of data? The financial world is still rebuilding trust with consumers, and doing this while convincing them we need their data to create new products is a huge challenge. The regulatory environment also needs to be globally applicable.
Schulman: What are we trying to regulate, he asks? Let’s not look back at what happened, but what is likely to happen in the future. He thinks it’s likely a major hack could happen, but innovation needs to be responsible and we need to be able to try new things without worrying about over-regulation.
Lagarde supports Schulman’s idea of a “sandbox” to try new ideas, as this would help us to deal with trust and limit any damage to consumers. She doesn’t entirely agree, however, with John Cryan’s suggestion that regulation is made by policy-makers, rather than the regulators themselves. Governments do participate, she says, but the decisions are still being made by the likes of the Financial Stability Board and the Basel Committee, and then channelled into the regulatory system. For bad or for good, the profession still has a lot to do with how supervision is defined. Gorman believes that cyber-security issues need to be addressed. At the heart of the banking system, he says, is trust. When this goes, people want their money back, but the banks don’t have this money, they’ve given it to someone else, and this is what caused the 2008 crisis.
What about the future of blockchains? Cryan does not see this sector growing too quickly in the next 4-5 years. Banks are better prepared to manage cash flow of debt and are able to gain insights regarding the credit worthiness of debtors better than someone who can’t access this knowledge.
Howard Marks | The Most Important Thing - "Origins and Inspirations" -
Howard Marks, Investing, The Most Important Thing (video above) - March 27, 2015
Warren Buffett said "When I see memos from Howard Marks in my mail, they're the first thing I open and read." Howard is the Co-Chairman of Oaktree Capital Management. He is known in the investment community for his "Oaktree memos" to clients which detail investment strategies and insight into the economy. He treats investing as equal parts psychology and finance, and his book The Most Important Thing provides "uncommon sense for the thoughtful investor." Race to the Bottom memo (2007) (pdf)
