Market Watch 2016

Sale.jpeg

I took this photo in the mall on New Years Day–yes, the stores were actually open on the holiday.


And Macy’s was having a blowout sale with racks and racks of “80% Off Original Price[s].”


We were laughing saying what’s next–99% Off and then even 100% off! 


So you think the economy is healthy with fire sales like these on the very first day of the new calendar year–when we still have another 364 days to make our year end sales quotas…


With turbulence around the globe brewing from Iran, Syria, Russia, North Korea, Yemen, Sudan, Nigeria, ISIS, and more…anyone care to say (pending) crisis.


How about commodities–my bet–that are in the toilet (and have been for years now)–do you really think no one needs iron, aluminum, nickel, lead, cooper, potash, oil, gas, coal, diamonds, and gold anymore? 


Then the Wall Street Journal warned again today about the overall investment marketplace, asking “How do you invest when everything is expensive? [at 25 times cyclically adjusted earnings–now that’s a fancy term]?


We’ve been down this road before in the bubble bursts and recessions of 2001 and 2008.


Is now really the time for the Federal Reserve to be raising interest rates (and what a nifty ripple effect that will have in both slowing our economy down and raising our interest payments on our already ballooning $18 trillion national debt)?


Oh, technology to the rescue again and again…it’s possible with everything from virtual reality to robotics and artificial intelligence on the cusp…or maybe not this time around. 😉


(Source Photo: Andy Blumenthal)

Where’s The Value?

Binary

So I don’t know how I feel about this or maybe I do. 


The Wall Street Journal reports today that from the 10 largest companies by market capitalization:


1) The top 3 are technology companies


Apple $679B

Alphabet (Google’s Parent) $489B

Microsoft $422B


2) Moreover, a full 5 (half) of the top 10 are technology companies


That includes the 3 above and the other 2 below:


Facebook $288B

Amazon $280B


As a technology person, I am thrilled at the impact that IT has on our society. 


We are no longer the same thanks to our Apple iPhones, Google Search, Microsoft’s business tools like Outlook, Office and SharePoint, Facebook’s social networking, and Amazon’s online shopping. 


But to think that these information capabilities outweigh by value everything else in society that we need as people is somewhat astounding.


For example, the other 5 of the top 10 companies are:


Exxon Mobil (Oil and Gas) $346B 

Berkshire Hathaway (Insurance, Utilities, Clothing, Building Products, Retail, Flight Services) $340B

General Electric (Power and Water, Oil and Gas, Energy Management, Aviation, Healthcare, Transportation) $298B

Wells Fargo (World’s Largest Bank) $280B

Johnson and Johnson (Pharmaceuticals) $278B


So when you add these behemoths up–this is what we have:


The 5 top technology companies are worth $2.158T


Vs.


The top 5 traditional companies from all the other industries combined are worth only $1.542T


Net it out:


The largest representative IT companies are worth $616B or 40% more than the other major companies combined.


(In fact, just the top 3 IT companies at $1.56T are worth more than the top 5 other companies at $1.542T.) 


Sure IT growth has been on a tear for the last couple of decades and we love everything futuristic it brings us. 


But isn’t it a little scary to think that the companies that meet all our other needs from food, clothing, shelter, medicine, transportation, energy, finance, retail, etc. isn’t worth more to us than just the IT alone. 


Perhaps adding it up from a value perspective just doesn’t add up in a real life perspective. 


I love technology and want more and more of it, but man does not live by technology alone. 😉


(Source Photo: Andy Blumenthal)

The Unbelievable Stupidity Of Raising Interest Rates

Bull

Interest rates have been near zero since the recession of 2008.


That supposedly to stimulate the economy. 


However, aside from a stock market bubble again, not sure we have a much stimulated economy.


We have a false low on the unemployment rate, while the the true percentage of the labor force working is the lowest in almost 40 years!


Moreover, manufacturing is down almost 40% from the 1979 peak with a loss of over 7.2M jobs


Commodities are at firesale prices as demand is sluggish and there is short-term oversupply. 


And innovation is facing a global slowdown


So people are out of work, we’re not making things, demand is depressing prices, and even ideas are few and far between–not too rosy a picture, regardless of what some politicians may have you believe. 


Let’s not forget that we have an over $18 trillion federal debt, and this is projected to grow ever greater as we borrow to fund social entitlements such as social security, medicare, etc. 


In this scenario, why would the Federal Reserve ever want to raise interest rates?


Well, if they don’t raise rates, then they can’t lower them later again when the economy really stalls out and goes into deep recession. 


Hence, this is seen as a tool for their financial toolkit–and if there are no tools with which to manipulate the economy, then there is no need for a (neutered) Federal Reserve. 


But think for a second what happens when the Fed raises rates, it’s going to slow the economy even further than the chug chug chug economy that we are already dealing with. 


Maybe even more important, it will raise the amount of interest payments we must folk over on the trillions of dollars of debt we owe.  


Simply put, when we raise interest rates, we pay more interest on our already astronomically high national debt, and this pushes our national deficit up even higher as we borrow more to pay the interest on the previous debt. 


If you did this with your credit cards, you’d probably be looking at the equivalent of debtor’s prison sooner or later. 


Rather than feed the Fed’s toolbox with interest rate bumps and drops, why not keep rates low as long as they can stay low, reducing our interest payments, and curtailing our national deficit and debt. 


What about the stock bubble…that’s a lesson investors will be learning about in their own good time–it’s the stock market, stupid. 😉


(Source Photo: Andy Blumenthal)

Nothing Is Something AND Something Is Nothing

Uber Commodities

So the world financial markets continue to go haywire. 


The Uber glorified taxi service and app (with an almost half billion dollar operating loss) is now valued at–get this–over $50,000,000,000!


And commodities–you know the precious materials that REAL things are made off (gold, silver, copper, aluminum, oil, gas, coal, wheat, cotton, corn, soybeans, cotton, cocoa, coffee, sugar, beef, and more) hit a 13 year low. 


When the nothings of this world like a basic cab service become invaluable and the real things that power our homes, technology, transportation, and manufacturing become valueless–then we know a day of painful financial reckoning is coming. 


The markets can stand on their head for only so long before the blood rushes in and people become dizzy and see spots.


A reversion to the mean is the one something here that is inevitable, along with a pretty decent recession to boot. 😉


(Source Photos: Andy Blumenthal)

10 Reasons In Just 1 Week To Fear Government Breakdown

Chaos

When I saw this in the store, I knew it was a true sign of the times, as they say. 


When the government that is supposed to sustain order and usher in social and economic progress is dysfunctional and broken, instead we have:


“Chaos, Panic, [and] Disorder”


Here’s some news highlights from just this last week:


SPREADING BASE OF WORLDWIDE TERRORISM


1) ISIS murdered 137 and wounded over 300 in suicide bombings at mosques in Yemen.


2) Al Qaeda / Islamic State killed 23 mostly European tourists and injured over 50 at attack on the National Bardo Museum in Tunisia.


3) Iraq’s battle to take back Tikrit from ISIS slows as ISIS continues to hold territory in Iraq and Syria larger than many countries–this after the last U.S. troops left Iraq in 2011. 


AGGRESSIVE POWER AND LAND GRABS:


4) Russia annexes South Ossetia from Georgia, just a year after annexing Crimea from Ukraine.


5) China starts up the Asian Infrastructure Investment Bank (AIIB) with support from key European Countries as well as Australia and South Korea, challenging American dominance via the International Monetary Fund (IMF)–this shortly after China surpasses America as the world largest economy.


PROLIFERATION OF WMD:


6) Iran says “Nuclear deal within reach,” while their neighbors in the Middle East shutter and warn of impending nuclear arms race.


FORESAKING STALWART ALLIES AND MIDDLE EAST PEACE:


7) The Administration threatens to back United Nations against Israel, imposing a 2 state solution rather than a negotiated peace and security for the region. 


ECONOMIC MESS:


8) U.S. economic forecast by the Fed was downgraded to just 2.5%, despite years of near-zero interest rates that were supposed to spark growth, but instead has simply driven stocks into overdrive and set us up for another bursting of the financial bubble


HEALTHCARE SHAMBLES:


9) Upcoming Supreme Court decision on Obamacare could see 8 million people lose subsidies and ultimately their health insurance coverage.


ENVORNMENTAL CRISIS:


10) 2014 as the hottest year on record and 13 of the 14 hottest years are in the 21st century so far, this as even Chinese officials acknowledge looming fallout ahead in terms of climate change and disasters


If this is just one (more) week with the current breakdown of government,  those causing it all, as the sign states, can proclaim:


“My Work Here Is [Almost] Done.”
 😉


(Source Photo: Andy Blumenthal)

Trouble In Protection Land

Insect
The Secret Service is one of the finest agencies in the Federal government, but unfortunately, the “recreational” drone crash landing at the White House was a protection disaster this week.



(And it comes on the heels of knife-wielding assailants running wild through the front doors of the White House, people taking pot shots at the White House, and even planes crash landing there). 



This time it was perhaps, a small drone innocently passing low without a significant radar signature unto the White House grounds, but next time it may be a miniaturized drone the size of an insect that attacks the President or his senior staff in the White House itself. 



This could happen with a pin prick of poison or a small drone carrying explosives, biological, or chemical weapons. 



We are entering a new dimension of threats that are not easily addressed with existing technology. 



It is said the the President is proverbially protected by a bubble of defenses around him, but where we are going is that this bubble may need to become an actual physical bubble that nothing, not even an insect drone can get through. 



It may sound ridiculous, but it may be the only way (for now) to really protect against these threats that literally fly beneath our radar!



Perhaps at some future time, we will have our swarms of defensive drones that go after any attack drone, no matter how small or how many, but in the meantime, we must protect our critical leadership and assets. 



Almost two years ago, I blogged about robots, drones, and commandos in exoskeletons attacking the White House and our not being prepared with adequate defenses and counter-measures.



This week’s drone crash should be making the alarm bells go off on this issue big time now!



We must move past reactive steps and a failure to anticipate and become true forward-thinkers, strategists, planners, enterprise architects, and futurists. 



The protection of our leaders, institutions, critical infrastructure, and people depend upon true out of the box thinking, not doing the same thing but on a different day. 



The time is now to think about protections from much more than traditional attack patterns to the wildest and craziest we can imagine–because our enemies are not hampered by the past and won’t rest until they see what we won’t. 😉



(Source Photo: here with attribution to David Illig)

Panic, Technology To The Rescue

Panic
Who us panic?

– ISIS is threatening the West with “dangerous new extremism

– Syria’s death toll tops 170,000 with more than 10,000 believed tortured to death. 

– Boko Haram is still abducting young girls (and boys).

– Iran says no deal on nukes

– Ebola is “out of control.”

– China is emergent as the U.S. pivots east and space becomes militarized with anti-satellite weapons. 

– Russia is resurgent (Crimea is history to Ukraine).

– The national deficit only hints at the true extent of our unfunded liabilities from entitelements.

– The economy is bubbling over the top again, warns Robert Shiller.

Racial and income inequality continues to divide America (case in point, Ferguson MO).

– Nearly 1 in 3 American adults has an arrest record.

– Almost half the world–3 billion people–live in poverty on less then $2.50 a day. 

Ah, if only technology could solve all our global problems–and this is a big list and not by any means comprehensive.

It’s a race of the “world is exploding all over” with technology trying to make it better with more and better information, innovation, productivity, security, and cures.

Almost like the war of good over evil–we may lose the battle, but hopefully (let’s pray) in the end, we will win the war. 😉

(Source Photo: Andy Blumenthal)