Archive for the ‘Technology’ Category

August 29th: Ed’s Daily Notes and Traders Corner   34 comments

The S&P 500 levels to watch today:

UPSIDE: 2001-2002 (2 data points), 2005 (August 26th’s high and the all-time high), and 2020 (top of the Bollinger Bands).
LAST CLOSE: 1996, inside the 1993-1998 (5 data points) range.
DOWNSIDE: 1982-1990 (July’s high and 5 data points), 1977 (August 20th’s low), 1971-1972 (2 data points), 1968 (June’s high), 1965 (50 day moving average), 1964 (August 15th’s high), 1959 (20 day moving average), 1958 (August 18th’s low), 1955 (August 14th’s high), 1947-1948 (2 data points), 1944 (August 11th’s high), 1941 (August 15th’s low), 1927-1939 (July’s low and 9 data points and the 100 day moving average), 1924 (May’s high), 1921 (August 4th’s low), 1916 (August 1st’s low), 1909-1913 (3 data points), 1904 (August 7th’s low), and 1898 (bottom of the Bollinger Bands).

S&P 500 Daily Momentum: Bullish (weakening)
S&P 500 Daily Overbought/oversold: Neutral (leaning overbought)
S&P 500 Weekly Momentum: Bearish (weakening)
S&P 500 Weekly Overbought/oversold: Neutral (leaning overbought)
S&P 500 Futures: Positive
Overall: Light volume with only small movement has left the technicals almost stalled this week. Momentum indicators for the S&P 500 seem headed to neutral, while overbought/oversold indicators still read about the same as they did at the beginning of the week.

And now for the news…

The Daily Beast: Why Obama Backed off More ISIS Strikes: His Own Team Couldn’t Agree on a Syria Strategy

After lots of bluster about striking ISIS on Syria, President Obama threw cold water on the idea Thursday, disappointing those who wanted him to take the fight to ISIS in Syria.
After a week of talk of eliminating the “cancer” of ISIS, President Obama said Thursday that he was not planning to significantly expand the war against the Islamic extremist movement anytime soon.

His remarks came after days of heated debate inside the top levels of his own national security bureaucracy about how, where, and whether to strike ISIS in Syria. But those deliberations – which included a bleak intelligence assessment of America’s potential allies in Syria — failed to produce a consensus battle plan. And so Obama, who has long been reluctant to enter into the Syrian conflict, told reporters Thursday that “we don’t have a strategy yet” for confronting ISIS on a regional level.

Only 875 more days of the lamest presidential administration ever…

Yahoo News: Nokia will have its revenge on the smartphone industry

Bobb posted this article yesterday in the comments:

Business Korea has just published a very provocative piece that depicts a monstrous troll attacking its home country’s pride and joy, Samsung. That troll, you’ll be surprised to learn, is Nokia.

The reason for this is easy to understand: Samsung may be forced to pay one of the history’s biggest patent royalty sums to Nokia, and fellow Korean electronics titan LG is not scot free, either.

What unleashed the beast in the Finnish company was its decision to sell its handset division to Microsoft a while back. As long as Nokia was a phone company, it was bound by a web of cross-licensing deals limiting how much it can charge for its thousands of handset-related patents. Nokia needed to use both essential and non-essential patents held by Samsung, Apple, Motorola and other industry giants, which put a rather severe cap on how much it could charge other phone vendors.

But when Nokia got out of handset business, the need for those cross-licensing deals vanished and Nokia emerged as a Non-Practicing Entity (NPE). Or as Business Korea defines the term, a patent troll.

This means the already competitive smartphone business just got a little more expensive.

Posted August 29, 2014 by edmcgon in News, Politics, Stocks, Technology

Ed’s Daily Notes for August 14th   Leave a comment

The Hill: Why is Obama returning to Washington?

President Obama won’t make any major announcements on immigration reform during his secretive mid-vacation trip back to Washington next week, the White House said Wednesday.

The president is expected to return to the White House on Sunday, but officials won’t say why Obama is taking the unusual, and costly, trip back to Washington. He’s expected to return to Martha’s Vineyard, where he’s been vacationing, on Tuesday.

The article goes into a lot of speculation over immigration reform and other things. My guess is the president is planning some kind of classified military operation. If it goes as planned, we may never hear about it. On the other hand, if it doesn’t, it could create a situation. Maybe something involving Ukraine, Iraq, or Iran?

Regardless of the reason, it would make me reluctant to buy any stocks until next week.

Bloomberg: Recovery Halts as Germany Shrinks, France Stagnates

Yesterday, it was bad news from Asia. Today, we have Europe:

The euro area’s recovery halted in its three biggest economies in the second quarter, underlining the vulnerability of the region to weak inflation and the deepening crisis in Ukraine.

German gross domestic product shrank 0.2 percent, more than economists forecast, while stagnation in France prompted the government to scrap its 2014 deficit target after data released today. Combined with Italy’s unexpected slide into recession, the reports may add pressure on the European Central Bank to expand stimulus.

While Germany’s second-quarter weakness was largely due to a warm winter that shifted production to earlier months, the outlook for coming months is now clouded by the impact of international measures against Russia over its support of separatists in Ukraine. That imperils the euro area as a whole, where inflation is running at the slowest pace since 2009 and measures announced by the ECB will take time to have an effect.

I love the excuse for Germany: warm weather. So cold weather slows the U.S. GDP, while warm weather does it to Germany? I guess people only work in Fall and Spring?

Bloomberg: Cisco Cutting 6,000 Jobs as CEO Forecasts Stagnant Growth

Bad news for Cisco fans:

Cisco Systems Inc. (CSCO) is cutting 6,000 jobs and forecasting little to no revenue growth in the current quarter amid a slump in demand from phone and cable companies, and weakness in emerging markets.

The world’s largest networking-equipment maker, which has about 74,000 employees, said it will take a pretax charge of as much as $700 million. Including the latest round of firings, which represent about 8 percent of the workforce, Cisco has eliminated more than 18,000 people over the past three years.

John Chambers, who is nearing retirement after almost two decades as Cisco’s chief executive officer, has been grappling with slowing growth for its market-leading routers and switches. Phone carriers and other large companies are replacing legacy network hardware with software that performs many of the same tasks. Sales in emerging markets won’t recover for several more quarters, Chambers said on a conference call.

While Cisco is still in a good spot financially, they need a strategy for getting out of the death spiral in which they seem to be stuck. If they can replace Chambers with an innovation-oriented CEO, or if the stock drops to book value ($10.90/share, which isn’t likely any time soon), then I might call the stock a buy. Until then, Cisco is a solid “sell”.

Posted August 14, 2014 by edmcgon in Economy, News, Stocks, Technology

Ed’s Daily Notes and Traders Corner for July 25th   21 comments

I am being lazy today and combining my morning posts into one.

The S&P 500 levels to watch today:

UPSIDE: 1989 (July 23rd’s high), and 1991 (July 24th’s high and the all-time high and the top of the Bollinger Bands).
LAST CLOSE: 1987.
DOWNSIDE: 1972-1986 (20 data points and the 20 day moving average), 1968-1969 (2 data points and June’s high), 1965 (3 data points), 1962 (July 1st’s low), 1959-1960 (3 data points), 1955 (July 17th’s low), 1954 (bottom of the Bollinger Bands), 1952 (July 10th’s low), and 1944 (50 day moving average).

S&P 500 Daily Momentum: Bearish
S&P 500 Daily Overbought/oversold: Neutral (leaning overbought)
S&P 500 Weekly Momentum: Bullish (weakening)
S&P 500 Weekly Overbought/oversold: Overbought
S&P 500 Futures: Negative
Overall: That was a short bull move! The top of the S&P 500’s Bollinger Bands are providing firm resistance, as the 1972-1986 range seems to be providing firm support. We may see another run at the top of the BB’s today, but I wouldn’t be surprised to see the S&P 500 close down in the 1972-1986 range today.

And now for the news…

Wall Street Journal: Google’s New Moonshot Project: the Human Body

Google Inc. has embarked on what may be its most ambitious and difficult science project ever: a quest inside the human body.

Called Baseline Study, the project will collect anonymous genetic and molecular information from 175 people—and later thousands more—to create what the company hopes will be the fullest picture of what a healthy human being should be.

The early-stage project is run by Andrew Conrad, a 50-year-old molecular biologist who pioneered cheap, high-volume tests for HIV in blood-plasma donations.

Dr. Conrad joined Google X—the company’s research arm—in March 2013, and he has built a team of about 70-to-100 experts from fields including physiology, biochemistry, optics, imaging and molecular biology.

Other mass medical and genomics studies exist. But Baseline will amass a much larger and broader set of new data. The hope is that this will help researchers detect killers such as heart disease and cancer far earlier, pushing medicine more toward prevention rather than the treatment of illness.

“With any complex system, the notion has always been there to proactively address problems,” Dr. Conrad said. “That’s not revolutionary. We are just asking the question: If we really wanted to be proactive, what would we need to know? You need to know what the fixed, well-running thing should look like.”

The project won’t be restricted to specific diseases, and it will collect hundreds of different samples using a wide variety of new diagnostic tools. Then Google will use its massive computing power to find patterns, or “biomarkers,” buried in the information. The hope is that these biomarkers can be used by medical researchers to detect any disease a lot earlier.

From an objective standpoint, this is fascinating. As a Google investor, I love how they are looking in different areas well beyond their expertise. They may get nothing from it, or they might create something beneficial to mankind (which could come with lots of dollar signs attached). Either way, I am pleased with my investment.

Market Watch: Greenspan says bubbles can’t be stopped without ‘crunch’

The article above is a must-read interview with former Federal Reserve Chairman Alan Greenspan. Whether you agree or disagree with him, his views are intriguing.

Ed’s Daily Notes for July 23rd   3 comments

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Bloomberg: Apple Posts Second Straight Profit Gain as IPhone Jumps

Apple Inc. (AAPL) said quarterly profit rose 12 percent to $7.75 billion, with a jump in iPhone and Mac sales helping to make up for a drop in iPad demand.

Apple sold 35.2 million iPhones and 4.4 million Macs in the fiscal third quarter ended June 28, up 13 percent and 18 percent respectively from a year ago. That helped boost revenue by 6 percent to $37.4 billion. IPad sales fell for the second straight quarter to 13.3 million, the company said in a statement today.

…Yet the results were mostly in line with analysts’ estimates and weren’t the blowout that investors have come to anticipate from the company. Apple is also approaching one of its most critical product rollouts in years. After facing questions about whether it can build breakthrough products without co-founder Steve Jobs, Apple is prepping new bigger-screen iPhones, a wearable gadget and an upgrade to its Apple TV set-top box, people familiar with the plans have said.

Although Apple is cheaper than other companies in their industry, I still wouldn’t call it cheap. It would have to fall to $80 or less before I would consider it cheap. Apple is a good short-term growth company, but longer-term (5 years from now) it has too many dark clouds. Overall, I would rate Apple as a “hold”.

Bloomberg: Microsoft’s Quarterly Profit Hurt by Nokia Acquisition

Microsoft Corp. (MSFT) reported profit that fell short of estimates in the fiscal fourth quarter, weighed down by the acquisition of Nokia Oyj’s handset unit, where about 12,500 jobs will be cut.

Net income in the period that ended June 30 was $4.61 billion, or 55 cents a share, including adjustments related to Nokia, the company said in a statement today. Analysts were predicting, on average, profit of 60 cents a share, according to estimates compiled by Bloomberg. Excluding the Nokia-related items and taxes, profit would have been 66 cents a share, beating the average prediction for 64 cents.

Chief Executive Officer Satya Nadella, who took over in February, is struggling to cut costs at Nokia after Microsoft completed its 5.44 billion euro ($7.33 billion) acquisition of the mobile-phone operations in April. Microsoft’s main software business topped estimates, owing to strength in Internet-based cloud programs and corporate computer applications.

…Microsoft is also seeing signs of improvement in the PC market, which drives sales of Windows and Office software. PC shipments declined 1.7 percent in the second quarter, a smaller drop than estimated as businesses upgraded their equipment. Demand in the U.S., Europe and Canada also helped to make up for a drop in Asia, researcher IDC said earlier this month.

Intel Corp. also released results last week that topped analysts’ projections. Microsoft’s Hood said the company is seeing similar trends to those reported by Intel.

One of my main problems with the whole emphasis on mobile is the assumption that pc’s are dead. What is replacing the pc? The smartphone? The tablet? Neither of these has the computing power of a pc. Laptops are a lot closer to pc’s than they used to be, but even those are almost considered passé by the markets.

That said, even Microsoft is getting richly priced. It is time to start looking for the exit.

Posted July 23, 2014 by edmcgon in Earnings Season, News, Stocks, Technology

Ed’s Daily Notes for July 9th   Leave a comment

Bloomberg: Fed Watcher’s Guide To FOMC Minutes

The big news today:

Here’s what to look for when the Federal Reserve releases minutes from the Federal Open Market Committee’s June 17-18 meeting at 2 p.m. today in Washington.

— Lift-off timing: Any indication of how close the Fed is to its first interest-rate increase since 2006 is “the most important question” the minutes could answer, said Guy Berger, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut. The minutes could reveal a growing sentiment that Fed officials “feel like they are moving toward the lift-off date faster than they previously anticipated,” even if they “haven’t quite reached a consensus on it yet,” he said.

— Updated FOMC forecasts for unemployment, inflation, and the federal funds rate released in June “suggest that there are certainly people, relative to where they were three or six months ago, who are more optimistic about the recovery,” Berger said.

— The question is whether the views of hawkish FOMC members, who would rather see rates rise sooner, are “gaining much traction within the committee,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, and a former economist at the Federal Reserve Bank of Richmond.

The markets may be a little tepid this morning in anticipation of the FOMC minutes.

New York Times: Samsung Foresees a Decline in Profit

To me, the bellwether for earnings season is Samsung, which typically issues earnings estimates right at the start of earnings season. The news this quarter is not good:

Samsung, which is based in South Korea, on Tuesday published a financial earnings preview that forecast a profit of about 7.2 trillion won, or $7.1 billion, for the three months that ended in June.

While that is still a substantial chunk of money, the overall profit represents a decline of 24 percent from the same period a year ago. The profit forecast also missed analysts’ expectations of about 8 trillion won.

The problem:

Growth of the overall smartphone market has slowed over the last year, largely because many people who want a smartphone already have one. Smartphones with nice screens and high-quality cameras are commonplace, and people may be feeling less compelled to upgrade as frequently, analysts say.

But Samsung, which offers a range of phones at various prices, is feeling pressure from all sides of the market. In the high end, it faces stiff competition from Apple, whose iPhone sales have recently accelerated thanks to a new partnership with China Mobile, the largest phone carrier in the world.

And in the low end and midtier phone markets, Samsung is facing intense competition from emerging Asian phone makers like Lenovo, ZTE, Xiaomi and Huawei.

If you want to know why the Nasdaq, of the three U.S. indexes, took the biggest hit yesterday, look no further than this story. While I won’t call this the death knell of the mobile internet industry, I will say it is probably a good idea to expect lower growth rates going forward, especially in the hardware part of the industry.

The Jerusalem Post: Hamas rockets reach Jerusalem and Tel Aviv

We get yet another Palestinian attack on Israel. The main thing to watch with this is what Israel does. As long as this confrontation remains between Israel and Palestine, it shouldn’t have much of an impact on world markets. On the other hand, if Israel uses this as an excuse to launch a preemptive attack on Palestine’s weapon suppliers (Syria? Iran?), this could have a chilling effect on markets.

Ed’s Daily Notes for June 26th   16 comments

Financial Times: Google takes ‘wearable’ battle to Apple with smartwatch services

Google sought to steal a march on Apple and breathe life into a new market for “wearable” devices, as it showed off a range of stripped-down internet services such as voice-activated search to feature on a coming generation of smartwatches.

The search company also outlined plans to take its Android smartphone software into other new markets, signalling an intensification of the platform wars between the leading consumer technology companies and internet companies. These included a version for cars, called Android Auto, and a TV set-top box, named Android TV, taking Google into fields that Apple has already entered.

Apple laid the ground last month for its own iWatch, with the announcement of a fitness app that will act as a hub for a user’s health information, much of it collected from around the body by sensors embedded in wearable gadgets.

The big US tech companies have raced to launch the wearables market as the growth in smartphone sales has levelled off in the developed world, carrying over the tactics they honed in the smartphone wars. Google’s approach, using a new version of its Android smartphone operating system, relies on rallying a range of electronics companies to make devices using its services.

No no no no NO! The smartwatch is DOA. While it is a useful concept for physical fitness fanatics, it has nothing useful to offer the average user.

For intelligent and innovative companies, both Apple and Google are dropping the ball on this one. Look at your forearm, and consider how much space a watch consumes on it. You could put a device there that is larger than your smartphone, with a whole lot more utility.

CNBC: Georgia is CNBC’s Top State for Business in 2014

The South rises again!

Georgia—the Peach State—slices up the competition in the 2014 America’s Top States for Business rankings by CNBC, signaling an apparent shift back to the Sun Belt from the energy-rich Northern Plains.

Always a contender, Georgia outdid itself in 2014.

The state scores a solid 1,659 points out of a possible 2,500, finishing at or near the top in three categories and in the top half in all but two. Since we began rating the states for competitiveness in 2007, Georgia has never finished outside the top 10 overall, with fourth-place finishes in 2007 and 2011, and a respectable eighth place in 2013.

Georgia rules! And it’s a nice place to live too.

Posted June 26, 2014 by edmcgon in News, Stocks, Technology

Ed’s Daily Notes for June 19th   1 comment

Bloomberg: Fed Dots Ignored as Investors Focus on Yellen’s Message

Investors trying to anticipate Federal Reserve interest-rate policy are ignoring the dots and focusing on Chair Janet Yellen’s words.

Fed officials yesterday released forecasts, represented as dots on charts, showing that starting next year interest rates would rise from zero faster than previously expected. Equity markets rallied on Yellen’s pledge of monetary stimulus for as long as necessary to achieve the central bank’s goals.

Yellen brushed aside concerns about quickening inflation, diminishing labor-market slack and asset-price bubbles in a prepared statement and press conference, emphasizing the Federal Open Market Committee’s view that rates are likely to stay low “for a considerable time.”

Yes, the “Mighty Oz” doesn’t want you looking behind the curtain. Just keep buying stocks, and all will be well…

Fox News: Amazon launches Fire Phone, takes personal shopping mobile

After months of rumor and speculation, Amazon has jumped into the smartphone market with the launch of its eagerly-anticipated Fire Phone.

Most of the hype over the last few months has focused on the device’s 3D capabilities, which Amazon duly delivered at the launch event in Seattle. Shrewdly, though, the online giant has also built a host of features into the Fire Phone that will pull users further into its vast retail empire.

Powered by a Qualcomm Snapdragon processor, the Fire Phone has a 4.7-inch screen and will be available exclusively on AT&T when it ships on July 25. Pricing starts at $199 for a 32GB version of the phone with a two-year contract. A 64 GB version will be priced at $299 with a two-year contract. The 32GB and 64GB versions will also be available with zero money down from $27.09 a month and $31.25 a month, respectively, on AT&T’s Next 18 plan.

The device’s Firefly feature offers image, text and audio recognition, letting users scan QR and bar codes, Web and email addresses, and over 100 million other items, according to Amazon. This includes movies, TV shows, and song recognition in the style of the popular Shazam app. When Firefly recognizes a song, for example, it taps into the Amazon Music catalog. The retailer says that Firefly can identify 35 million songs.

In addition to movies, TV shows and music, Firefly can recognize 70 million products, including household items, books, DVDs, CDs and video games. Fire Phone users can then access the relevant product details and order them from Amazon.com.

…Amazon is also offering a free 12-month membership to its Prime service for Fire Phone customers, further underlining the company’s desire to bring new customers into its world. Existing Prime users will receive an additional 12 months added to their account.

Additionally, the company is touting free unlimited cloud storage of photos taken with the phone and a ‘mayday’ feature, which establishes a live video link with an Amazon expert to walk users through the phone’s features.

…As expected, plenty of attention has been focused on the Fire Phone’s 3D capabilities. Amazon CEO Jeff Bezos introduced these features during the launch event, which the company describes as “dynamic perspective”. This gives users the ability to scroll through Web pages by tilting the screen and see different views of products in the Amazon Shopping app. Dynamic perspective could have a big impact in video gaming. Amazon has applied the technology to the Lili game, with users tilting their heads to alter a character’s perspective.

While I don’t see the Fire Phone as a game changer, it does look competitive. However, I also see the smartphone industry getting a little crowded.

Bloomberg: Half-Price Kurd Oil Threatens Iraq Breakup With Turkish Help

A tanker containing a million barrels of crude oil is floating around the Mediterranean, and its cargo is available at half-price. Yet if any country seizes the bargain, it may be pushing Iraq closer to disintegration.

The oil aboard the tanker is at the center of a fight over its ownership between the semi-autonomous region of Kurdistan, which pumped and shipped the crude from its territory in northern Iraq, and the central government in Baghdad, which claims the rights to all oil revenue.

Kurdish Peshmerga armed forces seized on the anarchy in northern Iraq, where militant Islamists routed the Baghdad government’s army last week, to occupy the region’s key oil hub, Kirkuk. The oil dispute has raised the possibility of the Kurdish region achieving financial self-sufficiency to go with those expanding territorial ambitions.

“If that tanker docks, Iraq’s Kurdistan Regional Government will take an important step toward independence and hasten the break-up of Iraq,” said Nihat Ali Ozcan, an analyst at the Economic Policy Research Foundation in Ankara, said by phone June 13.

The potential sale has embroiled Turkey, the conduit for the Kurdish oil, and Iraq in legal arbitration, while the U.S. has sought to dissuade the Kurds from going it alone.

I find myself rooting for the Kurds in this situation. Maybe it’s just me, but they seem to be the only group in the Middle East that has shown any kind of rational behavior. For the rest of the Middle East, it is all about politics of one sort or another.

Financial Times: Advertisers have lost the attention of a generation

The sub-headline says it all:

Tech-savvy US teens now watch only about 21 minutes of broadcast television a week

The advertising industry has been turned on it’s head. The worst part is the industry is in denial.

On the bright side, the kids have this one right: Television is a big waste of time. Since I gave up my television service a year ago in April, I find I have much more time in my life. I still have Netflix on my tv, so if I feel like watching tv, I can. But I do it on my own time, and not according to some programmer’s schedule.

Posted June 19, 2014 by edmcgon in Federal Reserve, News, Politics, Stocks, Technology