The summer this year has so far provided some level of respite (though not from the unusually hot weather!) against uncertain markets, with the S&P index ranging in a 10% band compared to 15% in 2010 and 20% in 2011. The relatively low volatility in markets has occurred despite a host of negative factors prevalent as in the previous two years– with the current factors being continued turmoil in Europe, the fiscal cliff in the US, the China slow-down to name a few. Why the relative calm? It is the commitment to provide adequate monetary support by both the Fed and the ECB (and the PBOC) which has effectively taken out the downside tail risk in markets and provided support for the "risk on" trade. Global central bank behaviour (in form of both commitments as well as actions) will be the critical factor over the coming weeks and months in providing further impetus to a cyclical bull market phase which could last twelve to eighteen months - albeit with continued volatility as some of the risk factors outlined above are likely to remain.
The Chicago Fed's National Activity Index, is based on 85 economic indicators drawn from four broad categories of data, and is produced monthly. The four categories are:
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As always, the famed value investor Jeremy Grantham did not disappoint with his latest quarterly newsletter - with this one focussed on the critical long-term issue of rapidly declining natural resources. This is likely to be the most important theme to play out over the next several decades and will have broad implications on every aspect of our lives going forward. So I would urge you to read the attached (long!) piece carefully - a brief summary to whet the appetite follows below:
-The world is five years into a severe global food crisis which is threatening global stability and growth, but is unfortunately underestimated by almost everybody.
-As analysed in a note last year, we are currently 10 years into a paradigm shift from a century long phase of falling prices to rapidly increasing real prices.
-We need to increase food production by 60% to 100% by 2050 to feed a projected population of 9 billion, with more meat to cater to the needs of the fast growing middle class in the developing world.
-However, we are unlikely to reach the lower end of the above estimate (unless under a very optimistic scenario) as there are many factors which are providing a headwind as outlined below:
1)Grain productivity has fallen from 3.5% in 1970 to 1.5% today. Even the most efficient producers are reaching a limit, as increases in productivity per acre reaches zero for various grain species.
2)Shortages of underground water and increased soil salination will offset the gain in production due to increased irrigation.
3)Continued bad farming practices causing land degradation is reducing our sustainable productive capacity.
4)Fertilizer use has increased five times over the last 50 years and is unlikely to provide the same impetus to increased production as in previous years.
5)Increased weather instability causing floods and droughts and increased heat, as we have see over the last three years, will negatively impact agricultural production.
6)Rapidly increasing cost of fertilizers and fuel will also have a severe negative impact on production.
-Even if we are able to raise food production to a level to feed the increased population, the significant rise in the cost of inputs will make it unaffordable to an increasing segment of the population.
-On a positive side, scientists now are optimistic that they will be able to introduce more efficient photosynthesizing genes into vital plants such as wheat and rice, in 20 to 30 years. This would increase production by 50% and buy some time.
-The rapid increase in food prices in 2008 and 2011 reflected these difficulties, but the rise in food prices over the last six weeks is more problematic as it occurred despite a significant increase in plantations. This has been caused by rapidly rising global demand which has made agriculture more prone to price shocks.
-Several countries dependent on foreign food grain imports have still not recovered from the 2008 food price shock, with food rising to 40% of households budgets in some cases. These high levels put immense social pressures and may have contributed to the Arab Spring. Any price increases from these levels would be catastrophic and could cause social collapse and unprecedented mass immigration.
-Strong countermeasures taken by the rich countries would be effective in curtailing the developing crisis but are unlikely to be taken as the they are not yet adversely affected by the crisis and is therefore not a top priority.
-Continued food pressures, exacerbated by fuel price increases, dramatically increase the risk of international confrontations - China is particularly concerned about resource scarcity, in particular food.
-Increased supply of natural gas will buy (mainly for the US) some time but also create more complacency and dependency on hydrocarbons. While the energy problem is less critical in the short-term than the food crisis, with sufficient supply causing only a slow and erratic increase in prices, it does make the food problem worse by increasing cost pressures on poorer countries.
-However, in the long term, increasing energy costs (particularly oil) and shortages are second only to the food problem and will result in very high prices which will negatively impact global growth and the viability of current economic models.
-Theoretically though, the energy problem can be contained through large investments in renewable and smart grids. The countries which are able to do this will emerge stronger with advantages in lower costs and energy security – most countries (including the US) will be unable to muster the political will and courage to implement this programme and counter the enormous political power of energy interests.
-Metals are a relatively minor problem in the next few decades with only steadily increasing prices. However, in the long run they are the most intractable problem as there are no research-intensive solutions like for agriculture or capital-intensive and technology-intensive solutions like for energy. We will slowly run out of metals eventually leading to dramatic price rises.
-We are currently ill-equipped to address the above problems in an effective manner – being ill-informed, manipulated, full of inertia and corruptible. The global stakes are very high and we must try harder.
-The portfolio implications of all this , for a personal portfolio without career risk, and a time horizon of 10 years and beyond, are:
1)expect resource stocks (with resources in the ground) to outperform over the next several decades as resource prices continue to rise.
2)farming and forestry are on top of the list .
3)long term investors should have at least a 30% weighting in a resources package.
4)a relative beneficiary would be high quality companies which have a smaller exposure to resources in terms of final sales and high profit margins.
5) More importantly, the resource squeeze combined with other growth-reducing factors(to be covered in the next quarterly) is likely to reduce returns from the rest of the investment portfolio.
Fascinating piece with serious implications for investment portfolios and quality of life in general! I have repeatedly emphasised the importance of having a high allocation to natural resources, and gradually accumulating a position which would reach 30% of your portfolio over the course of this decade (starting now if you haven't already got some exposure) would provide a reasonable level of protection against rising resource prices. In addition, having a high weighting in countries like China which are taking the natural resource issue more seriously than other countries would make sense. Exposure to resource stocks and underlying commodities via funds, etfs and single stocks would be appropriate, while farmland and forestry could be accessed via some funds and direct purchases.
As highlighted in the first paragraph, central bank monetary policy actions and commitments are going to be critical over the next few weeks and months in terms of reinforcing the bullish momentum for stock markets and other risk assets. This becomes even more important given the inability to provide more fiscal stimulus (outside of China) making economic growth anaemic. The chart below highlights clearly what ails the US economy:
| 1)Production and Income 2)Employment, Unemployment, and Hours 3)Personal Consumption and Housing 4) Sales, Orders, and Inventories |
It is the third category which has been holding back the economic recovery and is likely to do so for a while longer. So failing further fiscal stimulus, we can expect continued monetary stimulus (and commitments to that effect) to keep the markets and the economy afloat until consumer demand and housing recover to trend levels.
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The software can even build up a 3D model of your house, from which the hackers can inspect your rooms, potentially gleaning information about valuables in your home, calendar entries as well as spying on you.
The app 'PlaiceRaider' was created by US military experts at Naval Surface Warfare Center in Crane, Indiana, to show how cybercriminals could operate in the future, the Daily Mail reported.
The creators even demonstrated how they could read the numbers of a cheque book when they tested the Android software on 20 volunteers.
As long as the app could be installed on the users phone, it can instantly begin beaming back images from the phone when it senses the right conditions, and software on the other end can then re-construct maps of the visited room.
The team gave their infected phone to 20 individuals, who did not know about the malicious app, and asked them to continue operating in their normal office environment.
The team said they could glean vital information from all 20 users, and that the 3D reconstruction made it much easier to steal information than by just using the images alone.
Researcher Robert Templeman said their app can run in the background of any smartphone using the Android 2.3 operating system.
Through completely opportunistic use of the phone's camera and other sensors, PlaceRaider constructs rich, three dimensional models of indoor environments.
"Remote burglars can thus "download" the physical space, study the environment carefully, and steal virtual objects from the environment (such as financial documents, information on computer monitors, and personally identifiable information)," researchers said.
PlaiceRaider will silently take photographs, recording the time, location and orientation due to the sensors within most modern smartphones.
It will then delete any blurred or dark shots, before sending the rest back to a central server, which can reconstruct the user's room, based on information such as phone orientation.
Then the hacker can explore the user's property at will - for instance, scanning the room for calendars, private details on computer screens, and cheque-books or card details.
"We implemented on Android for practical reasons, but we expect such malware to generalise to other platforms such as iOS and Windows Phone," Templeman said.
( PTI )
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How to find a porn sites over the internet? A question which had no straight forward answer till now. But a new search called Search.xxx exclusively search the porn sites over the internet. It will help to find the porn content from the internet pool.
Search.xxx, which bills itself as "The Search Engine For Porn," searches for sites with the suffix .xxx, which, as one may have posited, are adult-themed.
ICM Registry, a Florida-based company that oversees all .xxx domains, launched the site on Thursday.
Aside from searching exclusively for porn, Search.xxx differs from other search engines like Google and Bing by allowing users to filter results by sexual orientation. Queries in Search.xxx aren't recorded in users' Google search history, so worries about potentially embarrassing previously-searched terms showing up at inopportune times are alleviated.
"It's the same dirty porn that you'd get in [sites ending with] .com, but in a safe, more controlled environment," Stuart Lawley, the CEO of ICM Registry, told The Huffington Post in an interview.
The company argued that its search engine returns better results because it knows that users are already looking for porn, rather than, for example, information about a sexual position.
As of Thursday afternoon, Lawley said the site had 100,000 unique visitors and 500,000 search queries.
There's no direct revenue model with Search.xxx. Rather, the goal is to drive traffic to the search engine so more porn providers purchase .xxx domain names, which is how his company makes money.
"Our long-term game plan is to increase that market share," Lawley said. "The more customers we get searching Search.xxx, the more providers we will have registering."
Lawley said that most .xxx domain names, available from retailers like Go Daddy and Domain.com, are sold for about $75. The company reserved about 1,000 high-value addresses to sell for substantially more. Gay.xxx, for example, fetched $500,000, while Fetish.xxx sold for $300,000. (Read More:Are .XXX Domains the Next Porn Battleground?)
According to Bloomberg Businessweek, Lawley's company could make $200 million per year off the domain names.
The Internet Corporation for Assigned Names and Numbers, the organization responsible for approving domain suffixes, approved the .xxx designation for ICM Registry last year.
Until this year, only a handful of what are called top-level domains, like .com, .net and .edu, existed.
About 13 percent of Internet searches were for "erotic content" in the year that ended July 2010, Forbes reported last year. About 4 percent of the 1 million websites with the highest traffic were devoted to the subject.
Search.xxx, which bills itself as "The Search Engine For Porn," searches for sites with the suffix .xxx, which, as one may have posited, are adult-themed.
ICM Registry, a Florida-based company that oversees all .xxx domains, launched the site on Thursday.
"It's the same dirty porn that you'd get in [sites ending with] .com, but in a safe, more controlled environment," Stuart Lawley, the CEO of ICM Registry, told The Huffington Post in an interview.
The company argued that its search engine returns better results because it knows that users are already looking for porn, rather than, for example, information about a sexual position.
As of Thursday afternoon, Lawley said the site had 100,000 unique visitors and 500,000 search queries.
There's no direct revenue model with Search.xxx. Rather, the goal is to drive traffic to the search engine so more porn providers purchase .xxx domain names, which is how his company makes money.
"Our long-term game plan is to increase that market share," Lawley said. "The more customers we get searching Search.xxx, the more providers we will have registering."
Lawley said that most .xxx domain names, available from retailers like Go Daddy and Domain.com, are sold for about $75. The company reserved about 1,000 high-value addresses to sell for substantially more. Gay.xxx, for example, fetched $500,000, while Fetish.xxx sold for $300,000. (Read More:Are .XXX Domains the Next Porn Battleground?)
According to Bloomberg Businessweek, Lawley's company could make $200 million per year off the domain names.
The Internet Corporation for Assigned Names and Numbers, the organization responsible for approving domain suffixes, approved the .xxx designation for ICM Registry last year.
Until this year, only a handful of what are called top-level domains, like .com, .net and .edu, existed.
About 13 percent of Internet searches were for "erotic content" in the year that ended July 2010, Forbes reported last year. About 4 percent of the 1 million websites with the highest traffic were devoted to the subject.
