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.
The book, 'No Easy Day: The Firsthand Account of the Mission That Killed Osama Bin Laden', is set to hit shelves on September 11, later this year.
It is penned under the pseudonym "Mark Owen," according to the publisher, but multiple sources were quoted by Fox News as saying that his name is in fact Matt Bissonnette of Wrangell, Alaska.
Bissonnette could be exposing himself to legal trouble, as the Pentagon has not vetted the account.
The tell-all book also has apparently upset a large population of former and current SEAL members who worry about releasing information that could compromise future missions.
One Navy SEAL was quoted by the Fox News as saying, "How do we tell our guys to stay quiet when this guy won't?" Other SEALs are expressing anger, with some going so far as to call him a "traitor."
And Colonel Tim Nye, a Special Operations Command spokesman, said the author "put himself in danger" by writing the book.
"This individual came forward. He started the process. He had to have known where this would lead," Nye said. "He's the one who started this so he bears the ultimate responsibility for this," he added.
According to a press release from his publisher, Penguin Group, "Owen (Bissonnette) was one of the first men through the door on the third floor of the terrorist leader's hideout and was present at his death."
In the book, Bissonnette writes "it is time to set the record straight about one of the most important missions in US military history."
A unilateral US military raid killed Laden in Abbottabad on May 2, 2011.
An experienced member of the elite Navy SEAL special operators, Bissonnette also participated in the highly publicised rescue of Captain Richard Phillips in the Indian Ocean in 2009.
That mission involved a daring rescue that ended when SEAL snipers shot and killed three Somali pirates with direct shots to the head.
Bissonnette received the rank of chief before he retired. The book is co-authored with Kevin Maurer, author of four books, many of which were based on Special Operations.
Along with using the pseudonym "Mark Owen," Bissonette protected his fellow SEAL Team 6 members by changing their names in the book.
Both the Pentagon and CIA said on Wednesday that the book was not in any way vetted by either department to prevent unwanted classified information from being released.
( PTI )
The 50-year-old visited the restaurant with a group of friends and insisted on paying the bill but couldn't as the eatery didn't accept his American Express card and Cruise was only carrying US dollars, reported Daily Mail.
"It was a big shock for us when he walked in. He said we had been recommended to him, but he would not say by whom. At the end of the meal he wanted to pay, but we could not accept American Express.
"He said his whole group only had dollars, then a lady came forward and paid in 50 pound notes," said Darshit Hora, the restaurant manager. Darshit says if the actor, who left with a generous tip, wouldn't have been able to pay the bill, the restaurant would have been more than happy to put on the house.
The bill was 220.85 pounds so they left almost an 80 pound tip. It was very generous. If they did not have any money, it would have been on the house," he added.
Cruise is reportedly enjoyed curry meals, specially chicken tikka at the restaurant. The 50-year-old actor, who recently divorced his wife Katie Holmes, was seen gorging on chicken tikka at the Indian restaurant Veer Dhara in St Peter's Street, reported Contactmusic.
The staff at the restaurant was surprised when the actor turned up with his entourage and ordered a huge list of dishes. The group also ordered fish and chicken starters, two lobsters, two Lamb dishes, rice, bread which totalled up to a bill of 220.85 pounds. The actor is currently busy shooting for his upcoming film, 'All You Need Is Kill'.
( PTI)
In an attempt to maintain its strict currency peg to the euro, the Danish central bank lowered its main deposit rate for banks—the certificate of deposit or CD rate—to -0.2 percent last month.
The Nationalbanken felt it had little choice. Investors flocked to Denmark in search of a haven outside the euro zone—one that has no currency risk with the euro and offers cheap protection against a break-up of the single currency.
The move to negative rates is being watched closely by central banks around the world. “We have never been so popular,” laughs one Danish policy maker.
Apart from a brief move by Sweden in 2009-10, negative official rates are something of a novelty. But others may soon follow suit, with the European Central Bank recently cutting its deposit rate to zero and warning that it could go negative.
Policy makers in the UK and elsewhere in Europe have expressed interest in the idea as a potential way of forcing banks that are currently hoarding cash to start lending again.
“The Danish central bank is the first one in a small experiment of what happens when you impose negative interest rates,” says Thomas Kressin, head of the European foreign exchange desk at Pimco, one of the world’s largest bond investors.
“The popularity of the Danish krone is because of the unpopularity of the euro. Investors all over the world are looking for safe investments and are even willing to face negative interest rates for the security of knowing their money will still be there.”
So far, the economic impact of the move is largely unknown. Scandinavians take their summer holidays in July, so the central bank has little normal data to rely on. But officials acknowledge there has been a negative impact on banks, which they estimate to amount to about DKr300 million ($50.5 million).
Danish banks have about DKr200 billion on deposit at the central bank. While Nationalbanken has increased the amount banks can hold on current account—where the interest rate is zero—from DKr23 billion to DKr70 billion, this still leaves a sizeable chunk where banks will, in effect, have to pay the central bank to look after their money.
Bank executives, as well as central bankers, are clear that lenders have to increase their loan prices to compensate for the loss, as they are unable to impose negative rates on customers.
“When we are at zero [for customers’ deposits], we can’t go any lower. We have to recover that money in other ways, so we do that by increasing our margins on loans,” Eivind Kolding, chief executive of Danske Bank, the country’s biggest lender, said this month.
Government bond yields have followed suit, complicating a normal way for banks to make money. Denmark’s two-year bond yields, which had never previously been negative, were -0.22 percent on Thursday.
The danger is that this hurts the economy by reducing lending. But, in Denmark, this has been offset by a huge fall in mortgage rates as the official lending figure—the central bank’s headline interest rate—has also dropped, although it remains just in positive territory at 0.2 percent.
One-year mortgage bonds being auctioned this month are expected to yield only about 0.25 percent, according to analysts, down from the 1 percent they fetched last year.
Mr. Kolding notes that, for consumers, the cost of a mortgage in Denmark is exceptionally low. But outsiders still think the overall impact on the economy is more negative than positive.
“It is almost quantum physics,” says Mr. Kressin. “All the way down to zero, monetary policy is ultra loose. But below zero, to some extent you tighten policy, because you impose a cost on the banking system.”
Nationalbanken officials are also keeping a close eye on the circulation of coins and notes. So far, as commercial banks still offer zero for current accounts rather than negative rates, there has been no move from the public to hoard cash. But central bankers concede that if the CD rate fell to, say, -1 percent, banks might feel under more pressure to charge customers.
Denmark’s fierce defense of its currency peg means that a further move into negative territory cannot be ruled out, especially if the ECB were to cut rates further. But the small relative size of the Danish economy and the existence of the peg have led some to question how much other central banks can learn from its experiment.
“Can the ECB draw any lessons? It’s too much of a stretch from my perspective,” says Mr. Kressin.
( FT.com)
The author, who uses a pseudonym, "was one of the first men through the door on the third floor of the terrorist leader's hideout and was present at his death," The Washington Post quoted a statement from Dutton, the New York-based publisher.
The book, 'No Easy Day: The Firsthand Account of the Mission That Killed Osama bin Laden', will be released on September 11.
If what the author says is true, the book would pull off the secrecy maintained by members of the team of Navy SEALs involved in the raid on bin Laden's compound in Abbottabad, Pakistan.
It could also raise legal and political issues for the Obama administration, which has carried out an aggressive crackdown on leaks even while it has also been accused of offering access to journalists and moviemakers to exploit the success of the bin Laden operation, the Post said. It added that the Pentagon and CIA officials appeared to be caught off-guard by Dutton's announcement of the forthcoming book.
Officials indicated yesterday that neither the author nor the publisher had cleared the book's contents with the Defence Department or the CIA, a step ordinarily required by former service members or spies seeking to write about classified operations.
"As far as we can determine, this book was not submitted for pre-publication review," said CIA spokesman Preston Golson.
Pentagon spokesman George Little said he was "unaware that anyone in the department has reviewed it". White House officials said they knew nothing of the book. "We learned about this book today from press reports, said Tommy Vietor, spokesman for the National Security Council. "We haven't reviewed it and don t know what it says".
The author's name is listed as Mark Owen, which Dutton acknowledges is a pseudonym.
( PTI )
A nearly 22 minute-long documentary titled 'In Search of Destiny (Coin Divers)' by Aakash Arun attempts to throw light into the lives of coin divers numbering around 400-500 and living near the much polluted but equally, if not more, revered Yamuna that flows through here.
The film begins with a train chugging on a bridge and people 'offering' coins to the Yamuna and subsequently praying for their wishes. It is followed by a shot where a child is seen hurling a dumbbell-shaped greasy object into the river and tugging the rope. The camera zooms into the dumbbell-shaped object and you see one shining coin stuck to it. Later on the scene focuses on two men who narrate how they receive sustenance from the Yamuna in the form of coins.
"The men are part of the marginalised section which is not only homeless and helpless but also are susceptible to the hills of addiction, says Arun. Nearly 60 per cent of these coin drivers in the national capital are in the grip of some form of addiction. These people are not to difficult to find out. Most of them are present in a radius of 4-6 km of the bridge over Yamuna that can be reached from Kashmere Gate, according to the film's narration.
"Coin divers on an average find coins worth Rs 100 daily," says Arun adding that earning goes up on few occasions when luck smiles upon them in the form of trinkets, heavy metallic objects that fetch decent prices. The documentary was shot entirely using a DSLR camera which, he said, could be brought out in the open only after he could gain confidence of the coin divers.
The fact that Yamuna plays a pivotal role in these people's lives can be easily grasped by viewers. "Yamuna is all encompassing. She gives shelter to all who comes to her. We sleep under the sky and sustain ourselves from her largesse (read coins)," says an elderly man in the documentary.
( PTI )
The Hindu's Business Line unleashes the position of Two Wheeler domestic makers of India who are geared up for production cuts owing to demand dip,reducing growth,piling up of inventories and competition. Their research shows that how players like Bajaj & TVS are going to be hurt the most with the two wheeler auto sector starting to face the downfall.
http://www.thehindubusinessline.com/industry-and-economy/article3765331.ece?homepage=true
http://www.thehindubusinessline.com/industry-and-economy/article3765331.ece?homepage=true
