Jul
29

The Stimulus End Game

Dan on July 29th, 2014

I have been banging the drum about economic stimulus, both domestic and in Japan for awhile now. A great article summing up the current state of affairs in Japan appeared here:

http://www.businessinsider.com/japan-inflation-abenomics-update-2014-7

I downloaded the bloomberg.com PDF which is referenced in the article and skimming it found some interesting tidbits. Here are a couple of the most interesting charts:

wagegrowthjapandebt Unemployment is falling, but real wages are also falling.  Public debt is huge – way off the scale for a developed country.

In the Bloomberg PDF I found this response to what the endgame is for economic stimulus, i.e. how to get out of inflating the economy and wind down the huge public debt (highlighting is mine).

bojendgame

 

Sounds like its going to be a minefield to try to stop quantitative easing without driving up interest rates.  If interest rates rise, then the huge debt accumulated becomes much more expensive, perhaps impossible, for the government to service.  It will require the goverment to walk ‘a very narrow path’ to try to get it done.  Based on the success of the governments managing the tech bubble of the early 2000′s, and the housing bubble of 2007, I am not too confident they can orchestrate a soft landing.

I also ran across a comment from Janet Yellen, the Fed chair, regarding the economic stimulus in the US.  From a fed speech on July 2, 2014 (again , highlighting mine):

In my remarks, I will argue that monetary policy faces significant limitations as a tool to promote financial stability: Its effects on financial vulnerabilities, such as excessive leverage and maturity transformation, are not well understood and are less direct than a regulatory or supervisory approach; in addition, efforts to promote financial stability through adjustments in interest rates would increase the volatility of inflation and employment. As a result, I believe a macroprudential approach to supervision and regulation needs to play the primary role. Such an approach should focus on “through the cycle” standards that increase the resilience of the financial system to adverse shocks and on efforts to ensure that the regulatory umbrella will cover previously uncovered systemically important institutions and activities. These efforts should be complemented by the use of countercyclical macroprudential tools, a few of which I will describe. But experience with such tools remains limited, and we have much to learn to use these measures effectively.

Yikes!  I am not wild about seeing ‘not well understood’ and ‘we have much to learn’ in the same paragraph.  Hopefully the US can learn from Japan as they are farther down the road than the US.  But Japan has no such luck, so they could be in for a rough road ahead.

 

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Jul
22

The ACLU vs SARs

Dan on July 22nd, 2014

Nice to see the ACLU take on the governments ‘Suspicious Activity Reporting’ program.  Check out this article to see these individual stories of harrassment in the name of homeland protection:

https://www.aclu.org/national-security/gill-v-doj-challenge-governments-suspicious-activity-reporting-program

If you are not offended by the assault on civil liberties this program raises, at least be offended by how much money is spent monitoring american citizens for no reason.  Thirteen years after 9/11 and the government is still in overdrive to try to arrest people based on ethnic profiling and illegal electronic surveillance.

The switch from the Bush Administration to the Obama Administration has done nothing to slow the increase in government monitoring of its citizens.  All we can do is continue to publicize these examples to try to get the American public to pay attention to whats going on.

Politics No comments »
Jul
19

New vfsystems.net Website

Dan on July 19th, 2014

A friend called me the other day and said he was was trying to get to one of my sites, and he was on  my ‘brochure’ site, www.vfsystems.net.  Much like the cobblers children that have no shoes, the old vfsystems site was a site I had ignored for years and it was very dated and somewhat embarrassing.

So I decided to embark on rebuilding the site.  I decided to use WordPress as the foundation, as it is pretty much a content site and WordPress is my favorite way to manage content.  Also, the number of wordpress plugins available to easily customize the site came in handy.  I found this nice plugin for my contact us page, and a nice rss feed plugin to pull my technology posts into the site as a way to keep the content fresh.  I donated to the developers that built the plugins I used, as I am trying to get better about rewarding the developers of open software (there is an amazing amount of good stuff freely available out there).

The other cool thing about this site is its responsive.   I found a responsive theme I liked created by Pep Themes.   Rather than try to delve into CSS and build a responsive design, it was great to use a pre-built theme done by someone who had an eye for design and CSS.  Responsive is the term for the site formatting the site differently depending on the screen size.

vfsystemssiteOne of the better examples of a response site is bloomberg.com - go to that site and shrink your browser window, and see how the site reformats itself and swaps in different menus.  Now go to www.vfsystems.net and shrink the browser window to simulate how it would appear on an iPad sized device or a phone. Back in the old days of the web (circa mid 2000′s), in addition to building a full website, we often had to create a mini site suitable for viewing on phones.  Responsive designs have solved this problem, using one site for all devices.

So one more thing off my todo list.  In addition to a new site that i don’t feel embarrassed about, I became  familiar with more plugins and got some other great ideas about future enhancements.

 

Technology No comments »
Jul
6

Can Corporations Have A Religion?

Dan on July 6th, 2014

I heard a really good discussion on a podcast regarding the recent supreme court decision known as the ‘Hobby Lobby’ decision.  I admit  I didn’t know much of the details since the media has just been focusing on the womens rights impact.  But it actually raises a bunch of interesting issues.

If you are up for some not-so-light reading, you can read the full opinion here:

http://www.supremecourt.gov/opinions/13pdf/13-354_olp1.pdf

If you don’t want to read the full opinion – here is my summary (and anybody is free to correct me if I missed something:

The decision was based on the Religious Freedom Restoration Act of 1993 (RFRA) which says that non profits can be exempt from the Affordable Care Act (ACA) contraceptive mandate, on religious grounds.  This was put in the act presumably for churches and religious charities.  The supreme court majority decided that if religious exemptions can apply to religious non-profits, it can also apply to closely held companies where the owners have demonstrated strong religious convictions.

The opinion also makes the point entities opting out of the contraceptive mandate has minimal impact on the recipients of health care.  This is because anybody who is covered under the ACA by a company exempt from the contraceptive mandate can get the coverage directly from the insurer at no additional cost.  The burden of religious exemption is a key piece in the RFRA allowance for religious exemptions.

Justice Ginsburg’s dissent (which starts on page 60 of the ruling) brings up some good points.  Ginsburg argues the court did not consider whether the contraception mandate is a  ‘substantial burden’ in their exercise of religion.  Also, for profit corporations have a different mission than non-profits – a for-profit corporation presumably is created to make money.

What I find disappointing about the media coverage of the decision is the focus on reproductive rights, the bigger issue here is spreading religious rights to corporations.  The problem that I see is with the corporatization of church organizations made it possible for the court to rule their is little difference between the two.

So the big question is, can a corporation have a religion?  I would argue no – the owners of corporations do, but corporations are agnostic.  The owners of corporations should create a separate non-profit and funnel their business profits into that organization.  I would even argue sole-proprietorships should not have the right to claim religious affiliations in the running of the business.

This religious corporation issue is the issue America and the media should be debating, but it seems to be just a side note to the birth control issue.  I think the religious corporation is much more dangerous.

 

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Jun
21

The New World Of Device Specialization

Dan on June 21st, 2014

I was intrigued by Amazon’s announcement of the Fire Phone.  This phone is  a device with some new consumer technologies that makes easy to buy almost anything on Amazon   – and oh – if you still make phone calls you can do that too.

I wonder if we are approaching a world where we have not just one mobile device but multiple mobile devices.  The Fire phone seems optimized for shopping and exploration, and maybe a TV remote if you are in the Amazon Prime eco-system.

As I mentioned in a previous post, I would prefer to have a laptop and a tablet, rather than an all-in-one Microsoft Surface type solution.  Maybe the same is true for phones.  Maybe in the future, we have a phone optimized for when we are shopping, a phone for connecting to the office, and a portable device for home automation.

Blackberry is making a bit of a resurgence with its new operating system that allows it to run Android Apps.  With Blackberry’s enterprise server software making it a good solution for VPN’ing to your office, maybe every office worker will have a device just for communicating to the office.   And you can still play Android games on it when nobody is watching.

Most of my friends have more than one computing device – phone, tablet, laptop and / or desktop, each device that performs some tasks better than the others.  Assuming the price of devices continue to fall, perhaps we are not too far off from even more specialized devices, rather than one mobile device that tries to do it all.

Technology No comments »
Jun
17

Why I Like SodaStream

Dan on June 17th, 2014

I was asked today if I had to pick one stock to buy today, what would  I pick.  Scanning through my list on Puget Investor,  I decided on SodaStream (SODA).  Every stock is pretty much a guess about future results, but I think SODA has more chances to succeed than fail.

Lets look at some numbers and charts to help me make my case.  Here is an interesting table that was included in SodaStream’s 1st Quarter 2014 results.  When these results were announced, the SodaStream stock price took a big hit because net revenue growth was slowing and revenue declined:

Product Segment Revenue Breakdown
Revenue Three Months Ended
March 31, 2013 March 31, 2014  Increase Increase
In millions USD %
Soda Maker Starter Kits $ 43.0 $ 32.2 $ (10.8) (25%)
Consumables 72.0 83.0 11.0 15%
Other 2.6 3.0 0.4 15%
Total $ 117.6 $ 118.2 $ 0.6 0.5%
Product Segment Unit Breakdown
Three Months Ended
March 31, 2013 March 31, 2014  Increase  Increase
In thousands %
Soda Maker Starter Kits 776 604 (172) (22%)
CO2 Refills 4,756 5,820 1,064 22%
Flavors 7,735 8,405 670 9%

What stands out to me is CO2 refills are up 22% – which means people use their SodaStream machines pretty consistently.    They have engaged their customers and get pretty good repeat business.

So lots of repeat customers, and still lots of room for growth:

sodastream

Current US penetration about 1% – and 10% doesn’t seem impossible.  However, revenue growth has been slowing for the past few quarters.  Below is a chart comparing recent SodaStream growth to Coca-Cola (KO):

sodavsko

I think revenue growth for Soda still has the potential to shrink, but I have faith that growth in new markets and related CO2 refills will help keep growth healthy.  In its earnings report, the company provided guidance that it expected revenue growth for 2014 to be approximately 15%.

Coca Cola, with its revenue growth shrinking, has taken a stake in SodaStream competitor Keurig Green Mountain.  This is mainly seen as a positive, as Coca Cola has validated the concept of the in home soda machine concept.  Over the last few months rumors have arisen that Pepsi or Starbucks were interested in taking a stake in SodaStream, which would be a positive for the stock price.  If Coca-Cola is right, and the in-home soda market is an underserved market, Pepsi, Dr Pepper or Starbucks would want to be in that market and be looking for a partner.  One other item of interest is that SodaStream would likely compare favorably cost-wise to a K-cup based product that might come out of the Coca-Cola partnership.

One final point.  SodaStream is pretty cheap.  Lets look at estimated forward 12 month earnings yield as compared to Coca Cola:

yldsodavsko

On a 12 month forward earnings basis, Coca Cola and SodaStream are evenly priced.  Coca-Cola has the benefit of stability and larger market cap, but Soda stream is growing 15% a year compared to Coca Cola’s flat growth.

The downside for SodaStream?  Keurig could come out with a superior soda maker, or the in-home soda making concept could be a fad and die out quickly, or management could make some wrong moves.   All stocks have  a bull case and a bear case – its up to the investor to figure out which side of the fence to be on.  Given the recent sales numbers and the low price, I think Sodastream has the best risk reward ratio of all the stocks I follow.

 

 

Investing No comments »
Jun
15

The Age Of Transformation

Dan on June 15th, 2014

Even though Bill Mauldin’s articles ooze of big money and one-percent lifestyles, I always find his articles thought provoking.  His latest free look into his paid service for high wealth investors has some interesting thoughts.

http://www.businessinsider.com/mauldin-the-age-of-transformation-2014-6

He is fairly doom and gloom on the world economy for the rest of the decade, but he does raise the interesting thoughts about the world economic condition.   He points out how world markets seem pretty complacent to all the lurking issues, and someday something is likely to snap.

I thought the second part of his article was more thought provoking than the first – where he discusses the next wave of technology transformation.  If you don’t want to wade through the whole article, at least skim the second part.  The image posted of the 1991 Radio Shack Ad makes a great point as we look forward 20 years.

He has a lot of observations on technology without coming to any solid conclusions.   I appreciate that, as its up to the reader to think about what he says and how the future will unfold.

Investing, Technology No comments »
Jun
5

Solar Update

Dan on June 5th, 2014

A couple interesting developments in the Solar power world:

1.  Interesting article here on the impact homeowner solar is already impacting electric utilities.  From the article:

Barclays recently downgraded the entire U.S. electric utilities sector to “underweight” on the threat posed by widespread adoption of solar-storage.

So if Wall Street is pulling their money from electric utilities, could be a harbinger of bad times ahead.  Utilities have been trying to fight back with surcharges and fees for home installed power, but with the costs of solar dropping between 5 & 10% a year that won’t be enough to stop the momentum.

2.  Lots of creative ideas around implementing solar power.  One of the more interesting that is starting to get traction is Solar Roadways.  The premise is intriguing, lots of solar energy wasted on hot pavement around the world – why not build roads out of material that will capture that?  One would think the incremental cost of building roads or parking lots out of solar panels would be or will be cost competitive.  Business Insider has an update on the project here.  While I think its unrealistic to retrofit roads with these panels, new projects seem like it may make sense in the long term.

 

 

Technology No comments »
May
21

Apple, Microsoft, And The Future Of Computing

Dan on May 21st, 2014

Business Insider recently posted an interesting article about how diametrically opposed Microsoft and Apple are approaching laptops and tablets.  With Microsoft’s introduction of the Surface 3, they are doubling down on the approach that one machine and operating system can function as a laptop and a tablet.  Apples strategy has been an operating system for mobile tablet / phone devices, and a separate operating system for laptops and desktops.

I think I side with Apple on this one, and I think Microsoft is missing the point.  From the Business Insider article:

While introducing the product, Microsoft’s Surface leader Panos Panay noted that everyone in the room was typing on a laptop. His point was that the laptop isn’t going anywhere despite all the predictions that tablets were going to kill traditional PCs

I agree that tablets aren’t going to kill the laptop, but I dont agree one device should try to do both.  If I am consuming content, a tablet works great as a browsing device.  If I am coding or writing,  I want a keyboard (and maybe I am alone with this – but I dont want a touch screen).

I think Microsoft is proving that by trying to have one device that does both, you get a device that does neither very well.  The surface is priced starting at $799.  Sorry Microsoft – I think I’d rather have a $300 tablet and a $500 laptop or chromebook.

Technology No comments »
May
17

Michael Sam – The Results Are In

Dan on May 17th, 2014

The results from the NFL Draft are in – and Michael Sam was drafted by the St. Louis Rams in the 7th round – the latest of any player who received SEC Defensive player of the year honors.  However, Michael Sam was named co-defensive player of the year, so maybe that could be used to justify that he was not a standout player.  So where his counterpart get drafted – C.J. Mosely – who shared defensive player of the year honors?  Round 1, pick 17.   The SEC offensive player of the year fell all the way to Round 3.

This article published back in February when Sam announced he was gay would seem to sum up reality in the NFL.  Michael Sam is going to have a lot of attention on him,  and the odds favor him making the roster based on past statistics.  Hopefully he will be up to the physical and mental challenges he will be facing.

 

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