Showing posts with label Commodities. Show all posts
Showing posts with label Commodities. Show all posts

January 2, 2016

Market Watch 2016

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)
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December 18, 2015

You're Getting Milked

If you have a pulse and have been to the stores or even shopping online lately (hey, it's the holidays so of course you have), you know that prices are on the rise.

And this is amazing, because--

Major factors point to pricing that should be driven down:

- Commodities--which are the basic raw materials from agriculture to oil and gas and metals and mining--are at a more than 16-year low!

- Manufacturing has moved to low cost sourcing countries (China, India, Vietnam, Africa, etc.)

- Technology continues to benefit us in terms of cost-efficiencies from the transformation to robotics and automation.

Yet, we keep on seeing prices move ever higher:

Just a few examples...

- "Housing market is on fire" with existing home prices exceeding the pre-recession peak!

- "Car prices at records highs - and rising"

- "Food prices are sky high"--it's not your imagination.

- Fashion "prices rising so fast"

- Health care spending is "again accelerating"

- "College costs are so high and rising."

Forget the B.S. of the basket of inflation stats your being feed...you know that your bills are going up, while your income is stagnant.

The real question is why is the middle class always getting milked--whose interest does it serve? ;-)

(Source Photo: Andy Blumenthal)
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September 14, 2015

The Unbelievable Stupidity Of Raising Interest Rates

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)
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August 1, 2015

Nothing Is Something AND Something Is Nothing


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)
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February 19, 2012

The Soul of A Shoe

I took these photos today of a cross section of a shoe. 

I was surprised that this was all there was to it. 

So what costs $140???

A little cowhide on the outside, a little cushion on the inside, and a some rubber sole on the bottom. 

Add some eyelets and laces, and some stitching to hold it all together. 

While there are certainly lots of styles, colors, and sizes out there, most are sort of commoditized, boring, and non high-tech.

Where are those jet-powered rocket shoes they promised when I was a kid.

Come on Nike--"just do it."



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November 13, 2011

Designer Bobigner

In a book review in Fortune Magazine (7 November 2011) of "Steve Jobs: The Biography...His Rivalry With Bill Gates", one of Apple's early employees from the 1980's is quoted as saying "Each one thought he was smarter than the other one, but Steve generally treated Bill as someone who was slightly inferior, especially in matters of taste and style."
While Microsoft seemed to lead for many years especially in terms of "business acumen," in the end, Apple built the "more valuable company"--Jobs was the design extraordinare and his imagination for user-centric product designs like the iPhone, iPad, iMac and more touched people in ways that no "other business leader of our time could possibly match."
I have found that not everyone overtly appreciates the importance of design--and in fact, some people make fun of it, almost like children chanting "designer bobigner"--whether because they value function over design or they simply don't have "taste and style" like Steve Jobs complained about his rival.
In either case, I think people who seem or act oblivious to the importance of design are missing the incredible power of those who can develop products with an eye towards beauty, novelty, and functionality combined. A computer is a magnificent thinking machine, but an Apple is generally a work of art.
Think about how people neurotically cover their Apple devices with all sorts of protective cases as if it were a precious jewel instead of a just a phone or computer.
Art is treated as priceless, but a computer is often just a commodity. However, Steve Jobs knew how to combine the functional power of a computer with the design of a master.
While "Big Box" retailers like Wal-Mart and Costco continue to grow and expand, our world seems smaller because of it--their shelves and aisles are stocked high with rows and rows of commodity, look-a-like goods of toothpaste, sweat pants, and TVs; it is easy to forget that those products that are really valuable to us, usually aren't just good to use, but great to hold, feel, and look at.
In this light, I found two product designs that I thought were pretty cool to share.
The first is the white milk container that says Milk and the other is a box of tea bags, each bag with its own hanger for display and use of the side of a cup. The ideas are so simple, yet somehow so creative and appetizing. Two age-old commodities like milk and tea can be made new and special by how we package and meld with it in our environment.
Like the Chinese concept of feng shui, there are brilliant ways to develop our surroundings that energize and inspire, and great design is a magical element in a commodity world and what was not so long ago dominated by the one color black Ford Model-T.
Thank you Steve Jobs and the many other great design minds out there--keep the special things coming that make us say, "I want one!"
(Source Photos: here)


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December 5, 2009

Tech is Threatening to Some and A Savior To Others

As technology advances and supplants the “old ways” of doing things, some people are threatened that they are being put “out to pasture” and others find opportunity in the emerging technology—they find in it something new to learn and grow with, perhaps an opportunity to shine and become the resident subject matter expert at work or at home.

As we get older, it’s natural that some people may not be as flexible in “starting over,” learning something new, or changing the way “we’ve always done things.” It’s reminiscent of the sort of unflattering old saying that “you can’t teach an old dog new tricks”—a saying by the way that I don’t really believe (you should see my Dad on email, Internet, and so on—he’s great!). But at the same time, people, as do all things, have a life cycle, and our strengths and weaknesses go through peaks and valleys at various points on the cycle. For example, “with age comes wisdom.” Years ago, getting the chairman or CEO to use email was a corporate challenge. Now, young people are migrating to Social Media for communications, and email is the technology dinosaur. It’s a constant technology transformation.

In November 2009, the Wall Street Journal reviewed a new book by Sci-Fi author Cory Doctorow, called “Makers”. “This novel is set in a not-too distant future when the creative destruction of technological change has created an economy so efficient, with profit margins so thin, that traditional companies can hardly stay in business.” In this book, the inventor “uses three-dimensional printers to produce copies of machines and most anything else at close to no cost.” Now “good ideas are copied so quickly that they become commodities. Every industry that required a factory yesterday only needs a garage today.” Where this leaves us is in a time with “competition and invention getting easier and easier—it’s producing a kind of superabundance.” And the result is widespread unemployment and stress.

As we are presumably heading out of a major recession now with unemployment topping 10% (and some would say the real figures, including the underemployed and those that have stopped looking for work, at closer to 20%), we must but wonder whether the recession/unemployment is due to the financial crisis alone or is there some element that is due to our new high-tech economy, where everything in the manufacturing sector has either been tech-enabled or outsourced to Asia. And where we are left in a primary “services economy—pushing papers and flipping burgers? Is there a time coming when we become so technologically advanced, like in the Makers, that there is a very real threat of leaving hundreds of millions of people behind, while the few technology mavens “have it all”?

Interestingly enough, with the advancement of technology, the income disparity between rich and poor has grown where the top 1% of Americans own more than a third of the wealth, compared with a fifth of the wealth in the 1970s (according to Robert Reich).

I think it is critical that smarts and performance be rewarded (i.e. performance-based), but that we cannot let things get out of control and unjust. Billions cannot starve while the ultra-rich hop from rural mansion to Park Avenue condo and from private plane to recreational yacht. Technology must be used to level the playing field and not abuse it. Some like Bernie Madoff used systems developers and technology to create and issue phony financial statements to Ponzi-scheme clients showing trades that never occurred. Instead, we need to use technology to educate, communicate, share, and advance the opportunities for all and overcome the technology divide through amazing advancements here and yet to come. To do this, we must focus on continuous innovation and application of technology to the challenges we face—whether alternative energy, health care, world-hunger, global warming, and so much more. There is no shortage of issues for us to apply our minds and technology to—there is plenty for everyone to contribute to.


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February 22, 2009

Disruptive Technologies

When companies get cozy, the marketplace gets innovative and from out of nowhere...a disruptive technology upends things.

We've seen this happen countless of times in big ways.

In the auto industry, 50 years ago neither GM nor Ford would have ever dreamed that they would lose their virtual monopoly on the U.S. auto industry to foreign car companies that would dislodge them with compact vehicles and hybrid engine technologies.

More recently in the music industry, Apple seized the day by combining functionality, stylishness and price on their iPod player with an accessible online iTunes music store.

More generally, the whole world of e-Commerce has stolen much of the show from the brick and mortar retail outlets with internet marketing, online transaction processing, supply chain management and electronic funds transfer.

Now, another disruption is occurring in the computer market. For years, the computer industry has made every effort to provide more raw computing power, memory, and functionality with every release of their computers. And Moore’s law encapsulated this focus with predictions of doubling every two years.

Now, on the scene comes the Netbook—a simpler, less powerful, less capable computing device that is taking off. Yes, this isn’t the first time that we’ve had a drive toward smaller, sleeker devices (phones, computers, and so on), but usually the functionality is still growing or at the very least staying the same. But with Netbooks smaller truly does mean less capable.

Wired magazine, March 2009, states “ The Netbook Effect: Dinky keyboard. Slow chip. Tiny hard drive. And users are going crazy for them.”

How did we get here?

“For years now, without anyone really noticing, the PC industry has functioned like a car company selling SUVs: It pushed absurdly powerful machines because the profit margins were high, which customers lapped up the fantasy that they could go off-roading, even though they never did.”

So what happened?

What netbook makers have done is turn back the clock: Their machine perform the way laptops did four years ago. And it turns out that four years ago (more or less) is plenty.”

“It turns out that about 95%...can be accomplished through a browser…Our most common tasks—email, Web surfing, watching streaming videos—require very little processing power.”

The netbook manufactures have disrupted the computer market by recognizing two important things:

  1. Computer users have adequate computing power for their favorite tasks and what they really want now is more convenience and at a price that says buy me.
  2. Cloud computing is no longer an idea full of hot air, but it is a technology that is here now and can do the job for consumers. We can get our applications over the web and do not have to run them on our client machines. We can afford to have computers that do less, because the cloud can do more!

The result?

Foreign companies are running away with the Netbook market. “By the end of 2008, Asustek had sold 5 million netooks, and other brands together had sold 10 million…In a single year, netbooks had become 7 percent of the world’s entire laptop market. Next year it will be 12%.”

“And when Asustek released the Eee notbook, big firms like Dell, HP, and Apple did nothing for months.” They were taken off guard by miscalculation and complacency.

The future?

Of course, the big boys of computing are hoping that the netbook will be a “secondary buy—the little mobile thing you get after you already own a normal size laptop. But it’s also possible, that the next time your replacing an aging laptop, you’ll walk away into the store and wonder, ‘why exactly am I paying so much for a machine that I use for nothing but email and the Web?’ And Microsoft and Intel and Dell and HO and Lenovo will die a little bit inside that day.”

Implications for CIOs?

  • End complacency and always be on the lookout for disruptive technologies and ways of doing business. There is always a better way!
  • Hardware becomes a commodity over time and supplying the infrastructure for the organization is moving the way that electricity generation did at the turn of the 20th century—to outside vendors that can do it more effectively and efficiently.
  • Cloud computing means that commonly used software applications are available over the internet and can be provide the foundation business functionality for the organization.

The important future value add from the Office of CIO is in IT strategy, planning, governance, and mission-focused solutions. We need CIOs that are true leaders, innovative, and focused on the business and not just on the technology.


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June 8, 2008

TEOTWAWKI and Enterprise Architecture

TEOTWAWKI stands for the end of the world as we know it. It is a term used in the survivalist movement and is sometimes used as a reference to the apocalypse. (The apocalypse though has religious connotations in that the end of the world has greater meaning in terms of revealing G-d’s ultimate purpose for mankind.)

The end of the world—is there such a thing?

As mortal human beings, we know that all living things have a beginning and an end of life. Even inanimate objects are recognized as having a lifecycle, and this is often talked about from a management perspective in terms of administering “things” from their initiation through their ultimate disposition. Some common lifecycles frequently referred to are: organizations, products, projects, assets, investments, and so on.

So how about the world itself?

Well, the answer is of course, yes—even the world will one day come to end. Astronomers have long witnessed even the implosion of stars at their end of life—these are called supernovas. And our world is a lot smaller than a star; in fact, you could fit about a million Earths inside our sun (which is a star).

When times get tough, TEOTWAWKI is something that perhaps we ponder about more and wonder whether this is it!

For example, during the Cold War and the buildup of the nuclear arsenals of the Soviet Union and the United States, there were enough nukes to destroy the world ten times over. And people wondered when the button would actually be pushed.

Nowadays, we wonder less about nuclear holocaust and more about overpopulation (currently at 6.3 billion and expected to reach 9 billion by 2042) and depletion of world energy resources like oil (currently at $140 a barrel and up 44% in cost YTD), demand outstripping supply for silver, copper, aluminum, and many other commodities, and shortages of food (as the UK Times reported in February that “the world is only ten weeks away from running out of wheat supplies after stocks fell to their lowest levels for 50 years.”)

Further, while the population continues to explode and resources continue to be depleted, we continue to overflow the world’s dumps with garbage so much so that there has even been talk of sending garbage into space, just to get it the heck out of here!

And let’s not forget global warming and pollutants that stink up our cities, cause acid rain, asthma, and so many other unfortunate effects on the ecosystem and human health.

The good news is TEOWAWKI talk is often just fear and occasional panic and it is not imminent. The bad news is there are some very real problems in the world today.

The problems are so big that leaders and governments are having a difficult time trying to tackle them. All too often, the problems get passed to the next generation, with the mantra, “Let it be someone else’s problem.”

As an enterprise architect, my frame of reference is to look at the way things are (the baseline) and try to come up with a better state for future (the target) and work up a transition plan, and basically get moving.

We all know that it is extremely difficult to see our way through these extremely complex problems of global magnitude. But if enterprise architecture has taught me anything, it is that we must create a roadmap for transformation; we must forever work to change things for the better. We must do whatever we can to prevent TEOTWAWKI.

Perhaps the field of enterprise architecture can be expanded from one that is IT-focused and now becoming business and IT-focused to ultimately becoming a discipline that can drive holistic change for major world problems and not just enterprise problems. Does this mean that enterprise architecture at some point becomes world architecture?


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