In this series FT Alphaville explores the rise of the collaborative economy, including everything from P2P lending and Facebook to home exchanging and couch surfing. We also look at the extent to which the movement represents a new type of shadow banking and how it stands to change and influence traditional finance and capital.
It’s worth noting, first off, that Gordon’s paper was relatively backward looking. It arrived at its conclusions by taking trends prior to 2007 and projecting them forward, largely ignoring the 2008 crisis that occurred. It also measured innovation in terms of dollar denominated growth. Read more
Nanex, the market analysts who like to create visual representations of the markets, have animated half a second of trading activity in Johnson & Johnson stock. The results are quite intoxicating to watch:
If you submit to theoretical physicist Geoffrey West’s urban development theories, then you’ve probably aware of the idea that humanity is set to face a critical crunch point soon enough (if not already). And by crunch point, we mean — either humanity throws everything it’s got at speeding up technology to ensure its resource consumption-to-population footprint becomes manageable, or we wither away.
(The Roman Empire, by the way, is perhaps the best example of a civilisation which failed to make the next great technologically leap to the carbon age and did actually wither.) Read more
2.) Multiple choice test to decide your condescending lede!
Question: When a fake (hacked!) Associated Press tweet about a White House attack moves the stock market down, then it recovers really fast — but maybe not making anyone much money — this is a referendum on the credibility of:
Love him or loathe him, Robert Skidelsky’s prose always makes for a good read.
His latest offering comes by way of Project Syndicate and relates to the issue of robots and the rise of automation. To what degree are we really approaching a leisure society and how best to respond to the changes afoot? Read more
And arguably it’s down to technology and crowd-sourcing.
But before you shout: “this is what Marx always said, Ricardo and the Luddites were well ahead of you on that one”, we would propose what we’re talking about is a complementary trend not one that necessarily validates or duplicates what the above have said perfectly. Read more
It seems more top-tier economists are coming around to the idea that robots and technology could be having a greater influence on the economy (and this crisis in particular) than previously appreciated. Paul Krugman being the latest.
But first a quick backgrounder on the debate so far (as tracked by us). Read more
It’s bad enough finding out that you’ve been made redundant when your pass fails to let you in to the building. But finding out that you’ve been sacked and replaced by a computer (which has more or less made your skills redundant)? That’s even worse.
So spare a thought for David Gallers, former head of CDS index trading at UBS, who was let go last week, to be replaced by snazzy new algo. Read more
George Magnus of UBS has a 29-pager out on Monday questioning if the Asian miracle may finally be over? FT Alphaville is still poring through the details, but couldn’t wait to bring you a substantial chunk of the note which is dedicated to the role of technology and its impact on Asian market dynamics.
We’ve noted on more than one occasion that economists may be missing a trick when it comes to how technology is changing the global economy. More so, that developments like 3D printing, could even pose a black-swan risk for Asia in their own right. Read more
This is the third installment in FT Alphaville’s “Beyond Scarcity” series, a somewhat radical look at the impact of technological progress and efficiency on the volume of goods and services being produced by the system, asking whether “abundance” could now be a key determinant of deflationary forces in the western world.
On top of this, we have considered the role played by “artificial scarcity”, whether imposed wittingly or unwittingly by industry participants as a counterweight to such deflation, and to what degree such measures could now be running into scalability issues. In short, whether there is a limit to how much artificial scarcity private organisations can impose to counteract deflationary forces of abundance, without experiencing diminishing returns. Read more
Presenting an economic journey in felt, looking at whether the system’s ails have more to do with an abundance of goods than a shortage of credit because of the system’s technological advances and efficiencies. Move ahead to slide 20 for a snapshot of where we *think* we are today.
Research in Motion, the maker of BlackBerry smartphones, was battling to shore up its network on Wednesday as it emerged that an intermittent service outage preventing users accessing email had spread to 30m-40m people, half of all Blackberry subscribers worldwide, the FT reports. RIM confirmed the problems during a news conference and said its engineers were working night and day to resolve the issue. David Yach, RIM’s chief technology officer for software, said there was no evidence of hacking, adding that the problems were global because RIM had to restrict service everywhere due to a backlog of undelivered messages after a core network switch in a data centre in Slough outside London failed on Monday. Since then the three-day old technical problems have spread to users in the Americas, Europe, India, the Middle East and Africa – the biggest network failure to hit the Canadian company since it launched the BlackBerry service a decade ago.
Ericsson’s second-quarter profitability was hurt by contracts in Europe and India, losses at the Swedish telecoms equipment maker’s joint ventures, and higher-than-expected costs for a job reduction plan, the FT reports. Ericsson on Thursday reported revenue of SKr54.8bn ($8.54bn) for the three months to June 30, up 14 per cent compared with the same period last year. Net income rose 59 per cent to SKr3.2bn, fuelled by the sales growth. However, the closely watched gross profit margin was 37.8 per cent in the second quarter, down from 39 per cent one year ago. The deterioration was blamed on lower-margin mobile network contracts in India based on third generation wireless technology and infrastructure modernisation projects in Europe. More such European projects are expected in the second half of 2011, which could put further pressure on profitability.
Global technology stocks were rebooting the rally in riskier assets after Apple joined IBM in delivering better than expected results, the FT reports. The more ebullient mood was also founded on hopes that signs of progress in US negotiations on raising the government debt ceiling sharply reduces the chances of a technical default by Washington – an event whose fallout investors have had difficulty extrapolating. In addition, stronger than forecast US housing data on Tuesday provided a morsel for growth optimists to chew on, while an easing of eurozone stresses was also providing cud for the bulls. The FTSE All-World index was up 0.5 per cent, with the FTSE Eurofirst 300 up 0.6 per cent as traders price in the extra gains from Wall Street’s 1.6 per cent advance overnight. S&P 500 futures pointed to Wall Street putting on another 0.2 per cent at the opening bell.
Apple beat Wall Street expectations with third-quarter revenues up 82 per cent and profits up 125 per cent year-on-year fuelled by demand for its iPad, iPhone and Mac products, the FT reports. The company said its record sales had been led by the iPad 2 and growing demand for its products in newer markets, such as China. Apple shares rose more than 5 per cent to $397.20 in after-hours trading in New York, despite the company suggesting that its fourth-quarter outlook would be weaker than expected. “We … have a future product transition that we’re not going to talk about today and [this] will impact our September quarter,” said Peter Oppenheimer, chief financial officer. Apple did not announce in June its usual annual update to the iPhone, leading to speculation that an iPhone 5 would be introduced in its September quarter. For more analyst reaction see FT Alphaville.
IBM raised its earnings forecast for the year as it reported a 12 per cent surge in second-quarter revenues, surpassing Wall Street expectations, the FT reports. “In the second quarter, our long-term strategic investments in the company’s growth initiatives again helped drive strong revenue performance,” said Samuel Palmisano, IBM chief executive, on Monday. “Hardware, software and services revenue grew at double digits, and we achieved strong profit and free cash flow growth.” Net earnings rose 8 per cent to $3.7bn as the company reported $26.7bn in revenue, $1.35bn more than had been expected by analysts. IBM lifted its full-year earnings forecast to at least $13.25 a share, ahead of analysts’ average estimate of $13.21. The company’s shares rose 3 per cent in after-market trading to $178.30.
Cisco Systems is to cut its workforce by 9 per cent as it struggles to improve its performance and refocus on its core network equipment operations, the FT reports. The Silicon Valley company said 6,500 employees would leave the company as part of a $1bn annual operating expenses reduction announced in May. This includes about 2,100 staff opting for voluntary early retirement.The cuts were fewer than anticipated, with sources indicating last week that 8,000-10,000 jobs could be cut from a global workforce that totalled 73,400 at the end of April. Its headcount is set to be reduced by another 5,000, however, after the sale of a factory in Mexico to the Taiwanese contract manufacturer Foxconn, also announced on Monday.
A second US fund dedicated to investing in still-private social networking and other technology companies has launched, marking the return of an investment strategy not seen since the dotcom bubble of the late 1990s, the FT says. The new fund, Keating Capital, announced it has raised $86m in capital from investors in an initial public offering, and is set to begin trading on the Nasdaq exchange as a closed-end fund by the end of the year. Earlier this year, GSV Capital raised $50m, and is currently trading on the Nasdaq. Mashable has an infographic comparing the dotcom bubble with recent activity.
The FT reports that sharp increases in share prices of young technology companies has led Oracle, Silicon Valley’s most acquisitive company, to turn its back temporarily on considering new deals, the company’s executives said on Thursday. “They are by and large not attractively priced right now and don’t make sense and we’re not doing them,” said Larry Ellison, chief executive, on a conference call to discuss the company’s latest earnings. “Anyone looks at the valuations today, and we don’t think they make any sense,” said Mr Ellison, who began a series of acquisitions nearly a decade ago that has left Oracle with a software business that tops IBM and is second only to Microsoft. Safra Catz, Oracle’s co-president and a former investment banker, added that prices of potential targets were “quite ridiculous”. The high price of acquisitions meant that Oracle had turned its sights inward for growth, for instance by boosting the number of sales people in its hardware division, said Mr Ellison.
Businesses are facing a dilemma over how to protect their trademarks after the body governing internet names voted on Monday to allow the creation of thousands of web suffixes to run alongside .com and .net, the FT reports. For a starting price of about $500,000, the Internet Corporation for Assigned Names and Numbers will allow companies and community groups to create customised domain names – such as .canon for the camera maker or .london for the English capital. So-called “generic” domains, putting common words after the “dot” in addresses, will extend the system further. The actual cost for popular domain names contested by several parties, however, is likely to multiply, with lawyers predicting that the new addresses will trigger big legal battles.
One of the most pervasive and costly types of virus is now affecting Mac computers, signalling the end of an age of innocence for Apple customers, who until now have been spared many common cybersecurity problems, the FT reports. Known as rogue antivirus or scareware, the scam programs warn PC and now Mac owners that they have been infected, then demand credit card payments to clean the machines. The operators of the programs are typically criminals who may resell the card details or try to install more malicious software.
Markets were enduring a classic “risk off” session as traders were rattled by evidence of slowing growth in China and the debilitating irritant that is the eurozone fiscal crisis, the FT’s global market overview reports. The FTSE All-World equity index was down 1.1 per cent and industrial commodities were sliding. US stock futures pointed to Wall Street opening lower by 1 per cent, starting a fourth consecutive week of declines, while the FTSE Eurofirst 300 was down 1.3 per cent as miners, financials and technology groups saw sellers. Investors were seeking the refuge of the dollar, Swiss franc, Treasuries and gold. A clue to the session’s risk aversion was being provided by the euro, which was down 0.9 per cent to $1.4008 and had hit a record low against the Swiss franc of SFr1.2352.