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Saturday, June 21, 2014

$goog may need federal oversight

Big banks got a lot of flack over the years because the assumed "firewall" between their investment bank and trading-desks were never really trusted. But the banks had a very large regulatory incentive to ensure the separation.

Google is on this same path with respect to user-data except there is no 3rd party oversight. 

Over the years, google's data collection has shifted from desktop-search to being able to turn on the mic and location functions of about a billion phones (at their discretion). With the purchases of Nest, and now Dropcam, their servers will collect a lot of user data.

Google has known AI groups and quants disecting and qualifying / quantifying the data.

While Nest attempts to suggest their user privacy is secure, Google Ventures and AI research groups have access to all of Google data. 

Google is in the position to now collect and utilize: 

1. user data, from over a billion people, tracking their daily / weekly / monthly habits. 

2. User data to observe habits at the home (through second derivative insights like temerature and now directly from video)

3. Lets not forget the health and genetric data it has collected from their Google Venture companies as well.

This data produces statistically significant outcomes that are used to tailor advertisements, investments, corporate actions and if safe gaurds are not in place serious vulnerabilities to the user.

With all the avenues Google has to collect user data, especially with out the knowlegde of the user, a legitimate question, who will over see all this data is used and stored in an appropriate way? Is google now in the position that it needs federal regulatory oversight?

I am no fan of needless regulation, but there is a serious risk to users, all without third party controls in place.

Update: Given Facebook just published a psychological experiment via its users, is there any other creepy facts needed to drive data protection measures?

Thursday, June 19, 2014

$aapl $goog $msft $fb $amzn mobile hardware

aapl - vertically integrated to produce profit. Best in class.

goog - Nexus used to push the OEMs to keep improving. Google's attempt to be a real vertically integrated OEM failed via Moto. The only differentiation on Moto phones was voice control and made in the USA w/ Moto X. Not enough and no connection to a consumer. (And they will keep failing at consumer hardware until they understand the customer satisfaction. Real people customer, not advertising customer.)

msft - does not have a viable ecosystem to differentiate a full vertically integrated hardware experience. So it's failing on the vertical. (But horizontally it's doing very well.)

FB - their brand was never strong enough for a primary dedicated device, but for them, that was never the point. They took key UI elements and incorporated it into their app. It seemed more of a collaboration they were approached on. HTC was probably like, "make a launcher for us and we will call it the Facebook Phone." It failed because the concept was confusing from the get go. (But the launcher was an interesting idea.)

amzn - an established ecosystem is already attached to the Fire Phone. A company dedicated to the consumer. Mayday may allow the fire to succeed where Google failed. Those that have tried the Fire HD tablet maybe the first ones to embark on this phone. And if the customer attention and user experience is good enough, it may gain traction for a 'well enough' market position.  

Variations in strategy exist. The chatter that ignore it is being lazy.

$amzn Fire Phone - Pro / Con

So much negative chatter on the phone. Most influencers are on the fence, while others are just dismissing it all together. But I hesitate to dismiss the phone. 

The Good:

1. Amazon already has an ecosystem. (The ecosystem ranges from the digital to the physical, and is primary reason other mobile phone makers are held back.)

2. They don't need to win the race. They are positioning themselves for when hardware is truly accepted as part of a company's platform.

3. The Fire Phone is designed for show-rooming. Amazon is bring the physical to their digital. (They are not trying to morph a physical location to the digital. So the lack of Bluetooth LE is not really a show stopper.)

4. Gives them vertical control to the costumer experience. 

5. The cost is actually cheaper despite the sticker-price. It's 32Gigs and a 12month Prime subscription ($99) for $199 or $650 (off contract). Comparable phones are 16gigs and don't come with free subscriptions.

The Not So Good:

1. Users a costumed to level of excellence with core apps (maps, mail etc) may get disappointed with core features expected from a phone. (Although the Apple Maps issue didn't deter sales.)

2. Core apps are missing. (But still a large enough App library that Blackberry signed a deal to use their App Store. Effectively making Amazon the true third mobile platform.)

3. Dedicated to Amazon. (It's the same negative Apple shares, and the Fire seems positioned to the Amazon loyalist. So this one may not be so bad.)

The Fire may lack mass market appeal, but at its sticker-price point it's not meant to be a mass market phone.

I think it's an interesting first step, and I am curious to see how this plays out. For instance, if the telcos do decide to remove subsidies (the day it snows in hell), Amazon will be in a very good position to benefit due to their ecosystem.

Thursday, June 12, 2014

Current Geopolitical Risks

1. Ukraine / Russia - since 2008 Putin has been stirring up instability, culminating in the take over of Crimea and now muscle-flexing in eastern Ukraine. Russia found a $400b friend via China, more than making up for the western sanctions. 

2. China / Japan - Senkaku Island have been despited for a while but with China forking over $400b to Russia, lines are being drawn. The US has now sided with Japan, and China keeps provoking with ship attacks and close military fly-overs.  

3. Iraq (Mosul) - threatens to escalate with Trukey willingness to intervene to protect its citizens, and Iran entering to provide 'assistance'. (There are interests to be protected in the north, and the US maybe forced to intervene.)

4. Syria - the level of life lost is horrible but the threat of engulfing multiple countries has mitigated. (Although with any war, things can change quickly.)

5. Pakistan - increased bombing leaves a high degree of uncertainty. 

The above is simply the obvious issues. 
# 1 and 2 are escalating each other. # 4 was already causing a light rift with Russia.

The vix has elevated over the last few days, but not enough to fully appreciate the Russia-China rift developing and the threat instability in Iraq can cause.

$aapl resumes long-term uptrend

Interesting observation: the peak rise above the trend line (~33%), the peak decline below the trend line (~31%).

Wednesday, June 11, 2014

$twtr $ebay

TWTR broke from its weeks-long negative trend. (The company is worth more than Whatsapp, and given its high-level user base of influencers, twtr has a very real potential to be a $100 market cap company.)

EBAY is down some 11 of 14 weeks, leading to an 18% decline, after a breakout head-fake in late Feb early March. (This is after a years worth of consolidation.)

The technician in me wants to sell ebay outright. But the fundementalist in me says 'fuck that noise'. Its a $66 stock, but willing to sell 1/3 of my position near 57. (With all this liquidity available, a Walmart buyout / merger of ebay would be interesting. WMT would gain tons of leverage in online/mobile retail over amzn and could effectively reduce their credit card expenses by massively adopting and promoting the use of PayPal. Also, given store locations, and their sizes, they can become same-day pickup services and / or same-day deliveries fairly easily.)

Thursday, June 5, 2014

The Tepper Effect

Impressive how much influence one man has.

The biggest market concern is not fear, its the lack of.