Fareed Zakaria GPS – CNN 11-30-14

Salient to Investors:

Fareed Zakaria said:

  • All through history, humans have advanced when they have been able to work together. Matt Ridley said human progress took off when human beings began exchanging things, ideas, skills, goods, services.
  •  Teamwork is the most crucial skill and yet education is mostly about solo performances.
  • If you want to innovate, think crazily, work with others, think big, be creative, and keep up with your math.

Walter Isaacson said:

  • Steve Jobs said creating a product is hard but creating a team, a company, is even harder.
  • Creativity is a team sport, a collaborative effort. You need a visionary and somebody who can everyday execute because vision without execution is just hallucination.
  • America has become a much more partisan society. The increased tension between government, corporations, and universities is diminishing the spirit that helped create the digital revolution.

Travis Kalanick of Uber said:

  • The most successful in Silicon Valley are the ones who do not accept failure ever – but are empathetic to reality.
  • Innovation is really about creative problem solving.
  • It’s so easy to talk about failure when you’re not failing. Those who talk of failure and how it is easy to do in Silicon Valley are people who have succeeded – but they were once scared out of their minds of failing.
  • It is very hard to be successful with something that the world hasn’t seen before.
  • America s dominance in technology will continue.
  • Beijing is a very young, vibrant Silicon Valley.

Peter Thiel said:

  • Most of what we call innovation is not innovation
  • Though we have had enormous innovation in the world of computers, we have had much less innovation in the world of atoms and energy and food technology, biotech, medicine, space travel, supersonic airplanes.
  • The companies that succeed in building breakthroughs are those that create the best bulk of all value.
  • Failure is very overrated. 20,000 people a year move to Los Angeles to become movie stars, but only 20 make it.

Linda Rottenberg at Endeavor said:

  • The two fastest growing groups in America that are starting businesses are women and baby boomers over 55. Yet only 6-8 percent of venture-backed businesses are started by women.
  • Entrepreneurs are a fancy word for doers, and are people who view the world differently and allow themselves to be contrarian.
  • Entrepreneurship is about a series of mini innovations and executing well.
  • You are the person that is holding you back.
  • The most successful entrepreneurs are those that believe being called crazy is a compliment and that if you are not called crazy you are not thinking big enough.

Vinod Khosla at Khosla Ventures said:

  • 80 percent of what doctors do will be done by computers in 20 years. There are 15,000 diseases, 15,000 devices, drugs, therapies, prescriptions so a doctor who graduated 25 or more years ago simply cannot remember what he learned. No cardiologist has read even 100 of the last 5,000 articles published last year on cardiac disease.
  • 20 years from now, there will be very few areas, maybe none, where human judgment is better than machine judgment.
  • The jobs eliminated will be those that people think of as work and drudgery
  • Within 50 years we will see an era of abundance and extremely high productivity – producing enough goods and services for all.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript

at http://edition.cnn.com/TRANSCRIPTS/1411/30/fzgps.01.html


Fareed Zakaria GPS – CNN 11-23-14

Fareed Zakaria said:

  • Terrorism is rising around the globe, but nothing to panic over.
  • The genius of America is alive – Washington may be paralyzed and polarized, but mayors and governors are ignoring party lines and partnering with the private sector to make reforms and investments for future growth.
  • The US is 75% more globally popular under Obama than Bush.
  • Policing and political power sharing will end terrorism, even in Iraq and Syria.
  • An American is 64 times more likely to die by homicide than from a terrorist attack – 40 times for a global citizen in 2012.
  • The number of people between aged 10 to 24 is the highest in history – 1.8 billion or a quarter of the global population.

Peter Zeihan says:

  • America is the world’s largest consumer market because of its rivers. Transporting goods by water is 12 times cheaper than by land, which is why civilizations have always flourished around rivers.
  • America has more navigable waterways than the rest of the world combined – 17,600 miles versus 2,000 miles in China and Germany and 120 miles in the entire Arab world.
  • The American Midwest is the world’s largest area of arable land.
  • America is rich with deep water ports – Chesapeake Bay has longer stretches of prime port property than the entire continental coast of Asia from Vladivostok to Lahore.
  • America is self-sufficient: imports were 17% of GDP in 2012, versus 46% for Germany and 25% for China.
  • America’s energy revolution has insulated it from the rest of the world, and as the world gets messier, there are fewer and fewer compelling reasons for America to pay blood and treasure to stabilize it.

Bret Stephens at The Wall Street Journal said:

  • America is not in decline and will do fine. This is still an American world, not a post-American one. Fracking, social media, possibly the apps revolution, are all American-made.
  • When you shrink American influence, the rest of the world doesn’t just stay still. Policy decisions account for many of the global disorders.

Peter Beinart at City University of New York said:

  • Khomeini considers himself a revolutionary, not a compromiser. Iran’s Cold War with the West helps keep him and the hardliners in power.
  • The retreat of America’s military footprint is not the same as a retreat of American power. We have seen a regeneration of American power, partly because the US responded better to the financial crisis than did Europe, and partly because health care and immigration reforms will help America become more dynamic.
  • America is much more popular under Obama.

The Institute for Economics and Peace said:

  • Since 2000, terrorism fatalities have increased 5 times; up 61% in 2013 over 2012.
  • 5% of terrorism deaths since 2000 happened in advanced industrialized countries.
  • 4 groups accounted for 2/3 of terror deaths in 2013 – ISIS, Boko Haram, the Taliban and al Qaeda.
  • Rand Corporation found that between 1968 and 2006, only 7% of terrorist organizations have been defeated through military action alone, the rest by local intelligence and police and political engagement.

Ernesto Zedillo at Yale said drug policies in the US, Europe, Latin America, and everywhere are making Mexico’s drug fight much harder.

Ethan Nadelmann at Drug Policy Alliance said:

  • Marijuana is a far less dangerous drug than alcohol for most people.
  • The use of marijuana does not lead to other drugs.

Andrew Roberts said:

  • Napoleon is becoming much more popular in China – it was Napoleon who called China a sleeping giant that will shake the world when it awakes.
  • Napoleon’s legacy for the world was meritocracy – the dominating concept of all successful modern countries.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1411/23/fzgps.01.html

Fed’s Two Jobs Collide as Drop in Unemployment Vies With Inflation – Bloomberg 11-18-14

Salient to Investors:

  • The median economist expects the jobless rate by June 2015 to be very near the 5.2%-5.5% range considered full employment, while the Fed’s preferred inflation gauge will not have budged from its current 1.4%.
  • 27 of 50 economists say unemployment at 5.5% or lower would prompt the Fed to tighten policy in mid-2015, while the other 23 say inflation below the Fed’s 2% goal would persuade it to hold off.
  • 53% of economists expect higher energy prices by mid-2015, 10% expect a further drop, and 37% see little change.
  • The personal consumption expenditure price index is projected to increase 1.4% in the year through June 2015.

Neil Dutta at Renaissance Macro Research said:

  • Employment is the dominant consideration in Fed policy, so expect a rate increase in June, perhaps earlier.
  • The drop in oil prices is primarily a function of a supply shock due to increased production from the US and Libya rather than diminishing demand, and is therefore less threatening to the inflation outlook.
  • The average hourly earnings series is not the best measure for labor costs.

Lou Crandall at Wrightson ICAP expects changes in conditions that make a higher inflation forecast plausible by mid-2015, including a pickup in wage growth and the end of falling commodity prices.

Stuart Hoffman at PNC Financial Services expects the Fed to start raising rates in July 2015 because it takes time for a tightening labor market to lead to a pickup in pay and then inflation.

Jan Hatzius at Goldman Sachs said:

  • Fed policy makers will not be quick to dismiss a shortfall in their inflation goal in deciding when to increase rates even as employment gains traction because the risks of a later liftoff have risen because inflation is the one area where the global market turmoil has shifted the outlook.
  • The impact on prices from a reduction in the unemployment rate is less precise and timely than the more direct effect of a drop in commodity prices
  • The Fed will start increasing rates in September 2015.

Sharon Stark at DA Davidson:

  • The first Fed rate increase will come in early 2016 because of mounting concern over too-low inflation.
  • Wage growth in the 3%-3.5% range is needed to give consumer spending and the economy enough of a boost to underpin inflation, and that is unlikely until unemployment falls below 5%.

Doug Handler at IHS Global Insight said:

  • The first Fed rate increase will come in June 2016, as rate volatility pressure will start weighing heavily in Fed decision-making.
  • To show that we can survive the onset of higher interest rates without an economic apocalypse is very important for business confidence.

Read the full article at http://www.bloomberg.com/news/2014-11-18/fed-dual-mandates-collide-as-drop-in-jobless-vies-with-inflation.html

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Harvard Endowment Loaded Up on Texas Energy Stocks Last Quarter – Bloomberg 11-17-14

Salient to Investors:

  • Harvard Endowment initiated positions in Texas-based oil and gas companies in Q3, increasing its energy position to about a third of US public equity holdings, second only to health care.
  • Stanford invested in fossil-fuel companies in Q3.

Read the full article at http://www.bloomberg.com/news/2014-11-17/harvard-added-texas-energy-companies-during-third-quarter.html

Click here to receive free and immediate email alerts of the latest forecasts.

Fareed Zakaria GPS – CNN 11-16-14

Salient to Investors:

Fareed Zakaria said:

  • Russia is a great power in decline accounting for only 3.4% of global GDP versus China’s near 16% and almost 4 x Japan’s and 5 x Germany’s.
  • China’s very different approach to foreign policy constitutes the most significant and dangerous shift in international politics since the end of the Cold War.
  • Chinese nationalism has risen sharply. The Christian Science Monitor found that the number of anti-western polemics in the official “People’s Daily” so far in 2014 is 3x that versus the same period a year ago.
  • China has moved from being anti-American to post-American.

Henry Kissinger says China has never been comfortable with the idea of a global system of equal states.

Elizabeth Economy at the Council on Foreign Relations

  • China was ready for Xi Jinping, a leader who wants to project Chinese power.
  • 670,000 premature deaths in China are reported to be from air quality.
  • The insidious side of Chinese nationalism will not tolerate a diversity of opinion and will chill the creativity and innovation that they want to support, while undermining its efforts to become a global leader with a shared vision for the Asia-Pacific.

David Lampton at Johns Hopkins School of Advanced International Studies.

  • China has crushing domestic problems, with demographics working against it.
  • China will be increasingly cooperative on issues like climate change, but will continue to push its sovereignty.

Stuart Butler at Brookings said:

  • More people are enrolling into online MOOCs than into actual colleges.
  • Student tuition debt in the US exceeds credit card debt.
  • Today’s online education is not our grandfather’s online education – it is completely transformed.
  • Traditional universities have got to rethink fundamentally what they do, how much they do, how long an education should be, whether it should be all at one place.
  • It has taken a while for business to wake up to what is going on in higher education – very soon colleges and universities will be seen as the equivalent of assembly companies.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1411/16/fzgps.01.html


They’re Old, They’re Rich and, Too Bad for the Economy, They’re Kind of Tight – Bloomberg 11-12-14

Salient to Investors:

William Emmons at FRB St. Louis said:

  • Americans born between 1928 and 1945 have become the richest old generation ever by benefiting from improved health, a more generous social safety net, an exit from the job market ahead of the past recession, rebounding stock and home values, and a diversified approach to investing.
  • The hit to net worth for the two subsequent generations will be difficult to recoup before they leave the workforce.
  • New retirees may release pent-up demand for travel and restaurant meals, but that behavior usually does not last for most people.

Neil Howe at Saeculum Research said the Silents have done very well, mostly from just being in their location in history – they planned ahead, were risk averse, played by the rules and the system worked for them.

Prime-age workers typically spend more than their elders.

Compared to other age groups, the median net worth for the oldest Americans has climbed to near the top from near the bottom just 20 years ago.  The median family net worth, adjusted for inflation, of Americans 75 and older was $194,800 in 2013 versus $130,900 in 1989.

JPMorgan Chase found that household spending peaks at age 45 and then falls in every category except health care, dropping about 43 percent by the age of 75.

Pew Research Center said 34% of the Silent Generation self-identifies as Democrats, 32% as independents and 29% as Republicans.

From 1962 through 1991, GDP grew an annual average of 3.5%, but 2.6% since.

The SP 500 Index rose almost 14 times from the start of 1977 through the end of December 2007. The HFA home price gauge rose 472% since 1975.

The Urban Institute said federal outlays on programs benefiting those 65 and older rose to $27,975 in 2011 per capita adjusted for inflation from $4,000 in 1960, or 7.5% of GDP from 2.1%.

In 2013, 9.5% of Americans aged 65 and older were in poverty, the lowest of any age group. In 1959, 35% of Americans aged 65 and older were in poverty, the highest of any age group.

In 2009, a 65-year-old could expect to live another 19.2 years, versus 12.2 years in 1930.

Read the full article at http://www.bloomberg.com/news/print/2014-11-12/silent-generation-wins-life-lottery-as-richest-u-s-age-group.html

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Fareed Zakaria GPS – CNN 11-09-14

Fareed Zakaria said:

  • The White House has no real solution for Syria.
  • There is no prospect of working with the Republicans on any major domestic policy.
  • The greater threat to global peace and prosperity over the next decades comes from the rise of China and not from IS.
  • Americans believe the unemployment rate, levels of immigrants and pregnant teens, age of the population are all higher than they actually are.

Ipsos MORI found:

  • People in all 14 countries studied overestimated their unemployment level and immigration levels.
  • Americans and the French overestimated the proportion of Muslims in their populations.
  • The Swedes ranked lowest in the Ipsos MORI Index of Ignorance: Italy ranked the highest followed by the US.

An Annenberg Public Policy Center poll found that over 50% of Americans do not know whether the Senate or House are controlled by Democrats or Republicans. James Madison said popular government without popular information or the means of acquiring it is but a prologue to a farce or a tragedy or perhaps both.

Bruce Bartlett said:

  • Obama has governed as a liberal Republican, with foreign policy on the same track as Bush and health care reform based on Republican ideas from the Heritage Foundation that were implemented by Romney in Massachusetts.
  • The recent mid-term election results changed little substantively and was not a Republican wave but about the disappearance of the Democratic base – Obama has given them very little over the last 6 years.
  • Nothing is going to change and Republicans are deluded in thinking their control in Congress will allow them to advance their agenda rather than simply continue to block Obama’s.
  • Obama has been very weak on job creation and infrastructure investments.
  • The next two years will see many vetoes.

Joshua Landis at the University of Oklahoma said the rebels in Syria that are backed by the US own only 1 or 2 percent of the country so for them to take out ISIS and take on Assad is virtually impossible – half a billion US dollars is not going to build an army, and is just there to satisfy Obama’s critics.

Freedom House said of the 15 former Soviet republics:

  • Only 3 are totally free, 5 are partly free and 7 are not free.
  • 12 do not have an entirely free press.
  • Only 6 can be considered electoral democracies.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1411/09/fzgps.01.html

Fareed Zakaria GPS – CNN 11-02-14

Salient to Investors:

Fareed Zakaria said:

  • Tunisia is more developed, more urban, more literate, and more globalized than Egypt, and has a more diverse civil society, stronger labor unions, civic associations, professional groups.
  • Tunisia’s relative success suggests there is nothing inherent in Islam or Arab society that makes it impossible for democracy to take root there.
  • Islam has been compatible with peace and progress and is compatible with violence just like all religions.
  • The greatest problem with government regulations is not that they are good or bad, but that they are eternal – once in place, lobbies form to sustain them and so they are rarely modified or eliminated. The future has few lobbies for its cause.
  • Google says 92% of Turkey’s Internet users use social media versus over 40% of close to 50 countries.
  • Tehran is clean, bustling and everything works.

Tarek Masoud said Tunisia’s success and Egypt’s failure at democracy has less to do with the quality of its Islamists than with deep differences in their political environments.

Samuel Huntington said a country can only be said to be a consolidated democracy when there have been two peaceful transitions of power.

Sam Harris said:

  • 20% of Muslims worldwide have values relating to human rights and free speech that are really in zero sum contest with our own.
  • Jihad is not an invention of the 20th century. Islam has been spread by the sword for over 1,000 years.

Bernard-Henri Levy said:

  • The dispute between the Sunnis and the Shias in Iraq and Syria is not a dispute between Sunni and Shia but between democrats and non-democrats, between enlightenment and obscurantism, and a world battle, ideological battle.
  • Arabs and Muslims cannot continue to blame everything on America, which is not guilty of all the sins of the world.

Rashid Khalidi at Columbia University said:

  • The a Muslim or Middle Eastern problem will involve the US and other countries because it is partly due to Western intervention – the US invasion of Iraq created the situation.
  • The US destroyed the entire Iraqi the entire structure of government, more so than was done in Nazi Germany.
  • Iraq is a political problem in need of a political solution.
  • The US has to deal with Russia and Iran – Syria’s backers – in a rate politic, non-ideological fashion.

Larry Lessig at Harvard Law School said:

  • Candidates who wants to run for Congress have to raise an incredible amount of money – funded by a tiny fraction of America, say 0.05%. Akin to the two-stage process in Hong Kong. Candidates spend 30 to 70% percent of their time calling these funders, who are not the people, thus corrupting governance – Republicans and Democrats alike find it impossible to get what they want out of their government.
  • The problem is not the spending but the fundraising. Wall Street has taken the lead in funding candidates for Congress. Many funders are people who want special tax breaks or renewals of special tax breaks.
  • Simplifying the tax code or dealing with climate change or real health care reform is impossible until we change the way we fund elections.
  • Funding reform is seeing incredible progress, especially among Republicans who recognize the need to change to get back to a government that can actually work.

Anthony Bourdain said:

  • Iran was extraordinary, heartbreaking, confusing, inspiring, and very different from the Iran I expected.
  • Iranians were outgoing and welcoming to strangers to a degree matched in very few places, including Western Europe and allied nations.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript

at http://transcripts.cnn.com/TRANSCRIPTS/1411/02/fzgps.01.html