Fareed Zakaria GPS – CNN 05-29-16

Salient to Investors:

Fareed Zakari said:

The US has re-enforced its position as the world’s leading economic, technological, military and political power, and energy superpower.

The US dominates virtually all leading industries including social networks, mobile telecom, nano and bio technology.

The US is at the cutting edge of green technology.

The US is demographically vibrant, while all its major economic peers, including Japan, Europe and China, face certain population decline.

The US dominates the military and political world. The US has 10 aircraft carriers versus China’s one secondhand Ukrainian ship. The US counts numerous allies while China has only North Korea.

The US will not have a real rival for a very long time. However, China’s share of global GDP in 1990 was 1.7% versus 15% today, and developing countries accounted for 20% of world GDP in 1990 versus 40% today.

China’s global influence is large and growing – able to create the Asian infrastructure investment bank over US objections. Regional powers like Saudi Arabia and Turkey are rising.

Joshua Cooper Ramo says the US dominates all 9 global tech platforms, including Google Chrome, Facebook, and Microsoft Office.

Stephen Brooks and William Wohlforth say that China is the US’s only rising rival, but only when it comes to GDP: half its exports are imported for assembly and re-exported.

Bret Stephens at the Wall Street Journal said Donald Trump is the biggest loser in presidential history, manifestly unqualified to be president in any way.

Pro Publica says apartheid schools (schools with 1% or fewer white students) more than doubled since 1988 to 6,727 schools in 2011. GAO reports K-12 public schools with extremely high percentages of poor, black or Hispanic kids comprised 16% in 2013-2014 versus 9% in 2000-2001.

Paul Tractenberg at Rutgers says that between 2000 and 2013, the number of Americans living in high poverty neighborhoods rose from 7.2 million to 13.8 million.

Rucker Johnson at Berkeley said:

More than 1 in 4 poor blacks live in extreme poverty neighborhoods versus 1 in 13 for poor whites.

Blacks that attended desegregated elementary schools were more likely to graduate and 22% less likely to be incarcerated as adults. Blacks who spent 5 years in desegregated schools saw their health improved to the equivalence of being 7 years younger, and earned 30% more than those not attending desegregated schools.

The narrowing of the achievement gap and increased success of black students had no negative effect on whites on any metric.

Reid Hoffman at LinkedIn said:

The cost of sequencing the genome is falling faster than Moore’s Law.

The US has a unique advantage not in start-up culture but in blitz scaling. The majority of the super interesting tech companies are on the west coast, primarily Silicon Valley, an area 25 square miles with 8.5 million people.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1605/29/fzgps.01.html

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Fareed Zakaria GPS – CNN 10-04-15

Salient to Investors:

Fareed Zakaria said:

  • Russia’s move in Syria is a desperate effort to shore up one of its only foreign allies and risks making it the great Satan with jihadists everywhere. However, Putin has at least a clearer strategy in Syria than Obama.
  • An US army of less than 30,000 men could easily defeat ISIS but then own problem territory in Syria.
  • Historically, the US when allied with a local force that was capable and viewed as legitimate has succeeded, but without such local allies, has not.
  • Syria will never be an intermingled country ever again whatever happens.
  • Code.org estimates that by 2020, there will be only 400,000 computer science students to fill the 1.4 million computing jobs in the US.
  • Liberal arts are important in teaching creativity, analytic thought and the joy of learning.

Jeff Colvin at Fortune said:

  • Studying humanities could become as valuable as a science degree because some jobs will always be done by “relationship workers”, the ones that emphasize social interaction – the need to interact with others is connected to our very survival, which is why we would prefer to see a real doctor or choose to work in teams.
  • From 2001 to 2009, the McKenzie Global Institute found that jobs involving human interaction, e.g. nurses and lawyers, increased by nearly 5 million in the US, while transaction and production jobs fell.
  • Science and technology disciplines are still crucial, but the humanities strengthen the deep human abilities critical for the success of most people far more than engineering or computer science.

George Soros said that Europe is in a state of disintegration, which started in 2008 and has become non-linear with problems with Greece, Ukraine, migration, and Putin’s Russia.

President Bill Clinton said:

  • Not very long ago, Europeans were killing each other in large numbers. The EU is a miracle, but in times of insecurity, fueled by both political problems and the absence of economic growth, negative identity politics tend to trump positive identity politics.
  • The issue of negative versus positive identity when you have slow growth is also true in America.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1510/04/fzgps.01.html

The Last Bubble Standing – Amazon’s Same Day Trip Through The Casino – David Stockman’s Contra Corner 07-27-15

David Stockman writes:

Amazon’s valuation, its one day gain and last week’s Google gain are reminiscent of the days before the tech wreck 15 years ago. The 12 Big Cap Techs of 2000 saw their peak combined valuation of $3.8 trillion plunge to $875 billion a decade later, even as their sales and earnings continued to grow.

Amazon’s market cap boost by $40 billion in the seconds after its earnings release had nothing to do with Amazon but to robo-traders and fast money chasing one of the greatest bubbles still standing in the casino, raving about the performance of AWS, Amazon’s totally unrelated cloud computing services division.

AWS is valued at 110 times. However, Google, Microsoft, Oracle et al are not about to cede the cloud to Amazon. With no barriers to entry, no killer patents, no material brand equity, no irreproducible sales and service network expect prices to fall rapidly – Oracle’s Ellison has promised to cut prices by 90% and he has rarely failed to follow through on those kind of promises. The cloud is destined to become Microsoft’s entire franchise.

Amazon’s $250 billion market cap is a bubble and it is being valued at 109 times free cash flow. In 25 years it has never, ever generated any material free cash flow despite its $96 billion of LTM sales, or paid a dividend.

Amazon is not a la GE in the 1950s because it has never made a profit beyond occasional quarterly chump change, nor does Bezos seemingly plan to ever make one.

We are in the waning days of the third great central bank enabled bubble this century, a casino that is all about beanstalks which grow to the sky and sell-side gobbledygook.

Nothing from UBS, a serial swindler and confessed criminal organization (Sic), can be taken seriously.

Read the full article at http://davidstockmanscontracorner.com/the-last-bubble-standing-amazons-same-day-trip-through-the-casino/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+Sunday+10+AM

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Take Cover – Wall Street Is Breaking Out The Bubblies – David Stockman’s Contra Corner 07-20-15

Salient to Investors:

David Stockman writes:

Google’s unwarranted market cap gain last Friday – 75% of the 9.6% gain in net income from the prior quarter was due to a lower tax rate and a cutback of ballooning G&A expenses – easily passed in one day the entire $50 billion market cap of Caterpillar, though only just beat its gain on April 17, 2000.

Google is entering corporate middle age: since 2011, its growth rate for both sales and net income has slowed to 15% per annum. 90% of revenues are from advertising, which is slowing and becoming saturated. The easy digital share gains have been had and no one has eliminated either the business cycle or the cyclicality of ad spending. Google has not invented a new product that’s on a 100 times or 1000 times market penetration ramp.

Adam Parker at Morgan Stanley argues that today we are dealing with real companies with substantial sales and earnings – 90% of tech firms have positive operating margins – whereas in 1999, less than half of the tech companies were profitable. Yet the aggregate market cap of the 12 big cap techs before and after the dotcom bubble – Cisco, Dell, Intel, Microsoft, Lucent, Juniper Networks, Hewlett-Packard, Nortel, WorldCom, Global Crossing, General Electric and AIG – went from $600 billion in December 1996 to $3.8 trillion at the March 2000 peak – unjustified on sales and earnings growth during the period. By 2012, 4 of these companies had disappeared and the market cap of the remainder had dropped 78% from the peak. The overall market value gain of the twelve companies from 1996 to the end of 2012 was a mere 2.5% per annum.

Wall Street sounds like February 2000. Last week at least 5 brokerages raised their 12-month targets on Google to $800, making Google only the second company to Apple to be valued above a half-trillion dollars. Cisco’s $555 billion market cap at the peak dropped 85% by October 2002 and even today is still down 75%, despite sales at triple and net income at nearly 4 times higher than 2000 levels. In April 2000, Cisco was trading at 220 times reported earnings versus 13 times today.

The total market cap of Morgan Stanley’s New Tech Index of 16 high flyers – Google, Amazon, Baidu, Facebook, Saleforce.com, Netflix, Pandora, Tesla, LinkedIn, ServiceNow, Splunk, Workday, Yelp, Priceline, QLIK Technologies and Yandex – total $1.3 trillion versus $21 billion of total trailing net income, or a multiple of 61 times. Excluding Google, the total market cap for the other 15 is $840 billion versus $6.0 billion of earnings, or a multiple of 140 times.

Read the full article at http://davidstockmanscontracorner.com/take-cover-wall-street-is-breaking-out-the-bubblies/

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Are Tech Giants’ New Buildings Signs of the Top? – OfTwoMinds.Com 07-20-15

Salient to Investors:

Charles Hugh Smith writes:

  • Building new gleaming headquarters generally marks the top of a bank’s fortunes. So Facebook’s glamorous new headquarters, Apple’s under construction “spaceship” campus, Google’s plans for an ultra-modernist headquarters may indicate excessive confidence in endless growth of revenues, profits and valuations.
  • Projections based on permanently parabolic growth have a long history of coming down to Earth.

Read the full article at http://charleshughsmith.blogspot.com/2015/07/are-tech-giants-new-buildings-signs-of.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+google%2FRzFQ+%28oftwominds%29

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The Emerging Megatrend Coming To Oil & Gas – OilPrice.com 07-16-15

Salient to Investors:

The FAA appears willing to allow drones to be used in the energy sector and is expected to release drone use rules in the next twelve months.

Large companies like Google, Boeing, and Northrup Grumman, have significant drone businesses and will benefit from wider use of drones across the entire global economy, though unlikely to lead to a dramatic change in revenues or profits.

Several smaller firms offer investors either a more direct play on drones or on the suppliers of parts for drones.

Read the full article at http://oilprice.com/Energy/Energy-General/The-Emerging-Megatrend-Coming-To-Oil-Gas.html

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Fareed Zakaria GPS – CNN 06-07-15

Salient to Investors:

Fareed Zakaria said:

  • In 2014, 190 million Indians used the Internet versus 60 million in 2009 and 7 million in 2001 – by 2018, there will be 580 million users.
  • Boston Consulting Group estimates the number of Internet jobs could quadruple in the next 3 years, with rural internet users growing to 40% to 50% from 29% of the population in 2013.
  • Reuters estimates India’s 250,000 villages will be connected with broadband cable in 3 years.
  • Nick Kristof says it takes 25 gallons of water to take a bath, 1,800 gallons to make a pound of beef, 468 gallons for chicken, 880 gallons for a gallon of milk.

Stanley McChrystal said:

  • ISIS is not a traditional terrorist or religious movement but an organization taking advantage of the political and social erosion in the Middle East and which uses the new technological environment to seem like they are everywhere and know everything.
  • It will very difficult to produce any kind of lasting solution without a team of teams by nations in the Middle East region, all being stakeholders in the need to get Syria, Iraq, and others back into effective equilibrium, then empower them to execute – which means letting go of some control.

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

at http://transcripts.cnn.com/TRANSCRIPTS/1506/07/fzgps.01.html

Fareed Zakaria GPS – CNN 03-15-15

Salient to Investors:

Fareed Zakaria said the NSF reports the US share of global R&D at 30%, down from 37% in 2001. China % of GDP spent on R&D is on track to surpass the US in just a few years.

Charles Bolden at NASA said a multi-planet species can survive in perpetuity; single planet species will die away.

Dr. Steward Williams at University of Louisville said we can now take an adult cell and transform it into other types of cells and will be able to print an entire heart within 10 years.

ITER says there is enough hydrogen in the ocean to power humanity with fusion for millions of years – fusion reactions do not produce any carbon emissions. China is making cables for the super conducting magnets which the US is building, and India is making the steel structure that will surround the magnets.

Michio Kaku said:

  • We have learned more about the brain in the last 10 and 15 years than in all of human history combined.
  • We can now photograph a thought and communicate it to a robot or a computer. We can see desire, self-awareness or a guilty conscience.
  • If we can upload our brains into a computer, we could outlive our frail bodies and perhaps achieve immortality.

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

at http://transcripts.cnn.com/TRANSCRIPTS/1503/15/fzgps.01.html

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