Posts Tagged ‘Google’

Kindling a Fire

February 5th, 2010 Michael McDonough Comments off

Intellectual property, mobile internet technology and national censorship make an incendiary mix for global business and consumerism. This was brought to center stage recently with the escalating disagreement between Google and the Chinese government over privacy rights for online content. The clash of swords has most recently become a truly intergovernmental affair as well with U.S. Secretary of State Hillary Clinton’s policy speech on global internet rights and the just announced cooperation between Google and the National Security Agency in the search for the hackers behind the intrusion into some customers’ personal emails. Once Google felt its property rights had been impinged, its first headline-making reaction was to immediately provide unfiltered search results to its individual Chinese customers, reversing the policy of acquiescence to China’s political and cultural internet censorship by which it had abided since entering the country.

Yet, l’Affaire Google could have even wider implications for a burgeoning technology taking the world by storm: the eReader. These devices have the ability to carry libraries of books and other information inconspicuously across borders, an issue that no government has apparently considered a discrete policy matter to date.

In China’s case, the threat to the censorship regime could be too big for the government to ignore, both in terms of the potential quantity of subversive material and the ease of dispersing it. As one traveler’s first-hand commentary puts it, “You’ll be fine, as long as it’s not a suitcase full of books and then it’d kinda start looking like you’re smuggling in anti-Chinese propaganda.” Well, the eReader is a suitcase full of books that can be loaded onto the internet and sent via email without requiring any access to the Chinese firewall.

The next question for the broader global business community is whether they will face governments that refuse to honor their asserted intellectual property rights if they do not bind themselves to national censorship requirements. Nor can this be viewed as a purely China vs. World conflict. Western countries including Germany, Canada, and France, for instance, qualify free speech rights in relation to some material regarded as derogatory or anti-social. The implications, like the communication capacities of the devices, are likely to grow virally. Will China be manufacturing components for the key weapons in breaking down its own firewall? And would consumers start requesting confiscation refunds as part of their eReader warranties?


US Week Ahead: A Hectic Week on Data & Earnings

July 11th, 2009 Michael McDonough Comments off

Despite a rather hectic week of economic releases; earnings news will likely steal the show this week. Big names on the earnings calendar this week include Goldman Sachs, JPMorgan, Bank of America, Citigroup, GE, Intel, Google, IBM, and Johnson & Johnson. However, a recent mixture of good and bad economic news, including decreasing consumer sentiment, rising unemployment, and dreadful retail sales have raised concerns over the potential for a prolonged recession. Therefore, it’s important we pay close attention to Tuesday’s retail sales and PPI data, Wednesday’s CPI and industrial production data, and finally Thursday’s jobless claims number, all of which have the potential to move the market in one direction or another. Here is the remainder of the calendar:

Monday July 13th:

2:00PM: Treasury Budget (Risk: Upside, Market Reaction: Marginal): The current Bloomberg consensus for the Treasury’s monthly budget report is –US$97bn compared to –USD187.7bn a month prior. These large deficits have been fueled by TARP expenditures and buying federal housing agency debt. But, several companies have recently paid back TARP funds, which will likely reduce the level of this month’s deficit.

Tuesday July 14th:

7:45AM: ICSC-Goldman Store Sales (Risk: Downside, Market Reaction: Marginal): This weekly index tracks aggregate store sales across major US retailers, accounting for roughly 10% of total retail sales. Given recent data supporting an increasing US saving rates and a worsening employment situation, this index could face some downward pressure. Last week’s number indicated a 0.1% increment in store sales over the previous week.

8:30AM: Producer Price Index (Risk: Downside, Market Reaction: Moderate/Significant): Higher energy prices and a small increment in food prices will likely lead to a higher headline number for the PPI, while core-PPI should remain relatively unchanged. According to Bloomberg the current consensus forecast for the PPI and core-PPI is 0.8% and 0.1%, respectively. Any significant upward surprise in this index could amplify rhetoric among inflation hawks. This index is considered a forward looking indicator to profits and the CPI.

8:30AM: Retail Sales (Risk: Neutral, Market Reaction: Significant): The effect of higher gasoline prices in June could cause retail sales to surprise to the upside. But, factoring out gas, recent weakness in other sales indicators imply that June’s sales data will be flat to negative. According to Bloomberg the current market consensus for retail sales and retail sales-ex autos is 0.5% and 0.6%, respectively. Retail sales plunged at the end of last year and have essentially remained flat this year.

10:00AM: Business Inventories (Risk: Neutral, Market Reaction: Marginal): On the back of a decline in wholesale inventories, business inventories will likely decline again in June after declining the previous eight months. Look for auto and retail inventories to continue their decline. According to Bloomberg the current market consensus for business inventories is a monthly change of -0.8%. The good news is that with inventory levels so low once a recovery does begin we could see a jump in manufacturing as companies look to replenish their stocks.

Wednesday July 15th:

7:00AM: MBA Purchase Applications (Risk: Neutral, Market Reaction: Marginal): This index, which tracks new mortgage applications tends to be a reasonable forward looking indicator for home sales, but issues including customers filling out numerous applications could skew the index. Last week the purchase index rose 6.7%, while the refinance index increased by 15.2% on the back of relatively low mortgage rates.

8:30AM: Consumer Price Index–CPI (Risk: Downside, Market Reaction: Significant): As with the PPI, a recent rise in energy prices will likely add some upward pressure on the headline index, while core CPI should remain relatively constant relative to last month. According to Bloomberg the current consensus forecast for the CPI and core-CPI is 0.7% and 0.1%, respectively. Any significant upward surprise in this index could amplify rhetoric among inflation hawks; the inverse is true with a downward surprise.

8:30AM: Empire State Manufacturing Survey (Risk: Downside, Market Reaction: Marginal): This index tracks manufacturing activity in New York state across 175 different companies in a variety of industries. Recent weakness in the overall manufacturing sector will likely add some downside pressure to July’s release. According to Bloomberg, the current market consensus for the general business conditions index is -4.5, compared to -9.4 a month prior. It will be important to monitor the general business conditions, new orders, and prices paid components of the index, all of which were negative last month. Conversely, the future general business conditions index rose last month.

9:15AM: Industrial Production (Risk: Downside, Market Reaction: Significant): Continued weakness in manufacturing sector will likely add downward pressure to the overall index. According to Bloomberg, the current market consensus for June’s IP is a monthly change of -0.7% with a capacity utilization rate of 67.8%. In June capacity utilization stood at 68.3%, or 12.6% below its 1972-2008 average.

10:30AM: EIA Petroleum Status Report (Risk: Neutral, Market Reaction: Moderate): This report highlights domestic petroleum inventories, which could have a significant impact on the energy sector.

2:00PM: FOMC Minutes (Risk: Neutral, Market Reaction: Marginal): Given the three week lag between the FOMC meeting and the release of the minutes this should have only a marginal effect on trading. But, the minutes could elaborate the rationale behind the FOMC’s decision, and give some clues to future decisions, in which case the market could move on the release.

Thursday July 16th:

8:30AM: Jobless Claims (Risk: Upside, Market Reaction: Significant): Last week’s better than expected initial jobless claims may have been exaggerated by inaccurate seasonal adjustment factors stemming from the timing of automotive and other manufacturing lay-offs, which could be repeated this week. According to Bloomberg the current consensus for initial jobless claims stand at 535K, compared to 565K last week. Although, I do believe we will continue to see a downward trend in the number of new claims, the level last week’s number implied is too optimistic.

9:00AM: Treasury International Capital Data (Risk: Neutral, Market Reaction: Marginal): This data highlights the flow of financial instruments to and from the US. Thus, indicating foreign demand for US financial instruments, which tends to have a stronger impact on the dollar and bond markets compared to equities.

10:00AM: Philly Fed Survey (Risk: Downside, Market Reaction: Moderate): This index, which tracks manufacturing activity within the Philly Fed’s district, is correlated to both the ISM and Industrial production indices. According to Bloomberg the current market consensus for the general business conditions index is -5.0 versus -2.2 a month prior. Continued weakness in manufacturing will likely place downward pressure on this index.

10:00AM: EIA Natural Gas Report (Risk: Neutral, Market Reaction: Moderate): This report highlights domestic natural gas inventories, which could have a significant impact on the energy sector.

1:00PM: Housing Market Index (Risk: Downside, Market Reaction: Moderate): The housing market index, published by the National Association of Home Builders, indicates the demand for housing combined with consumer sentiment towards the housing market. The index is calculated by using a weighted average of the following indices; present sales of new homes, sale of new homes expected in the next six months, and traffic of prospective buyers in new homes. Increasing unemployment coupled with waning consumer confidence could place some downward pressure on this index.

4:30PM: Fed Balance Sheet & Money Supply (Risk: Neutral, Market Reaction: Marginal): Since the Fed’s shift to quantitative easing, the balance sheet has become one method to measure to the Fed’s effectiveness. The market will pay close attention to the reserve bank credit component, which measures factors supplying providing reserves into the banking system. Last week the Fed’s balance sheet shrunk to $1.977 trillion from $1.989 trillion the previous week.

Friday July 17th:

8:30AM: Housing Starts (Risk: Downside, Market Reaction: Marginal/Moderate): After experiencing an unexpected bump in May housing starts are likely to decline in June. According to Bloomberg the current market consensus for starts is 530K, compared to 532K last month. Weak demand for homes will likely place downward pressure on this index.

Have a good weekend!