Anger over Google Home’s inability to answer questions about Jesus led the company to bar the device from answering questions about all religious figures, according to a statement released Friday.
Some users became angry when the smart speaker was unable to answer questions such as, “Who is Jesus?” but could respond to similar queries about Buddha, Muhammad and Satan, CNBC reports. Some unhappy social media users alleged that Google was “censoring” Jesus.
Danny Sullivan, Google’s public search liason, tweeted a statement by way of explanation on Friday. “The reason the Google Assistant didn’t respond with information about ‘Who is Jesus’ or ‘Who is Jesus Christ’ wasn’t out of disrespect but instead to ensure respect,” the statement reads. “Some of the Assistant’s spoken responses come from the web, and for certain topics, this content can be more vulnerable to vandalism and spam.”
Until the issue is fixed, according to the statement, all responses for questions about religious figures will be temporarily unavailable.
By Mattson Newell (@MattsonNewell), Director for Partners In Leadership, an expert and author on Breakthrough Communications, Global Human Resources, and Talent Development.
While the initial success of companies like Netflix, Facebook, and Tesla, is, of course, grounded in the fantastic products they’ve introduced to consumers, the leaders of these tech world behemoths recognize that long-term success requires fostering a strong culture of innovation within their companies. In fast-moving industries, leaders must create a culture of learning that keeps employees invested in their work and committed to the challenge of improving upon the status quo.
The strategies used by leaders like Elon Musk, Mark Zuckerberg, and Reed Hastings are innovative and unique, but they can be borrowed by leaders from all industries to encourage a sense of creativity and curiosity in their employees. The success of these visionary leaders in creating cultures of learning can be boiled down to five critical strategies.
1. Lead With Passion
Mark Zuckerberg is passionate about the grand vision that his company is working towards — but he applies that same passion to the everyday, often unglamorous work it takes to achieve that vision. Through frequent appearances on the news and at conferences, as well as through posts on his own personal Facebook page, Zuckerberg is constantly setting an example for his employees, demonstrating to the world how excited he is about the work Facebook is doing. This kind of dedication does more than inspire confidence in shareholders: employees who see that their managers are passionate about what they have achieved are much more inclined to work diligently in pursuit of the company vision.
2. Lead By Example
Earlier this year, Elon Musk caught wind of some safety concerns affecting employees in one of Tesla’s plants. Instead of just issuing a new company policy or sending a sympathetic email, Musk asked that moving forward, employees send any and all concerns regarding safety directly to his inbox. On top of that, he promised to personally visit any factory in which these incidents occurred, spending time on the factory floor and observing the process himself to determine what changes could be made to improve protocol. Musk’s decision to lead from the front lines showed his employees that he was committed to their safety and personally invested in improving Tesla’s manufacturing process.
3. Create a Culture of Asking Questions
Leaders who create a culture in which employees are encouraged to ask questions are able to keep their organizations nimble and primed for growth. It was Musk’s constant willingness to ask questions and challenge the status quo that pushed Tesla from being just another car company to one of the most innovative businesses in the world. If Musk hadn’t challenged what was accepted as “the way business has always been done,” SpaceX would never have been born.
In order to create and implement truly innovative ideas at their companies, leaders must not only embrace change themselves, but ensure that their employees do the same. CEOs like Netflix’s Reed Hastings, for example, understand that ideas for new products and processes are great, but that these innovations will never truly be impactful if they are not seen through to completion. That’s how he pushed his company to make the transition from mailing customers DVDs by hand to streaming all of its video content, a practice that was unheard of until Netflix championed it. Rather than letting this daring idea fall by the wayside, Hastings acted on it, and in doing so ushered in the new normal of on-demand video streaming services.
5. Empower Employees to Learn
It’s all well and good for managers to encourage their employees to take learning seriously — but the best leaders actually give their employees the resources they need to do it. For example, Google allows its employees to spend 20% of their time each week learning new skills and developing their existing talents. Granting employees the time and space to learn will always generate positive returns for any company.
NEW YORK (Reuters) – Trading software provider Trading Technologies International Inc said on Thursday it has teamed up with crypto-currency exchange operator Coinbase to give institutional traders direct market access to both bitcoin and bitcoin futures beginning in March.
The partnership means that large trading firms will have both bitcoin spot prices and bitcoin futures on the same screen, positioning them to potentially reap more profits trading the spread between the two financial products.
The firms withheld the financial terms of the deal.
Much of the interest in trading bitcoin has come from retail traders, but institutional participation has been picking up steam, especially over the past year, Adam White, general manager of Coinbase’s Global Digital Asset Exchange (GDAX), one of the biggest cryptocurrency exchanges, said in an interview.
“This is the first time hundreds, if not thousands of institutional clients will have the ability to trade the crypto spot market side by side with 45 other markets,” he said.
Trading Technologies, known as TT, is connected to 45 markets worldwide, including CME Group (CME.O) and Cboe Global Markets Inc (CBOE.O), which both introduced bitcoin futures trading in December.
The cash-settled futures give speculators a chance to short bitcoin, meaning they are betting the price of the underlying security will fall. One bitcoin was worth around $11,150 on Thursday morning, down from a high of around $19,000 last month.
TT also counts Goldman Sachs Group Inc (GS.N) , JPMorgan Chase and Co (JPM.N), and most other Wall Street banks as clients, as well as many Chicago- and London-based proprietary trading firms.
“We’ve had a lot of demand from the institutional trading community, everything from the traditional buy-side, hedge funds, managed accounts, the prop community, that I think have been looking for a bridge like this as a way to trade the crypto markets against the cash markets,” Rick Lane, TT’s chief executive officer, said in an interview.
The Chicago-based firm will also be rolling out enhanced surveillance tools to help police crypto-trading in the coming months, Lane said.
Coinbase, which is regulated under the New York Department of Financial Services BitLicense, also said it would soon introduce a new custodian offering with strict financial controls and secure storage for institutional traders wanting to trade digital currencies like bitcoin.
Reporting by John McCrank; Editing by Andrea Ricci
The accidental missile alert in Hawaii earlier this month made real for 38 terrifying minutes the vague, low-level dread that permeates American life today: Nuclear war seems closer and more real than it has in a generation. Even the pope—not exactly a fear-monger—said last week that the world now stood at “the very limit.”
That existential fear was affirmed today by the organization of nuclear scientists who have spent seven decades trying to turn humanity away from nuclear weapons: The Bulletin of Atomic Scientists moved its “Doomsday Clock” 30 seconds closer to “midnight,” an unofficial barometer of how close the world stands to a man-made catastrophe. It now stands two minutes away.
“To call the situation dire is to understate the danger,” said Rachel Bronson, the head of the Bulletin, at the National Press Club in Washington, DC, Thursday, announcing the clock’s new setting.
The clock dates back to 1947, when the scientists who participated in the Manhattan Project wanted to create a mechanism to warn of escalating global tensions and the danger of global Armageddon. The iconic stylized timepiece has since become the global arbiter of dread—or hope. It aims to answer two questions: Is the future of civilization safer or at greater risk than it was last year? And how does today’s risk compare to the risks we’ve experienced over the last 71 years?
The graphical clock started at seven minutes to midnight, its two-dozen changes since marking the shifting tensions of the Cold War. Its “peacetime” rating peaked in 1991 at 17 minutes to midnight, as the Soviet Union broke apart. It has gradually ticked darker ever since, first as nuclear weapons proliferated to countries like India and Pakistan, and then as it began to factor in other global threats, like climate change.
Last year, for the first time, it ticked forward a half-minute, reflecting the rise of nationalism and the threat to the post-war international order, as well as President Donald Trump’s troubling supportive comments about the appeal of nuclear weapons, and his climate change skepticism.
At the time, he’d been president only a few days; there was little track record to measure his actions versus his campaign rhetoric. But as Bronson told me last month, “Many of our fears played themselves out in 2017… A lot of our concerns were really borne out.”
Today’s movement of the Doomsday Clock—announced live in a webcast—was yet another sign that the world stands on a precipice perhaps unparalleled in the modern era. It hasn’t sat this close to midnight since 1953, a few months after the United States and Russia tested their first thermonuclear bombs.
Last week, as he started a trip to South America, Pope Francis handed out to reporters aboard his Alitalia plane a photo from 1945 that depicted a Japanese boy carrying his dead brother in the hours after the US bombing of Nagasaki, a nuclear weapon roughly equivalent to what US intelligence believes North Korea possesses. The Pope cautioned his travel companions, “I am really afraid of this. One accident is enough to precipitate things.”
The Pope’s comments reflected, whether intentionally or not, the strong sense of the presidents who lived through the danger of the Cold War: They rarely feared the superpowers intentionally launching global general thermonuclear war. Instead, what men like Dwight Eisenhower, John F. Kennedy, and Ronald Reagan feared was a rapid escalation through miscommunications, misunderstandings, and miscalculations that resulted in the two countries stumbling into a war neither intended.
As it turns out, if there’s one critical geopolitical lesson of the Cold War—one that should be impressed on every commander-in-chief in turn—it’s that nuclear war is actually hard to avoid.
Eisenhower, the former Supreme Allied Commander and the president who perhaps knew war better than any other during the nuclear age, declared that his proudest accomplishment was seemingly the simplest: “We kept the peace. People ask how it happened—by God, it didn’t just happen.”
During Eisenhower’s eight years, the United States and the Soviet Union repeatedly had to take active action to step back from escalating tensions. Many times, in fact, Eisenhower sat in rooms as president where military leaders recommended war as the best option—where, incredibly, starting a war would have been easier politically than choosing peace. It seems hard to imagine today, but the US seriously contemplated the use of nuclear weapons in the Korean War, and even to defend the islands of Matsu and Quemoy in the Taiwan Strait from invasion by the mainland Chinese military.
Eisenhower paid a political price for his forbearance. Democrats hammered him in the midterm 1958 elections as “soft on defense,” and Ike’s reputation as a peacemaker helped John F. Kennedy defeat Vice President Richard Nixon in the 1960 presidential race.
Kennedy, though, quickly came to agree with Eisenhower: Keeping the peace is often harder than going to war.
The US has invested trillions of dollars in a sophisticated defense and intelligence apparatus that, left to its own devices, protectively escalates the country to war.
More simply put, war is the default setting. Only through careful, sober, active leadership has the US avoided a nuclear exchange since 1945.
Kennedy’s own scare came in 1962, as the Soviet Union loaded nuclear-armed missiles into Cuba. In reading historian Barbara Tuchman’s The Guns of August—which traces how the Great Powers defaulted, almost accidentally, into beginning the Great War in the summer of 1914— Kennedy fixated on a conversation between two German leaders.
“How did it all happen,” asked a former German chancellor of the current chancellor. The latter, who had led his nation into the terrible, destructive “War To End All Wars,” replied, “Ah, if only one know.” Amid the Soviet standoff, President Kennedy told his brother Bobby that his driving motivation was to avoid a history book someday entitled The Missiles of October.
Indeed, the more historians have learned about the Cuban Missile Crisis, the more we’ve realized how correct Kennedy was: Kennedy and Soviet leader Nikita Khrushchev communicated poorly throughout the faceoff, and both sides misunderstood the others’ motivations, red lines, and military readiness. Numerous scares could have escalated: A routine preplanned U-2 surveillance flight strayed into Soviet airspace; a US attempt to scare a Soviet submarine resulted in the sub readying its nuclear-tipped torpedo.
In the context of the last seven decades of near-misses, the accidental Hawaiian missile alert is remarkable only in that was a public-facing mistake. Over the years, warning systems on the American and the Russian side have mistaken satellites, flocks of birds, and even the rising moon as incoming surprise missile attacks. Boris Yeltsin—back when the Doomsday Clock stood at a remarkably peaceful 14 minutes to midnight—was actually handed the Russian nuclear briefcase, known as the Cheget, in 1995 when Russian radar mistook the launch of a Norwegian scientific rocket for a surprise attack from a US submarine. He had less than five minutes to decide whether to launch a retaliatory strike.
The Cold War saw all manner of high-level scares. Jimmy Carter’s national security advisor, Zbigniew Brzezinski, was awoken one night with news that 2,200 Soviet missiles were on their way to the United States. He was preparing to wake the president for a retaliatory strike when word came through that the incoming missiles were just a computer glitch, a gremlin inside the system at NORAD. Brzezinski never bothered to wake his wife, figuring that she’d be dead anyway in a few minutes, so why bother her?
The Soviets misinterpreted the 1983 NATO nuclear weapons command exercise, known as ABLE ARCHER, as the preparations for a surprise attack and readied their own forces to respond. “In 1983, we may have inadvertently placed our relations with the Soviet Union on a hair trigger,” a classified 109-page US intelligence review later concluded.
In 2018, the focus instead lies on North Korea, as the isolated regime’s rapidly progressing missile program has become the center of geopolitical tension. During the first of what have now become regular scares, news reports circulated of a US aircraft carrier battle group steaming rapidly to the Korean peninsula—only to report days later that the Pentagon had garbled the location. The ships were, instead, thousands of miles away off the coast of Australia.
For a weekend, though, Kim Jong Un might have correctly believed the US was coming to kill him—and acted accordingly.
Each time until now, careful reflection and cautious leadership—leadership on all sides in all countries—in these crises has de-escalated rather than escalated. As President Trump has repeatedly shown, past is not necessarily prologue when it comes to nuclear weapons, particularly as more nations arm themselves and as the global rise of social media can spread reports—accurate or not—faster than policymakers can understand it, increasing the chances of miscalculations.
The current system makes nuclear war easier to start than to avoid; there’s precious little room for reflection. The first ICBMs will leave their silos just four minutes after a presidential order; once they launch, there’s no mechanism to stop them. And country on the planet possesses the capability to shoot down an incoming strike.
Today’s Doomsday Clock announcement offers a critical reminder that continuing Eisenhower’s dictum that he “kept the peace” requires the continuation of active, steady leadership throughout the world.
In an age where the blunt instrument of 140-character tweets all but beg to be misinterpreted, it’s a reminder that can’t be stressed enough.
After 10 long years, the Google-sponsored competition to land a robot on the moon for millions of dollars will end without a winner.
The XPrize foundation, which hosted the competition in collaboration with Google, announced Tuesday that the grand prize of $30 million will go unclaimed since none of the five teams will be able to reach the moon by the March 31st deadline. While the nonprofit said that it “did expect a winner by now,” it may move forward with a new sponsor to fund a prize if possible or reframe the Lunar XPrize as a non-cash competition.
A decade ago, teams were challenged to land an unmanned spacecraft on the moon, move the device around the surface for at least 500 meters, and then send photos and video back to Earth. The deadline was pushed back several times, but XPrize finally decided to halt the competition “due to the difficulties of fundraising, technical and regulatory challenges.”
XPrize argues that it still succeeded in some ways because it “sparked the conversation and changed expectations with regard to who can land on the Moon.” Indeed, a number of private spaceflight companies such as Elon Musk’s Space X, Richard Branson’s Virgin Galactic, and Jeff Bezos’ Blue Origin have sprung up in recent years with goals to usher in space tourism.
“We set out on this journey in 2007, excited by the potential of the prize to spur innovation and discovery in commercial space travel,” an XPrize spokesperson said. “Though the prize is coming to an end, we continue to hold a deep admiration for all Google Lunar XPrize teams, and we will be rooting for them as they continue their pursuit of the moon and beyond. To all teams, thank you for inspiring us to dream big and work hard.”
The nonprofit added that Google awarded more than $6 million to teams over the course of the competition “in recognition of the milestones they have accomplished.”
After a brief delay, Apple’s HomePod is hitting store shelves next month.
Apple on Tuesday announced that it will release its HomePod wireless smart speaker on February 9. The company will begin taking pre-orders on the device on Friday, January 26. When HomePod hits store shelves, it’ll cost customers $349. It’ll be available in two colors: white and space gray.
The tech giant unveiled its HomePod last year. While it comes with support for its virtual personal assistant Siri, putting it in direct competition with devices like Amazon’s Echo and Google’s Home, Apple has touted its sound quality. In a statement on Tuesday, in fact, it was the device’s “stunning audio quality” and “incredible music listening experience” that took top billing.
Apple’s HomePod comes with support for Apple Music, the company’s streaming music service. It also can be used in stereo with another HomePod and if users want to put HomePods throughout the home to listen to audio in different rooms, they can.
On the smart home side, Apple’s HomePod can be used to control everything from thermostats to lights through Apple’s HomeKit service.
Apple’s virtual personal assistant Siri stands at the center of the HomePod experience. Siri can be asked to do everything from playing music to setting reminders. It’s also by asking Siri that users can control the smart home gadgets around the house.
To boost the HomePod’s features, Apple has released a software development kit called SiriKit. The feature allows developers to integrate their apps with Siri, so they can be controlled via the HomePod.
Apple had hoped to release the HomePod in December, but announced in November that it would need more time. Apple didn’t say why it was forced to delay the device, but a report last week said that the company needed more time to ensure the HomePod’s software worked with the hardware.
The HomePod will be available in the United States at Apple’s stores and Best Buy. It’ll also be available in the U.K. and Australia on February 9. Other European countries will get HomePod in the spring.
FRANKFURT (Reuters) – Optiv Security, an acquisitive Denver-based company backed by private equity firm KKR, is expanding into Europe where it will offer its cyber security management and consultancy services, executives said on Tuesday.
Optiv also is looking to roll-up independent security firms to gain geographic and technical scale, starting in Britain and then across Europe, they said. Rivals include national telecom operators and global computer and management consulting firms.
The company, which is majority owned by KKR, the world’s No.2 private equity firm, has hired Simon Church as European general manager and executive vice president.
Church, a veteran deal maker, executed a smaller-scale roll-up of European managed security services from 2009 to 2015 as director and later CEO of Integralis, which was acquired by Japan’s NTT Com Security. He aims to replicate that at Optiv.
“There is no really pan-European player in the way Integralis was in the pure-play security provider market, along with two or three other worthy competitors at that time,” Church told Reuters in a phone interview.
He more recently worked at security venture capital investor C5 Capital and as CEO of Vodafone Enterprise Security Services.
Optiv, which had a turnover of around $2.25 billion last year, draws up strategies for knitting together thousands of potential security products and then offers them as managed services for clients who can’t afford to maintain in-house security teams of their own.
Optiv executives said they were looking to offer similar consulting and managed security services to European-centered firms and offer more services on the ground to existing U.S. clients in Europe.
Frost & Sullivan predicts that managed security service revenue in Europe, the Middle East and Africa will nearly double to $8.3 billion between 2016 and 2021.
Europe’s managed security market is stratified among mature technology providers and newer entrants focused on cloud and mobile services and data breach remediation, experts say. Staff are in short supply, stoking demand for managed services.
Organizations also are racing to comply with Europe’s General Data Protection Regulation, which takes effect in May, which sets stiff penalties for data breach failings.
Optiv aims to grow through a mix of organic, internally generated sales growth, outside security acquisitions and so-called “acquihires” in order to pick up top talent, Church said.
Acquisitions can run up to tens of millions of dollars each, or be far larger if strategic deals come into play, Evans said.
Optiv is itself the result of a 2015 merger of Accuvant and FishNet Security, both roughly around $700 million revenue companies at the time. The company expanded further into Canada in November.
It has 1,800 employees and counts nearly two-thirds of Fortune 1000 companies among its customers, Chief Marketing Officer Peter Evans said by phone.
Outside of North America, Western Europe is the largest market for corporate security, larger than all other regions combined, Gartner estimates. It forecasts total spending to grow to around US$32.6 billion by 2021, up 27 percent from 2017.
(1 British pound = $1.3989)
Reporting by Eric Auchard; Editing by Douglas Busvine and Susan Fenton
The internet of things, or IoT, is pervasive these days in your personal life. However, this technology is just getting into the Global 2000 companies. Yet most of the Global 2000 companies are unaware of the risks that they are bringing to IT and cloud security with their IoT adoption.
How did this happen? Well, for example, as thermostats and sensor fail in buildings’ HVAC systems, they are often replaced with smart devices, which can process information at the device. These new IoT sensor devices often are computers unto themselves; many have their own operating systems and maintain internal data storage. IT is largely unaware that they exist in the company, and they are often placed on the company’s networks without IT’s knowledge.
Besides the devices that IT is unaware of, there are devices that it does know about but are just as risky. Upgrades to printers, copiers, Wi-Fi hubs, factory robots, etc. all come with systems that are light-years more sophisticated in intelligence and capabilities than what came before, but they also have the potential of being turned against you—including attacking the cloud-based systems where your data now resides.
Worse, many of these IoT devices are easily hacked, and so can easily become agents for the hackers lying in wait to grab network data and passwords, andeven breach cloud-based systems that may not have security systems that take into account access from within the company firewall.
And don’t let price be a proxy for secrity level: I’m finding that the more specialized and expensive that the devices are, the more they are likely to have crappy security.
This is going to be a huge issue in 2018 and 2019; many companies will need to get burned before they take corrective action.
The corrective action for this is obvious: If the IoT device—no matter what it is—cannot provide the same level of security as your public cloud provider or have security systems enabled that you trust, it should not be used.
Most IoT companies are improving their security, even supporting security management by some public clouds. However, such secure IoT devices are very slow to appear, so most companies deploy what is available in the market: IoT devices without the proper security systems bundled in.
Sadly, I suspect that IoT security will be mostly a game of Whack-a-Mole over the next several years, as these things pop up on the corporate network regularly.
That’s really too bad. We finally just got cloud security right, and now we’re screwing it up with new thermostats and copiers that make all that good security worthless.
As I stated back in early December 2017 in my previous update on the SPDR Gold Trust ETF (GLD):
The next FOMC meeting is scheduled for December 12-13, and it’s a done deal that the Federal Reserve will raise the Fed Funds rate by another 25 basis points. If there is one thing the bears have working in their favor at the moment, it’s the fact that GLD has declined (sometimes aggressively) leading up to all recent Fed meetings in which a rate hike was expected…the next 10 days still definitely favors those negative on gold. But this is the last hope for the bears of getting a rout to materialize in gold between now and the end of the year. If they can’t get something going here very soon, then they will have their backs up against the wall, as the returns in GLD over the next month following these rate hikes have typically been very strong.
Sure enough, GLD has followed this projected path as it declined right up to the Fed meeting and has swiftly reversed course since then. It’s surged higher over the last several weeks and has closed in positive territory for 11 days in a row. Although it’s certainly due for a pullback.
As I pointed out just before the start of Q4 2017, most investors were anticipating a major decline in gold during the last quarter of this past year. Not only was this a clear contrarian signal, but the reasonings put forth for a substantial drop were illogical (especially when looking at historical Q4 trading of gold during bull markets).
Gold actually spent most of the quarter in a very tight trading range and was basically flat for the majority of the time. All the bears could muster was just that brief ~2.5% sell-off right before the Fed meeting, but that loss has since been more than fully recouped and shorts have scrambled for cover. That vicious decline that so many expected simply never materialized. Likely because it was based on flawed analysis.
There is a big difference between how gold performs in Q4 when it’s in a bull market vs. a bear market. This is the performance of the metal during its 2002-2010 bull run. The shorts are lucky that gold didn’t bury them like it has in previous bull years.
Many keep saying this isn’t a bull market. Investors keep listening to these calls and losing out on some big returns, especially in the gold stocks.
Gold And The S&P 500 Rising In Tandem
GLD has risen 24.31% since it bottomed in late 2015, while the S&P 500 is up 32.71% during that time (if you include dividends, the return is a little stronger). Both have been moving higher over the last few years and the SPX has only taken a firm lead in the last few months. If you would have asked investors, economists, and talking heads back at the start of 2016 where gold would be trading if the S&P went up by 32% over the next 2 years, the vast majority would have given an extremely bearish response. Yet here we are:
While general equities and gold typically trade inverse to each other, it’s not a perfect correlation and there was always a scenario where they could rise in tandem (which I discussed in previous articles). In this environment, where rates are still ultra low and the Fed is giving inflation plenty of room to run, there isn’t much to stop either gold or the stock market from moving higher. Throw in current economic policies/tax cuts of the Trump Administration, and this is the perfect breeding ground for an inflation spike.
We have the yield on the 3-year now above 2%, which is the highest since 2009. This is most definitely something to pay attention to as it’s clearly not signaling tame future inflation data and/or a Fed on hold anytime soon. Markets are always forward-looking.
We have the Producer Price Index now at multi-year highs on a percent change basis (both Total and Core PPI). The PPI has increased 3.1% YoY, a level not seen since 2011. Core prices are at a 12-month rate of change not seen since 2012.
The stock market is reacting to the positive catalysts hitting the economy in combination with the still low interest rate environment. Gold is reacting to rising inflationary pressures and investors are taking advantage of its ultra cheap valuation. Eventually, the stock market will hit a wall and gold will keep moving higher, but it’s unclear when that break will occur.
The stock and bond market are certainly due for a correction. A 60:40 portfolio of US stocks and bonds hasn’t had a 10% decline since 2009. You have to go back to the 1930s to have a longer run, and we are basically near that mark right now. If bonds roll over and rates spike along with inflation, expect at least a 10% drawdown for a portfolio with this weighting.
I’m not calling for a top in the stock market; I would actually prefer to see it continue to gain even further ground. Clearly, it’s not having a negative impact on gold so I wouldn’t be worried about the precious metals sector in that scenario. Surging equities will eventually reach a tipping point where investors start to assess the rising rate environment due to inflationary pressures and adjust accordingly. I’m not sure we are there yet, as rates have only begun to normalize and are still quite low.
This environment could stay intact for a while longer even though I expect further rate increases. I’m ignoring the flattening yield curve and recession warnings as I think that’s too early of a call. We continue down a path that will be highly positive for gold, yet eventually, very negative for stocks.
Commodities Cheap Compared To The S&P
Gold is only starting to get its form back, while the S&P has been increasing for years. By comparison, gold is a far more compelling opportunity in terms of 2-5-10 year return potential compared to the stock market. Other commodities like silver looked primed for a re-rating as well.
DoubleLine’s CEO Jeffrey Gundlach is one of the few major fund managers to be bullish on gold. In a webcast last month, he stated:
“If you ever thought about buying commodities… maybe you should buy them now.”
This is the graph he used to show how cheap commodities are compared to the S&P 500. The S&P GSCI Total Return Index is trading at historical lows when compared to the $SPX. As Gundlach states: “We’re right at that level where in the past you would have wanted commodities instead of stocks.”
Over the last 50 years, commodity prices have only been this cheap relative to the S&P on two other occasions – at the beginning of the 1970s (just when the U.S. went off the gold standard) and during the height of the Dot.com bubble. Commodities far outperformed the S&P over the next 5-10 years in each of those two instances. Gundlach isn’t suggesting just to buy gold, as he believes investing “in commodities broadly rather than gold alone.”
The only issue with the S&P GSCI is that oil makes up about half of the index, and that sector has long-term structural issues to contend with. It’s unclear if we will actually see this index rise to its previous peaks, as those tops were fueled (no pun intended) by an oil crisis. Having said that, even if you remove oil from the equation, other commodities like gold, silver, wheat, corn, etc. are historically cheap and seem to offer much better future returns than stocks. I expect these commodities to do extraordinarily well as strong demand cycles always reemerge.
GLD And The HUI – The Current Technical Picture
The MA (100) on the weekly chart of GLD has acted as very strong support/resistance for years now. The 100-week has been on the rise since 2016, and GLD has found support every time it has declined to this level. Gold breached the MA (100) last month, but it has vaulted back above since then and appears poised for a major surge.
When I look at this chart, I see a few things: One, it shows the ebb and flow of the gold sector from a longer-term perspective (which is the most important way to observe a market). Two, it shows that bullish momentum continues to build. Markets like this don’t turn on a dime, it takes time to gain steam after a change in trend has occurred. The MA (100) is now accelerating to the upside as GLD increases in strength.
180 had acted as key support for the HUI throughout 2017, as the index managed to bounce every time it touched this level. Last month, though, the HUI was unable to rebound when 180 was hit and instead kept declining. At that point, the concern was that the index would continue to fall to 160 or possibly even lower. However, I warned subscribers of The Gold Edge that a break below 180 could be a bear trap and “any swift reversal back above 180 over the next few days shouldn’t be ignored.”
We did get a reversal and now the HUI is approaching 200. It’s not out of harm’s way yet but this chart is much more bullish. Despite the uncertain short-term outlook, there is no question about the long-term direction of this index, it’s going much higher.
I do want to point out that the HUI is forming a perfect rounded bottom and there is some nice symmetry in terms of an inverse head and shoulders pattern. The right shoulder is basically complete, and if 200 can be taken out again, then the stage is set for a surge in gold stocks over the next several years.
Expectations For 2018
2016 was a fantastic year for this sector and a great one for me personally as an investor. 2017 was more of a stock picker’s market in the precious metals space, but there were still strong gains to be had if you were in the right gold miners. To follow up stellar returns in the first year of the bull market with solid gains last year, proves that the downtrend is well behind us and a new long-term uptrend has emerged. I expect in 2018 that this bull will assert itself more aggressively, and by the time it’s all said and done, there should be no question about whether the precious metals are in a bull market or not.
If the sector doesn’t break out in the next few weeks, at most this drags on for another 2 months or so. My gut tells me a surge above major resistance happens sooner rather than later, but I’m prepared for anything and everything in this sector.
There will be big winners – and likely some big losers – this year given this is the gold mining sector and prospects can change fast, but I expect a more uniform appreciation in gold (and silver) miners in 2018 compared to last year. It will be similar to the run in 2016 but yet still different in some facets. I’m expecting a more stable price appreciation environment and not as jarring of corrections. I don’t believe there will be any 50% drawdowns.
This is about making sure one is positioned properly and has a clear and exact game plan to work off of so no profits in this phase of the bull market are missed out on. The goal is full participation during the run.
The Gold Edge
I offer a premium service on Seeking Alpha called The Gold Edge. I believe this strong surge in the gold market will continue for the foreseeable future. While we are in this surge, there will be lots of volatility, which means lots of opportunities.
If you would like to read more of my thoughts, ideas, and research on the gold sector, including which companies I believe are best positioned for outsized returns in this bull market, you can subscribe here.
Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
It was one of those normally mundane end of year seasonal events.
But what I heard blew my mind and will substantially shape my trading and investment strategy for 2018.
By now you already know that I used some of my stock market winnings this year to buy a vintage Steinway concert grand piano (click here for“The Inflation Hedge You’ve Never Heard Of.”)
Well, you can’t own a Steinway without a recital, and ours was held last weekend.
After listening to an assortment of children display their skills with Pachelbel, Ode to Joy, and The Entertainer, we adjourned for a celebratory buffet dinner.
Making small talk with the other parents, I asked one particularly articulate gentleman what he did for a living. He too had enjoyed an excellent year, and also used his profits to buy a Steinway, although his was a cheaper upright model.
It turned out that he was the chief technology officer at Lam Research (LRCX).
Had I heard of it?
Not only did I know the company intimately, I had recommended it to my clients and caught the better part of the nearly 400% move since the beginning of 2016. Furthermore, I was expecting another double in the share price in the years ahead.
Was I right to be so bullish?
The man then launched into a detailed review of the company’s prospects for the next three years.
The blockbuster development that no one outside the industry sees coming is China’s massive expansion of its semiconductor production.
More than a dozen gigantic fabrication plants are planned, the scale of which is unprecedented in history. Some of these fabs are ten times larger than those built previously.
This is creating exponential growth opportunities for the tiny handful of companies that produce the highly specialized machines essential to the manufacture of cutting edge semiconductors, including Applied Materials (AMAT), ASML (ASML), Tokyo Electron (OTCPK:TOELY), KLA-Tencor, and LAM Research (LRCX).
Everyone in the industry has boggled minds over the demand they are seeing for their products.
The reality is that artificial intelligence is rapidly working its way into all consumer and industrial products far faster than anyone realizes, creating astronomical demand for the chips needed to implement it.
Bitcoin mining is also creating enormous new demand for chips that no one remotely imagined possible even two years ago.
As a result, the industry has been caught flat footed with severe capacity shortages. They are all racing to add capacity as fast as they can. Profit margins are exploding.
(LRCX) announced Q3 revenues of $2.48 billion, a staggering increase of 51.84% over the previous year, and a gross margin of 46.4%. The operating margin was 28%, generating net income of $591 million.
That gives the shares a very reasonable price earnings multiple of 16.95X, a 10% discount to the 18X multiple for the S&P 500. That is an incredible deal for one of the fastest growing companies in America.
Samsung of South Korea was far and away it largest customer, accounting for 38% of total sales.
On November 14 the company announced an eye-popping $2 billion share repurchase program that is certain to drive the price higher.
If there is one dark cloud on the horizon, it is the loss of the research & development tax credit embedded deep in the proposed Republican tax bill.
This will have a noticeable and negative impact on (LRCX)’s bottom line. Still, my friend thought that the company could offset this loss with faster sales growth and margin expansion.
However, many other technology companies in Silicon Valley won’t be able to bridge that gap. It is a hugely anti-technology move for the government to take.
My fellow Steinway owner thought that LAM Research could easily see sales double in three years as long as there is no recession, which I believe is at least two years off. As for the share price, he couldn’t comment, but remained hopeful, as he was a large owner himself.
Of course, the trick is how to buy a stock that has just risen by 400% in two years. So you could start scaling in here, and build a larger position over time.
You only get opportunities like this a couple of times a decade, and it’s better to be too aggressive than too cautious.
To learn more about LAM Research, click here to visit their website.
Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.