Sunday, August 18, 2013
US SEC is taking the jobs of Chinese SEC
US SEC takes the Responsibilities of Chinese SEC to investigate into Chase. Interesting If I could vote, will vote Mary White for her second term if any.!!!
The U.S. Securities and Exchange Commission’s anti-bribery unit is investigating whether JPMorgan Chase & Co. (JPM) hired the children of Chinese officials to help its business, The New York Times reported, citing a confidential government document.
The bank hired the son of a former Chinese banking regulator who is currently chairman of China Everbright Group Ltd., a state-controlled financial company, while its Hong Kong office employed a Chinese railway official’s daughter, according to the report. After each appointment, the bank secured assignments from companies connected to the new hires’ parents, according to the report.
The bank has not been accused of any wrongdoing, according to the report. The government document and public records cited by The New York Times do not indicate that the employees helped JPMorgan secure business or that they were unqualified, according to the report.
Sunday, June 30, 2013
Stay defensive from now
What lines ahead of us for the interest rate ? Concerns the Fed may curtail the bond buying, known as QE, helped push the yield on the 10-year Treasury note as high as 2.61 percent from as low as 1.63 percent in May. The carry trade effect caused the market turmoils in both US and Asian market last week as Chinese market hit 4-year low. And over the weekend, William Dudley, president of the Federal reserve bank of NY came out to clarify what Ben has said last week. However, we all know, Bernanke really meant what he said, the tapering of bond purchase will become reality in the coming 6-12 months. He just spoke in a way to test the market and found out only 5% correction happened and became stabilized with assistance from Central bank of China.
So in short, a risk averse investors do not want to allocate to bonds in your 401k starting from now if you have not done so previously.
Sunday, June 2, 2013
The money outflows from SAC may trigger sell-offs in some illiquid assets
Both SAC and its founder Steven A. Cohen have been at the epicenter of a federal investigation into insider trading for several years. However, the situation is getting worse recently as the Justice Department's case against the firm and Cohen appears to be ramping up.
Several employees have been charged with securities fraud, and the fund agreed to pay the SEC $614 million to settle those charges.
But some clients became spooked two weeks ago after SAC told investors it had officially stopped cooperating with the government.
Sources say many of SAC Capital's long-time investors, including the Blackstone Group and Morgan Stanley, are taking their money and walking away from one of the best-performing hedge funds of all time.
Most of time, when the prime brokers or institutions pull themselves out from a hedge fund, the fund must liquidate some of its assets for redemption. MS, on behalf of its investors, invested about $180 millions into SAC. And Blackstone had positions about $550 millions. So a total amount of $730 m will be taken out in a short time. This is still not the end, and sometimes it is almost certain this is not an end. A ripple effect of redemption driving up by investors who run fast to get themselves out may rush in within a short-time window. We will watch the progress closely in the following days.
Several employees have been charged with securities fraud, and the fund agreed to pay the SEC $614 million to settle those charges.
But some clients became spooked two weeks ago after SAC told investors it had officially stopped cooperating with the government.
Sources say many of SAC Capital's long-time investors, including the Blackstone Group and Morgan Stanley, are taking their money and walking away from one of the best-performing hedge funds of all time.
Most of time, when the prime brokers or institutions pull themselves out from a hedge fund, the fund must liquidate some of its assets for redemption. MS, on behalf of its investors, invested about $180 millions into SAC. And Blackstone had positions about $550 millions. So a total amount of $730 m will be taken out in a short time. This is still not the end, and sometimes it is almost certain this is not an end. A ripple effect of redemption driving up by investors who run fast to get themselves out may rush in within a short-time window. We will watch the progress closely in the following days.
Friday, May 17, 2013
The Online Streaming Music Service -- The unavoidable threat to Apple iTune/IPhone/iPod online music business
Download the PDF version of this article
It’s been over a decade since the first Apple iPod emerged on the scene, disrupting the music industry and prompting the inevitable shift towards digital. It was a great debut for the almost out-of-business comapny, Apple computer, to turn around in its history. When it was first introduced, this pocket-sized music player went head-to-head against the now legacy playback formats that previously dominated the recording industry, including CDs and vinyl records. While the sound quality of an mp3 file will never match the fidelity of a record due to file compression, the added convenience of being to carry one’s entire music library in his pocket has forced the hands of music execs and fueled the development of new music business models for the transmission and playback of our favorite beats.
And since that, iTune/iPad hardware-software co-design has evolved as the MP3 industry's dominant design model, while motivating other competitors to understand and mimic its eco-system. Through endless efforts by designers in the industry, the process innovation eventually brings up the new type of business model, the online streaming music services, provided by companies, such as Spotify and Pandora.
Without too much surprise, Google announced at its I/O developer conference that its service would allow users to combine their existing music libraries with Google's millions of available tracks to create their own playlists. That puts the new streaming product in direct competition with on-demand products like Spotify and Grooveshark. But the product also features radio stations, which could pit it against other internet radio services like Pandora. Many on-demand services also provide radio options.
The disruption model by Prof. Christensen allows us to explain the MP3 player market as a new disruptive innovation that needed an integrated platform due to the complexity and initial disaggregation of music on the Internet.
As described in Christensen’s context, when the functionality and reliability of a product are not good enough to meet customers’ needs, then the companies that will enjoy significant competitive advantage are those whose product architecture is proprietary and integrated across the performance-limiting interfaces in the value chain. The initial MP3 player industry had characteristics similar to a traditional PC, such as a hard disk interface and a processor to convert digitized music into analog sound. These MP3 players seemed ready-made for modularization. As the case points out, the technical hardware had all of the key ingredients that Baldwin and Clark highlighted as necessary properties for modularization including module partitioning and hidden module capability in hard drive disks, an interface specification based on PC interfaces for things such as hard disks, and system compliance and testing specifications based on minimum performance requirements for hard disks. All of these ingredients would allow for a market based on modularity. However, the music industry and the MP3 files, that had become the standard digitized music file format, were not easily integrated into these those assembled devices. For example, before Apple launched its iTunes store there was a low appropriability regime in the digital music space and it wasn’t clear what platform users would use to pay for music. Other questions remained unknown to both suppliers and customers, such as: What is the appropriate approach for customers to store their music? What kind of software platform should be used on portable MP3 players, which allowed customers to play and share their music? How can the music copyright be protected in the MP3-based music industry? There were many unknown interdependencies. MP3 makers only provided module-based hardware but the MP3 music industry itself was still at a stage where the interfaces and integration of music on the devices was unclear and unsettled. Similar to the Japan phone network example pointed out in Christensen’s framework, a seamless customer experience model was needed and Apple was able to provide this integrated, seamless experience, with a revenue model, an easy-to-use user interface and integration with the music industry itself in the form of digital rights contracts. Therefore, an integrated and proprietary solution, as offered by Apple’s iPod/iTunes ecosystem, that vertically spanned across those interdependent interfaces in the value chain could emerge with a competitive advantage.
Clearly, the MP3 player’s disruption and the initial quality of the entire package (or lack thereof) meant that the industry had moved to the left side of Christensen’s disruption diagram and there was a performance gap that needed to be bridged by an integrated product such as the iPod/iTunes. SanDisk and other MP3 player makers seemed to see this market as ready for modularization, with the PC interfaces as a template, but they missed the fact that while technical interfaces were easy to modularize, the full architecture of the music distribution system was not ready for modularization.
In the context of Christensen’s framework, at the beginning of a wave of new-market disruption, the companies that initially will be the most successful will be integrated firms whose architectures are proprietary because the metrics required by customers are not yet good enough. Apple benefited from its integration process to provide customers with a seamless hardware-software codesign with the iPod/iTunes ecosystem, allowing customers to manage their MP3 music efficiently with a portable device and a centralized music digital rights management (DRM). Apple has dominated this integration process because functionality and reliability were initial concerns of the customers. After several years of market evolution, those disruptive pioneers themselves become susceptible to hybrid disruption by a faster and more flexible population of nonintegrated/modularized companies whose focus gives them lower overhead costs. Now that customers of the digital music market have been relatively well served, they have many mature options to choose to access and manage their favorite music. Furthermore, the architecture within the digital music industry has been quite stable and well defined. Both customers and content providers know which attributes of the digital music player ecosystem are crucial to the operation of the product systems. They can also verify whether those attributes offer clear guidelines. For example, customers can verify whether the software provided will allow them to download and store MP3 music easily and conveniently and whether the device can provide enough storage volume and enough processing power for entertainment. Also, there are not many poorly understood interdependencies across the customer-supplier interface. Customers can predict how the subsystem changes will interact with other subsystems in an integrated digital music solution, as provided by Apple, Microsoft or Amazon. As we can see, these three elements follow what is described in Christensen’s framework, indicating the industry will shift to modularization.
The re-emergence of streaming music services reflects this underlying trend in the following ways: \item Streaming music services can be seen as a modular architecture because customers don't need to worry about the hardware and all of the bells and whistles - they can simply configure their songs and stream the music from anywhere. It provides great flexibility for customers to control their music content without a centralized service system and proprietary hardware.
\item Streaming music services eliminate the limitation on hardware storage and the dependency on the hardware platform. Now that the interfaces with the music industry are relatively well defined, you can listen to music on any portable electronic device, such as, an iPod, iPhone or smartphone, as well as a PC.
\item Streaming music services offer a lower cost structure, which allows them to compete in this industry as the market evolves.
Apple will need to compete by opening up its architecture (relying less on hardware) and perhaps allowing an iTunes streaming service with competitive pricing - this will eat into its high margins.
It’s been over a decade since the first Apple iPod emerged on the scene, disrupting the music industry and prompting the inevitable shift towards digital. It was a great debut for the almost out-of-business comapny, Apple computer, to turn around in its history. When it was first introduced, this pocket-sized music player went head-to-head against the now legacy playback formats that previously dominated the recording industry, including CDs and vinyl records. While the sound quality of an mp3 file will never match the fidelity of a record due to file compression, the added convenience of being to carry one’s entire music library in his pocket has forced the hands of music execs and fueled the development of new music business models for the transmission and playback of our favorite beats.
And since that, iTune/iPad hardware-software co-design has evolved as the MP3 industry's dominant design model, while motivating other competitors to understand and mimic its eco-system. Through endless efforts by designers in the industry, the process innovation eventually brings up the new type of business model, the online streaming music services, provided by companies, such as Spotify and Pandora.
Without too much surprise, Google announced at its I/O developer conference that its service would allow users to combine their existing music libraries with Google's millions of available tracks to create their own playlists. That puts the new streaming product in direct competition with on-demand products like Spotify and Grooveshark. But the product also features radio stations, which could pit it against other internet radio services like Pandora. Many on-demand services also provide radio options.
The disruption model by Prof. Christensen allows us to explain the MP3 player market as a new disruptive innovation that needed an integrated platform due to the complexity and initial disaggregation of music on the Internet.
As described in Christensen’s context, when the functionality and reliability of a product are not good enough to meet customers’ needs, then the companies that will enjoy significant competitive advantage are those whose product architecture is proprietary and integrated across the performance-limiting interfaces in the value chain. The initial MP3 player industry had characteristics similar to a traditional PC, such as a hard disk interface and a processor to convert digitized music into analog sound. These MP3 players seemed ready-made for modularization. As the case points out, the technical hardware had all of the key ingredients that Baldwin and Clark highlighted as necessary properties for modularization including module partitioning and hidden module capability in hard drive disks, an interface specification based on PC interfaces for things such as hard disks, and system compliance and testing specifications based on minimum performance requirements for hard disks. All of these ingredients would allow for a market based on modularity. However, the music industry and the MP3 files, that had become the standard digitized music file format, were not easily integrated into these those assembled devices. For example, before Apple launched its iTunes store there was a low appropriability regime in the digital music space and it wasn’t clear what platform users would use to pay for music. Other questions remained unknown to both suppliers and customers, such as: What is the appropriate approach for customers to store their music? What kind of software platform should be used on portable MP3 players, which allowed customers to play and share their music? How can the music copyright be protected in the MP3-based music industry? There were many unknown interdependencies. MP3 makers only provided module-based hardware but the MP3 music industry itself was still at a stage where the interfaces and integration of music on the devices was unclear and unsettled. Similar to the Japan phone network example pointed out in Christensen’s framework, a seamless customer experience model was needed and Apple was able to provide this integrated, seamless experience, with a revenue model, an easy-to-use user interface and integration with the music industry itself in the form of digital rights contracts. Therefore, an integrated and proprietary solution, as offered by Apple’s iPod/iTunes ecosystem, that vertically spanned across those interdependent interfaces in the value chain could emerge with a competitive advantage.
Clearly, the MP3 player’s disruption and the initial quality of the entire package (or lack thereof) meant that the industry had moved to the left side of Christensen’s disruption diagram and there was a performance gap that needed to be bridged by an integrated product such as the iPod/iTunes. SanDisk and other MP3 player makers seemed to see this market as ready for modularization, with the PC interfaces as a template, but they missed the fact that while technical interfaces were easy to modularize, the full architecture of the music distribution system was not ready for modularization.
In the context of Christensen’s framework, at the beginning of a wave of new-market disruption, the companies that initially will be the most successful will be integrated firms whose architectures are proprietary because the metrics required by customers are not yet good enough. Apple benefited from its integration process to provide customers with a seamless hardware-software codesign with the iPod/iTunes ecosystem, allowing customers to manage their MP3 music efficiently with a portable device and a centralized music digital rights management (DRM). Apple has dominated this integration process because functionality and reliability were initial concerns of the customers. After several years of market evolution, those disruptive pioneers themselves become susceptible to hybrid disruption by a faster and more flexible population of nonintegrated/modularized companies whose focus gives them lower overhead costs. Now that customers of the digital music market have been relatively well served, they have many mature options to choose to access and manage their favorite music. Furthermore, the architecture within the digital music industry has been quite stable and well defined. Both customers and content providers know which attributes of the digital music player ecosystem are crucial to the operation of the product systems. They can also verify whether those attributes offer clear guidelines. For example, customers can verify whether the software provided will allow them to download and store MP3 music easily and conveniently and whether the device can provide enough storage volume and enough processing power for entertainment. Also, there are not many poorly understood interdependencies across the customer-supplier interface. Customers can predict how the subsystem changes will interact with other subsystems in an integrated digital music solution, as provided by Apple, Microsoft or Amazon. As we can see, these three elements follow what is described in Christensen’s framework, indicating the industry will shift to modularization.
The re-emergence of streaming music services reflects this underlying trend in the following ways: \item Streaming music services can be seen as a modular architecture because customers don't need to worry about the hardware and all of the bells and whistles - they can simply configure their songs and stream the music from anywhere. It provides great flexibility for customers to control their music content without a centralized service system and proprietary hardware.
\item Streaming music services eliminate the limitation on hardware storage and the dependency on the hardware platform. Now that the interfaces with the music industry are relatively well defined, you can listen to music on any portable electronic device, such as, an iPod, iPhone or smartphone, as well as a PC.
\item Streaming music services offer a lower cost structure, which allows them to compete in this industry as the market evolves.
Apple will need to compete by opening up its architecture (relying less on hardware) and perhaps allowing an iTunes streaming service with competitive pricing - this will eat into its high margins.
Tuesday, May 14, 2013
A Review of IEEE WCNC 2013 report - Best Paper Award
IEEE Wireless Communications and Networking Conference (WCNC) was held in the magnificent city of Shanghai, China, on April 7 – 10, 2013. This was an historical event for the IEEE Communication Society, not only because China is the largest mobile communications market in the world, but also because this was the first ever IEEE WCNC event held in mainland China. IEEE WCNC 2013 received a record-breaking 1903 paper submissions in the main theme, the highest in IEEE WCNC’s history. 843 papers were accepted in the four tracks, following a thorough peer review process that ensured each paper received at least three reviews. The accepted papers were presented in 160 technical sessions organised in the four tracks, 139 sessions of which were dedicated to oral presentations and 21 sessions to posters. This separation among the accepted papers was not based on technical quality, as all oral and poster sessions in IEEE WCNC 2013 were considered to be equally important.
In addition to the main technical sessions, there were five keynote lecturers, five Technology and Business panels, five workshops, and ten tutorials. For the first time WCNC2013 offered free tutorials to all attendees. The conference offered attendees a content-rich program, covering both fundamental research and newly emerging advances in wireless communications systems and wireless networking. On the other hand, the Best Paper Awards promoted world-class research in our community, and the Student Travel Grants encouraged students to participate in the event. Throughout the four-day international event, more than 940 attendees representing 60 countries converged on the Shanghai International Convention and Exhibition Center to discuss the latest wireless communications & networking technologies and their applications.
Wednesday marked the event’s final day, which was initiated by the keynote address by Mr. Guanghua Yang, Director of Huawei Technologies. Mr. Yang discussed “Progress Toward the Future of Mobile Broadband Communications” and the need to fundamentally improve spectrum efficiency and re-architect radio networking protocols and infrastructures. After the keynote address, the Best Papers Awards ceremony was held, where the announcements were made by Professor Jiangzhou Wang, the TPC Chair, and the presentations by Professor Xiaohu You, the General Chair. The authors and papers honored were:
* Jianwei Niu, Long Cheng, Yu Gu, Junghyun Jun and Qingquan Zhang for their paper, entitled “Minimum-Delay and Energy-Efficient Flooding Tree in Asynchronous Low-Duty-Cycle Wireless Sensor Networks,”
* Nam Tuan Nguyen, Rong Zheng and Zhu Han for their paper, entitled “An Unsupervised Mobile Locations Extraction Approach with Incomplete Data,”
In addition to the main technical sessions, there were five keynote lecturers, five Technology and Business panels, five workshops, and ten tutorials. For the first time WCNC2013 offered free tutorials to all attendees. The conference offered attendees a content-rich program, covering both fundamental research and newly emerging advances in wireless communications systems and wireless networking. On the other hand, the Best Paper Awards promoted world-class research in our community, and the Student Travel Grants encouraged students to participate in the event. Throughout the four-day international event, more than 940 attendees representing 60 countries converged on the Shanghai International Convention and Exhibition Center to discuss the latest wireless communications & networking technologies and their applications.
Wednesday marked the event’s final day, which was initiated by the keynote address by Mr. Guanghua Yang, Director of Huawei Technologies. Mr. Yang discussed “Progress Toward the Future of Mobile Broadband Communications” and the need to fundamentally improve spectrum efficiency and re-architect radio networking protocols and infrastructures. After the keynote address, the Best Papers Awards ceremony was held, where the announcements were made by Professor Jiangzhou Wang, the TPC Chair, and the presentations by Professor Xiaohu You, the General Chair. The authors and papers honored were:
* Jianwei Niu, Long Cheng, Yu Gu, Junghyun Jun and Qingquan Zhang for their paper, entitled “Minimum-Delay and Energy-Efficient Flooding Tree in Asynchronous Low-Duty-Cycle Wireless Sensor Networks,”
* Nam Tuan Nguyen, Rong Zheng and Zhu Han for their paper, entitled “An Unsupervised Mobile Locations Extraction Approach with Incomplete Data,”
Friday, May 10, 2013
What drive the recent market rally and do we expect a huge pullback?
Finally got some time to update my market expectation on recent market rally after a busy week. Today we saw all the indexes dip into light negative territories with low volume. It is the light pause after 5 consecutive rally to market new high since its breakout on May 6th. The recent market internals really shock me as I have discussed early last week that the P/E multiple should not even remain the same level as it was before 2008. Even the recent economic outlook has improved, the investment context within the world was not optimistic from my perspective. The export data from China, the eye-catching emerging market, was inflated as we all know some of the exports did not even leave the tax harbor, rather acting as a way for some domestic companies to ask for state refund. The slowing outlook on China economy, together with all of the QE monetary policies followed by other central banks, did not indicate any potential real growth. So I argued that the valuation is high based on D/P yield trajectory model.
However, money, especially money managed by most active funds, has to flight somewhere to seat. You might say they can go to bond market. Well, with negative real interest rate implied by TIPS, that is not wise to go. What about commodity? Not all funds can access to those assets. The commodity market not only links to QE but also connect to economic outlook. That is why recent commodity market tumbles even after FED announced the potential additional stimulus.
The group rotation brought technology and materials stocks back to yesterday’s leadership. Industrial metals rose following a wider-than-expected trade surplus. Energy, utilities and consumer discretionary stocks were flat to lower. All of these suggest investors require a lower market premium for their investment. Is this the whole pictures right now? You keep wondering why market keeps going up without a pause under low volume? This leads us to discuss next meaningful question, do we expect a huge pullback soon?
After analyzing the earning reports by those big institutions, such as, JP Morgan , Morgan Stanley, and BOA, I tend to update the picture to a more realistic one - we may not see a huge pull back in May. Let's take a look at too-big-to-fail banks' reports.
JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) had perfect trading records in the first quarter, making money every day of the period as Morgan Stanley posted losses in eight sessions and Goldman Sachs Group Inc. in two.
One daily gain at JPMorgan exceeded $200 million as the biggest U.S. bank by assets recovered from last year’s London Whale derivatives loss, the New York-based company said yesterday in a regulatory filing. Bank of America, the second-largest lender, generated more than $25 million of revenue on 97 percent of trading days, compared with 76 percent at Morgan Stanley, the firms said in separate filings. Goldman Sachs, which generated about half its revenue from trading last quarter, said its team made more than $100 million on 17 days.
You will ask where those trading revenue come from, the tiny notes said a big portion of that came from them selling insurance to clients. Pause here, what "insurance" are they talking about? yes, in financial industry, the "insurance" is the put option. Now when those big banks are all writing the put options, do you expect big institutions such as GS to bet huge market downward slope? Remember, they are too big to fail banks, which have access to capital market with huge financial resource to gauge market internal. Therefore, I will not bet against them, at least not in the following two weeks.
I will keep eyes on the market and update the market review whenever I see something new.
However, money, especially money managed by most active funds, has to flight somewhere to seat. You might say they can go to bond market. Well, with negative real interest rate implied by TIPS, that is not wise to go. What about commodity? Not all funds can access to those assets. The commodity market not only links to QE but also connect to economic outlook. That is why recent commodity market tumbles even after FED announced the potential additional stimulus.
The group rotation brought technology and materials stocks back to yesterday’s leadership. Industrial metals rose following a wider-than-expected trade surplus. Energy, utilities and consumer discretionary stocks were flat to lower. All of these suggest investors require a lower market premium for their investment. Is this the whole pictures right now? You keep wondering why market keeps going up without a pause under low volume? This leads us to discuss next meaningful question, do we expect a huge pullback soon?
After analyzing the earning reports by those big institutions, such as, JP Morgan , Morgan Stanley, and BOA, I tend to update the picture to a more realistic one - we may not see a huge pull back in May. Let's take a look at too-big-to-fail banks' reports.
JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) had perfect trading records in the first quarter, making money every day of the period as Morgan Stanley posted losses in eight sessions and Goldman Sachs Group Inc. in two.
One daily gain at JPMorgan exceeded $200 million as the biggest U.S. bank by assets recovered from last year’s London Whale derivatives loss, the New York-based company said yesterday in a regulatory filing. Bank of America, the second-largest lender, generated more than $25 million of revenue on 97 percent of trading days, compared with 76 percent at Morgan Stanley, the firms said in separate filings. Goldman Sachs, which generated about half its revenue from trading last quarter, said its team made more than $100 million on 17 days.
You will ask where those trading revenue come from, the tiny notes said a big portion of that came from them selling insurance to clients. Pause here, what "insurance" are they talking about? yes, in financial industry, the "insurance" is the put option. Now when those big banks are all writing the put options, do you expect big institutions such as GS to bet huge market downward slope? Remember, they are too big to fail banks, which have access to capital market with huge financial resource to gauge market internal. Therefore, I will not bet against them, at least not in the following two weeks.
I will keep eyes on the market and update the market review whenever I see something new.
Sunday, May 5, 2013
Warren Buffet 's dancing show on the annual shareholder meeting
Today, the whole investment community shed their eyes onto Omaha, where the oracle of Warren Buffet leads his annual shareholder
meetings as before. He has become the icon of all of the young investors like me since the first day I touched equity investment, about 10 years ago. And what really matter to most of us will be who can take over Bershire Hathaway after he and Vice Chairman Charlie Munger are gone. And he assures us that no one, including his son, could steer the route away from how is run today. Indeed, I hope something new can come in, because the strategy he uses has been known to most of us, being a value/Large Cap investor. Well, success will keep pacing its own way.
Show my greatest respect to Warren!
Show my greatest respect to Warren!
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