2013: The year of the bubble? 2014 will tell

This week, the US stock market has displayed what looked like a peak. Not just a normal peak, but one that looks like the charts just before the market crashed in 2007, 2000. This means the market may either push through and plateau. Or it will crash again, as it has done before - perhaps even worse than 2007, and start a global depression akin to the 1930s. That depression was then followed by an ugly protracted global war.

Other Signs of a Bull
The technology bubble has emerged, similar to the 90's tech investment frenzy. In the past few years, VC investment was soft where only truly ground breaking companies received money. That is all in the past. Today, VCs around the world are investing in net 2.0 wannabe sites.

Behind all this are stimulus led by USA Quantitative Easing (QE), which adds around US$90 billion into the US financial system every month. Total to date is $4 trillion with limited no exit in mind.

Emerging Markets. Fuel for Growth
Although the world is at a precipice, it is also at the cusp of some great events. In an interesting Charlie Rose interview, White House Economic Tsar Lawrence Summner shared an interesting phenomenon recently:
- Life expectancy and infant mortality of rest of the world, will improve to reach US levels. The first time in hundreds of years
- The reason of this is greater awareness spurred by the mobility and democracy of information and knowledge. Growth markets are more easily identified and exploited. Strife is more readily targeted and addressed.
- Many US firms are benefiting from this growth. They are also in a unique position of being a energy exporter soon, as well as starting to control healthcare cost.

This seems to be driving the markets. Mature economies are keeping themselves afloat whilst regional markets are scurrying to reach critical mass using products sold by Americans, Europeans and Japanese. But we are probably a generation away from critical mass.

So, This means the next crash will be painful because there may not be enough cash in the system to payout the losses. Hopefully it is not fatal because the rest of the world seems to be hurtling towards maturity, as long as Mother Earth herself doesn't collapse. But that is another story.

*This is my first musing after the end of Australian rugby season, which took a lot of my writing time

Venturing back North

Recently, the National Venture Corporation Association reported the healthy state of VC investments in USA. Although fund supply dropped from a previous year, it increased 25% from the previous quarter to $4.1 billion. What remained constant is that most funds are sourced by the same small elite pool of VCs.

Government shutdown notwithstanding, there seems to be a accelerating confidence in USA instead of emerging markets. But the Russians, Chinese and Germans are not resting on their laurels:

-The Russians have raised over $300 million via private and public sources intended to acquire and build technologies for Russian interests

-The impending public listing of Alibaba for $200 billion is a sign of things to come for China. The VC market is finally started to heat up, in particular e-commerce, gaming and data services

-SAP Germany raised $1.5 billion, mostly for late stage investments.

Fund supply is up because demand is looking good!

Investment into infrastructure middleware players such as MongoDB (noSQL database) and Ring Central (enterprise VoIP), each valued over $800 million, demonstrates maturity of the 2.0 market. VCs continue to pour hundreds of millions into services for developed markets such as dog sitting, dating 2.0, geneology, student loans and teaching content.

But there is also funding for technology meant for the rest of the world. UN just gave an innovation ward for Aussie firm BiNu, for creating technology that turns feature phones into smart phones. Gates put $8 million into California-based Varentec to help power grids operate efficiently.

Monsanto, one of the world’s most “loved companies”, recently spent $930 million on “The Climate Corporate” to help increase farm yields. There is the mysterious data mining firm Palantir that works for US government. Its valued at $8 billion and was seeded by facebook’s Peter Thiel. 

So, money is certainly moving into high technology. Money is certainly being made in North America, Europe* and North Asia. It is something the equatorial markets and southern hemisphere will need to catchup on.

*Recently, it was reported facebook made $355 million dollars in UK and does not have to pay any tax.

Sold(i)er On!

Of late, seasoned engineers around the world are alarmed with the increasing number of electronics engineers who cannot use a soldering iron properly. Is this a case of a cackle of old timers who are living in the past? Or is it symptomatic of the decline of the engineering class?

Do modern engineers really need to know how to paste wires to each other? The next engineering problem is designed using software and delivered by fabs located in various parts of the world. On this note, there has been a spate of fabs being built in low cost places like India and... New York. Interestingly one of players announced by India is Malaysia's very own Silterra.

According to testing solution providers Coverity, there is going to be an even bigger need for an already poor-sized pool for coders. Demand for IoT (Internet of Things) will drive up demand and price of software developers. These includes systems developers, app developers, device "drivers", communications, data aggregators, security and so on. Oracle believes it too, and continually promotes Java for IoT.

But no. It is not the death of engineering. In fact, engineers alongside scientists are using their skills to create funky things which require greater skill than connecting wires: spray-on circuits, gold nano-particles for brain implants, and quantum computers. So! Leave hot iron to the tinkerers. Its time to move on.

btw Wouldn't it be good if my backyard (Asia) could build the management, scientific and engineering capability that is sorely needed? This is ironic considering its manufacturing might. Plus! there doesn't seem to be a shortage of cash here. But that's another story.

Coverty's IoT Infographic:

Not a good week for incumbents

First the good news. IEEE forecasts that data usage will grow 10 times today's volume in a mere three years, and will expand a whopping 100 times by 2020. This will be driven by almost two billion new heavily online people in Asia, half a billion more from Middle East and Africa. Altogether it means adding 15 billion new devices.

This is good news for device makers, communication companies. It is also going to be good for anyone delivering products via the cloud, social, mobile and analytics (big data). If you are in Asia, then you can count yourself as the lucky(er) ones.

Now for the bad news. Between now and 2015 is going to be one of the roughest rides since world war two. For starters, South East Asia despite emerging as a significant market, runs the risk of becoming a military hotspot. China seems to be eager to try to divide ASEAN via the South China Sea. Russian and American governments have also recently increased their focus, resources (arms) in our part of the world. This is also in addition to previous announcements by the Indians who will also increase patrols here.

Secondly, there is a growing number of economists who opine that the world is in a depression. Although there aren't any people jumping from the top of the Empire state building, all the major economies have all the symptoms: crippling sovereign debt, financial crisis, declining economy and chronically high unemployment. Al Lewis from Dow Jones, shares that one out of seven Americans are living on food stamps. This is around 45 million, roughly the same population as Spain.

Thirdly, the USA federal reserve, the European Union and the Chinese government have increased prospects of their respective stimulus to DEFCON 3. Expect cheap money to flood soon. That means prices will go up for us folks in Asia. Any incumbent trying to get re-elected in the next couple of years is going to have a challenge staying in power.

People want to get rid of the old and bring in the new. The new has to be visibly cheaper, better and faster. Take for example the Ouya game console under development. When it is built, it will probably not reach standards of PCs and any of the major consoles. But it will be so cheap that people will use it, then upgrade it when a better version releases, just like android based phones. And yes, Ouya will run on the android operating system.

It wasn't long ago that e-commerce companies like Amazon and e-Bay were the vanguard, but they are quickly becoming incumbents. Governments around the world are now starting to put together laws to tax their transactions. This includes the U.S. Senate, who is starting a debate to instate sales tax for online transactions.

Even weapons companies are starting to lose their grip. A few days ago, a chap codenamed "Have Blue" printed an assault rifle using his 3D printer, then used it to shoot 22 calibre bullets. It is a good time to put your head down, roll up your sleeves and do something new and meaningful, even if it only makes a small difference. Because the times are a-changing.