CloudSec2018 – Toronto

I attended the fantastic CloudSec2018 event in Toronto today held at the St.James Cathedral Center.

The focus of the event centered around the following:

  • Machine learning and AI in cybersecurity – implementations or strategies incorporated in cybersecurity solutions or technologies

  • IoT/IIoT research – research on smart cities, vulnerabilities in infrastructure, and ICS/SCADA threats

  • Blockchains, cryptocurrencies, cryptominers – how these three are related, and how they impact cybersecurity

  • Vertical-specific threats – Threats or vulnerabilities that concern the healthcare and banking industries

  • Fake news and cyberpropaganda – the fake news underground economy, and how cyberpropaganda is beyond fake news and can impact organizations

All in all an interesting day with superb speakers and panelist hosted by Trend Micro. Name dropping:

  • Jim Love – CIO @ ITWC
  • Doug Cahill – Senior Analyst ESG
  • Mark Nunnikhoven – VEEP Cloud Research, Trend Micro
  • Gladstone Grant – Director Solution Sales, Microsoft
  • Adam Osherhold, Cloud Specialist SE, VMware
  • Matt Hoerig, President, Cloud Security Panel
  • James Peek – Security Expert and Consultant, Sourced Group
  • Brett Gillett, Founder, Curious Orbit Cloud Consulting Enterprise Intelligence
  • Dawood Khan, Co-founder, Capital Blockchain
  • A slew of others were on the docket as well

Word cloud for the day:

  • Innovation moves at the speed of security
  • Attack vectors
  • Hybrid Cloud – Burst into the cloud during peak periods.
  • Shared responsibility model
  • Division of labour to secure stack
  • Customer is responsible for Workload, data security, identity access management.
  • Traps – Desire‎ to run all through regular controls
  • Notion that cloud security is immutable.
  • Cloud is cutover as opposed to patch production.
  • Virtual patching to monitor for exploits. Looking for behaviour that has potential for an exploit
  • DevOps traps – Security checks need to happen. Continuous integration with security can be done better.
  • Run time controls in Production.
  • Static vs Dynamic Analysis – static to review code for vulnerabilities.
  • DevSecOps- umbrella term for security integration into modern deployment in an autonomous fashion.
  • Use the correct security ‎structure at every stage.
  • Trust but Verify
  • Micro segmentation to minimize blast radius if compromised.
  • Shared Responsibility Panel
    • Divide general resp‎ into areas of the cloud
    • Sequence of events to go from enterprise deployment to cloud. Milestones to get there.
    • Understand cloud readiness posture/state is for your solution.
    • Metered usage model – cloud.
    • How does the contract look. Flexibility is required.
    • Look at security, audits, control sets, SLA.
    • Delineation between responsibility of consumer, provider.
    • Issue- try to drag all process to the cloud.
    • Look at improving security, instance level security to the cloud.
    • Mutual trust with cloud provider. Certify that provider is compliant.
    • Cloud Pillars:
    • Privacy, Transparency, Compliance, Security
    • Hybrid model approach: App, workloads that can be outsourced to the cloud. Integration of Systems – read only between sockets
    • Incorporate security in the build process
    • Horizontal compliance vs Vertical compliance
    • Dynamic/Transient Compute – instances may live for 4 minutes. How to secure an architecture like this?
    • Re-evaluate toolset
    • Routing in public clouds something to think about and underscore the importance of API security
    • Patch Management & Federated Identities
    • Define IAM policies – principle of least priviledge
    • MFA for humans!

What a fantastic day!! I encourage all of you to make it out to events such as this to listen, learn and network.

More information here: https://www.itworldcanada.com/client/cloud-sec-2018.html

Alvin

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Weekly Update: April 2 – April 7 2018 The Intersection of Society and Technology

Muskrat Watershed Rehabilitation Project

Machine Learning The Key To Network Latency?

Google Cloud Machine Learning Documentation

Is BlockChain The Future of the Internet?

Cyber Attack on Natural Gas Pipelines

Have a fantastic week!

Alvin

Weekly Update: March 25 – April 1 2018. The Intersection of Society and Technology

Facebook Data Privacy

Cyber Attack – Ransomware Atlanta

Cyber Attack – British Sports Anti Doping Agency

MicroFinance

Amazon

Data Security

New Economy – Wind Turbine Drone Inspections

Weekly Recap: March 17-24 2018 The Intersection of Society and Technology.

Space:

Climate Change:

Third Space:

MicroFinance:

Future Thinking: Look back then Look Forward

Enjoy your week!

Alvin

The Roadmap

The Roadmap

It creates direction, charts a course, provides a path from information to value stream. All this is true and for the sake of simplicity let’s refer to it as a plan.

What is a plan? I refer to it as a consciousness shared amongst a group, individuals or society with a destination in mind.

We’ve all read the Facebook, Amazon, Netflix, Google startup journeys and are in awe at the sublime thought process that went into their creation eventually becoming what they are today. What were their initial plans like? How did they get their idea into a plan?

Tip: Breakdown the idea into smaller bits. Create a story board.

Take the idea and write without stopping. Write down what you think you will need before, during, after for success. Write down what you’re afraid will happen. Write down who you think you will need. Write down how you think you will accomplish the idea. Write down when you want to do it, why you think you need to do it.

Write it down!

Writing things down is essential to story telling. In my experience, the failure to write things down in its raw format is a red flag. It’s the first sign that you’re stuck in the loop of perfectionism. There is no such thing. Write it down. Review. Revise. Pause, then do it all over again.

No magic pills or shortcuts. It’s hard work – How bad do you want it.

Tip: Don’t let the deluge of information overwhelm you. Group, Sort, Categorize.

To quote William Gibson “Time moves in one direction, memory in another”.

Categorize activities into three distinct areas; Beginning, Middle, End.

Grouping and sorting are important however just as important is to categorize. Take what you’ve written down and sort into the 3 categories mentioned above.

This allows you to apply a time frame to your story and allows the concept of memory application to your story by going back in time to add or remove details.

Tip: Prep for Execution. Exercise Acuity.

The last step in the road-mapping process is the hardest.

“To exercise acuity in planning, we must speak out loud with bold humility” Me!

“Everything becomes a little different as soon as it is spoken out loud” Herman Hesse

Discuss, discuss, discuss. This is by far the most important phase of planning. You’ll be able to further revise, review and categorize to determine what’s needed as preparation for execution.

Next up: Execution

 

 

Comments, Questions, Feedback

I’d like to thank everyone for the feedback I have received thus far via emails, comments, phone calls and direct messages.

Your feedback is ultra-important and has made me a clearer thinker and better writer as I journey through this process.

I thought I would share questions I have received thus far.

  1. What is your blog all about? Leadership? Strategy?
    • My goal is to write and share about the interconnectedness of Leadership, Strategy, Execution, the deep thinking I have done and put into practice. In addition, I’d like to share an idea I have developed, to help businesses/organizations understand how to evaluate and adapt technology in order to improve business outcomes. (Foundation, Framework and Adoption Principle)
  2. You indicated this blog will eventually become a book, how do you plan to do that?
    • I am not too clear on that at the moment. I know that it’s far simpler and more economical to put a book together today that it has been ever before. That said, I have not yet done research on the approach. Feedback welcome!
  3. What motivates you to write about Leadership, Strategy and Execution?
    • My inspiration to write about Leadership, Strategy and Execution comes from my experiences in the Technology space. I’ve been involved in a number of technology and business initiatives where I have encountered various scenarios. I’ve experienced firsthand a lack of leadership, wonderful leadership, disconnected execution with a sound strategic plan and fantastic execution despite a lack of strategy. The main point I’d like to bring across in the information that I share is that keeping things simple is not easy. It means deep thinking, critical thinking, sorting, categorizing, implementing patterns, clear execution. It is difficult and requires all of us to lead, guide, think, role play, focus.
  4. What’s next? What do you have planned?
    • I plan on starting out several startups that will focus on Society, Culture, Financial Services, Work and Business. Most of you who know me know that I love working and thinking about the intersection of Technology and Society. Stay tuned!
  5. Aren’t you afraid to put content out for all to read?
    • Not at all. The topics I write about are positive in nature and allow me to share what I’ve learned and thought about with others. It’s part of my continuous learning.

Thank you!

Alvin

The Tao of Ideas

“Ideas shape the course of history” John Maynard Keynes


A simple patterned approach to idea generation.

Tip: Trust the process.

It’s difficult at the start. When pressured to create, pivot or course correct, the process to generate the way forward, “The Idea”, feels insurmountable. It’s important to note is that this is normal.

It’s normal to feel overwhelmed and stressed. Stress is a biological and psychological response when we feel we do not have the resources to deal with threats encountered. What you are likely unaware of is that under duress, biology has started the critical thinking process automatically. The brain has started to evaluate the situation against strengths and weaknesses.


Tip: Use a simple approach to generate ideas.

Natural selection is the process that results in the adaptation of an organism to its environment. Breaking down this theory gives us a straight forward path for idea generation: Think – Variation, Fitness, Competition

  1. Document the outcomes you are looking for:
    • Where you want to be
    • What you want to be
    • Who you want to be
    • Why you want to be
  2. For each outcome, analyze perspectives :
    • Innovation
    • Business Improvement
    • Social Undercurrents
  3. For each perspective, document the following. Keep your outcomes in mind:
    • Strengths
    • Weaknesses
    • Contributing Success Factors
    • Constraints

Tip: Plot data on verticals

Armed with data, it’s time to plot our data on verticals.

The data above will give us the ability to categorize information on a maturity scale – High, Medium, Low within each identified vertical.

Verticals are Tao’s:
The absolute principle underlying the universe (Vision), combining within itself the principles of yin and yang (Balance) following a code of behavior (Mandate), that is in harmony with the natural order.

In the example below, I’ve plotted 5 data sets in the following verticals:

  • Innovation
  • Business Improvement
  • Social Undercurrent

plotverticals

Plotting data against Verticals allows for a visual interpretation and representation of the outcomes. This holistic view in comparison to Verticals (Point of Inflection) is important to the overall transformation of an Idea to Strategy.

Strategy = Trust the process -> Start with a simple approach -> Plot data on verticals

Assessment

Now that we have Idea(s) morphing into Strategy, I will share Step 2 in the Strategy to Execution process – The Roadmap.

Strategic Thinking

“Strategic Thinking is the bridge that links where you are to where you want to be” John Maxwell

“Analysis is the critical starting point of strategic thinking” Kenichi Ohmae

“The stock market is a device for transferring money from the impatient to the patient” Warren Buffett


It’s easy to get tripped up in high pressure situations. Life, much like the game of chess hinges on the importance of strategy coupled with patience.

The starting point for strategic thinking calls for deep analysis through self-assessment and reflection. Utilizing simple yet effective questions such as:

  • Who are we?
  • What are we doing well?
  • Where are we in our journey so far?
  • How did we get here?
  • What are the gaps?
  • What are our strengths?
  • When did we change?
  • Why, Why, Why?

As mundane as they may seem, the questions above provide insight into our current state, charting where we are, allowing us to map our new destination in a methodical and patient manner through analysis.

In my next post, I will share the parts that make up analytical thinking as it relates to idea generation, and as we progress, this blog will journey through a systematic story from idea Assessment to Execution alongside the Foundation, Framework and Adoption Principle.

The Leadership Swing – Follow Through

“Simplicity is The Ultimate Sophistication” Leonardo da Vinci


I realize what I’ve written so far isn’t earth shattering. The ideas shared are simple, meaningful, attainable and realistic.

Leonardo da Vinci, the greatest thinker who ever lived, taught us his key principles.

  1. Be curious and have an unrelenting quest for continuous learning.
  2. Commit to test what you know through experience and willingness to learn from mistakes.
  3. Stop and smell the roses. Breathe in life and enrich your senses.
  4. Embrace change. It’s all around us. Celebrate it.
  5. Use “Whole Brain” thinking. Goals Driven + Vision Driven + Results Driven + People Driven.
  6. Demonstrate poise.
  7. Apply “Systems Thinking”. The interconnectedness of things.

The Internet is a marvel and has provided us with an abundance of information. The ability to see through it, sort through it, summarize and absorb meaningful data is difficult. It requires us to reflect, self-assess, contemplate and question things systematically.

Following our Leadership Principles through the Influences gets us to the Target Areas. These targets require Leaders to utilize “Whole Brain” thinking, in baseball(when swinging at a pitch) its called the follow through.

  • Goals
  • Responsibilities
  • Accountabilities
  • Approvals
  • Strategy
  • Prioritization
  • Communication
  • Collaboration
  • Clarity
  • Coaching

Collectively, I call it The Leadership Framework.

GRASP4C

 

The Leadership Puzzle – SKEPQ

It feels like it was yesterday.

Sometimes you have to look really really hard to find the meaning behind the experiences you’re going through. At other times, life has a way of telling you, showing you, making you feel what you should know and remember forever.

My parents called them teachable moments.

My sister and I fondly look back at those teachable moments my parents demonstrated as instances where we dodged the slipper to the back of our heads. Don’t fret, I guard and cherish those experiences and as a result of those teachable moments, I’ve developed a spidey sense of sorts. Able to dodge projectiles in a flash.

I was running towards the defender dribbling the football (Soccer to North Americans) and ran into Bernard The Brute. The kids called him a brute because he was the biggest, baddest, roughest defender known to all 10 year olds at the school. You could hear him growl at you as he ran to defend his patch of grass, get right into your face, push, pull essentially bullying the ball off the offensive player.

I don’t profess to have been the best soccer player as a child however I can comfortably say that I was a good player, a player some looked to for leadership and to model.

I anticipated this would happen, Bernard would run at me. He thought that like countless other times I would inevitably give up the ball. Not because he was better, not because he took it off of me, but because I was scared. I didn’t want to admit it at the time, but it’s the truth.

What Bernard didn’t know was that I was waiting for that moment. I knew what I had to do.

The moment that prepared me for Bernard was when I watched my parents put in their application to migrate to Canada. I didn’t understand most of what was happening however one thing stood out. It was a difficult moment, I could feel it.

I asked my father one question. “How do you know you will have a career in Canada as an Aircraft Engineer? You don’t know anything about Canada or the expectations.” (Please remember this was before the Internet)

His response prepared me for Bernard.

He said the following “Never forget who you are, what you are, where you are, what you know and smile, SKEPQ, SKEPQ, SKEPQ”

I blinked then he followed up with “I will use my Skills, Knowledge, Experiences and Personal Qualities son, do that, you will be fine”.

So that day, Bernard got a taste of SKEPQ. I danced, dodged, scored then smiled.

What does this all have to do with Leadership Influences?
Leaders need to draw on their SKEPQ in order to drive their Principles forward.

It’s part of the Leadership puzzle. Do this, you will be fine.

SKEPQ

The Role of Technology Leadership

Leadership by definition is leading a group of people or an organization with synonyms such as guidance, direction, control, management and supervision.

I believe that Leadership is nuanced, a subtle mix of Inspiration, Alignment, Motivation, Behavior Modelling and Engagement.

With the current fast paced cadence of technology innovation and businesses willing to adopt leading and bleeding edge ideas, the role of Technology Leadership is more important than ever. It requires acute critical thinking, a razor sharp focus on strategy, an effective efficient execution path and most importantly, timely decision making.

I’ll delve a bit deeper in future posts with respect to the Influences leaders must reference to drive their Leadership Principles, while being mindful of the specific Target Areas to deliver on positive business outcomes.

Leadership1

Leadership2

Leadership3

Leadership4.png

Leadership5

Dreamer

If you haven’t tried to predict the future, I suggest you start.

My programming is as such – inquisitive, wildly imaginative and solutions driven. Some have called me a dreamer, which I accept, having decided to follow through with liberated thinking.

That said, I’ve upped my critical thinking in the last 12 months about society, its norms, where we were, where we may end up and the path forward. I will be sharing this path forward and I welcome all to read and contribute.

In addition, I am excited to announce that I’ve a book construct ready and working on details. Some of you have heard me talk about it – Strategy to Execution and The Foundation, Framework, Adoption Principle.

I admit that the ideas are largely raw, however I know that the content will be refined as I share and receive feedback.

“We were lucky enough to grow up in an environment where there was always much encouragement to children to pursue intellectual interests; to investigate whatever aroused curiosity.” Wright Brothers

Thank you to all who have helped me frame my thinking so far and for future conversations.

The Next Wave – Biomimicry

 

Biomimicry by definition is the design and production of materials, structures and systems that are modeled on biological entities and processes.

Innovation inspired by Nature.

This has already started to happen and I believe is one of multiple ways in which Technology and Biology intersect.

https://www.digitaltrends.com/cool-tech/biomimicry-examples/

https://www.fastcompany.com/3000085/the-booming-business-of-biomimicry

Auto Parts Manufacturing – Canada and Ontario’s Next Step

In my previous entry, analysis and corresponding data show how internal and external demands of the Auto Parts Manufacturing industry are created in nations that had little to no raw materials production.

France and Korea’s strong position in the global automotive market have their respective countries positioned extremely well to grow and build a top auto parts manufacturing industry.

In addition to demand, France and Korea have created successful trade partnerships by implementing meaningful regulations, tariffs, subsidies and non-tariff barriers which remove barriers and create incentives supporting the automobile and auto parts manufacturing industry.

Now it’s time to connect the dots in order to determine how and what the Canadian Federal and Provincial governments do to support and strengthen auto parts manufacturing space?


Canada’s top export destinations are the USA, China and Japan and top import partners are the USA, China and Mexico.

Top imports into Canada are Cars, Crude Petroleum and Vehicle Parts. Auto Manufacturers import these parts into Canada so that automobiles can be assembled and sold in Canada.
Recommendations:

  • In order to strengthen Canada’s automobile manufacturing industry, Canada should boost trade agreements with its major export partner China. Canada currently exports USD 20B, items such as wood, minerals, paper products, fish products and oil seeds. Imagine if Canada were to partner with China to export Automobiles.
    • Chinese population: 1.357B people
    • Chinese population with drivers license 2014 – 300M
    • Canada needs to act now in order to fill the growing need for automobiles and auto parts in China
  • The larger question – How does Canada partner which China to boost its auto sector?
    • Canada should play to its strength. What does China need from Canada? A partnership is such that there is something in the partnership for both parties. Ease regulation/tariffs for a percentage of Chinese goods. Ease regulation and bureaucratic process for raw materials China requires. This creates an incentive for exports and imports with China strengthening the upstream demand which if structured correctly, will generate greater demand downstream.
    • http://www.cbc.ca/news/canada/what-does-canada-trade-with-china-1.1262424
  • Promote innovation in technology, process and manufacturing. Ontario is already doing a bit of this however a wider investment net could be argued for.

France and Korea have successfully done the above and the results speak for themselves. With the right strategy, Canada and Ontario can develop a strong position in the world as a major supplier for auto parts.

Auto Parts Manufacturing – Part 4

My analysis and dissection of auto parts manufacturing has become a bit like a plane starting its landing procedure. It feels like I’ve been circling around for quite a while and it’s taking me a bit of time to land. That said, I hope to land in this entry.

In the previous entry, I discovered that I had more question::

Things are now starting to make sense. France and Korea should definitely be high on the list of exports for auto parts since they both have 2 to 3 major automobile manufacturers in their respective countries. The demand is both internal and external.

Source:


 

More corroborating data shows internal and external demand for auto parts in France and Korea.


  • Are there 1 or 2 key government regulations in France and Korea that help support the auto parts industry. Perhaps upstream regulations are in place for easier or incentive based import of raw materials or export of auto parts. Maybe critical downstream regulations that create demand? Another item to look at would be whether major trade partners have progressive regulations which allows for low CKD. This would then allow countries to import parts from France/Korea.

Source:

  • Korea
    • Major Korean imports – 5th Iron/Steel $15.4B
    • Major Korean exports – Automobiles $69.1B(13.1%)
    • Export partners – China($142B), USA($64.1B), Japan($34.6B),Singapore($24.8B),Hong Kong($23.3B)
    • Import partners – China($80.3B), Japan($58B), USA($40.2B), Saudi Arabia($34.2B),Qatar(@23.5B)
  • France
    • Major French imports – machinery/equipment, crude oil, plastics, chemicals
    • Major French exports – Automobiles $44.1B (8.7%)
    • Export partners – Germany ($82.2B), Belgium-Luxembourg($51.3B), USA(#39.8B), UK($39B), Italy($38.4B)
    • Import partners – Germany($120B), Belgium-Luxembourg($55.6B),China($50.4B),Italy($49.8B), Spain($42.6B)

What type of international trade regulation exists between Korea and China, France and Germany?

France and Germany – Trade regulation highlights

  • Part of TARIC system, duties are applied to imports from non EU countries.
  • TARIC focus is to consolidate and integrated European market. Combined bilateral, regional and multilateral policies
  • Duties levied on imports from non EU countries are moderate
  • Most raw materials enter duty-free or at low rates, most manufactured goods are subject to rates between 5 and 17 percent

Korea and China – Trade regulation highlights

  • Have taken major strides to setup bilateral free trade agreement
  • A bilateral trade agreement between the two countries would open up competing exporters of manufactured products to each other, allowing for the trade of key components for markets such as technology and automobiles

http://trade.gov/topmarkets/pdf/Autoparts_Top_Markets_Report.pdf

Other key factors to consider when looking at international trade regulations between France and Germany, Korea and China:

  • subsidies
  • tariffs
  • non-tariff barriers

To summarize:

France and Germany, Korea and China have eased trade regulations and created solid partnerships that bolster each countries economic conditions. One industry that benefits from this partnership is the Automotive Parts Manufacturing sector in both France and Korea.

The data above shows us that both internal and external demand in combination with eased trade regulations have propelled both auto parts manufacturing and automobile manufacturing in France and Korea to top 6 in the world.

In my next post, I will take what I’ve learned to delve into a deeper look at Canada’s import/export story , trade partnerships and existence of subsidies, tariffs and non-tariff barriers



 

 

 

Auto Parts Manufacturing – Part 3

In my previous post, I decided to take look at the top 100 companies in the world in order to determine how many are from France and Korea.

I found that aside from the #7th largest auto parts company in the world, France also had the #15th and #40th largest company. Korea was even more impressive, aside from the #8th largest auto parts company, Korea also boasts the #38th, #46th, #70th and #90th. Super impressive.

In order to gain some insight in to how France and Korea accomplished this, I started by looking for answers to the questions below.

(6)Who needs automotive parts?
(7)Why don’t Automotive manufacturers produce their own parts?
(8)Why do Automotive manufacturers setup in emerging markets?
(9)Why has the automotive industry remained regionalized?
(10)Why have Auto Supplier contributions increased from 56% to 82% in 2015?
(11)For automakers to produce more cars, what are the downstream impacts to industry,
jobs, economy?

 

It seems simple enough to determine that Automobile Manufacturers need Automotive Parts. Doesn’t get any easier than that right.

So why don’t Automotive Manufacturers produce their own parts?

  • From my research and reading, indications are that auto manufacturers focus on important things like building dealer networks, marketing and sales functions.

Why do automotive manufacturers setup in emerging markets?

  • So far these are easy simple answers; Domestic demand growth, increasing competition, high tax imposition on Completely Build Unit (CBU) and Completely Knocked Down Unit (CKD).
    • Completely Build Unit (CBU) are vehicles imported in a fully assembled state.
    • Completely Knocked Down Unit (CKD) – Individual parts are imported but the vehicle is assembled locally.

Why has the automotive industry remained regionalized?

  • Although automakers are spread globally, the automotive industry remains regionalized due to socioeconomic trends, infrastructure development, customer requirements and government regulations.

Why have auto supplier contributions increased from 56% to 82% in 2015?

  • Dawn of the mega suppliers occurred due to auto manufacturers concentrating on dealers networks, marketing and sales.

For automakers to produce more cars, what are the downstream impacts to industry, jobs, economy?

  • My research shows the following downstream impacts; logistics, fuel, banking, media (advertising dollars), car rentals and hires and aftermarket products.

 

So where to go from here? After answering the questions above, I’ve had more questions albeit more specific to France and Korea, and ultimately lessons learned that Canada could adopt in order to answer question posed by the Red Tape challenge.

  1. What percentage of auto parts manufactured in France and Korea end up outside of their respective countries vs stay in.
  2. How many automobiles do France and Korea manufacture each year?
    1. Is there enough information out there to determine how many automobiles are shipped to other countries for sale?
    2. If possible, list the auto manufacturers in France and Korea and determine market share of those companies around the world.
  3. Are there 1 or 2 key government regulations in France and Korea that help support the auto parts industry.
    1. Perhaps upstream regulations are in place for easier or incentive based import of raw materials or export of auto parts. Maybe critical downstream regulations that create demand?
    2. Another item to look at would be whether major trade partners have progressive regulations which allows for low CKD. This would then allow countries to import parts from France/Korea.

There you have it – more questions. One thing is for sure, I’ve learned a lot about this topic in just 2 days.  Look out for part 4 coming this week.

 



 

 

 

Auto Parts Manufacturing – France and Korea – Analysis 2

In my previous post, I compared raw materials production Mean scores of countries that have companies in the top 10 for Auto Parts Manufacturing. I was looking for data that would confirm my initial assumption that countries with a larger share of raw material production would have a greater number of companies in the top 10 for Auto arts Manufacturing.

The data indicates that this assumption is incorrect.

The USA was the run away winner with a Mean score of 4.29. In second place was Japan with 6.71. If my assumption was correct, the USA would have have the greatest percentage Auto Parts Manufacturers in the top 10; however this was not the case.

Putting the USA data aside, France and Korea had high scores of 9.14 and 10. Those nations had very little raw material production but somehow had 1 company each in the top 10.

This generated the normal set of questions around France and Korea – Why? How?

  • Had France and Korea engineered favorable trade policies and partnerships in order to receive the raw materials their companies needed to produce auto parts?
  • Did the French and Korean governments have progressive business regulations that allowed for their companies to flourish?
    • If this was the case, wouldn’t or should’t there be more companies that pop up in France/Korea that are in the top 10? Perhaps.

I started to think that I should look at top 100 companies and count how many were based in France or Korea. I read somewhere that the initial investment needed to start up an Auto Manufacturing plant was extremely high, perhaps this was also the case for Auto Parts manufacturers, acting as roadblock for new firms to startup in France and Korea.

The Ontario Red Tape Challenge question:

“Ontario is committed to developing modern, outcome-focused and evidence-based regulations. Tell us how you think we can improve regulations to better support business. By reducing the burden to business while protecting consumers, workers and the environment, Ontario is helping to create the right climate to create jobs and grow the economy.”

 

Next post will be more about France and Korea.

 

 

 

Auto Parts Manufacturing – Analysis 1

Ontario is crowd sourcing thoughts and ideas in order to develop modern, outcome-focused, evidence based regulation. https://www.ontario.ca/page/red-tape-challenge

I decided to tackle one six categories identified – Automotive Parts Manufacturing.

Red tape Challenge:

  • Goal: Modern, outcome-focused and evidence based regulation
  • Question: How can we improve regulations to better support business?
  • Why: Reduce burden to busines while protecting customers, workers and the environment. This helps create jobs and grow the economy.

Where to start?
I decided to start from the Macroview(MAC) then  to the Microview(MIC)


MacroView
(1)Identify top 10 companies that manufacture auto parts for the world and focus on their main manufacturing base (country)
(2)List products manufactured, list the markets where their products are sold
(3)What are the upstream factors in automotive manufacturing that have a
significant impact to employment?
(4)How does an improvement in regulation help create jobs, grow the economy while
reducing burden to business, protecting customers, workers and the environment?

(5)Determine policies at Federal/Local levels that meet the following goals:
(a)Reduce Burden on Business
(b)Protect Customers
(c)Protect Workers
(d)Protect the Environment
(e)Promotes job growth which inherently grows the economy

(6)Who needs automotive parts?
(7)Why don’t Automotive Manufacturers produce their own parts?
(8)Why do Automotive Manufacturers setup in emerging markets?
(9)Why has the automotive industry remained regionalized?
(10)Why have Auto Supplier contributions increased from 56% to 82%?
(11)For automakers to produce more cars – What are the downstream impacts to industry,
jobs, economy?


MicroView

(1)For each country identified as a top parts producer, look to upstream manufacturing and regulation.
(2)Correlate regulations – major auto parts manufacturing countries vs Canadian regulations
(3)What should the Canadian government focus on in order to boost Auto Parts Manufacturing?
(4)What are the top 3 regulation changes upstream that would have the largest impact
downstream to Canadian Auto Parts Manufacturers?


Top 10 companies in the world that manufacture auto parts: 

  • Germany = 3, Japan = 3 , Canada = 1, USA = 1, France = 1, Korea = 1

Source:https://www.autonews.com/assets/PDF/CA89220617.PDF

Robert Bosch GmbH - Stuttgart, Germany
 Gasoline systems, diesel systems, chasis system controls, electrical drives,
 starter motors & generators, car multimedia, electronics, steering systems, battery
 technology, exhaust gas turbochargers and treatment systems
 36.787B
 North American Percentage - 17
 Europe Percentage - 52
 Asia Percentage - 27
 Rest of the world - 4
 Top 3 locations
 Germany - 112300 employees
 India - 26000 employees
 North America - 24750 employees

Denso Corp, Kariya, Japan
 Thermal, Powertrain control, electronics & electrical systems,small motors, telecommunications
 34.200B
 North American Percentage - 16
 Europe Percentage - 11
 Asia Percentage - 71
 Rest of the world - 2
 Japan - 132276 employees
 North America - 17000 employees

Continental AG, Hanover, Germany
 Electronic & Foundation brakes, stability management systems, tires,chasis systems, safety system electronics, telematics, powertrain electronics,interior modules, instrumentation, technical elastomers
 32.8B
 North American Percentage - 21
 Europe Percentage - 50
 Asia Percentage - 25
 Rest of the world - 4
 Germany - ? employees
 Argentina - ? employees
 Costa Rica - ? employees
 North America - 1600 employees

Magna International, Aurora, Ontario
 Bodies, chasis, interiors, exteriors, seating, powertrain, electronics,mirrors, closures & roof systems & modules
 North American Percentage - 53
 Europe Percentage - 40
 Asia Percentage - 0
 Rest of the world - 7
 Canada, Mexico, USA - 65000 employees
 Europe - 55000 employees
 Brazil, Argentina - 3500 employees
 Asia - 17700 employees

Aisin Seiki Co, Kariya, Japan
 Body, brakes & chasis systems, electronics, drivetrain & engine components
 30.08B
 North American Percentage - 14
 Europe Percentage - 10
 Asia Percentage - 76
 Rest of the world - 0
 Japan - 78000 employees
 North America - 8000 employees

Johnson Controls, Milwaukee, USA
 Seating, overhead systems, door & instrument panels, center & overhead consoles & interior electronics, lead acid & hybrid vehicle batteries
 22.515B
 North American Percentage - 41
 Europe Percentage - 47
 Asia Percentage - 12
 Rest of the world - 0

Faurecia, Nanterre, France
 Seating, emissions control technologies, interior systems, exteriors
 22.500B
 North American Percentage - 27
 Europe Percentage - 56
 Asia Percentage - 10
 Rest of the world - 7

Hyundai Mobis, Gangnam-Gu Seoul, Korea
 Chasis, cockpit & front-end modules, ABS, ESC, MDPS, airbags, LED lamps, ASV parts, sensors, electronic control systems, hybrid car powertrains, parts & power control units
 21.351B
 North American Percentage - 22
 Europe Percentage - 11
 Asia Percentage - 67
 Rest of the world - 0

ZF Friedrichshafen AG, Friedrichshafen, Germany
 Transmissions, chasis components & systems, steering systems, clutches dampers
 18.614B
 North American Percentage - 19
 Europe Percentage - 58
 Asia Percentage - 18
 Rest of the world - 5

Yazaki Corp, Susono City, Japan
 Wiring harnesses, connectors, junction boxes, power distribution boxes,instrumentation, high voltage systems
 15.801B
 North American Percentage - 22
 No other information available

(3) What are the upstream factors in Automotive Manufacturing that have a
significant impact on employment? Consider top 10 companies for auto parts manufacturing and their country of operation: Germany, Japan, Canada,USA, France, Korea. Allocate a score for how countries rank against raw materials production)

Materials:  Steel, Aluminum, Glass, Fossil Fuel, Software, Rubber, Plastic

Verdict:

Mean score out of 7 categories. Default rank is 10 if no rank or greater than 10. Lower scores are better.

  • USA Mean Score: (3+6+2+3+1+10+5 / 7) = 4.29
  • Japan Mean Score:(2+10+3+10+10+10+2)/7=6.71
  • Germany Mean Score:(10+10+1+10+10+10+1)/7=7.43
  • Canada Mean Score:(3+4+10+7+10+10+10)/7= 7.71
  • Korea Mean Score:(4+10+10+10+10+10+10)/7=9.14
  • France  Mean Score:(10+10+10+10+10+10+10)/7=10
  • Canada ranks 3 in Aluminum and 4 Fossil Fuel.
  • Canada ranks 17th in global Steel production
  • Canada ranks 7th in the IT sustainable index (Software)
  • Canada does not rank top 10 globally in either Rubber, Plastics, Glass production

What’s I find interesting – 3 of the top 10 companies who manufacture Auto Parts are based in Germany however Germany ranks 3rd in the overall mean score for materials required to produce Auto Parts.

Despite having a clear advantage in raw materials for Auto Parts, the USA only has 1 company that ranks top 10, tied with Canada.

Japan ranks high on the Mean scale however has 3 companies in the top 10 for Auto Parts manufacturing.

Note: The data indicates that raw materials are not the most important factor for a successful top 10 Auto Manufacturing businesses.

France and Korea are good models to study as they are not in the top 10 for raw material production however have the #7 and #8 Auto Manufacturing companies in the world.

I will focus on France and Korea in order to determine the top three factors that allow for a top 10 showing in world Auto Parts Manufacturing.

More to come in blog #2

Is the Canadian Housing Market poised for a period of downturn? Part 1

Information on the bubbly nature of the Canadian housing market has reached frothy levels. I’d say that there is an information bubble occurring around media reports covering the housing bubble in Canada. Media articles and reports include splashy headliners like Hillard McBeth, Garth Turner and Kevin O’Leary to support the case of the housing bubble

At first glance, the media reports include information that I tend to agree with, however I have an uneasy feeling that I’ve based my opinions on a singular perspective and this has left me with some significant unanswered questions.

I’d like to analyze these questions one at a time and to start off I’ll take a look at the following.

  1. Is the Canadian Housing Market poised for a downturn?
    1. High level perspective answer: Yes absolutely. Further reading below indicates how I arrived at this conclusion.

Part 2 will delve into greater details. However the first step in my analysis was to look for trends in Canadian housing.

  • Valley: Period where housing prices have flattened from a peak.
  • Trend up: Period where housing prices are trending up towards a peak

Canadian Real House Price Index
http://www.macleans.ca/economy/realestateeconomy/a-canadian-housing-chart-that-puts-the-bubble-in-perspective/
Years considered 1980 – present

  • Valley 1982 – 1985 (V)
  • Trend up 1986 – 1994 (T)
  • Valley 1994 – 2002 (V)
  • Trend up 2002 – 2008 (T)
  • Valley 2008 – 2009 (V)
  • Trend up 2009 – 2016 (T)
  1. 80’s – 90’s
    • 3 Valley, 4 Trend up
  2. 90’s – 2000’s
    • 4 Trends up, 6 Valley
  3. 2000’s – 2010’s
    • 7 Trend up, 3 Valley
  4. 2010 to present
    • 6 Trend up, 0 Valley

4+4+7+6 = 21 trends
3+6+3+0= 12 valleys

12/40 = 30% occurrence of Valleys in 4 decades
21/40=52.5% occurrences of Trends up in 4 decades

Allot 5 years for valley and 5 years for trend up to create a baseline

Breakdown allowed per year
30/5 = 6% probability of a Valley each year
52.5/5 = 10.5% probability of a Trend up each year

  1. From 2010 to 2020
    • 2010 – 2016 trend is up
      • 10.5*6 = 63%. This exceeds the 10 year 52.5% occurrences of Trends up
  2. From 2016 to 2020
    25% probability that there is a housing valley in 2016 and for each of the next 4 years.

In future posts, I will gather and analyze factors in order to dial up/ dial down the 25% probability of a valley for 2016 and onward.

Federal Reserve Predictions 2016 – Recap April 2016

Update – April 28 2016

Not an overly surprising move in April 26/27 2016 announcement by FOMC that rates stay idle. Reports up to this meeting were that global economic factors weighed heavily in the minds of committee members prompting no rate movement in March 2016. The lack of movement in the rate for April is an indicator that global economic uncertainty isn’t going away and the US economy is tied to that uncertainty, the FEDs steadfast mantra of data dependency didn’t warrant an April rate move.

Here are some key items to think about going forward:

  1. FOMC press release did not have a reference to the global economy. March minutes had this reference. The message seems to indicate that the focus is local economic factors for April. This does not mean that the global economic factors aren’t considered.
  2. The break in economic momentum is another consideration. The US local economy expanded but at its slowest pace 0.5%. The FOMC saw this correctly and alluded to this in their press release.
  3. Employment numbers have again come back positive. Employers are hiring and holding on to their hires. This is a good sign, these numbers are watched closely by pundits for and against a rate increase.

What to look for in June 14/15 2016?

The global economic environment is already complicated and seems destined to hold this path. With the pending Brexit referendum bringing uncertainty to Europe in addition to the dire state Greece’s economics is and has been may divert global investors to the US.  My adjusted forecast for June 2016.

  • PCE: 16
    • No change
  • GDP:12
    • -3
  • Global Markets:5
    • -5
  • Employment Rate:9
    • +1
  • Fed Balance Sheet:5
    • No change
  • Outcome
    • 47%
  • Predicton April 2016: 47% probability that the FOMC recommends to raise interest rates

Update – April 7th 2016

We are in interesting territory as reports indicate inflation has edged closer to the FED target of 2%. With month after month of positive employment numbers reported from the US and  GDP by 1.4% in Q4 2015 what’s holding the FED back from raising rates in April?

The US is playing defense against global markets. The world has caught a financial cold.

With statements like this “a core group of policymakers who appeared to include Fed Chair Janet Yellen did not believe the market’s roller-coaster ride this year was over. Several “expressed the view that the underlying factors abroad that led to a sharp, though temporary, deterioration in global financial conditions earlier this year had not been fully resolved and thus posed ongoing downside risks.””  I have adjusted the Global Market indicator to reflect the negative news and sentiment awash in global financial markets.

Global Market indicator adjusted from 10 to 7. All other indicators stay the same bringing the probability of a rate increase in April to 52%.

Update – March 29th 2016

  • Janet Yellen message at a Economic Club In NYC – “Fed could envision a gradual pace of interest rate increases in light of global pressures that could weigh on the US economy”
    • WOW! That was likely the most forward and open Janet Yellen has been with regards to why interest rates were not raised in March and the tentative approach adopted by the FOMC for April
  • Inflation reported below FOMC target
  • US Jobs market is healthy – 242000 jobs added in Feb 2016, unemployment rate steady at 4.9%. January 2016 jobs numbers revised from 151000 to +172000

Taking all that into account: April 2016 outlook is as follows

  • PCE: 16
    • No change
  • GDP:15
    • No change
  • Global Markets:10
    • No change
  • Employment Rate:9
    • +1
  • Fed Balance Sheet:5
    • No change
  • Outcome
    • 55%
  • Predicton April 2016: 55% probability that the FOMC recommends to raise interest rates

Source:

  1. http://business.financialpost.com/investing/global-investor/yellen-stresses-the-fed-foresees-gradual-pace-of-rate-hikes-and-will-proceed-cautiously
  2. http://www.adeccousa.com/employers/resources/Pages/job-market-update.aspx

 

March 2016 is here and my prediction that the FEDs would raise their rates was incorrect. First things first, I will revisit the weight for the 5 categories I took into consideration in my initial analysis. Second, I will add a % likelihood of whether the FEDs would raise rates.

The report out of the FED today indicated two reasons on the rate hold as opposed to a rate increase – https://www.federalreserve.gov/newsevents/press/monetary/20160316a.htm

  1. Market based measures of inflation remained low. Survey based measures of longer term inflation expectations are little changed, on balance in recent months.
  2. Global economic and financial developments continue to pose risks.

Inflation and jobs

My research and reading indicate that it is very difficult to predict the sudden rise of inflation and the efforts to curtail this rise would take dramatic action from the FED. The jobs numbers are something that have been highly discussed and debated over the last number of months.

Some analysts have pointed out that the FEDs mandate of “full employment” has been reached and that this is an indicator that inflation is about to be dialed up. On the flip side of the argument, others have indicated the current jobs numbers reporting”full employment” isn’t really what it seems once the jobs numbers are drilled down in order to take into consideration the quality of jobs over quantity.

The FEDs themselves have not indicated the meaning of “full employment” however their statement today gave us a glimpse.

“Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen.”

With the above statement, could the FED be indicating that jobs numbers aren’t what they seem and would like to see continued dialing up to be sure? Perhaps.

Global economic and financial developments

With regards to the FEDs consideration of the global economic conditions and their stance today. It’s no secret that world economies are connected. Reports from all around the world are that countries and economies not named USA are in trouble. The powerful US economy would be adversely impacted by the economic challenges these countries are currently facing.

  1. 2015 numbers Top 5 economies FOMC includes in assessment of world economic affairs: In Billions
    • China – Exports/Imports (116.2/481.9) (16% of total trade)
      • Currently slowing GDP
    • Canada – (280.3/295.2)(15.4%)
      • Currently in recession and slowing GDP
    • Mexico – (236.4/294.7) (14.2%)
      • Slowdown in GDP
    • Japan – (62.5/131.1) (5.2%)
      • Recession, experiencing deflation and have enacted negative interest rates

Revised numbers for March 2016. April 2016 outlook revised.

Inflation PCE Indicators

Weight:35%

New:30%

GDP

Weight:25%

New: 20%

Global Markets

Weight:20%

New: 35%

Employment Rate

Weight:15%

New:10%

Fed Balance Sheet

Weight:5%

Outcome:

FED Target 75

Recovery Target New: 100

Normal Economic conditions target: 80

Prediction
March 2016 25 – Trending up

15

25

15

5 15 – Trending up

7

5 75

47% chance the FEDS raise rates

March 15/16 – Rates go up .25%

Decision was to stand pat

April 2016 16 15 10 8 5 54 April 26/27 – 54% chance rates go up

NBA Playoff Predictions 2015/2016 – Update April 15 2016

Updated April 15th 2016 –  Round 1 Playoff match-up and outcomes.

EAST:

  1. Cavs vs Pistons
    1. Cavs in 5
  2. Raptors vs Indiana
    1. Raptors in 5
  3. Miami vs Charlotte
    1. Charlotte in 6
  4. Atlanta vs Boston
    1. Atlanta in 6

West

  1. GSW vs Houston
    1. GSW in 5
  2. San Antonio vs Memphis
    1. San Antonio in 5
  3. OKC vs Dallas
    1. OKC in 6
  4. Clippers vs Portland
    1. Portland in 7

Here are the questions this post will attempt to predict:

  • Rank the top playoff seeds in the EAST and WEST.
  • What will be the outcome of each round
  • Who will meet in the NBA Finals
  • Who will be NBA Champions for 2015/2016
  • Who will be Playoff MVP

End of season records and playoff rankings:

Teams Conference Regular Season Record Seed
Cleveland E 57-25 1
Toronto E 53-29 2
Miami E 48-34 3
Boston E 44-38 4
Atlanta E 43-39 5
Charlotte E 43-39 6
Washington E 43-39 7
Indiana E 42-40 8
Golden State W 74-8 1
San Antonio W 63-19 2
OKC W 55-27 3
LA Clippers W 53-29 4
Memphis W 47-35 5
Portland W 47-35 6
Dallas W 42-40 7
Houston W 41-41 8
Round 1 Team Team Result
EAST Cleveland Indiana Cleveland in 6
EAST Toronto Washington Toronto in 6
EAST Charlotte Miami Charlotte in 7
EAST Atlanta Boston Atlanta in 6

 

Round 1 Team Team Result
WEST GSW Houston GSW in 6
WEST San Antonio Dallas San Antonio in 6
WEST OKC Portland OKC in 6
WEST LA Clippers Memphis LA Clippers in 6

 

Round 2 Team Team Result
EAST Cleveland Atlanta Cleveland in 6
EAST Toronto Charlotte Toronto in 7
WEST GSW LA Clippers GSW in 6
WEST OKC San Antonio OKC in 7

 

Conference Final EAST:

Finals: http://espn.go.com/nba/hollinger/teamstats/_/sort/paceFactor

Prediction: Toronto over Cleveland in 7

Raptors leads the season series 2-1

 

Category Details Details Result
Player Depth Chart
Lowry/Joseph Irving/Williams Advantage Toronto
JV/Biyombo Thompson/Mozgov Tie
Caroll/Johnson James/Jefferson Advantage Cleveland
DeRozan/Ross Smith/Shumpert Advantage Toronto
Scola/Patterson Love/Frye Tie
Grade Toronto with the Advantage
Category Detail Detail Result
Defensive Efficiency Cleveland Toronto
101.4 102.4 Virtual Tie
Offensive Efficiency 106.7 106.4 Virtual Tie
Pace 95.2 95.3 Virtual Tie
Turn Overs 12.3 12.4 Virtual Tie
TS – True Shooting Percentage 55 55 Tie

The EAST Finals will be a test between two teams that are virtually tied almost all categories. The factor that will put Toronto over Cleveland in my estimation is the MVP play of Lowry this season. Add the stellar play of DeRozan and the return of Caroll’s defensive on LeBron. The Raptors should take this one in a 7 game series.

Conference Final WEST:

Prediction: GSW over OKC in 6

GSW lead season series 3-0

1 Win in OT

Category Details Details Result
Player Depth Chart GSW OKC
Curry/Livingston Westbrook/Payne Advantage GSW
Thompson Waiters Advantage GSW
Bogut/Ezili Adams/Kanter Advantage OKC
Green/Speights Ibaka/Collison Advantage GSW
Barnes/Iguodala Durant/Singler Advantage OKC
Grade GSW with the Advantage
Category Detail Detail Result
Defensive Efficiency GSW OKC
100.2 103 Virtual Tie
Offensive Efficiency 112.5 109.8 Advantage GSW
Pace 102.2 99.4 Advantage GSW
Turn Overs 13.5 13.8 Virtual Tie
TS – True Shooting Percentage 59.2 56.5 Advantage GSW

Prediction: GSW win series in 6 games

Althought the depth chart indicates the teams are tied in player depth chart. No other player in the league has had this level of positive impact on players around him since Michael Jordan. Steph Curry’s play trumps all depth chart matchups giving the Warriors the edge.

GSW has the edge on offensive efficiency, play at an extremely high pace and shoot a higher percentage. The Warriors will take this matchup in 6 games over OKC.

NBA Finals:

Prediction: GSW over Toronto in 6

In order to analyze the head to head matchup between GSW and Toronto, I will consider the following categories.

  1. Season Series = Compare Cumulative scores
  2. Player Charts without their best players
  3. Remove Lowry and Curry from equation
  4. Season Offensive Rebounding & Season Defensive Rebounding
  5. Season Field Goal Percentage
  6. Compare #3 & #4 against season series

Season Series Cumulative Scores

  • GSW 227 > Toronto 219
  • Margin of victory = 8

Player Depth Chart without best player

  • Livingston/Barbosa < Joseph/Wright
  • This matchup comes down to Joseph vs Livingston. Edge to Joseph as he is having his best season and his basketball IQ is through the roof due to prior experience with San Antonio
  • Thompson/Rush > DeRozan/Ross
  • Thompson is a force to be reckoned with however DeRozan and Ross are having excellent seasons themselves. Together they match up to one motivated Klay Thompson when Lowry is around to distribute. Take Lowry away and the Raptors have no one to take away heat from DeRozan.
  • Green/Speights > Scola/Patterson
  • Green is having his best season thus far and is playing with tremendous confidence. His play outshines both Scola and Patterson
  • Bogut/Ezili < Valanciunas/Biyombo
  • With two headed monster of Valanciunas and Biyombo, Bogut is no match for them.
  • Barnes/Iguodala > Caroll/Johnson
  • Take nothing away from young gun Barnes but Andre Iguodala is the X factor in this matchup. He is equal to the task when its his time to bring his A game.

Grade: GSW

Season Offensive Rebounding:

  • Toronto 24.4 > GSW 23.8

Season Defensive Rebounding:

  • Toronto 77.6 > GSW 75.8

Season Field Goal Precentage:

  • Toronto 50.3 < GSW 56.1

Head to Head comparison vs Season Averages

  • Game 1 Field Goal Percentage:
  • GSW: 53.8
  • Toronto: 46.8

Game 2 Field Goal Percentage:

  • GSW: 47.9
  • Toronto 44

Grade: Raptors show they can hold GSW down from their league high field goal percentage

Game 1 Offensive Rebounds:

  • GSW: 9
  • Toronto:12

Game 2 Offensive Rebounds:

  • GSW: 8
  • Toronto: 11

Grade: Raptors show their edge on the offensive glass

Game 1 Defensive Rebounds:

  • GSW: 25
  • Toronto: 28

Game 2 Defensive Rebounds

  • GSW: 35
  • Toronto: 27

Grade: Warriors show their resilience in game 2 by out working the Raptors on the defensive glass by a significant margin

Prediction: GSW win series in 6

The Warriors have proven time and time again that their offense is stellar and second to none. However in the head to head match up, Toronto gave GSW everything they could handle. The Raptors have shown that with some effort, their defensive capabilities can limit the Warriors to second chance points. This assumption is based on the expectation that the Warriors will miss more than they make. Thus far, the best team in the NBA and likely ever, have shown us their propensity to score in bunches and score fast.

I can envision the Raptors putting up a fight, however my prediction is GSW in 6 games over the Toronto Raptors.

MVP: Stephen Curry

Federal Reserve Predictions 2016

Changed my mind: Analysis below

Here are my predictions for FOMC Interest Rate announcement for 2016. I will circle back and add some notes in order to analyze the outcome of my predictions

Month Prediction
March 2016 March 15/16 – Rates go up .25%
April 2016 April 26/27 – Rates go up .25%
June 2016 June 14/15

Rates stand pat

July 2016 July 26/27

Rates stand pat

September 2016 Sept 20/21

Rates stand pat

November 2016

American Elections Nov 8th 2016

Nov 1/2

Rates stand pat

December 2016 Dec 13/14

Rates go up .25%

Question: When will FOMC raise rates in 2016

Assume that FOMC looks at 5 Open Market conditions and assign a weight to each condition.

In order of priority for FOMC for a rate increase

  1. Inflation and PCE indicators
    1. Weight:35%
  2. GDP
    1. Weight:25%
  3. Global Markets
    1. Weight:20%
  4. Employment Rate
    1. Weight:15%
  5. Fed Balance Sheet
    1. Weight:5%

 

  Inflation PCE Indicators

Weight:35%

GDP

Weight:25%

Global Markets

Weight:20%

Employment Rate

Weight:15%

Fed Balance Sheet

Weight:5%

Outcome:

Fed Target 75

Prediction
Feb 2016 15 25 5 10 5 60  
March 2016 25 – Trending up 25 5 15 – Trending up 5 75 March 15/16 – Rates go up .25%
April 2016 25 25 5 15 5 75 April 26/27 – Rates go up .25%
June 2016 20 25 5 15 5 70 June 14/15

Rates stand pat

July 2016 20 25 5 15 5 70 July 26/27

Rates stand pat

September 2016 20 25 5 15 5 70 Sept 20/21

Rates stand pat

November 2016

American Elections Nov 8th 2016

20 25 5 15 5 70 Nov 1/2

Rates stand pat

December 2016 25 25 10 15 5 80 Dec 13/14

Rates go up .25%

I started my analysis in Feb 2016. Please excuse the format – this was me trying to analyze and organize my thoughts.

  1. Federal Reserve Balance Sheet: http://www.federalreserve.gov/releases/h41/current/h41.htm
    • Current Balance Sheet Value:
      • Feb 10 2016 – Assets:4486278T
      • Feb 10 2016 – Liabilities: 4446766T
      • Equity = Assets – Liabilities
        • Feb 10 2016 – 4486278-4446766 = 39512B
      • Largest chunk of sheet Assets:
        • Securities, unamortized premiums discounts, repurchase agreements and loans: 440762T
          • Securities held outright: 4236672T
            • US Treasury Securities: 2461174T
            • Mortgage backed securities: 1744180T
          • Largest chunk of Liabilities:
            • Federal Reserve Notes: 1373926T – money printed and in circulation
            • Deposits:2783045T
          • Feb 2007
            • Assets = 871 Billion
              • Largest chunk of Assets sheet:
                • Securities, unamortized premiums discounts, repurchase agreements and loans:808935B.
                  • US Treasury: 778889B
                    • Bills: 277019
                    • Notes and Bonds:466675
                  • Liabilities = 840Billion
                    • Largest chunk of liabilities:
                      • Federal Reserve Notes: 769955B – money printed and in circulation
                      • Reverse Purchase Agreement:37336B
                      • Deposits: 22640B
                        • Money that banks are keeping with the Federal Reserve. FED does not pay interest on deposits. They can use this to purchase securities to get interest on them.
                      • FOMC Target:
                      • Trending (up/down):
                      • Priority out of 5: 5
  1. Employment Rate: Readings lower than 300000 jobless claims indicate a healthy jobs market.
    • Current Employment Rate:4.9%
    • FOMC Target: Was 6.5 then 6.2 then 5
    • Trending (up/down): Trend is up(Greater Employment). Lower unemployment rate in the US for 2016
    • Priority out of 5: 4
      • the unemployment rate declines when there is an increase in the employment ratio; this would suggest a stronger economy. On the other hand, the expression also shows that the unemployment rate declines when the labor force participation rate falls; this might signal a weaker economy if there has been an increase in the number of discouraged workers who have given up looking for jobs and left the labor force entirely
  1. GDP: The value of the goods and services produced by the nation’s economy less the value of goods and services used up in the production, adjusted for price changes
    • GDP Rate 2014:16768 T
      • 4 increase in 2015: 17170.432T
    • FOMC Target: Looking for upward trend
    • Trending (up/down): Up
    • Priority out of 5: 2
  2. Inflation Indicators – PCE (Personal Consumption Expenditures), Core Inflation: Personal consumption expenditures (PCE) is the primary measure of consumer spending on goods and services in the U.S. economy. It accounts for about two-thirds of domestic final spending, and thus it is the primary engine that drives future economic growth. Key measure of inflation for FOMC http://www.advisorperspectives.com/dshort/updates/PCE-Price-Index.php. According to long term chart, wages have stagnated thus PCE has dropped to low levels. Check out 1975 data.
    • Current PCE Rate:1.3%
    • Current Core Inflation Rate:2.16%
    • FOMC Target:2%
    • Trending (up/down): holding steady
    • Priority out of 5:1
  3. Global Markets: https://www.census.gov/foreign-trade/statistics/highlights/toppartners.html
    • 2015 numbers Top 15 economies FOMC includes in assessment of world economic affairs: In Billions
      • China – Exports/Imports (116.2/481.9) (16% of total trade)
        • Currently slowing GDP
      • Canada – (280.3/295.2)(15.4%)
        • Currently in recession and slowing GDP
      • Mexico – (236.4/294.7) (14.2%)
        • Slowdown in GDP
      • Japan – (62.5/131.1) (5.2%)
        • Recession, experiencing deflation and have enacted negative interest rates
      • Germany – (49.9/124.1) (4.6%)
      • South Korea – (43.5/71.8) (3.1%)
      • UK – (56.4/57.8) (3.0%)
      • France – (30.1/47.6) (2.1%)
      • Taiwan – (25.9/40.7) (1.8%)
    • Priority out of 5:3

 

“And that house on the hill when you drop like 80
On a down payment thinking damn ain’t life gravy” – J.Rule