5 Daily Observations — Issue #16
Today: Inflation, book publishers are thriving, the downside of seeking wealth, silicon valley’s stock exchange, and North Korea’s 6,000 hackers.
1. INFLATION, INFLATION, INFLATION
Both CPI and core CPI YoY came in under analyst expectations. Core CPI excludes items with high price volatility such as food and energy.
Why is inflation important? Part of the federal reserve’s dual mandate is to maintain steady prices. These inflation reports are important in determining whether or not they raise short-term interest rates.
They have already penciled in another rate raise this year and 3 for next. This will likely change depending on the data.
Headline inflation(1st chart) would have been lower. Hurricane Harvey pushed up fuel prices.
Inflation for medical care(1st chart) and prescription drugs(2nd chart) has been falling.
Going to college should be getting cheaper, at least the books.
U.S Lumber futures are at a 13-year high as the NAFTA negotiations falter. Expect the cost of new home construction and renovations to rise.
2. BOOKS ARE BACK IN FASHION
Book publishers are returning to printing books as e-book growth declines reports the WSJ.
From the article:
Now, e-book sales are on the decline, making up a fraction of publishers’ revenue, and traditional book sales are rising. The consumer books industry is enjoying steady growth in the U.S., with total revenue increasing about 5% from 2013 to 2016, according to the Association of American Publishers.
Since anyone can self-publish a book with a little time and low cost, the supply of e-books has never been greater, but discovering what’s worth reading has never been harder.
Even with sites like Goodreads, sifting through which books you should read is still a challenge.
I have started to gravitate back to hardcover books. Maybe it’s just the feeling of holding a physical book in my hand?
3. SILICON VALLEY’S NEW STOCK EXCHANGE
What’s the problem? Silicon Valley’s high-tech denizens complain the public stock markets are marred by a narrow focus on short-term earnings and profits reports the WSJ.
I am sure this applies to some companies, but a few of the largest companies are tech companies.
Think Netflix, Tesla, and Amazon. These companies that have been given slack(years) to forego short and medium-term profits in the hope of achieving their long-term aspirations. These companies stress the long-term and have been rewarded with valuations most analyst would consider “rich” by traditional metrics.
A key feature of this new exchange is tenure voting.
From the article:
A system in which the voting power of shares increases the longer investors own them. Firms listed on the exchange would need to use such a structure, often called “tenure voting,” while abiding by numerous other rules, such as a ban on tying executive pay to the company’s short-term financial performance.
It will be a year or more before we know whether the exchange will be approved, but if it is, expect tech companies to consider it an option as opposed to the NYSE or NASDAQ.
4. PERSONAL FINANCE
Saving Money and Running Backwards · Collaborative Fund — www.collaborativefund.com
Wealth has a curse. It’s called the hedonic treadmill. Its mission — and it is ruthless — is to move the goal post of your financial dreams, extinguishing the joy you thought you’d get from having more money once you attain it. GREAT READ
From the article:
The solution, particularly after basic needs are met, is actively seeking contentment with what you have. That doesn’t mean you stop saving, stop putting in effort, stop sacrificing. It means you come to terms with the idea that the outcome isn’t a fountain of happiness. So if you’re going to grind, you better damn well enjoy the process.
The bold sentence above: “actively seeking contentment with what you have”. This is something I am trying to learn every day. To be content with what I have.
5. NORTH KOREA’S 6,000 CYBER HACKERS
The World Once Laughed at North Korean Cyberpower. No More. — The New York Times — www.nytimes.com
Per the NYT: Their track record is mixed, but North Korea’s army of more than 6,000 hackers is undeniably persistent and undeniably improving, according to American and British security officials who have traced these attacks and others back to the North.
Unlike its weapons tests, which have led to international sanctions, the North’s cyberstrikes have faced almost no pushback or punishment, even as the regime is already using its hacking capabilities for actual attacks against its adversaries in the West.
From the article:
The most widespread hack was WannaCry, a global ransomware attack that used a program that cripples a computer and demands a ransom payment in exchange for unlocking the computer, or its data. In a twist the North Koreans surely enjoyed, their hackers based the attack on a secret tool, called “Eternal Blue,” stolen from the National Security Agency.
In the late afternoon of May 12, panicked phone calls flooded in from around Britain and the world. The computer systems of several major British hospital systems were shut down, forcing diversions of ambulances and the deferral of nonemergency surgeries. Banks and transportation systems across dozens of countries were affected.
I remember this crisis well. It took a 22-year-old kid living with his parents in England to stop a global ransomware attack.
From the article:
It ended thanks to Marcus Hutchins, a college dropout and self-taught hacker living with his parents in the southwest of England. He spotted a web address somewhere in the software and, on a lark, paid $10.69 to register it as a domain name. The activation of the domain name turned out to act as a kill switch causing the malware to stop spreading.
Remarkable, it only cost $10.69 to stop an attack that cost companies in the millions of dollars.
