Here are a few notes from my research and conversations on tech and markets over the weekend.
— Watch out, Tesla. Mercedes is launching its first plug-in hybrid-electric midsize sedan, the C350e, in U.S. dealerships this September, according to reports. Chatter on the street suggests that the German auto-making powerhouse plans to deeply undercut Tesla stickers, with a price around $42,000 before $5,250 worth of federal and state incentives. The 85 kWh Tesla starts at twice that level. And the brash young automaker will not have a competitive product until at least 2017. Mercedes can undercut the pricing because it has a lot more experience at mass production and sourcing; will make the car in low-cost Alabama instead of high-cost California; and it can subsidize the vehicle with its other vehicles, just to gain market share. The market for electrics is growing dramatically; this is just the start.
— Cheap computational power caused the global financial crisis. That is a pretty provocative statement, but it is well argued in the recent book by tech philosopher Jaron Lanier. I would explain further but that would spoil the fun of reading this analysis at Medium.com.
— Happy trails. I’m really going to miss Richard Fisher at the central bank. He is retiring as president of the Federal Reserve Bank of Dallas, and in turn from the Fed board in Washington. He was a rare breed among Fed officials: A businessman, not an economist, who spoke his mind, and colorfully. He was a master of the quick quip or succinct anecdote.
As the New York Times recalls, one of the most memorable was his 2012 description of his breeding bull, Too Big to Fail, as full of liquidity but unable to reach the pretty cows on the other side of the fence. He was also famous for calling a list of 50 corporate leaders before Fed meetings to touch base on their views of the economy, rather than relying on central bank statisticians.
Fisher once said, “My local dry cleaner, I would say that if you took him and put him against the whole Fed staff in terms of forecasting, he’s been far more accurate.” He was an opponent of stimulus and quantitative easing, and quite frequently wrong in his forecasts. But he was a fresh voice in a stale environment and will be missed. Click here to read the New York Times farewell.
— Justified. Billionaire trader Paul Tudor Jones warned in a TED Talk in Canada this week that income inequality will end in revolution, taxes or war — and added that none were on his bucket list. He argued that “we’ve ripped the humanity out of our companies,” and that markets and the country would be better served by a societal imperative to focus as much on “justice” as profits.
PTJ, as he’s known in the industry, is not exactly a rags-to-riches story himself, but close enough. He grew up in Memphis as the son of an attorney, and started as a cotton trader after graduation from University of Virginia. He made and lost a fortune before figuring out how to trade currencies and commodities using quantitative methods. PTJ earns a lot of respect for essentially building his $4.5 billion net worth from scratch as well as co-founding the Robin Hood Foundation to fight poverty in New York.
I interviewed him at length on the phone and in person for my annotated edition of “Reminiscences of a Stock Operator,” and was very impressed with his humility and intelligence. This TED talk is a fascinating twist on his path. Click here to read the Business Insider report, and here to see the report on the TED Blog.
— Watch this. HBO was the first significant pay television channel on cable, and it continues to innovate like crazy. It burst onto the scene almost 40 years ago by broadcasting sports and movies, and then became a powerhouse of original programming with The Sopranos, Sex and the City, The Wire, The Larry Sanders Show — and more recently the likes of Game of Thrones, Girls andVeep. The Financial Times last week published a great piece last week on what has made HBO, a unit of Time Warner (TWX), successful. The chief executive gets off some great quotes. He is wary of the concept of corporate strategy. “Culture,” he says, “eats strategy for breakfast.” Click here to read.
— Don’t watch. I promised I would quit ragging on the Apple Watch, considering it has not even released yet, but need to break that vow for just one minute. I was talking this weekend to someone who has an inside view of Apple’s television commercial development process. He said the ad development team had spent the past month creating spots for the Apple Watch and were amazed at how ordinary and over-priced the devices are. Apple’s in-house marketing team apparently has a cynical attitude that they can slap an Apple logo onto anything and persuade people to buy it. I think that attitude is going to be tested in this case. Unless I am missing something, I bet the Watch unit sales disappoint.
Best wishes,
Jon Markman
