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Daily Intelligence Briefing – May 9, 2017

FEATURED TOPIC – CYBERSECURITY SECTOR IS BOOMING

Cybercrime is BIG business, a fact that we’re reminded of every day:

Cyber-espionage: Two weeks ago, the US government issued a warning that an international cyber-espionage campaign by APT10 — a group with suspected ties to the Chinese government — has been targeting companies globally. No industry is safe: APT10’s targets are in construction, engineering, aerospace, telecom, etc., and include government agencies in the US, Europe and Japan.

Phishing: Business Email Compromise (BEC) attacks, a form of phishing, are skyrocketing in frequency. More than 40,000 victim organizations around the world were hit in the past three years, generating over $5 billion in losses during that time. Incidents and costs will only accelerate.

Cyber-hijacking: Apparently, ransomware-as-a-service (RaaS) is now a thing. A $175 ransomware service, introduced in the Russian underground, allows any buyer to encrypt infected machines and then trigger a ransom note demanding payment. 

FURTHERMORE, here are additional recent articles relevant to the industry: (these articles are summarized in the TECHNOLOGY section)

  • Cybersecurity – Cybersecurity Pros Will Soon Patrol Computer Networks Like Agents in ‘The Matrix’ 
  • Cybersecurity – Cyber business continues to solidify at U.S. military contracting giants 
  • Cybersecurity – Major Defense Company to Adopt Blockchain Cyber Security Tech
  • Cybersecurity – Microsoft uncovers hacking operation aimed at software supply chain
  • Cybersecurity – US, Japan deepen cyber information sharing 
  • Cybersecurity – Cybercrime is biggest threat to small and medium-size firms ‘by far’
  • Cybersecurity – Hong Kong regulator SFC seeks input on tighter cybersecurity measures 
  • Cybersecurity – AI Is the Future of Cybersecurity, for Better and for Worse 
  • Cybersecurity – US Lawmakers call for flexibility in hiring cybersecurity pros without 4-year degrees 
  • Cybersecurity – BEC attacks have hit thousands, top $5 billion in losses globally
  • Cybersecurity – Phishing Scams Cost American Businesses Half A Billion Dollars A Year 

THEME RELEVANCE: LONG CYBERSECURITY

Just as cybercrime is big business, so too is cybersecurity. In fact, organizations worldwide will spend $101.6 billion annually on cybersecurity software, hardware and services by 2020 compared with spending of $73.7 billion in 2016, according to the International Data Corporation (IDC). Therefore, MRP is re-affirming the recommendation to be LONG CYBERSECURITY.

CHART: PureFunds ISE Cyber Security ETF (HACK)

ALSO, here are some companies, outside of the defense sector, that have exposure in this space:

  • NETWORK SOLUTIONS: CHKP; PANW; FTNT; PFPT; ZIXI; CYBR; QLYS; VDSI; MIME; RPD; IMPV; CUDA; RDWR; JNPR; KEYW; ATEN
  • ENDPOINT SOLUTIONS: SYMC; FEYE

OTHER STORIES HIGHLIGHTED IN TODAY’S DIBS:

  • Markets:
    •  Bonds – Germany rejects idea of joint euro bonds after Macron victory 
    • Exchanges – LME introduces gold and silver trading on July 10 
  • Politics and Policy: 
    • Elections – These are the Elections to Care about After France 
  • Finance: 
    • Banking – China’s crackdown on shadow banking could seriously upset global markets  
  • Services: 
    • Media – Facebook wants to launch its big attack on TV next month here’s what we know 
    • Grocers – Startup introduces ‘Internet of Groceries’ to push sales while reducing waste 
    • Auction Houses – Auction houses see signs of art market uptick ahead of New York sales 
  • Manufacturing and Logistics: 
    • Capex – French manufacturers to hike investment 6 percent in 2017: INSEE survey
  • Technology: 
    • Quantum Computing – Companies Look to Make a Quantum Leap with New Technology 
    • 3DP – GE, Rivals Turn to Europe For Push Into 3-D Printing 
    • 3DP – Norsk Titanium Receives Production Part Order from Boeing, Highlighting a Bright Future in Aerospace Metal Additive Manufacturing
  • Transportation:  
    • EVs – Self-repairing roads could also charge your electric car 
  • Energy & Environment
    • Wind – Origin stuns industry with record low price for 530MW wind farm 
    • Wind – Wind energy sets 8-year record as installations swell in Q1 
  • Biotech: 
    • Genetic Engineered Crops – Will CRISPR be GMO? 
  • Endnote: 
    • Cyber Security: The World’s Best And Worst Presented With A Well-Designed Infographic  

About the DIBs: MRP focuses on identifying transformational change in the global economy and offering an investment thesis whenever an opportunity arises that has not yet been recognized by the market. The DIBs are MRP’s compilation of articles and data from multiple sources on subjects reflecting disruptive change that have potential investment implications for an industry or group of securities. We share these with our clients who may already have or may be considering exposure in the industries affected. The subjects change daily and constitute an excellent update on featured topics.

   MAJOR DATA POINTS Top   
  • United States, Labor Market Conditions, Index, MoM, APR: 3.5 form prior 0.4
  • United States, TD Ameritrade, MoM, APR: 6.06 form prior 6.22
  • United States, Redbook, YoY, APR/6: from prior 2.3%
  • Czech Republic, Retail Sales, YoY, MAR: 7.8% from prior 0.6%
  • Turkey, Retail Sales, YoY, MAR: -0.4% from prior -4.4%
  • Netherlands, Inflation Rate, YoY, APR: 1.6% from prior 1.1%
  • Lithuania, Inflation Rate, YoY, APR: 3.5% from prior 3.1%
  • Croatia, PPI, YoY, APR: 3.3% from prior 1.2%
   MARKETS Top   

Bonds – Germany rejects idea of joint euro bonds after Macron victory 

Macron’s victory is a relief for Germany, the main defender of the European Union against rising anti-establishment sentiment on the right and left of the political spectrum. However, the idea of joint borrowing by euro zone states does not play well with frugal German voters. One proponent of euro bonds told Reuters on Monday that Macron’s clear win in Sunday’s election could mark a step toward creation of such instruments. Chancellor Angela Merkel’s conservatives have rebuked Martin Schulz, her Social Democratic challenger in September’s general election, for calling for “euro bonds” in the single currency bloc to relieve its debt crisis. R

Exchanges – LME introduces gold and silver trading on July 10 

London Metal Exchange, a subsidiary of Hong Kong Exchanges and Clearing, will launch gold and silver spot and futures trading in London on July 10 in a bid to capture the increasing demand for trading of precious metals in London. The LME gold and silver product will launch at a time when HKEX is planning to introduce gold futures in the third quarter of this year should it secure approval from the Securities and Futures Commission. The trading in the two markets however, would remain separate, and there will be no cross trading. The LME will also plan to launch more precious metals contracts at a later stage, including platinum and palladium futures and options. SCMP

  POLITICS & FISCAL POLICY Top   

Elections – These Are the Elections to Care About After France 

The French presidential election is over. But political risk hasn’t gone away. Here’s a look at the other major elections coming up over the next 18 months…

South Korea – May 19: Former opposition leader Moon Jae-in faces software tycoon Ahn Cheol-soo in the race to succeed conservative Park Geun-hye, who was ousted amid a corruption scandal. The result could shape the international response to North Korea’s nuclear weapons program. Moon has signaled a softer touch to relations with Kim Jong Un, while Ahn has backed the installation of a controversial U.S. missile shield. Both have endorsed measures to reduce the influence of South Korea’s family-owned “chaebol” conglomerates.

Germany – May 14: The incumbent Social Democrat-led coalition will face off against Chancellor Angela Merkel’s Christian Democrats. The outcome will give a clear sense of voters’ mood four months from September’s federal election. 

Iran – May 19: The incumbent moderate president, Hassan Rouhani, is seeking a second term. The election is a referendum on Rouhani, who struck a deal to limit Iran’s nuclear program in exchange for sanctions relief. His main opponents — Conservative Tehran mayor Mohammad Baqer Qalibaf and conservative cleric Ebrahim Raisi — say they would respect the deal, but the election of a hardline president still raises the risks of a showdown with U.S. President Donald Trump, who described it as a “disaster.” 

U.K. – June 8: Prime Minister Theresa May wants to win a larger majority for her governing Conservative Party. May says she needs a large majority to strengthen her hand in Brexit negotiations, which are due to start after the election. The vote will also give clues on the strength of support for Scottish independence, whether Labour leader Jeremy Corbyn can survive in his job and how much influence anti-Brexit lawmakers will have during talks.

French parliamentary elections – June 11, June 18: President-elect Emmanuel Macron’s En Marche!, which was formed a year ago and currently has no seats in the parliament, will run for the first time. The Socialists and The Republicans, France’s two establishment parties, will be seeking to bounce back after their failures in the presidential elections, as will Marine Le Pen’s National Front. The constitution gives the president many powers, but only if he or she has a majority in parliament, which has the power to choose the cabinet and pass laws. B

  FINANCE Top   

Banking – China’s crackdown on shadow banking could seriously upset global markets  

The Beijing government’s efforts to discipline its financial system and rein in a huge credit bubble have already led to a deterioration in sentiment in the country’s equity and debt markets. Since the drive to curb financial leverage intensified in early April, China’s banks have started withdrawing money from so-called entrusted investments – asset or wealth management products that banks outsource to third-party asset managers – which has forced non-bank financial institutions to sell their bond and equity holdings.

More worryingly, there are signs that China’s economy is beginning to slow once again. On April 30, the publication of an official purchasing managers’ index survey showed that growth in the manufacturing sector last month fell to a six-month low. A brutal sell-off across commodity markets is putting China’s manufacturing industry under strain and, more alarmingly for international investors and traders, accentuating the risks posed by Beijing’s efforts to tighten liquidity and rein in shadow bank credit.  Make no mistake, the global repercussions of Chinese regulators’ efforts to tame financial risk could become a lot more severe in the coming weeks and months. SCMP

  REAL ESTATE Top   

Media – Facebook wants to launch its big attack on TV next month here’s what we know  

Facebook has kicked its push for TV-like shows into high gear and is aiming to premiere its slate of programming in mid-June, multiple people familiar with the plans told Business Insider. Facebook plans to have about two dozen shows for this initial push and has greenlit multiple shows for production, according to people familiar with the discussions. They said the social network had been looking for shows in two distinct tiers: a marquee tier for a few longer, big-budget shows that would feel at home on TV, and a lower tier for shorter, less expensive shows of about five to 10 minutes that would refresh every 24 hours. BI

Grocers – Startup introduces ‘Internet of Groceries’ to push sales while reducing waste

Wasteless, a startup with headquarters in Israel and New York, has introduced a new innovation dubbed the “Internet of Groceries” to reduce waste while saving customers and retailers money, according to a press statement.

The Wasteless technology tags perishable foods in stores using an RFID chip that is intended to replace the use of the bar code. The RFID chip tracks the item’s expiration date and, using software, detects the appropriate price for the item to be sold. Newer products may cost retail price, while soon-to-expire products may be discounted by a few dollars.

While the technology aims to cut down on waste, its purpose is also to “re-capture $1B of lost grocery sales every week,” according to Wasteless. The RFID chip allows for inventory manager to have real time information of what’s on the shelf to combat over-stocking.  WasteDive

Auction Houses – Auction houses see signs of art market uptick ahead of New York sales  

After years of gangbuster results marked by soaring prices, both auction houses staged relatively modest sales last year, owing largely, they say, to hesitancy on the part of consignors in an unsettled global market. No works carried estimates much beyond $40 million, in contrast to recent seasons when many pieces broke the $100 million barrier. Executives resorted to employing such terms as discerning, measured and selective to characterize both the market, and some flabby results. But collectors’ hunger for top-tier works also drove some heavy spending in the fall, said Brook Hazelton, president of Christie’s Americas, citing its Claude Monet record price in November. R

  SERVICES Top   

Media – Facebook wants to launch its big attack on TV next month here’s what we know  

Facebook has kicked its push for TV-like shows into high gear and is aiming to premiere its slate of programming in mid-June, multiple people familiar with the plans told Business Insider. Facebook plans to have about two dozen shows for this initial push and has greenlit multiple shows for production, according to people familiar with the discussions. They said the social network had been looking for shows in two distinct tiers: a marquee tier for a few longer, big-budget shows that would feel at home on TV, and a lower tier for shorter, less expensive shows of about five to 10 minutes that would refresh every 24 hours. BI

Grocers – Startup introduces ‘Internet of Groceries’ to push sales while reducing waste

Wasteless, a startup with headquarters in Israel and New York, has introduced a new innovation dubbed the “Internet of Groceries” to reduce waste while saving customers and retailers money, according to a press statement.

The Wasteless technology tags perishable foods in stores using an RFID chip that is intended to replace the use of the bar code. The RFID chip tracks the item’s expiration date and, using software, detects the appropriate price for the item to be sold. Newer products may cost retail price, while soon-to-expire products may be discounted by a few dollars.

While the technology aims to cut down on waste, its purpose is also to “re-capture $1B of lost grocery sales every week,” according to Wasteless. The RFID chip allows for inventory manager to have real time information of what’s on the shelf to combat over-stocking.  WasteDive

Auction Houses – Auction houses see signs of art market uptick ahead of New York sales  

After years of gangbuster results marked by soaring prices, both auction houses staged relatively modest sales last year, owing largely, they say, to hesitancy on the part of consignors in an unsettled global market. No works carried estimates much beyond $40 million, in contrast to recent seasons when many pieces broke the $100 million barrier. Executives resorted to employing such terms as discerning, measured and selective to characterize both the market, and some flabby results. But collectors’ hunger for top-tier works also drove some heavy spending in the fall, said Brook Hazelton, president of Christie’s Americas, citing its Claude Monet record price in November. R

  MANUFACTURING Top   

Capex – French manufacturers to hike investment 6 percent in 2017: INSEE survey 

French manufacturing companies expect to boost investments this year by six percent, the most since 2011, a quarterly survey by the INSEE official statistics office showed on Thursday. The estimate was up slightly from five percent the last time the survey was conducted in January and follows a four percent increase in 2016, INSEE said. Manufacturers of electrical, electronic and machine equipment expected particularly strong investments this year, flagging a 27 percent increase. R

 

 

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