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Daily Intelligence Briefing – January 18, 2017

Featured Topic: Cybersecurity and Other Tech

  • Cybersecurity – The US Air Force is beefing up cybersecurity for the F-22 and F-35
  • Cybersecurity – Analyst: Northrop has ‘largest cybersecurity business’ among defense companies
  • Cybersecurity – Cybersecurity Firms to Benefit from Govt. Clients
  • Cybersecurity – Cybersecurity Leaders Look to Meet Cloud Demand
  • Cybersecurity – College Pays Off Hackers With $28K In Bitcoin
  • Cybersecurity – More Cybercrime Than Physical Crime in North Wales
  • Cybersecurity – Connected Cars Pose a Cybersecurity Challenge
  • Cybersecurity – New cybersecurity regulation hits New York financial firms March 1
  • Cybersecurity – Digital transformation forces businesses to rethink cybersecurity
  • Cybersecurity – 59% increase cybersecurity spend
  • Cybersecurity – Trump Administration Can Help Finance Sector Shift Cybersecurity Paradigm
  • IT – Tech CEOs want to help the federal govt. save $1 trillion on IT,
  • Blockchain – Blockchain could save investment banks up to $12 billion a year
  • AI – Robotics  In 2017, China Is Doubling Down on AI

Meanwhile, Trump’s tweets create quite the stir….

Other Highlights:

  • Markets:
    • Twitter – Trump’s tweets could offer investors an opportunity
    • China Equities – China’s Second Stock Link Is Changing How People Buy Its Shares
  • Economics and Trade:
    • USD – Trump just signaled the death of Clinton-era strong dollar policy
    • China – China unveils new plan to further open economy to foreign investment
    • China – China Spawns New Debt Market to Ease Burden on Local Governments
    • Australia – Australia new vehicle sales hit a record for 2016
  • Politics and Policy:
    • Brexit – Britain to leave EU market as May sets ‘hard Brexit’ course
    • Int’l Tension – Taiwan Holds Military Drills Simulating Naval Invasion By China
    • Elections – Italy’s Tajani Picked to Lead EU Parliament Amid Populist Threat
    • Elections – How Trump Could Actually Boost Merkel’s Election Pitch
  • Monetary Policy:
    • Fed – Brainard joins Fed chorus warning about fiscal stimulus risks
  • Finance:
    • Brexit – Finance industry’s ‘worst case’ on Brexit spurs contingency plans
    • E.U. – ECB sees euro zone bank lending growing in first quarter
  • Real Estate:
    • U.S. – Property Supply Hasn’t Kept Pace With Popularity of Real-Estate Funds
  • Services:
    • Apps – Worldwide app downloads grew 15% and revenue soared 40% in 2016
    • Cannabis – As Pot Prices Plunge, Growers Scramble to Cut Their Costs
  • Manufacturing and Logistics:
    • Chip Sector – Qualcomm Said to Face U.S. Antitrust Case Over Licensing
  • Transportation: 
    • EVs – China, Europe drive shift to electric cars as U.S. lags
  • Commodities:
    • Iron – China steel, iron ore: A new year, a new bubble
    • Oil – U.S. oil and gas industry has turned the corner
    • Oil – U.S. shale oil output set to grow in February as prices rise
    • NatGas – Natural gas prices in 2016 were the lowest in nearly 20 years
  • Biotech:
    • Healthcare – For $149 a Month, the Doctor Will See You as Often as You Want
    • Healthcare – Obamacare Repeal Would Leave 32 Million Uninsured, Report Finds
  • Endnote:
    • Bloomberg 2017 Innovation Index: These Are the World’s Most Innovative Economies

Current Themes: 

  • Long Aerospace and Defense
  • Long Homebuilders
  • Long Gold
  • Long Value over Growth
  • Long U.S. Energy
  • Long Oil Services and Equipment
  • Long CAPEX
  • Long Steel
  • Long Emerging Markets 
  • Long Treasury Inflation Protected Securities (TIPS) & Short Long-Dates Treasuries
  • Long Coffee
  • Long Financials
  • Long Regional Banks

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. Every day, the DIBs also include links to MRP’s MARKET VIEWPOINT, THEME TRACKER and MACRO MONITOR. On many days, the DIBS will also include NEW DATA & THEME DEVELOPMENTS for active themes.


United States: Industrial Production, y/y: 0.5% from prior -0.7%
United States: NAHB Housing Market Index, JAN: 67 from prior 69
United States: Consumer Price Index, m/m: 0.3% from prior 0.2%
United States: Core Consumer Price Index, m/m: 0.2% from prior 0.2%
United States: Consumer Price Index, y/y: 2.1% from prior 1.7%
United States: Core Consumer Price Index, y/y: 2.2% from prior 2.1%

*December: Uptick in Headline Inflation – Energy (and less so shelter/rent) driven. Energy subindex up 5.44% y/y

Euro Zone: Consumer Price Index, y/y: 1.1% from prior 0.6%
Germany: Consumer Price Index, y/y: 1.5% from prior 0.7%
United Kingdom: Unemployment, NOV: 4.8% from prior 4.8%

   MARKETS Top   

Twitter – Trump’s tweets could offer investors an opportunity

Tweets from Donald Trump about “out of control” costs for a new 747 Air Force One being built by Boeing and Lockheed Martin’s F-35 programme hit stocks of both companies in December. The president-elect began January with a tweeted threat to General Motors about one of its cars: “Make in USA or pay big border tax!”…

Days before Mr Trump’s inauguration, executives, investors and traders, as well as protectors of corporate reputation, are all rapidly having to get used to a president willing and able to bypass the traditional setpieces and media gatekeepers, to share thoughts on specific stocks, sectors and policy plans…

“Because he uniquely uses this medium to speak directly for the first time to everyone at once and the impact of his voice is so large as the president, it obviously offers unique opportunities,” says Ian Rosen, chief executive of StockTwits, a social media platform to share ideas between investors. “We are getting a tremendous amount of discussion about the effect of this.”

Trying to mine social media for market moving sentiment is not new, nor is focusing automated tracking tools on the chatter of famously successful investors, such as George Soros and Carl Icahn… professional investors primarily hedge and quant funds have in recent years developed sophisticated algorithms and other procedures to track social media, hoping for the coveted “edge” on the rest of the pack FT * *


China Equities – China’s Second Stock Link Is Changing How People Buy Its Shares

China’s second stock exchange link with Hong Kong is accelerating a change in how overseas investors access the world’s second-largest equity market.  Foreigners are selling the Chinese shares they hold under the Qualified Foreign Institutional Investor program and buying them back using the new Shenzhen-Hong Kong Stock Connect, according to market participants. The shift may partly explain why some mainland equities have seen heavy purchases through the link even as their prices dropped. Among the 10 Shenzhen-listed stocks bought most through the connect on its Dec. 5 debut, just two rose on the day…

The link to Shenzhen’s $3 trillion market has left international equity investors with one less reason to use the 14-year-old QFII program, which comes with higher expenses and stricter rules on re-patriating money. While the shift doesn’t yet mark QFII’s demise, foreigners are now more likely to use their quotas on other investments including bonds. B


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