LOST Spending: Apparently Getting Through Purgatory Ain’t Cheap

on Friday, May 28, 2010

I am sure most of you, much like myself, were confused, bewildered, and left with your head spinning last Sunday at the finale of LOST.

I began reflecting on the last 6 years and what has happened. I first thought of all the money I’ve spent the last 5 years on food, drinks, and cleaning products while hosting weekly LOST parties at my house.

We went back and watched the very first episode and began discussing how the characters got from that point to the finale and everything that happened in between. Whatever your theory of what the “Island” is, I began thinking of the obscene amount of money people spent on studying it, protecting it, and trying to destroy it.

First the Dharma Initiative built 10 elaborate stations in order to conduct research in various fields such as zoology and psychology. Most of these stations were built pretty far underground (and underwater). These stations would have cost any where from $5 - $50 million to build and equip. They needed an army of people to build and maintain these stations. They recruited the most brilliant people in the world, like Juliet, to conduct the research at each station, which I am sure wasn’t cheap considering most probably earned a minimum of $350K a year. They also needed teachers, mechanics, doctors, janitors, engineers, security, etc. in order to maintain this self-sufficient society. The Dharma folks had all of their supplies they needed (yes – beer is a necessity) dropped on the island periodically. They apparently had enough money to continue to deliver supplies to the island well after their people were dead. They even had their own submarine to get to and from the island! That alone would have to cost a minimum $250 million.

Then there’s the wealthy business man Charles Whitmore. He must have spent over $500 million between large freighters, helicopters, fake planes at the bottom of the ocean with a few hundred dead people, and his army of personnel doing his bidding – doctors, scientists, crazy ex-military commandos, geo-physicists (that look like Tina Fey) and experts in almost every field imaginable.

So in all, “protecting” this island has been a multi-billion dollar venture. So who was fitting the bill for all this?

If Whitmore and the Dharma Initiative would have utilized Source One’s procurement services they could have still saved the island, made it to purgatory, and ultimately to heaven, while spending 20 – 30% less!

I guess if you can control time and space money is no object – so I’m going to get to work on that!
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The Stock Market Wild Ride

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The Dow Jones continued its wild ride yesterday. According to Wednesday’s New York Times, “after days of sudden losses and reversals in the market, investors rallied around a rare bit of good news. The Chinese Government dismissed reports that it might pare its European investments given the debt problems gripping Europe.”

On Wednesday, the Dow fell below 10,000 for the first time since February 8th. According to MarketWatch.com, “analysts said stocks seemed to react to a late-day dip in the euro below $1.22, possibly triggered by reports about China's commitment to European debt.” Wednesday’s Financial Times had said that China was “reviewing its euro-zone debt holdings in the wake of Europe's financial problems. China's State Administration of Foreign Exchange, which manages the reserves, has expressed concern about its exposure to the five euro-zone markets of Greece, Ireland, Italy, Portugal and Spain.” The increasing tension between North and South Korea has also added to the nervousness in the market.

However, yesterday saw a major rebound as the Dow Jones added 285 points, or 2.9%, to finish the day at 10,259. Quoting from CNN Money this morning, “U.S. stocks soared Thursday, with the major indexes gaining about 3%, after Chinese officials dismissed reports that they're reviewing their nation's investment in European bonds amid concerns about the continent's debt problems.”

What is confusing people is, according to the New York Times yesterday, “the wide swings without any particular conviction.” The article concluded that, “the market is now dominated by momentum trading.”

We should not expect this volatility to end any time soon. According to Guy LeBas, chief fixed-income strategist for Janney Montgomery Scott, quoted in yesterday’s New York Times, “it is not even a day-to-day, it is kind of an hour to hour market.” We saw a nice “bounce” upwards yesterday, but this is symptomatic of the pattern we are seeing. Expect more of the same; the only relief could come as we get into summer and traders take vacation. This might be a steadying influence.
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Corn - Commodity Speculation Report

on Thursday, May 27, 2010

According to Hightower, “positive price action late last week appears to be setting a supportive tone in the corn market this morning despite a sharply higher dollar and sharply lower equities. Traders indicate that China demand and a lack of sellers in futures and cash markets are the main supportive factors.”

Aya Takada, writing in Bloomberg.com's Businessweek on May 25th says, “China, the second-largest corn consumer, has booked almost 1 million metric tons of imports from the U.S. and will probably buy more, the U.S. Grains Council said. That would be the biggest purchase in 14 years.”

Additional support is coming from the USDA Weekly Crop Progress Report. According to agriculture.com,“the USDA estimated U.S. corn 93% planted, ahead of 80% a year ago, and a 89% five-year average. USDA rated the corn crop as 5% very poor-poor, 24% fair, and 71% good/excellent.”

Hightower cites the weather as an additional supportive factor. “Weather got mostly dry and warmer over the course of the weekend in the US. Hot weather is forecast across the region for at least the first half of this week with scattered mostly light showers in most of the area over this period.” This outlook is viewed as supportive by most traders.

So what should we expect going forward? According to Jason Simpkins, Managing Editor of Money Morning, “corn prices have slumped some 24% since January and more than 50% since hitting a record high $7.65 a bushel in June 2008. Now they are being further threatened by potentially the largest corn harvest in history.” Whilst high export potential and a stronger dollar may help to sustain prices in the coming months, the combination of the European debt crisis and the possibility of a bumper crop should exert downward pressure. Expect to see prices steady or slightly down in the coming months.
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Global Crowdsourcing- Mass Appeal or No Deal

on Wednesday, May 26, 2010

I recently found an interesting article on crowdsourcing and wanted to share with my fellow out-sourcerors. First, let’s look at what crowdsourcing is.

Crowdsourcing is exactly what it sounds like, outsourcing tasks to a large group of people. For those of you stuck underneath a rock, crowdsourcing has been utilized by large companies for years for such reasons as collaborating on product developments, understanding customer needs, creative solutions, or even task completion.

To help understand how crowdsourcing can be utilized, let’s look at Amazon.com’s website, http://www.mturk.com/, Mechanical Turk. This site allows subscribers to post tasks and outsource a job to anyone. It allows anyone to create an account, search for HITs (human intelligence tasks), accept a HIT, and complete the task. Once the requestor approves the work submitted the payment is deposited into an account for the worker. Such tasks include translation, website ratings, product ratings, and surveys. Current compensation on Amazon’s site ranges from a penny to approximately $13.00. Also vice versa, the site allows you to create HITs as well. It gives you a video tutorial and shows you how to optimize MTurk for the most effective results in asking workers to complete tasks.

Now that we are connoisseurs of crowdsourcing, let’s take a look at an article I found called “Crowd Sourcing the World” on TechnologyReview.com. The article explains the fundamental idea of crowdsourcing and Nathan Eagle’s newest project, txteagle.

Txteagle is outsourcing crowdsourcing, so to speak. This new project, similar to Mechanical Turk, will outsource and distribute tasks but via cell phones to the poorest and most underused work forces in the world. This will allow workers in foreign countries to participate in answering questions via text messages, audio clips, or video messages. Some of the benefits this project may offer are:

  1. Greater efficiency in the translation of smaller dialects and languages
  2. More reliable translations of smaller dialects will allow for localization of cell phones therefore making way for advanced technology
  3. Transcription/Translation would be cheaper then hiring an outside company
  4. The tasks provide an income to workers in developing nations
  5. More proficient ratings of local search results/relevancy allowing for market penetration
  6. Local blog/news and survey access for market research and up to date information

Although this may seem like the greatest idea since sliced bread let’s take a look at a few of the cons:

  1. Quality control is hard to, well...control. The level of accuracy for each answer will always be discretional since it’s a human answer. Even incorporating complicated algorithms to analyze the accuracy of an answer will never be 100% accurate.
  2. The targeted developing nations are regarded to as “developing” for a reason. Penetrating a third world workforce is great but not if no one can afford a cell phone or if they don’t have access to one.
  3. Also, most widely used cell phones in undeveloped nations would be very simplistic given the lack of technical infrastructure and knowledge. Would the capabilities of these third world cell phones be sufficient for a completion of such tasks? Or would the size of the screen or character limits inhibit the accuracy of the answers?

Although this new gig sounds fancy, I'm not completely sold that the main idea behind it is to help third world countries but more or less it's to keep costs down for companies.

So you tell me, is this another shrewd attempt at exploiting the poor by handing off elementary level tasks and providing little pay to workers? Or is this an inventive idea for a next generation look into unknown markets?

Let me know your thoughts!

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i-want cell phone!

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With all the buzz around new devices: i-phone, my phone, your phone, and new applications, services, promotions...it's a wonder business managers are crazed with decisions on which equipment to purchase, which provider to use, and which plans to implement.

Each provider will tell you why their network and equipment is the best and perfect for your business.

The first and most important question for managers to ask is what does the employee really need to get the job done?

Here are a few things to think about:

Voice plans
  • Talk time requirements and coverage

Data plans

  • Bandwidth requirements and coverage

Bundle plans – voice and data

Features and other applications

  • Texting
  • GPS
  • Equipment Insurance
  • Other pertinent features or apps
  • What features should be blocked

Security

Equipment Ease of Use

Financial investment and Cost of Ownership

  • Equipment purchase
  • Monthly recurring charges
  • Ongoing network developments and end-user training

Network Requirements

  • Operating systems (BES, Android, IPhone, Windows, etc)

Liability – corporate vs. individual employee

Businesses should also consider implementing a mobile policy and encourage formal compliance. Mobile policies not only produce a financial savings, but can help ensure employees are using company equipment for business purposes.

Mobile policies will all promote safe and secure use of equipment. Don't text and drive.

For more information on mobile policies or help managing your cell phone fleet, please visit Source One Management Services, LLC at http://www.sourceoneinc.com/.

If you have no interest in what you are paying or what your employees are doing, then I would recommend purchasing the Versace Unique!

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What's Up With The FCC?

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On May 17th Boston.com reported that Verizon forgave the balance of a $18,000 cell phone bill. The customer’s son tethered his cell phone to a laptop to connect to the internet which accumulated $18,000 in charges. It looks like the FCC has already begun to help with this issue. Here’s an excerpt from their May 25th 2010 Announcement:

“… the Consumer & Governmental Affairs Bureau of the Federal Communications Commission (Commission) released a Public Notice (Notice) seeking to gather information on the feasibility of instituting usage alerts and cut-off mechanisms similar to those required under the European Union (EU) regulations that would provide wireless voice, text, and data consumers in the United States a way to monitor, on a real-time basis, their usage of a wireless communications service, as well as the various charges they may incur in connection with such usage (e.g., roaming services, voice service “minute plans,” text message plans).”

HmmmOk. So what are the European Union regulations? A few rules that I really like are:

"...per second billing after the first 30 seconds for calls made and immediately for calls received."

"…A cut-off mechanism once the bill reaches €50, unless they choose another cut-off limit (recently, a German downloading a TV programme while roaming in France faced a bill of €46,000). Operators have until March 2010 to put this cut-off limit in place. "

It seems like these types of usage regulations in the US should be a "no-brainer." But I’m sure our carriers will come up with an amazing story as to why it would be unfair for them to have to do this.

**Peace . Love. and Blackberries**
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Futurecast

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Since we deal in many markets every day, people ask Source One about what we are hearing from suppliers and clients relative to the economy. Basically, there have been four major drivers of the economy during the last year - Government Stimulus, Government Hiring, Exports and Emerging Markets. Let's look at each one of these.

Government Stimulus - 1 1/2 years ago, the US / global economy was in coronary failure. The government applied paddles in the form of $2+ trillion of government and Federal Reserve stimulus. You would think that $2 trillion would revive the patient. It barely put a blip on the screen. Industrial production has fallen April 09 - April 2010 by 1.3%. Not the result you would have expected. In addition, the government needs to get its fiscal house in order. This leaves little room for additional stimulus. For a little humor, here is my plan to balance the budget.

Government Hiring - a big chunk of money went to bail out the states last year. States either maintained or increased employment levels. So far the money is not coming from the Feds this year. Estimates are for up to 2 million government pink slips in the upcoming year.

Exports - bright spot in the economy for the last few years. The weak dollar made US goods cheap overseas. Now the Euro is tanking. This will make our exports more expensive and will dampen growth for China and the US. The double whammy to corporate profits will come when foreign sales are converted to US dollars. For years, US companies have realized outsized profits from the currency exchange gains. I suspect that in future quarters you will hear corporate execs blame the strong dollar for profit misses.

Emerging Markets - emerging markets will continue to do well, but growth will be a little lower due to slowing European and US economies.

With interest rates at historical lows, economists forecasted rising inflation. How can manufacturers raise prices with such low capacity utilization? Higher interest rates will result from increased risk associated with sovereign default and not from inflation. Governments bailed out the banks. Who will bail out the governments. Higher rates will have a slowing effect on the economy.

Higher taxes seem certain in the future as all levels of government look for new sources of revenue to get their fiscal house in order.

Some people might see this as a pessimistic view. I consider myself an optimist and a realist. If you face reality, you can take action now to prosper in the future. As certain markets decline, others do well. There will be great opportunities in servicing aging baby boomers. We see many of our pharma clients doing well. Education is seeing boom times as people retrain for the future. Many technology sectors like the Internet will continue to grow and provide opportunity. At Source One, we use our knowledge of markets to help our clients to obtain a best in class pricing for purchased goods and services.
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Soybean Oil - Commodity Speculation Report: Updated

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Update from May 1oth Commodity Speculation Report for Soybean Oil.

Soybean oil futures continued to drift downwards last week, closing below the key support level of $0.37. The market still looks extremely “bearish,” continuing the slide that started during the middle of April.

Factors contributing to the expected downward trend in the market are:
  • According to Refined Oils Weekly Wire, (published weekly by Bunge for its customers), “corn planting progress came in at 87% and beans at 38%, both still above average. Corn conditions came in as favorable, 57% of corn planted is in ‘good’ condition.”
  • We have previously considered the potential effects of the biodiesel tax credit passing as a “bullish” factor, but according to Refined Oils Weekly Wire, it is looking less and less likely that it will happen before June, exerting potential downward pressure on the market.
  • The outside markets have been under considerable pressure over the last week. The European economy continues to look “fragile,” adding pressure to the domestic US markets.
Conversely, factors which might turn this market around might be:
  • According to Bunge, the agricultural markets have shown a downward trend in the last few weeks, together with most of the financial markets. “Bearish sentiment has been a consistent theme of late and as a result the markets (especially soybean oil) are much oversold. Thursday’s strong close in the face of outside market turmoil was a positive sign going forward.”
  • Soybean oil exports out of the US into China are likely to increase as Argentina continues its’ dispute with China.
This writer believes that, contrary to the last report, a number of “bearish” factors have taken over the market in the last week. The Dow Jones rally has not sustained itself and crude oil continues to struggle to hold a level above $70 / barrel. The European debt factor continues to exert considerable downward pressure on all US markets. To this end, it is unlikely that the soybean oil market will make any kind of serious rally in the foreseeable future.
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Wheat Market - Commodity Speculation Report: Updated

on Monday, May 24, 2010

Update from May 14th Commodity Speculation Report for Wheat.

Quoting Bloomberg.com, “wheat fell for the sixth straight session after rain boosted prospects for winter varieties in the southern U.S. Great Plains. “The big news in the wheat business is the great rains,” said Darrell Holaday, the president of Advanced Market Concepts in Manhattan, Kansas. “These are rains we don’t usually see this time of year. It was just perfect.”
According to the Hightower Report last week, July wheat has fallen close to the lows of April, driven down by several factors:
  • The beginning of the winter wheat harvest
  • A bullish crop expectation
  • Anticipated low export demand, fueled by the debt crisis in Europe
  • Favorable weather in the Southern Plains to support the early harvest
Cindy Snyder, writing in Times-News Magic Valley.com , states; “wheat growers and market watchers who were hoping to find a reason for prices to rally in the coming months were disappointed by the latest revision to the world’s grain balance sheet. In the same article, Jon Marcus, a trader with Lakefront Futures and Options said in a press conference call following the release of the May world agricultural supply and demand estimate, “there’s no reason for wheat to go up.”

Further, according to weeklytimesnow.com, coupled with near-record global wheat stocks, Australian farmers face a grim outlook in the immediate future. According to the CBH Group wheat trading manager Chris Brown, “a lack of storage in the Black Sea region meant countries, including Russia, the Ukraine and Kazakhstan, will have to dispose of their wheat straight after harvest. Mr. Brown said cheaper, but inferior quality wheat, would flood Australia's traditional markets. On top of that, a relatively low euro would result in cheap EU wheat hitting Australian markets.”

The market still seems very bearish to this writer. Cheap exports from the old Soviet states means that export demand from both the US and Australia is expected to be considerably less than in the recent past. When you factor in continuing record stocks in both the US and the World and another bumper crop, it is hard to see anything that can take this market back up. Economic uncertainty in Europe will continue to exert downward pressure on an already uncertain market.
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Palm Oil - Commodity Speculation Report

on Friday, May 21, 2010

The price of August delivery palm oil rose to $754 / metric ton (2,476 ringgit); this is the biggest one day increase since April 23rd. The primary reason for the increase, according to Palm Oil HQ, was “short covering and fresh buying interest as crude oil rebounded, trade participants said.”

A further factor in the increase was a pickup in demand from China, the largest consumer of edible oils. According to bloomberg.com, “Malaysia’s palm oil exports rose 7.1 percent to 775,995 tons in the first 20 days of May, with higher shipments to China and India offsetting lower deliveries to Europe. Shipments to China and India gained after slumping in April, when the two countries switched to soybean supplies from South America. The pickup comes after China on April 1 banned imports of Argentine soybean oil, saying quality standards were breached.”

Slumping shipments to the European Union have been caused primarily by the combination of the reduced purchasing power caused by the debt crisis and the weak Euro (the ringgit has gone up 24% against the Euro in 2010), which has meant a drop in exports of between 27% - 40%, depending on which source you believe.

Quoted on Bloomberg.com, Arhnue Tan, a senior analyst at ECM Libra Capital said that “while the numbers have come in positive all month, crude palm oil prices are still quite weak, having reached the lowest in more than three months this week.”

This blogger believes that the price of palm oil has probably “bottomed out” for the foreseeable future. The combination of continuing increased demand from China and India, together with the demand to support the production of biodiesel from Europe and India will send prices upwards, as countries seeks to reduce their reliance on more traditional sources of power. According to palmoilprices.net, “crude palm oil prices are expected to continue its’ rise as demand grows.”
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Crude Oil - Commodity Speculation Report

on Thursday, May 20, 2010

Crude oil prices for June dropped to $67.90 a barrel on the New York Mercantile Exchange, the lowest level since September 30th. Ann Koh wrote on bloomberg.com yesterday that “crude oil dropped for a seventh day, its longest losing streak in five months, on concern gasoline demand is slowing in the U.S. and as investors delayed buying commodities on speculation the European debt crisis will worsen. Oil slumped to its weakest level in seven months after the euro touched a four-year low earlier today as European nations struggle to meet austerity requirements.”

As the euro continues to weaken, trading at a 14 month low against the dollar and U.K. trade data shows a larger than expected trade deficit. According to The Hightower Report, crude inventories at Cushing, Oklahoma, where New York-traded West Texas Intermediate oil is delivered, rose to a record high last week, according to the Energy Department.

Gordan Kwan, the head of regional energy research at Mirae Asset Securites Ltd. in Hong Kong, was quoted on Bloomberg on Monday, “at best, oil will only bounce back to $70 a barrel, and drift between $70 and $75 until the euro crisis fears have subsided somewhat. Summer demand for gasoline will be positive, so that’s another excuse for a technical bounce for oil prices.”
So where do we see prices going in the future? Keith Kohl, writing in Energy and Capital, does not “see prices remaining below $70 per barrel for much longer,” because, “below a $70 / bbl price tag, new investments simply won’t be as attractive”, despite recent heavy losses.

This blogger sees oil prices rallying, probably climbing up to around $75 per barrel as demand increases to meet summer vacation travel needs. It is likely that it will sustain these levels through the fall, with the potential to fall back down to the $65 range by the beginning of the winter.
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Is WiMax the next BetaMax?

on Wednesday, May 19, 2010

A turf war is looming in the wireless world, but whether there will be a winner or loser or neither remains to be seen. I’ve blogged before about the impending conflict between WiMax and Long Term Evolution (LTE). The time is quickly coming to see what will happen when these two technologies begin truly competing.

Like BetaMax in the home video market, Clearwire has been first to market the 4G world. Clearwire has made good progress deploying WiMax in the past 2 years, reaching 971,000 subscribers by the end of Q1 and expanding its coverage to 50 million people. Their ambition is to continue the trend and expand coverage to 120 million people and by the end of the year and have just announced plans to expand to 15 additional major markets this summer.

Clearwire is hedging that they can penetrate enough of the market -via attractive pricing and spending more than $3 billion on their network- by the end of this year when telecom behemoths AT&T, Verizon, and T-mobile will begin rolling out LTE.

LTE, the VHS of 4G and running on GSM networks, is likely to gain an advantage over WiMax by having better exposure to customers domestically and abroad. This higher rate of adoption will be a significant factor in their potential to wipe WiMax out for good. If there is to be only one 4G technology to rule them all, widespread adoption will be the the deciding factor and LTE will easily be the victor on that front.

Nothing may happen for a while. For now, WiMax is firmly rooted in the broadband space while LTE will primarily play in the wireless space. This will likely allow the two technologies to compete for some time until those two arenas inevitably merge at which point I think we'll see a single 4G technology dominate.

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Worthy of mention, Clearwire has recently changed the terms of their agreement with Intel which allows them to exit their agreement to continue using WiMax with 30 days notice –so maybe it won’t be competition that does WiMax in, but that’s a different blog post altogether
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Supply & Demand Chain Executive 100, Source One

on Tuesday, May 18, 2010


Source One is pleased to announce that it has been awarded the Supply and Demand Chain Executive 100 Award for 2010. The 2010 Supply & Demand Chain Executive 100 are supply chain solution and service providers that are assisting their customers and clients achieve supply chain excellence and prepare their supply chains for the post-recessionary return to growth.

"As the economy makes tentative steps toward recovery and growth, our readers are turning to Supply & Demand Chain Executive to learn about solutions and best practices for enabling business expansion through supply chain excellence," said Andrew K. Reese, editor of Supply & Demand Chain Executive. "With this year's Supply & Demand Chain Executive 100, we highlight a broad range of supply chain solution and service providers that are helping to position their customers for the 'New Normal' economic environment."

This is the 5th consecutive year that Source One has been awarded this honor.

Read more about: Source One's 2010 SDCExec 100 Award
Visit: Supply and Demand Chain Executive
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More Government Idiocracy

on Friday, May 14, 2010

Here is my favorite article of 2010 - "Drug War Has Met None of Its Goals". I love government programs that don't meet any goals. I love it even more when they continue for 40 years, cost $1 Trillion, hundreds of thousands of lives and lots of people go to jail.

It gets even better when the jails are so full with non-violent drug offenders that we have to release violent criminals early to make room for more non-violent drug offenders.

Need I say more? Read it and weep.
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Collaboration Can Be Key

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Obama is asking us to all work together to help save our economy and bring more jobs to Americans. A recent commentary indicated that the outskirts of some cities and towns have been hard at work achieving this goal through collaboration. For example, outside Seattle 14 cities and one county pool their resources and funding to coordinate affordable housing near mass transit. Chicago area municipalities were hit hard during the 2009 foreclosure crisis with 41,321 foreclosures. By working together with outside groups and overcoming the trials and tribulations of local politics, the municipalities were able to put together a plan for affordable housing near mass transit and ensure people are able to get to jobs. Although they were denied for federal stimulus funding, they are moving in the right direction. Allegheny County in PA goes beyond providing affordable housing, and they collaborate with Pittsburgh for shared services like police and fire departments.

There can be success with collaboration. Most companies (or cities and towns in this case) do not have the time, resources or tools to get results on their own, but by working together results and savings can be achieved. Source One provides that expertise and collaborates with their clients on a daily basis because it’s known we can achieve more together then we can apart. I would hope that this process continues to expand to more areas of the US so that more people can benefit from the results.
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Wheat Market - Commodity Speculation Report

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According Louise Gartner, writing for Agriculture.com, despite the mayhem in the financial markets last week, “wheat managed to keep price action relatively under control. We did see some price choppiness, but at least it wasn't violent price swings like we saw in the equities and financials.” Gartner believes that fundamentals in wheat continue to look increasingly bearish as the harvest draws near in the US southern Plains, and the weather conditions continue to be favorable. The cold weather that moved south last weekend did not get cold enough to damage the crop and it appears frost scares are over for the season.

Hightower reported that Tuesday’s crop production and supply and demand reports from the USDA were perceived overall as bearish. Whilst wheat supply and demand numbers were unchanged for 2009 / 2010, the crop production report for winter wheat showed production around 25 million bushels higher than anticipated. Ending stocks also came in higher than expected, putting them at the highest levels since 1987 / 1988.

Another recent blog entry, Closing Grains Commentary May 11th, explains “Coming into the week, we were hitting two-month highs (5.17 July wheat). On Monday we saw a large correction and July finished 17¾ lower.” We have continued to see a drift downwards since that time. Crop conditions continue to show wheat in good shape. There is a huge carry over in the futures market and a discount in the basis. Further, according to Justin Kelly of EHedger LLC , despite an early rally this morning, a sharp selloff later in the day left the market 1 ¾ lower in the July Chicago contract. “Fundamentally the wheat market is losing export business and still has a surplus of supplies worldwide. This will make the Chicago wheat contract susceptible to an even further break despite the occasional short covering rally.”

It is the opinion of the writer that with harvest just a few weeks away and no production problems on the horizon, we should expect a downward turn in the market. Spring wheat planting have also started well, with good moisture in most places. We continue to have large volumes of old crop in stock; there continues to be plenty of wheat in the US and the World.
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How Private is Your Privacy?

on Thursday, May 13, 2010

I’m sure just about everyone reading this blog has a Facebook page or a MySpace page or a Twitter account or whatever else is out there for social networking. Does anyone find the privacy settings to be utterly confusing and sometimes misleading? I can tell you from my experience that I went through the whole list and marked no notifications and privacy on almost everything and would go back to find out I did something wrong or that my settings were somehow reverted to non-private! Some people believe this is done on purpose for ease of information sharing across the internet. An article on CNN.com talks about how people are getting tired of their information being shared, such as their preferences being used for solicitation purposes. Then again how private is private on the World Wide Web?
With the advantages we receive from technology today come disadvantages as well, you cannot receive all the fun perks and not see some negative aspects as well. Recently I was informed of a site called Spokeo.com (from a Facebook post from a friend no less) that collects information from various sources on the internet and aggregates the data. For a low annual fee you can access all kinds of personal information concerning just about anyone who has used the internet for various purposes. I first thought the main source was social networking type sites so I searched for my fiancĂ© who does not have any type of page on any of those sites. Sure enough, he came up on Spokeo.com and with more information than me! Not only is this scary but it is a violation of our privacy. Then again how can we claim privacy and then post a message to our 245 friends about what we had for breakfast this morning, is this a double edged sword or a real issue? The article from CNN talks about the coming wave of people quitting Facebook and why everyone should. But I think it is a misconception that by deleting your Facebook account you are suddenly safe from information sharing. The article even states that you need to follow this multi-step process to completely remove your information from Facebook, because just deleting your account still allows Facebook to catalog your data such as photos and posts. What do they want with my pictures from my vacation in Cabo anyhow!? Anyway, I think this is just another trend. People are very addicted to social networking and if they aren’t getting their fix on Facebook they will go to Twitter or MySpace or whatever else is out there. You can read more about the Facebook privacy policy here and tell me how you feel about your rights.
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Creative Sourcing Solves Government Fiscal Problems

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There is so much debate about Government budgets and the size of the national debt. After much thought, I have come up with the following plan to eliminate the budget deficit within the next year and the national debt over the next five years. My plan eliminates $2 - $3 trillion from the Federal budget and can be implemented immediately.

Health Care (estimated savings $1 Trillion annually) - 40 years ago, there was a device on Star Trek called the medical tricorder. Just wave it over someone and in seconds it could diagnose what was wrong with them. Who needs expensive equipment like MRI machines? Cost $44.99 for the official model or you can get the iPhone app for a few bucks.

And then there's the Ultrasound Bloodless Surgery. Fixed up and healed in minutes. Just think about all the hospital and pharmacy costs that will be saved.

Defense (estimated savings $500 Billion annually) - In Avatar, the Na'vi enlist the help of Pandora's animals to beat the US military. Let's get the animals on our side before someone else does. As backup, we can put Ironman on a $1 Billion retainer. Tony Stark has already privatized world peace.

Transportation, Education, Labor, Housing, Energy & Agriculture (estimated savings $350 Billion annually) - We can all live the Amish way. No driving, grow our own stuff, one room school house and reduce our dependence on foreign oil. If someone needs a house - everyone will pitch in and build them one. For extra money, we can build those Amish fireplaces and sheds and sell them to Greece, Portugal and Spain.

Homeland Security, FBI & CIA (estimated savings $350 Billion annually) - Sherlock Holmes has this stuff down to a science. Since Sherlock and Ironman are the same person, this is a no brainer.

Space Program (estimated savings $10 Billion annually) - get NASA to enlist blue whales. The whales could swallow the astronauts and shoot them to the moon through their blow holes.

Tax Sex and Drugs (estimated revenue $ 25 Billion annually) - hey, sex and drugs sell, even in bad times. Why miss out on this steady revenue stream?

You may think that these ideas are crazy. They aren't as bad as some of the things that I have heard politicians propose. What ideas do you have?
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Who Watches the Watchmen?

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Over the last year or so we’ve had a banking crisis, a mining safety crisis, an auto safety crisis, and now an oil spill crisis. Other than pure greed on part of the controlling entities, the commonality between all four of these crises is the incompetence of government regulators.

As these disasters happen, the first response of the federal government is to look for ways to close loopholes in current laws or provide additional regulation that would help fill the gaps. But this overlooks a major issue – our regulators don’t regulate. If the regulators weren’t watching porn at work, or doing coke and having sex with the people they were supposed to regulate, they were simply ignoring the laws and providing as little oversight as possible.

Was anyone fired for this ineptitude? In most cases, no. Instead, the guilty parties were put on paid leave or reassigned. Many go to work for the companies they were supposed to regulate, with new inflated salaries.

I would argue that even firing is not enough. These people should go to jail.

If a police officer gets caught taking a bribe, they go to jail. If a soldier goes AWOL, they go to jail. Why should our government regulators be any different? As a basic tenet, police, soldiers, and regulators all perform the same job function, protecting the welfare of the citizenry. Any corruption of that duty should be considered a crime.

Recently, the Senate voted 98 – 0 to audit the Fed, in an effort to see how bailout funds were allocated and determine whether or not the toxic assets our government bought will make us as insolvent as Greece. I am sure the results of the audit will raise some eyebrows, but I wonder if any heads will roll. As congress meets to talk about additional regulations for the banking, mining, and auto industries, I hope they decide to look inward and ask if they should also be regulating their regulators.
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Commodity Outlook

on Tuesday, May 11, 2010

The global economy has managed to keep on track despite a series of negative events. According to The Hightower Report, Commodity Outlook - 2010.04.26; “The evidence of forward motion is quite compelling with various economic readings flashing positives, corporate earnings showing an improvement in revenues and profits and ongoing evidence that the Chinese economy will continue to expand.”

Further, Businessweek reports; retail sales likely rose in April for a seventh straight month. This rise points to a rebound in consumer spending that is helping to broaden the economic recovery. Economists explain that the largest gain in payroll (over the last four years) may be foreshadowing retailer's confidence in sales growth and the lift in payroll will encourage further consumer spending. “Retail sales are picking up because of income growth,” said Dean Maki, chief U.S. economist at Barclays Capital in New York. “Consumption is going to be growing at a firm pace through the end of the year. We are in a sustainable recovery now.”

In other news, the Colonial Pipeline has recently seen a string of days where a number of requests for shipment of gasoline and distillate products were rejected because of capacity constraints. This news is also contributing to renewed economic optimism. According to Hightower, “Chinese oil demand rose more than 12% in March and according to PetroChina that resulted in a seventh straight month of double digit demand expansion. When one also notes that Chinese copper concentrate imports were 17% above year ago levels and up 27% from the prior month, it is clear that the Chinese economy is not hitting the skids, contrary to many Wall Street predictions last month.”

To summarize; the Bears are suggesting that the significant gains in the stock market (using the 2009 lows as a baseline), are signaling more expansion than can be justified by current economic conditions. However, an alternate point of view might be that concerns over a potential depression were actually factored into the market between September 2008 and March 2009; as such, the market is actually finding a realistic level. One of the few people who saw the US economic crisis coming, International Institute of Management President Med Yones, is now predicting that the economy will begin to recover in 2010.

Let's hope the recovery is here.
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Soybean Oil - Commodity Speculation Report - May 2010

on Monday, May 10, 2010

Soybean oil futures dropped again last week, falling below support levels. Some of the factors affecting the market are as follows:

Bears:
  • Planting progress for corn was reported at 68% which is well above the 5 year average. 15% of the soybean crop has been planted, which is also ahead of the 5 year average.
  • Soy meal consumption continues to be challenged by alternative protein feeds from the bio-fuel industry.
  • The May 6 “meltdown” (the Dow Jones was down almost 1,000 points before a modest recovery), puts the Dow at almost unchanged in 2010. Behind the scenes were concerns over Europe’s debt crisis, particularly Greece, and continuing worries over the stability of the Spanish economy. Possible malfunctions with trading technology played a role as well.
Bulls:
  • Renewable Energy World reports: The past few months have seen production drop off and new investments grind to a halt in the biodiesel industry. In March, the U.S. Senate passed a bill containing the reinstatement of the biodiesel blender’s tax credit (an extension of the US $1 per gallon biodiesel production tax credit) which had expired at the end of 2009. The bill calls for the tax credit to be retroactive to January1st and runs out on December 31st 2010.
  • We could see a passage of this bill before Memorial Day, at which time we will likely see much support in the bean oil complex as it rallies to a closer relationship with Heating Oil.
  • Oil share was steady last week. With the Stock Market selloff on 6th May, the market is viewed as oversold and we could see a corrective bounce.
  • China last month halted shipments of soybean oil from Argentina, the world’s biggest supplier, as part of a widening trade dispute. (http://www.businessweek.com/news/2010-05-06/china-said-to-consider-easing-rules-on-u-s-soy-oil-update2-.html). As such, China, the biggest user of cooking oils, may relax a barrier on imports of soybean oil from the U.S.
  • We should also be mindful of the potential for increased crude oil exports from the US and Brazil.
  • More talk of China purchasing US corn coupled with better than expected export inspections have supported the corn market.
This blogger's conclusions:
  • The Dow Jones has rallied since May 6th and though some continued weakening in the soybean oil market should be expected in the near term, we should anticipate some upward movement in the coming months as heating oil and crude oil are expected to rally.
  • Potential exports to China should help push the market upwards.
  • The price of oil will most likely see a corrective (upward) “bounce” in the coming weeks.
Other references: Refined Oils Weekly Wire, Weekly Publication
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Vegas vs. Wall Street

on Friday, May 7, 2010

People that put money in the stock market are called investors. People that play at the tables in Vegas are called gamblers. With the volatility in the stock market can you really call stocks investments?

Wall Street has become a casino where the odds are stacked in the favor of the "insiders", just as the odds are stacked in favor of the casinos. The average person probably has a better chance of being a winner at the casino than on Wall Street. In a casino, you know the rules and the games are relatively easy to learn. On Wall Street, the rules keep changing and few people really understand the game and many of the exotic investments that have a huge market impact. Even Alan Greenspan admitted that he didn't fully understand some of the derivatives markets.

People buy stocks without realizing how these exotic securities can affect their investments. CDO's and other derivative contracts were largely responsible for the depth of the 2008 market crash and the subsequent recession. The government bought the toxic paper from the banks to shore up the financial system. Now all of this toxic paper, among other things, is causing government balance sheets to come into question...possibly leading to global currency contagion.

Many people that invested money in the stock market over the last 10 years are still under water. I know people that were just getting their money back from 2001 when the 2008 crash happened. At the start of the recent volatility, the same people were hoping to get back their 2008 crash money. Is this investing or gambling? Market professionals continue to tell people to stay in for the long haul, while they are making huge commissions and bonuses on your account as you are losing money.

Yesterday, computers executed trades that caused the market to fall 700 points in 15 minutes. Trades that caused a loss of 60% or more are being reversed as computer errors. What about the people that lost 50%, 40%, 30% etc. At this time, it is not 100% clear exactly what caused the problem.

When it comes to Vegas, I know the rules and the odds. When it comes to Wall Street, even the people who run the markets aren't always sure about what is going on. Should we continue to play their game in their casino or are people just optimists?
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How much is your Garden worth?

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Have you thought about starting your own garden to save some money this summer? Having your own small garden or container garden continues to grow in popularity. Even the White House partakes in gardening. But really farming on a small scale or “gardening” really is not anything new and it’s been feeding families for a very long time. It takes a little upfront investment, but you can reap the awards of your hard work with fresh fruits and vegetables all summer long. A small garden in your back yard or a container garden can cost you about $100 to get started. You need some gardening tools, soil, fertilizer, and some plants of your choice. If you want to save some additional money, think about using seeds in your garden or containers (try something like lettuce) and make yourself a salad. According to one article, the Department of Agriculture indicates the savings is significant for planting your own garden, at least $1000 worth of vegetables for a $100 investment. My personal opinion is it’s definitely worth the investment if you enjoy it. You feel good and proud when you are able to bring those home grown vegetables to your table. But don’t forget gardening is work, and you won’t see the savings if you don’t remember to water, fertilize, weed, and battle pests throughout the season.
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Strategic Alliances

on Thursday, May 6, 2010

I just thought I would take a few minutes to touch on an important topic, strategic alliances in business. Strategic alliances can be formed with one or more partners in a firm and can even consist of a network of companies. These alliances can be formed to alleviate risk financially or within a service related business among other circumstances. Not only can a strategic alliance help all parties involved share the risk but they can also share in costs. Risk management is actually one of the most common reasons to join forces with other companies. Expansion in services and talents are also a good reason. Here at Source One we have partners that help us strengthen our abilities to provide the best possible service to our clients. Strengthening the business muscles in this case can also help a company to enter into new markets with more ease than had they tried to alone. Partnering with foreign alliances can make this collusion even less complicated. Additionally, within a strategic alliance companies can manage uncertain situations better. By collaborating with other firms companies can pursue strategies with more force if they have the proper backing they need. Finally it is important to remember to set clear guidelines when forming these types of alliances. Companies can easily fall into situations where information sharing becomes legally complicated. The idea of the alliance is to share resources not hoard them. However companies must know when to protect their assets and when to share them with others.
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Crystal Ball - Greece's Meltdown

on Wednesday, May 5, 2010

Can current events predict the future? Did bankers, SEC officials and credit agencies foresee the excesses that led to the bursting of the real estate bubble that was largely responsible for the current economic downturn? Even though many of the banking, government and agency executives that testified before congress denied foreseeing the meltdown, is it possible that they were too busy focusing on their own material gain and maintaining the status quo rather than monitoring credit quality and standards?

What about Greece? Years of deficit spending and fiscal irresponsibility has resulted in government debt being downgraded to junk status. Does this sound familiar? Has the United States been doing the same thing at every level of government - Federal, State and Local? If you are the type that likes to keep their head in the sand, then don't look at this link. The US debt clock pegs our national debt at almost $13 trillion. That's about 90% of GDP. Greek's total debt is about 120% of GDP. With trillion dollar deficits forecasted for the US, into the foreseeable future, we are not far away from Greece. By the way, the debt clock pegs our total debt at almost $56 trillion and unfunded future liabilities at a staggering $108 trillion! Are you getting sick yet?

So everyone has been living off the "fat of the land" for years just as the Greeks have. Now the day of reckoning has arrived and the Greeks are being asked to accept austerity measures to get their fiscal house in order. How do people respond when they have to face reality? Thousands of Greeks are taking to the streets and people are rioting. Three people are dead so far.

Are we getting a sneak peek at our own future reality? Based on the current trend in government deficit spending, I don't see any real strategies being deployed that will change the trend line. Does government have the discipline to immediately institute cost cutting measures to reduce the rapid growth of the deficit? Are we going to put off "dealing with reality" until we go broke? Is a Greece like implosion in our future? What do you think?
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States Can Benefit From Strategic Sourcing

on Tuesday, May 4, 2010

As of May 1st many teen drivers in New Jersey are required to display red stickers on their license plates to comply with Kyleigh's Law. The stickers allow police to readily identify them as new drivers. Many New Jersians were upset about privacy issues. No one seemed to notice that the contract for 500,000 of these 1" x 1" stickers went to a Chicago company (SecureMark Decal) at a cost of $644,000. That's about $1.30 per sticker. According to NJ Motor Vehicles, SecureMark placed the only bid for the contract.

Some state businesses might ask why a local company could not be found to provide the stickers. State residents might question whether or not the stickers could have been purchased at a better price since they will be required by law to purchase the stickers to offset the cost to the state. How many of you think that the state could have gotten a better price? Is 10 cents a reasonable price? Savings about $580,000. Is 25 cents a reasonable price? Savings about $519,000. What do you think?
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