news

• 1 Ready to Go

  There’s little suspense at this point about whether the Fed will raise rates.Atlanta Fed President Dennis Lockhart, a closely watched centrist policy maker, flatly stated last week that he’s “ready for a decision to lift off.” Private economic forecasters surveyed by the Journal see the probability of a rate increase this week at 87%. Futures markets suggest an 83% chance of liftoff as of Monday afternoon, according to CME Group. It’s hard to imagine a scenario in which the Fed would shock markets with a decision to hold rates steady.

• 2 Gradual Guidance

  The Fed’s mantra has been that the precise timing of liftoff matters less than the path for interest rates going forward. Many officials including Ms. Yellenhave repeatedly used the word “gradual” to describe the expected pace of rate increases, but policy makers also appear wary of committing themselvesto anything like their mechanical tightening tempo of 2004-06. Keep an eye on the policy statement and Ms. Yellen’s press conference for guidance on what will drive the Fed’s subsequent rate increases.

• 3 Watch the Dots

  For more clues about how quickly and how high the Fed will raise rates, check out officials’ projections for their benchmark federal-funds rate in the quarterly chart known as the “dot plot.” As of September, policy makers’ median estimate saw the rate rising to 1.375% at the end of 2016, 2.625% at the end of 2017 and 3.375% at the end of 2018, just below its normal long-run level of 3.5%. That suggested four quarter-point rate increases next year. But with U.S. inflation still running well below the Fed’s 2% annual target, officialsmight move their dots down and predict a slower pace of rate increases.

• 4 Out of Step

  Richmond Fed President Jeffrey Lacker has dissented at the Fed’s past two meetings in favor of raising rates. He might get his wish this time, but that doesn’t mean the decision will be unanimous. Chicago FedPresident Charles Evans and Fed governors Lael Brainard and Daniel Tarullo have all expressed reservations about raising rates and potentially could cast dissenting votes. A dissent by Ms. Brainard or Mr. Tarullo would raise eyebrows because the Fed’s Washington-based governors typically vote with the chairwoman, and none has dissented since 2005. For her part, Ms. Yellen said she “wouldn’t try to stifle dissents, and I would even expect some at critical junctures.”

• 5 Nuts and Bolts

  If the Fed raises its target for the fed-funds rate to a range of 0.25% to 0.50% as expected, it’ll use an array of tools to tighten monetary policy in a financial system awash with cash. The Fed has signaled that the details will be announced in an “implementation note” alongside the usual policy statement, and officials will watch closely to make sure those tools work as expected. “If adjustments to policy tools or administered rates subsequently proved necessary to implement an unchanged policy stance, the implementation note could be revised without altering the [Fed’s] policy statement,” according to the central bank’s June meeting minutes.

As 2015 draws to a close at GFIN we wish everyone every success for the New Year.
The last few months have been a mix of enthusiasm and anticipation for our clients and all of us here at GFIN Green as we commenced our relationship. After many months of background work the Managed Account finally launched during November. Firstly clients ‘endured’ the account opening procedure, a requirement of the modern financial system. Jack at GFIN and the administrators at our referral firms worked tirelessly to make this process as seamless as possible, although I am sure it never felt that way for anyone!
On the account management side the investment process was adapted to all our clients’ requirements and also for use on the SAXO platform. While there always will be improvements to be made, a great base has been built for ongoing efficiency and success.
The markets are finishing 2015 in quite an apprehensive state. The much anticipated interest rate increase by the US Fed has occurred, and as I write commodity markets, interest rate markets and stock indices are still adapting to the new economic environment and its likely ramifications. In times like this trading in a systemized way is less problematic than having to make discretionary investment decisions!
After such a positive period from January to the beginning of December where the fund was up approximately 31%, it is a little disappointing but not that surprising that our managed accounts gave back about 6% of the profit in the last month of the year. Depending on when your account started trading will reflect on your account balance. It’s a bit of a “life’s like that” moment that the accounts began trading just as markets began to trade in a choppy range. While the current 6% drawdown from the account high watermark is nothing unusual it never feels good.
Other than the obvious goal of making money, projects for the New Year includes client education and continued development of our investment process and offerings. On the education side we would like to feel confident that clients are able to log in and check their account if they are inclined. While it is debatable if it is a good idea to do this too often, once a client has an understanding of the investment process we feel that all information is “good”. At some stage we are planning a presentation for our clients on the investment process. Armed with this knowledge an investor will be better able to ride out any account volatility.
At GFIN we will be launching an updated website in 2016. On this we will feature more blogs, client education articles and general market information. Until this happens we will continue the Facebook page “GFIN Group – Barwon MDA”. Here we post a limited amount of articles, blogs and results. Please be aware that results posted here may vary slightly from some account results. Also a major initiative will be the launch of our equities managed account, plus a pooled wholesale fund. We are enthused by these developments as they are client driven, which we vainly take to mean that we are doing something right!
Best wishes and safe travelling to everyone over the holiday and festive period from all at GFIN.

Via Finanz und Wirtschaft’s Christoph Gisiger,
Howard Marks, Chairman and founder of Oaktree Capital, warns that investor behavior has entered the zone of imprudence and thinks that China is the biggest threat for the US economy.
If you want to know from Howard Marks which stocks are going to do well next year, you’re going to be disappointed. The chairman of Oaktree Capital, one of the most successful investors on Wall Street, does not need to pretend that he can look into the future. Instead, he focusses on the things that are most important to investing for the long run: risk control, a good sense of market cycles and inspiration which, for example, he finds in the world of sports.
Mr. Marks, we’re at an interesting point in time. For the first time since the financial crisis the Federal Reserve has raised the interest rate. How does the world look like from your perspective at this historical moment?
We’re in a very strange market. Most people are doing a good job of thinking and the consensus is not necessarily wrong today. On one side, the world is a very uncertain place and I think the average investor understands that. Most people are sober and sensitive to all the uncertainty. You don’t see many people who are massively bullish. Nobody is saying stocks are going to the moon. Back in 1999 there was a book published with the title “Dow 36’000” predicting that the Dow Jones Industrial would almost triple. Well, that book is not being re-published today.
And on the other side?
Security prices are not low. I wouldn’t say high, but full. So people are thinking cautiously but they’re acting bullish and they’re behaving in a pro-risk fashion. While investor behavior hasn’t sunk to the depths seen just before the crisis, in many ways I feel it has entered the zone of imprudence.
How do you explain this juxtaposition?
The answer is that they are forced to be buyers by the central banks. The rate on money markets is close to zero and treasuries yield between one and two percent or even negative in Europe. Most investors can’t live with that. They have to move out the risk curve in order to try to get five, six or seven percent. That has induced or forced risky behavior. To me, this is the most important thing that’s been going on over the last few years, and it still is here at the end of 2015.
There are a lot of risks lurking out there: Monetary policy divergence between the US and Europe, a high degree of stress in the emerging markets and the specter of further terrorist attacks. What’s the most important risk for investors?
Academics say risk equals volatility and the nice thing about volatility is that it gives them a number they can manipulate and use in their formulas. But I don’t worry about volatility and I don’t think most investors are worried about volatility. We know prices will go up and down. But if something is going to be worth a lot more in the future than it is today we’re going to buy it regardless. So people don’t worry about volatility. What they worry about is the potential of losing money.
You wrote extensively about risk in one of your recent memos. What does risk mean to you?
Most people think that there is a positive relationship between risk and return: If you make riskier investments you can expect a higher return. That’s total nonsense! Because if riskier assets could be counted on for higher returns than they wouldn’t be riskier. The reality is that if you make riskier investments you have to perceive that there will be a higher return or else you have no motivation to make that investment. But it doesn’t have to happen: If you increase the riskiness of your investments the expected return rises. But at the same time the range of outcomes becomes greater and the bad outcomes become worse. That’s risk and that’s what people have to think about.
Where do you see potential for bad outcomes?
Investors are not doing what they want to do. They’re doing what they have to do. They are like “handcuff volunteers”. Today, if you want to make a decent return you have to take risks. And most people have been willing to do that. And because of that money has flown into high yield bonds and leveraged loans. For example, at one time there were ninety-five straight weeks of inflows into leveraged loans mutual funds.
Now, credit markets have become quite nervous. What goes through your mind when you look at the rising spreads on high yield bonds?
That’s a good thing. If you’re a buyer you would rather buy at a high risk premium than on a low one, everything else being equal. Maybe the onrush of money was too strong, maybe the attitudes were too optimistic. Now people are a little more worried, especially since they already had a little bad experience in Ukraine, in Greece and in China over the summer.
Then again, the consequences of a full blown crisis in high yield bonds could be severe.
The riskiest thing in the world is the belief that there is no risk. When people think there is no risk, they do risky things. By contrast, when people think there is risk than they behave in a safe manner and the world becomes a safer place. That’s why I welcome the recent developments. They remind us that today the risks are substantial and they should be undertaken only with considerable forethought. My dad used to tell the story of the gambler who went to the race track and said: “I hope I break even because I need the money.” The market is not an accommodating machine. It will not go where you want it to go just because you need it to go there. So if you’re talking about money that you can’t afford to lose then you can’t say: “Just give me the highest yield.”
Investors aren’t the only ones who behave riskily. The central banks themselves have placed venturous bets on unconventional policies like quantitative easing and negative interest rates. What’s the price we’re going to have to pay for that?
This is one of the factors that contributes to making the world a risky place today. In the United States, we had seven years of super low interest rates to try to stimulate. That has never happened before. What are the long term effects on the economy? What’s the effect on lending behavior? And, how will that go now that the Fed has started to raise rates? What will that do to the world? The answer is very simple: We don’t know. And anybody who thinks he knows is kidding himself.
Some kind of wild card is the steep fall in energy prices. Has oil reached a bottom now?
There is nothing intelligent to be said about the price of oil, as I wrote in a memo at the end of 2014. Oil prices have been controlled by OPEC (editor’s note: Organization of Petroleum Exporting Countries) for the last forty years. So clearly, the past doesn’t tell you anything about the free market price of oil. There are assets we feel we can value: stocks, bonds, companies and buildings. They all have in common that they deliver a stream of cash flows that can be valued through a proper discounting process. But how do you value an asset like a barrel of oil or an ounce of gold that doesn’t produce cash flow? You can’t!
Oil was one of the most important factors for the financial markets this year. What’s your outlook on the eve of a new year?
Everybody would like to know what’s going to happen a year from now. What the economy, interest rates, exchange rates, earnings and all that stuff is going to. But it’s very, very hard to know. My favorite quotation on this subject comes from the economist John Kenneth Galbraith: “We have two classes of forecasters: Those who don’t know – and those who don’t know they don’t know.”
So how should investors prepare themselves for the next year?
The most important thing to do is to assess not the future but the present. Awareness and understanding of cycles is an essential tool for investment survival. That’s why I always say: “We may never know where we’re going, but we’d better have a good idea where we are.”
Where are we today?
The point is, we had a crisis in 2007-2008. The central banks all moved to stimulate the economies to get them going. But all around the world economies are growing slowly: Europe, America, Japan – and China is slowing down. That’s what’s happening today. The last six years have been slow and most people believe that the next ten or even twenty years will be slow compared to the ‘eighties and the nineties. And I must say, I am pretty convinced that they’re right. I happen to believe that the nineties especially, but maybe also the eighties, were in many ways the best of times and are not going to be duplicated. So in my opinion we’re not going back to a high growth environment.
As a matter of fact, some people fear that the US economy could even fall into a recession.
There will always be cycles and that means there will always be a recession coming. But is it one year away or five? That’s the question! I think we’re going to limp along in a slow growth mode. There is always a possibility of some acceleration. But there is no boom so there is no need for a bust. Booms usually create overexpansion and when it turns out that it was excessive it turns into a bust. Today, I don’t see boom and I don’t see bust. So I don’t see anything that could cause a recession in the short term, at least not in 2016 – and I’m not characterized an optimist.
And how about further down the road?
I don’t think the world has to worry about the US. But it has to worry about China. So if you’re asking me when the US will have a recession then the question is how long will China go without a recession?
How come?
China has been going for the last twentyfive years with superior growth and without a recession. It’s not going to grow 25 years in double digits again. China is going to grow in single digits and it may have ups and downs. And if China has a recession, that’s very significant for the whole world. Looking at the statistics you might say China is not too important for the US. For instance, the percentage of the profits of the S&P 500 (SP500 2053.13 -0.38%) companies that comes from China is just 1%. But a recession in China would have significant effects on other countries we sell to. The US would not be untouched. So if you need a culprit for a future recession in the US then it’s likely China will contribute.
Another concern are weak earnings. Yet US companies are paying out dividends and buying back shares at a record pace. How healthy is that for Corporate America?
One of the worst things is when a business behaves in a short term way. When the management does things which are not desirable just to please shareholders, either to make the stock go up or to hold on to their jobs. I’m not saying that all buybacks and dividends are wrong. But stock prices are on the high side of fair. The Price/Earnings ratio on the S&P 500 today is 19, whereas the post war average is 16. So if I wouldn’t buy the stock as an investor, why should the company be buying it? Don’t they have better use for their money?
Obviously, there seems to be a lack of good ideas.
There is an interesting book called “The Outsiders” by William Thorndike. He follows the careers of eight outstanding CEOs like Henry Singleton of Teledyne, Katharine Graham of the Washington Post, John Malone of Liberty Media and Warren Buffett of Berkshire Hathaway (BRK.A 199259.5 -0.93%). They all were outsiders because they behaved differently from the crowd. For example, when an industry would go through an acquisition wave these CEOs would not participate. They would think: “Everybody else is buying and that’s driving up the price of companies so we shouldn’t buy.” They were called capital allocators and they treated cash as a valuable resource. And today, with the average stock on the expensive side, these CEOs wouldn’t be buying their stocks back.
Those CEOs were also good at investing. What does it take to be successful in investing?
For me, the definition of a great investor is one who performs well in the good times and doesn’t get killed in the bad times. In other words: When the tide goes out he’s prepared because he has a margin of safety in his portfolio. It’s like in the world of sports: Pete Sampras for example, who is widely regarded as one of the greatest in tennis history wasn’t always an exciting player. His highlights were hard to distinguish from his low lights. But that means his worst moments were almost as good as his best moments. That would describe a terrific money manager: Consistent and not too much excitement, no big ups and downs – and that’s what we try to do at Oaktree Capital.
In your recent memo you worte about inspiration taken from the world of sports. What else can investors learn from top athletes?
If you want to be a superior player you have to have self confidence. The same is true for the superior investor. At some point you have to act boldly. You have to say: “This is my conviction” and you have to act on it. You can’t have five hundred different stocks and expect to have a great return because you’ll be diversified into mediocrity. Also, you have to think different from the crowd because if you think the same you act the same and you perform the same. That’s what I call second level thinking. A first level thinker says: “It’s a great company so I should buy the stock”. In contrast, the second level thinker says: “It’s a great company. But it’s not as great as everybody thinks so the price is too high and I should sell.”
In your memo you also refer to the baseball star Yogi Berra. He was famous for saying things like “It’s too crowded, nobody goes there anymore”. What kind of trades are too crowded in today’s markets?
Today, I don’t see any glaring exceptions. Of course, I see some asset classes that are somewhat more attractive than others. But I don’t see things that are dirt cheap or crazy high, except the possibility of social media stocks and technology IPOs. But other than that I don’t see anything glaringly wrong. I just think the whole world is priced for a better future than we have.
So what’s your strategy in this kind of market?
We are living in a low return world caused by the central banks pulling down the risk-free rate to zero. And yet, even though the returns are low, the risks are substantial. That’s why at Oaktree our mantra for the past four and half years has been “move forward but with caution.” The outlook today is not so bad and prices are not so high that they demand complete caution and defensiveness. But at the same time prices are not so low and the outlook is not so good that we should be aggressive. So our strategy is not maximum defensiveness, not aggressive. It’s somewhere in between, but with a significant emphasis on caution. And that means you have to select your investments carefully.

‘Independent’ inquiry after inquiry has resolved that there is no cartel activity operating in Australia between the oil distributors.
Who stands to gain with disproportionately higher prices at the bowser? Obviously the oil companies and the Federal Government.
Why would the government want to allow the companies to allegedly agree among themselves to fix the pump price in their favour? Well the government gets more revenue through the fuel excise tax with a higher price. If you look at the charts below it is pretty plain to see that the dramatically lower oil price over the last two years isn’t all flowing through to the customer.
If we compare the crude oil futures price, the NRMA average unleaded bowser price in Sydney, the Australian Dollar and the CPI rate from December 2013 to December 2015 you will see that there is a big discrepancy against the consumer.
If the lower oil prices were fully reflected at the pump the average Sydney ULP per litre should be more like 109 cents per litre factoring in inflation and the fall in the AUD. Who is pocketing the extra 14.5%? Maybe the Government and the Oil companies some may suggest.

Charts by Barchart.com

Gadgets, breakthroughs and ideas we think will define the state of the art in the year ahead
From artificially intelligent messaging apps to drones that follow you like paparazzi, 2016 will turn science-fiction tech into science fact. WSJ’s Geoffrey A. Fowler and Joanna Stern gaze into our near future.
By GEOFFREY A. FOWLER and JOANNA STERN
December 29, 2015
http://www.wsj.com/video/predictions-2016-tech-that-will-change-your-life/61E049D9-1E84-422D-A1B5-FBA3E2F82274.html?mod=trending_now_video_2
Entering 2016, the future never felt more within reach.
Science fiction will become science fact this year when you take virtual-reality vacations and your dishwasher reorders its own soap. Are you ready for a drone that follows you around like paparazzi?
When we gazed ahead at the devices, breakthroughs and ideas most likely to make waves, two themes emerged. One is liberation: We’re increasingly less shackled, be it to a phone charger or a cable subscription. The other is intelligence: As processing power and bandwidth increase, our machines, services and even messaging apps become more capable.
Here are our best picks for what’s coming, and what you can do to be ready for it.
The long-awaited Oculus Rift virtual-reality headset is slated to arrive this spring. ENLARGE
The long-awaited Oculus Rift virtual-reality headset is slated to arrive this spring. PHOTO: OCULUS VR
Virtual Reality Gets Real
It’s marked on 2016 calendars everywhere: Virtual reality finally gets real. It begins with the scheduled spring arrival of the long-anticipated Oculus Rift headset, followed by HTC’s Vive and Sony’s PlayStation VR. Unlike less expensive smartphone-based headsets like Samsung’s Oculus-powered Gear VR, advanced sensors and imaging in dedicated headsets promise immersive experiences that will make you feel like you’re in a teleporter. (“Augmented reality,” a combined view of virtual and real worlds, being developed by Magic Leap, Microsoft’s HoloLens team and others, is still a ways from home.) Games and other flights of fantasy will be key to the appeal. But thanks to investments in 360-degree video and apps, you’ll also get closer to not-so-far-out realities: front row at a sold-out concert…or a seat at that meeting you’d otherwise miss.
How to get ready: If you have a new Samsung Galaxy phone, get the $100 Gear VR. If you have an iPhone or another Android phone, try out the $20 Google Cardboard. A swivel chair makes it easier to spin through the 360-degree environments without hurting yourself. You may also want some Dramamine.
Wiser Messaging Apps
Your new robot BFF is just a message away. In 2016, messaging stops being just a way to send texts and emojis to friends, but also a way to reach all-knowing bot assistants. Beta-testers in the San Francisco area using Facebook’s Messenger app can already ask “M” to book restaurant reservations, buy a gift for a friend or simply tell you Mom’s birthday. Google is reportedly readying a similar app. Bots aside, messaging software will also evolve to include more features. Just like China’s popular messaging apps, you’ll be able to pay your friends or bills, book appointments, play games, translate messages and more.
How to get ready: A messaging app is only as good as the people using it. Gather your friends and family and try to get them on the same one—best if it works across all devices.
Safer, Smarter Drones
The Lily drone, delayed until later in 2016, is designed to be waterproof and able to follow you around. ENLARGE
The Lily drone, delayed until later in 2016, is designed to be waterproof and able to follow you around. PHOTO: LILY ROBOTICS
Everybody loves the aerial look of drone photography, but let’s face it—not everybody was born to be a drone pilot. We’ll soon think of drones more like cameras than helicopters, as their technology evolves to compensate for novice mistakes and foolhardy fliers. One maker, Lily, plans to release a waterproof model that launches when flung into the air, then follows you around as you kayak, ski or take a sunset selfie on the beach. Action-camera giant GoPro also plans to deliver a drone, called Karma, though the company has been tight-lipped about how it’ll work.
How to get ready: Unless you’re prepared to commit to flying lessons, don’t buy one of today’s models. Beware, too, of great-sounding drones that appear on crowdfunding sites such as Kickstarter. They may face significant delivery delays—if they deliver at all. Also, get to know your rights and obligations as a drone owner, such as where you can fly and how to register it with the government.
Happy New USB Port!
The USB port you have known—and probably hated—is in for a change. In 2015, the smaller, faster USB Type-C port appeared in laptops like Apple’s new MacBook, and phones like Google’s Nexus 6P. This will be the year it also turns up in monitors, hard drives and everything else. The great news: USB Type-C is capable of two-way power, so one port on a laptop could be used to charge the battery and connect an external drive. This should result in fewer cords, plus faster charging. The bad news: All the USB cords you’ve previously amassed will join the rat’s nest in your garage.
How to get ready: Be on the lookout for devices with USB Type-C. Dell and HP just joined Apple with computers that have it. You may also want to buy some USB-to-Type-C adapters—as low as $8 on Amazon—so you can keep older peripherals plugged in.
Voice-Operated Everything
Voice control will play a bigger role in the home, especially as robots like Jibo move in. ENLARGE
Voice control will play a bigger role in the home, especially as robots like Jibo move in. PHOTO: JIBO
No, you’re not paranoid: The gadgets really are listening. Voice-operated electronics are poised for a quantum leap in accuracy and intelligence in 2016. Talking offers a more natural way to interact with devices that need complex input but aren’t exactly keyboard-friendly, such as TVs, sound systems and household electronics. Voice arrived in a big way in 2015 when Microsoft’s Cortana virtual assistant came to Windows 10, while Siri and Google Now turned up in cars and TVs. This year, expect voice control on more computers and an even wider range of gadgets, including the CogniToys Dino, a toy that uses IBM’s Watson to help answer questions, and Jibo, a talking family robot.
How to get ready: Find a platform and stick to it. Voice systems work better the more they get to know you, and Amazon, Apple, Google and Microsoft don’t always play well with each other. You’ll also need to learn the still-awkward lingo of some systems, or else you’ll do a lot of yelling.
Chinese Phones Hit the U.S.
Chinese smartphones are big globally, but little-known to U.S. shoppers obsessed with Apple and Samsung. In 2016, expect Chinese brands that don’t just undercut on price, but bring features from China’s thriving mobile culture. Huawei, the world’s third-largest smartphone maker, made the $449 Nexus 6P and has declared its intention for a U.S. launch of its flagship Mate 8, which also has a metal body, fingerprint scanner and large battery. Letv, a brand created by known as the “ Steve Jobs of China,” is also poised for a big U.S. splash. Then the ball’s in the court of the enormously valued startup Xiaomi, which has downplayed U.S. launch plans.
How to get ready: If you’re on the fence about buying a new Android phone right now, hold off. At the very least, don’t sign a service contract that ties you to a handset.
Cameras That See More
The Light camera uses an array of 16 lens-and-sensor modules to create crisp, super-high-resolution images.
The Light camera uses an array of 16 lens-and-sensor modules to create crisp, super-high-resolution images.
Smartphones and point-and-shoots alike are sprouting multiple lenses and sensors to improve image quality, capture depth and “see” in 3-D. Some laptops and tablets already contain multi-sensor cameras—such as Intel’s RealSense—to measure rooms and use facial ID at login. A slim camera called the Light L16, due this summer, goes all out, employing 16 lens-and-sensor modules of varying focal lengths to capture massive 52-megapixel scenes.
How to get ready: Don’t invest in an expensive new DSLR camera just yet. With this new multi-lens technology, you may soon be able to get better shots from a device that’s a fraction of the size and weight.
Streaming Channels Galore
Television’s metamorphosis has only just begun. In 2016, look for more streaming versions of channels now found only on your cable box, including some big networks and local stations. Just don’t expect cutting cable to save you a lot of money, as your credit card statement floods with assorted subscription charges. Apps will evolve so that it’s easier to find stuff to watch—and provide new interactive experiences for your home’s biggest screen.
How to get ready: Buy a streaming box or smart TV that runs most of the latest apps. Roku remains the one to beat, but the new Apple TV is also a good option given the iPhone maker’s sway with media companies. Decent home broadband and a recent Wi-Fi router will ensure fewer streaming hiccups.
Wireless Charging Everywhere
After years of slow performance and limited availability, wireless charging is poised to take off. ENLARGE
After years of slow performance and limited availability, wireless charging is poised to take off. PHOTO: SAMSUNG
Wireless charging is the tech industry’s campaign promise: often discussed, never quite delivered. This year, we may really stop plugging all our gadgets into the wall. First, an ugly standards war is resolving, in part because more phones, like Samsung’s Galaxy S6, are supporting multiple technologies. Next, more countertops will provide juice. Starbucks already has tables that charge devices wirelessly, IKEA has started shipping furniture that does the same. GM, Toyota and Audi have it in cars—or soon will. As more compatible devices arrive, many will be capable of faster charging speeds than the sluggish rates currently available.
How to get ready: Keep an eye out for wireless charging stations in airports, coffee shops, etc. As for buying gear, it’s best to wait and see. Definitely avoid the current wireless charging cases.
Independent Wearables
Without a nearby phone, the smartwatches of 2015 don’t do much more than track steps and tell the time. The smartwatches of 2016, however, will begin to show their independence with built-in wireless, including cellular and GPS radios. It could make a big difference for fitness nuts who want to leave their phone at home but still track routes and stay in touch. LG and Samsung recently launched watches with built-in cellular connectivity, and other popular models should gain enhanced wireless capabilities, too.
How to get ready: Hold off on purchasing a smartwatch for a few months. But once new options are released, pay attention to battery life: Those new radios could severely impact endurance.
Cutting the Headphone Cord
Truly wireless headphones, like Bragi’s upcoming Dash, don’t even need a wire to connect the two ear pieces.
Truly wireless headphones, like Bragi’s upcoming Dash, don’t even need a wire to connect the two ear pieces. :
Bluetooth headphones are far from new, but this is the year you should buy a pair. Improvements to the wireless technology mean no more muffled sound or dropped connections. We’re expecting several truly wireless earbuds in 2016, including Bragi Dash and Alpha Skybuds—they don’t even need a wire to connect between your ears. There’s even talk of headphone jacks disappearing from smartphones, a casualty of the quest for ever-thinner designs.
How to get ready: You could buy yourself a comfortable pair of Bluetooth headphones, like Bose SoundLink, or the Jaybird X2 for exercising. For the next wave, wait at least until after January’s Consumer Electronics Show.
A Useful Internet of Things
Finally, there’s a reason to connect household items to the Internet, thanks to programs like Amazon’s Dash Replenishment Service. Using sensors built into devices like Brita water pitchers, Brother printers and Whirlpool washers, it automatically orders more supplies when you’re running low. In 2016, expect to hear credible ideas about how everyday objects—from garage doors to air vents—can be connected to help run your house and reduce your worries.

Five Tech Predictions for the Year Ahead
How to get ready: Choose products that support capabilities like Amazon Dash, the first of which are launching early in 2016. Also, look for connected devices that speak a common language like Google’s Works With Nest.
Write to Geoffrey A. Fowler at geoffrey.fowler@wsj.com or on Twitter @geoffreyfowler and Joanna Stern at joanna.stern@wsj.com or on Twitter @joannastern.
Corrections & Amplifications
While two leading wireless charging factions have merged, the Samsung Galaxy S6 supports two standards, one of which is not part of that merger. A previous version incorrectly stated that it supported technology from the two merged factions. (Dec. 30, 2015)

14 December 2015
As the industry awaits final rules from the European Commission, fund managers are left facing a number of pressing questions about paying for research under MiFID II. What immediate steps should they take to prepare for this new and highly complex environment?
In September, Europe’s regulatory body, ESMA, finally announced its long-awaited capital market reforms. With 1,500 pages to wade through and 28 new rules to digest, it’s fair to say that fund managers have plenty on their plates. While many will be thankful for the level of granular detail regarding who needs to report on what, to whom and when, the question of exactly how research will be paid for still remains.
It’s a question that’s likely to hang in the air for a while yet. Although expected in November, the latest chapter in the lengthening story is that the delegated acts probably won’t appear from ESMA until at least February and perhaps even March, with rumors that the European Commission may send some of the rules back to the regulator.
Until then, much uncertainty surrounds how exactly fund managers go about paying for research. But one thing we know for sure is that investment managers must set their research budgets in advance either through Commission Sharing Arrangements (CSAs) or – in the event that the EC decides that managers have to pay for research separately – via a Research Payment Account (RPA).
[Related: “Unbundling: What Is It, Who Does It Impact, and How?”] There currently is a lack of clarity stemming from national regulators’ differing interpretations of ESMA’s take on CSAs, which enable fund managers to access research and execution from separate providers while paying for both through dealing commissions. Back in February, the UK’s FCA argued that CSAs are linked to transacted volumes and therefore not allowed, as ESMA states that research costs should not be linked to the volume or value of execution services. Yet, other European regulators have argued CSAs will still be valid, and at the moment it looks as though the French are making headway with their push to convince the Commission to allow portfolio managers to keep using them. In any case, fund managers cannot afford to wait for the final results: There are fundamental questions that need addressing today.
The most pressing of these is exactly how fund managers will be affected. Regardless of whether CSAs survive, fund size is an important factor. If the cost of research goes up, smaller investment managers may be disadvantaged, given the relative impact any increased expense would have on a small firm. Then there is the administrative burden of setting a research budget – deciding how much money to set aside will be challenging. However, larger players may find it easier, as their budgets likely have more capacity to absorb any extra research costs.
As if this wasn’t enough to think about, MiFID II now encompasses all asset classes, so confusion also remains over how firms should allocate research payments. For example, can an investment manager who consumes research for currency and bonds share the cost with an equity-focused colleague? If so, how should they allocate the cost? Additionally, fund managers will have to contend with extra expenses if research is unbundled, as VAT costs will be piled on top.
One might think that once research has been allocated and costs factored in, fund managers would be all set, but there are other points to consider. Since trading desks will gain greater discretion over which execution brokers to trade through, the quality of algorithmic and electronic trading will become even more important.
It may take time for these changes to filter through, but time is still very much of the essence for fund managers. Both ESMA and the Commission have made a case for delaying the January 2017 implementation date, but for now it remains hardcoded in the regulatory texts, and we don’t yet know whether any delay will be wholesale or take a phased-in approach. The challenge for trading desks is to re-evaluate the tools available to them now to ensure they achieve best execution.
[Related: “MiFID II Best Execution Requirements Will Transform Buy Side”] So what immediate steps should fund managers take to prepare for this new and highly complex environment? Well, unbundling broker relationships to gain transparency and differentiate between execution and research is a good place to start. CSAs can certainly help with this. CSAs are designed to get the best research and execution from separate providers, without incurring additional costs or administration. Fund managers can also compare past research budgets with future expectations, as well as assess whether portfolio managers are consuming all the research they currently receive. We also believe that tools that allow fund-level reporting will become increasingly important.
It would be unwise for fund managers to break from CSAs now, as we await the European Commission’s final decision. As far as long-term strategy, much will depend on whether the rules are implemented as a regulation or directive. If a regulation, they must be implemented uniformly across Europe; while a directive provides more flexibility to local policymakers and regulators in how they interpret and apply the rules. Regardless of the outcome, fund managers that already are tackling the key questions will be best positioned to demonstrate full transparency to clients.
For more stories in the Rebuilding Risk and Compliance for the Age of Oversight Spotlight Series click here.
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KIERAN DAVIES, ECONOMIST, BARCLAYS CAPITAL

“I think the numbers are exaggerated by sample rotation. Almost all the gain in jobs in the month was due to people rotating to the sample and not quite matching the characteristics of the people who rotated out.

“Definitely the numbers are overstated but there’s still some better results than what the market had anticipated.”

MICHAEL TURNER, STRATEGIST, RBC CAPITAL MARKETS

“You can’t ignore these numbers forever. They are strong, unemployment is low and is running ahead of most other indicators on the labour market. Even though they improved, they don’t go to that extent. We have the unemployment rate at 6.5 percent over the course of next year, so 5.8 percent now makes it harder. In the absence of significant revisions, which is always a possibility, you’d need to see things slow down a bit. We still think that it will happen next year. We have a rate cut (forecast) for Q1 and (this jobs report) does not help our argument.”

TOM KENNEDY, ECONOMIST, JP MORGAN

“We looked at the October number as almost too good to be true and you look at today’s number and it blows it out of the water even more. So two very, very strong back to back months and it’s very difficult to pin any drivers down because economic growth is still pretty soft. The firms are hiring, but I don’t know if the pace they’re hiring at is at multi-year records.

“It looks very very strong, almost too good to be true so they (the RBA) don’t over-react to one or two months of data, so they’ll see how the trend settles out and what the data does in the next one or two quarters.”

On 3 December 2105 legislation was introduced into Parliament to provide a framework for crowd-sourced equity funding (CSEF), encouraging Australians to innovate and invest.

According to the Assistant Treasurer Media Release “CSEF or crowd funding is an emerging way for start-ups and early stage businesses to access the funding and investors they need, while maintaining adequate protections for retail investors who share in the risks and successes of these businesses”.

►     The legislation will allow unlisted public companies with less than $5 million in assets and less than $5 million in annual turnover to raise up to $5 million in funds in any 12 month period.

►     Companies that become an unlisted company in order to access crowd-sourced equity funding will receive a holiday of up to five years from some reporting and governance requirements.

►     While investors will be able to invest an unlimited sum in crowdfunding, there will be a cap of $10,000 per issuer per 12-month period to ensure that mum and dad investors are not exposed to excessive risks.

►     Regulations to support the framework for crowd-sourced equity funding will be released for consultation shortly. The Government will also consult on options to facilitate crowd-sourced debt funding in 2016.

The Government’s Innovation Statement is planned for released next week. The document aims to overhaul Australia’s innovation ecosystem, covering science and research, financing, government procurement, commercialization and talent.