What are the odds a debt ceiling bill is passed? The Intrade Prediction Market gives us a clue and so do CDS rates, interest rates and the VIX

The Intrade Prediction Market tells us the odds of Congress passing a debt ceiling bill by July 31 have dropped to 21%, a test of the lowest reading on the chart (not yet reflected in the charts below).  The same platform also says the odds for passage of a bill by August 31 is now 75%.  The point I takeaway is that the public and the markets are actively discounting the possible short term outcomes of the August 2 debt ceiling deadline being breached.  Passage by August 2 would now be a surprise.  Therefore the market driven indicators may be assumed to be reflective of the short term consequences of not meeting the deadline.  The bond market suggests investors see the debate as more political theatre vs. a probable risk of actual default on Treasuries.  CDS rates (the cost of insuring against a U.S. default) are reported by Reuters today as being “nearly half” their March 2009 peak.”  Interest rates are real money bets and they are saying that the markets are not particularly alarmed by the political showdown in Washington over the budget.   Additionally, the VIX (volatility index) is outright boring trading at a fraction of the levels of 2008 and 2009 and not far from its low for this year indicative a lack of extreme risk mitigation.  So . . . We have market based indicators saying “be calm” while we have the Rasmussen consumer index testing 2 year lows, and “retail” investor sentiment at very low levels . . . my read is the market is right and sentiment is wrong.  Jeb Terry, Sr. July 24, 2011

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iPhones and iPads jack up Apple’s Q2 growth, beat estimates, point to accelerated growth in mobile data traffic.

Silicon Alley Insider (here) posted the following chart today illustrating the explosive growth in Apple’s revenue by product. They noted . . . “The iPad is already the second biggest part of Apple’s business as measured by revenue after less than two years on the market. In the June quarter, the iPad generated $6 billion in revenue versus the Mac which generated $5 billion.  The real story for Apple continues to be the iPhone which did $13.3 billion in sales for the quarter. The iPhone and iPad are now 66% of Apple’s sales.”  More iPhones and iPads = more mobile data traffic = more mobile advertising = more mobile commerce . . . and of course, increased need to offload the mobile data traffic onto WiFi networks.  You can be sure Aberdeen remains focused on these developments.   Jeb Terry, Sr. July 19, 2011

Source: Silicon Alley Insider

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Mobile Ads get noticed ~9X Better than regular online banner ads

A recent article at eMarketer highlights a startling comparison of the effectiveness of banner ads on mobile devices vs. banner ads on PCs.  The article can be read here. The clickthrough rate for mobile ads is almost 9X better than ordinary online banner ads.  As the title of the report by MediaMind mentioned in the article suggests “Tiny Screen, Huge Results”.  No wonder mobile advertising spending is expected grow by 48% this year to $1.1 billion and to more than double by 2014 to $2.55 billion. Jeb Terry, Sr. July 19, 2011

Source: MediaMind

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Here is some good retail sales news you probably didn’t know

The analysts at Bespoke Investment Group have done it again.  They have produced an insightful chart on a recent report that provides scale and context to a macro economic report that should matter more than is broadly noted.  Here is what they had to say about the year over year growth in retail sales for June.  “With an 8.1% increase in retail sales over the last year, this June’s reading is the highest y/y reading for the month of June going back to 2005 and the third highest since 1994. Not bad for an economy that some are worried may be sliding into another recession”.  Jeb Terry, Sr. July 14, 2011

Source: www.bespokeinvest.com

Aberdeen Investment Management – a guide service for micro-cap technology investment

A Picture worth a 1,000 words – Mobile data traffic is surging

I have written in the past about the outlook for growth in mobile data traffic (see my earlier post here) where I noted Cisco has stated data traffic will increase 39X from 2009 to 2014.  Here is a chart of the growth in data traffic on mobile devices in the US since the beginning of 2007 – the date Apple launched the iPhone – prepared by Chetan Sharma.  It’s no wonder the AT&T and Verizon are capping the data plans of smartphone users – they are unable to deal with the traffic on their so called “3G” / “4G” networks.  There are multiple takeaways from the chart and the data . . . 1) The carriers have to find a way to offload data traffic from their networks and the most logical way appears to be to push it to WiFi networks, 2) the increase in traffic is symptomatic of the growth in internet engagement on mobile devices which translates into the explosion in mobile commerce in general and mobile advertising in particular.  Aberdeen is intensely focused in the investment implications of these two takeaway points.  Jeb Terry, Sr. July 10, 2011

Source: www.chetansharma.com

Aberdeen Investment Management – a guide service for micro-cap technology investment

There is a video tsunami hitting the web

Video is becoming the main type of data transferred over the internet.  Increasingly online video is being streamed onto mainstream TV screens.  A recent report by eMarketer entitled “US Online Ad Spending: The Floodgates are Open” includes the following statements made by Cisco in June:  “By 2012 internet video will account for over 50% of consumer internet traffic”, “Internet video streamed to TV tripled in 2010”.  Along with the increase in video traffic is dramatic growth in online video ad spending.  The table below is excerpted from the eMarketer report and displays multiple estimates for the growth in online video ad spending out to 2015.  Suffice to say that an investor would benefit from being exposed to a market that is expected to triple by 2015.   Jeb Terry, Sr. July 7, 2011

Source: eMarketer

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The Market is up 7 days in a row

The NASDAQ is up 7 days in a row.  This is an unusual event since the tech bear market having only happened 23 times out of 2,547 trading days since Dec. 31, 1999.  Using the QQQ ETF as a proxy for the NASDAQ, the market has gone on to rise an average of 3.8% in the 30 days following such a long string of up days in 64% of the incidences.  It has declined in only 8 incidences 30 days later by an average of 1.8%.  The strongest gain was 7% following a 7 day string of up days in September 2010.  If the market goes on to rise tomorrow and Friday the historical tendency of more upside strength will rise to above 70%.  Jeb Terry, Sr. July 6, 2011

Source: Aberdeen Investment Management

Aberdeen Investment Management – a guide service for micro-cap technology investment

Smartphone adoption continues to accelerate, becoming the norm

The Yankee Group just published survey results on the likelihood of consumers to choose a smartphone with a data plan as their next phone.  Their conclusion . . . “consumers are moving to smartphones at a voracious rate”.  I have reproduced their chart below depicting the percentage of consumers who are “very likely” or “likely” to move up to a smartphone.  The combine percentage likely to adopt a smartphone has grown from 41% in 2009 to 55% in 2011.  You can expect us to stay focused in all things related to smartphone usage for a long time, including mobile commerce, advertising, location based services, digital money and more.  Jeb Terry, Sr. July 2, 201

Source: Yankee Group

Aberdeen Investment Management – a guide service for micro-cap technology investment