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“The future belongs to people who see possibilities before they become obvious.”  
-Ted Levitt
I’m guest-writing the Early Look this morning for Keith, and he asked me to give a glimpse into why I’m so focused on Mobility for the next few years, with our new Mobility Black Book, and the conference call we’re hosting for Tech subscribers tomorrow afternoon. Here goes, and feel free to ping me with any feedback/questions at .
The Mobile Internet has the power to pull us out of the current economic downturn.  That’s how powerful this innovation cycle is and will be over the coming years.  It will impact every consumer with an Internet-enabled mobile phone (meaning everyone) and it will alter the way every business does business.
If that sounds a bit crazy, take a second to put away your Blackberry or your iPhone – these devices aren’t what I am talking about.  Far from being well underway, mobility – especially the Mobile Internet – is just beginning.  This isn’t about packaging desktop applications into smaller form factors.  The Mobile Internet is a different animal altogether.
Mobile devices will increasingly be connected to the cloud and able to leverage all information – in real time.  Simply put, the ability to marry ubiquitous information with location-based, personal productivity, and social-networking services will lead to magical outcomes.  Yes. I said “magical.” Mobile ecosystems are just now beginning to grasp what can be built to take advantage of connected mobile devices.  Apple and the iPhone showed the world a teeny slice of what’s possible, but thinking the iPhone is our final destination is like thinking the telegraph was the crowning achievement in telecommunications.
Currently, just 20% of mobile devices worldwide use 3G networks, which is the minimum required for modern smartphones, and the inflection point for 3G and smartphone growth will be in 2010. And, as a sublimely smart colleague of mine told me this morning, 2010 is a mere 6 ½ weeks away.
Over the last two years, Apple and the iPhone have shown the world what is possible, and we are on the cusp of an explosion that will leverage mobile platforms to drive new services, then the new services drive new demand, then new demand drives new devices. Rinse and repeat. For the end user, the handset maker and the application/service developer, this is a self-perpetuating, virtuous cycle.
So what? As the Mobile Internet matures, the economics will go towards online commerce, paid services, and advertising, while data will get proportionately less revenue, just as with Web 1.0.  Make no mistake, data revenue growth will still be substantial, as more data flows to more devices more often, but other segments of the market will grow faster.  At the same time, new marketing, advertising and customer experiences will arise from the combination of local, social, and mobile which allows businesses to efficiently hit their targeted demographics. The companies that ‘get’ this will leapfrog the competition.  
It’s been a decade since we’ve seen this sort of sea change, and it won’t hit every name the same. Some tech companies have used the recession to invest and position themselves (GOOG, ADBE, MOT), and some have been fighting a rear-guard action in last year’s war (RIMM, ERIC, NOK). More importantly, and harder to predict, a whole generation of lesser-known infrastructure players will win big here, and with Switzerland plays that leave them immune to the vagaries of product cycles. Think Levi Strauss selling pickaxes to the gold rush.
Imagine a world with five billion mobile devices.  Data will be real-time, around the world, instantly.  
Imagine getting into your car and having the latest traffic information, music and news that’s most relevant to your exact location and plans for the day fed to you via the cloud.  
Imagine your wife’s birthday combining with her social network’s comments and your e-commerce platform to suggest, order, inscribe, and deliver (ahead of time!) the right gift at the right time.  
Imagine being able to leverage your Mobile Internet, camera, location and search to get the best deal available, real-time, on anything.
Imagine knowing what Americans are worried about this week.
Imagine knowing when your father’s insulin shot is late, and when your daughter has gotten an A.
Keep on imagining…

Rebecca F. Runkle
Managing Director


FXE – CurrencyShares Euro Trust
We bought the Euro on 11/12 on a down move against our short position in the British Pound. A bullish formation in the Euro remains and we think the ECB could hike before the Fed does.

XLU – SPDR Utilities We bought low beta Utilities on discount on 10/20. TRADE and TREND bullish.

GLD – SPDR Gold We bought back our long standing bullish position on gold on a down day on 9/14 with the threat of US centric stagflation heightening.   

CYB – WisdomTree Dreyfus Chinese Yuan The Yuan is a managed floating currency that trades inside a 0.5% band around the official PBOC mark versus a FX basket. Not quite pegged, not truly floating; the speculative interest in the Yuan/USD forward market has increased dramatically in recent years. We trade the ETN CYB to take exposure to this managed currency in a managed economy hoping to manage our risk as the stimulus led recovery in China dominates global trade.

TIP – iShares TIPS The iShares etf, TIP, which is 90% invested in the inflation protected sector of the US Treasury Market currently offers a compelling yield. We believe that future inflation expectations are currently mispriced and that TIPS are a efficient way to own yield on an inflation protected basis, especially in the context of our re-flation thesis.

EWJ – iShares Japan While a sweeping victory for the Democratic Party of Japan has ended over 50 years of rule by the LDP bringing some hope to voters; the new leadership  appears, if anything, to have a less developed recovery plan than their predecessors. We view Japan as something of a Ponzi Economy -with a population maintaining very high savings rate whose nest eggs allow the government to borrow at ultra low interest levels in order to execute stimulus programs designed to encourage people to save less. This cycle of internal public debt accumulation (now hovering at close to 200% of GDP) is anchored to a vicious demographic curve that leaves the Japanese economy in the long-term position of a man treading water with a bowling ball in his hands.

EWY – iShares South Korea South Korea has joined Japan in the ominous position of broken TREND and TRADE. This is not China or Taiwan. This is an early cycle economy that we want to be short against China/Taiwan.

XLI – SPDR Industrials We shorted Industrials again on 11/9 on the up move as the US market made a lower-high.  This is the best way for us to be short the hope of a V-shaped recovery.   

EWU – iShares UK Despite areas of improvement, broader fundamentals remain shaky in the UK: government debt continues to expand, leadership in critical positions lacks, and the country’s leverage to the banking sector remains glaringly negative.  Q3 saw its GDP contract by -0.4%. Further bank stimulus and the BOE’s increase in its bond purchasing program suggest that this will not end well.

XLY – SPDR Consumer Discretionary We shorted Howard Penney’s view on Consumer Discretionary stocks on 10/30. TRADE and TREND bullish.  

FXB – CurrencyShares British Pound Sterling
The Pound is the only major currency that looks remotely as precarious as the US Dollar. We shorted the Pound into strength on 10/16 and 11/16.

SHY – iShares 1-3 Year Treasury Bonds  If you pull up a three year chart of 2-Year Treasuries you'll see the massive macro Trend of interest rates starting to move in the opposite direction. We call this chart the "Queen Mary" and its new-found positive slope means that America's cost of capital will start to go up, implying that access to capital will tighten. Yields are going to continue to make higher-highs and higher lows until consensus gets realistic.