Shaheerah Kayani

Reality Stranger than Fiction: JP Morgan and Minority Report

Can you be fired or arrested for a crime you haven’t yet committed, but most likely will? JP Morgan thinks so – and they’ve developed new algorithms to monitor their employees and stop rogue trading behaviour before it happens.

Stay tuned to find out how and why they’re doing this.

Transcript

Amanda: Remember the movie Minority Report? It was a few years ago, and Tom Cruise’s smouldering eyes aside, the general gist of it revolved around arresting people for crimes they hadn’t yet committed, but were going to. Well, reality is becoming even stranger than fiction, as JP Morgan attempts to stop rogue trading behaviour before it happens.

And Tom Cruise doesn’t even star.

Jeremy: In a scene reminiscent of the movie Minority report, the Tom Cruise thriller, JP Morgan is using predictive analytic software to stop rogue trading behaviour before it happens. Let’s discuss.

Archana: JP Morgan has paid $36 billion in legal fees over the recent times, and since the financial crisis – and that’s led to the company unveiling a new algorithm that helps it to pinpoint rogue employees before erroneous trades happen.

Shaheerah: As Archana mentioned, they’ve paid $36 billion in legal bills. One of the famous ones was the 6.2 billion London Whale Fraud. And this both hurts their reputation and it hurts their profits as well. Now if they can actually cut legal and other expenses, the investment bank’s return on equity would actually rise to 13% as opposed to the 10% they made last year.

Jeremy: What kind of data points do you think they’re analysing to predict this rogue behaviour guys?

Shaheerah: Well, there are a lot of factors that will go into this new deduction software, some of them will include: are these workers skipping the compliance classes; are they breaking the personal trading rules; or are they reaching the Market risk limits? The whole point of this software is to predict the themes and the patterns in their employee behaviour, so it’s actually pretty cool. You’re trying to predict how a human is going to behave. And one thing I think is that they should really be keeping an eye on the middle managers and the top-level executives, as opposed to the lower level managers. It’s the top-level executives that have the access to the data, and have the authority to make the decisions, and they know all of the internal systems and controls.

Archana: Algorithmic misbehaviour prediction is apparently a booming business. Again, this all boils down to big data and data analytics which we’ve been talking about of late quite extensively. And going back to what we specialize in as well, so P4Capital we do understand the space and we do have the right kind of candidates who are experienced doing data analysis, and working with some of the latest and greatest in terms of software tools that are out there.

Jeremy: Okay, both of my colleges here have mentioned that JP Morgan has spent $36 billion in legal fees, and this will be a measure to help reduce those fees and reduce scandals that occur, but I think they’re going to be hitting some new legal actions and sanctions against them. When you try to discipline a trader for something that he hasn’t done yet – is that really going to hold up in court? You’re just opening up a whole new can of worms I think.

Archana: Absolutely, I do agree with Jeremy – it is a very tricky space to venture in, but I guess it’s more for the compliance team and the regulators to show to the institutions out there that they have the right kind of checks and balances in place, so that if JP Morgan again faces a similar situation that it has witnessed in the past, it would have its books in order.

Shaheerah: And just apart from this software, they are also spending money as well. So the company has hired 2500 compliance workers, and they spent $730 million over the past 3 years to improve operations. They’re also equating a special surveillance unit to monitor the other electronic and telephone communication in the investment bank. So if you go back and look at the fraud investigations that they’ve done, a lot of it could have been caught earlier on if they were checking the emails and the phone calls that the employees were having.

Jeremy: Yeah, a company like JP Morgan must have billions of emails going through their systems in a year. That’s a lot of work for 2,500 compliance people to be monitoring. I can see where there’s some value added to automating this to the Big Brother.

Amanda: What if people go outside of JP Morgan, and employees just send emails from their private servers?

Jeremy: That can probably be monitored as well, depending on how they’re using it. I don’t know about the legality of that.

Archana: So in the past JP Morgan and some of the other investment banks as well have used dedicated whistle-blower phone lines and email addresses where workers could actually email anonymously with tips to the management if they do see any fraudulent behaviour. Obviously this is a step up for them in terms of using technology to monitor behaviour of their employees. Also another interesting thing is that this is obviously just part one – the algorithm is just part one of the entire review of the investment bank’s work culture. The second part is obviously is HR and training related – JP Morgan is invested heavily in terms of training their employees and also to identify and fix areas where potential lapses could occur.

Shaheerah: And I also just wanted to bring some more facts to the discussion. It’s a fact that each year more than 30 million consumers actually fall victim to investment frauds – it’s a pretty big number. And the average loss for an investor is about $15,000 dollars, as well as individual losses could be all the way up to millions of dollars. And this happens because there’s nothing really suspicious in the beginning. I mean high returns and the financials seem legitimate, and this could go undetected for years. And it’s always usually in the end when you finally find out, and you start to investigate what has happened.

Archana: The new program that’s actually being rolled out would be tested in the trading part of their business first, and then the bank will spread it out throughout their global investment banking division, as well as their asset management division, and their complete roll out would happen by 2016.

Jeremy: JP Morgan has always been a market leader and they’re one of the première investment banks out there, so I imagine that there’s a bunch of other banks watching with bated breath to see if this experiment works. So only time will tell.

That was the P4Capital team discussing JP Morgan’s new initiative of stopping internal banking crimes before they happen. Want to know more? Check out our website and previous posts at www.planet4it.com or follow us @p4capital. Thanks and see you next time.

Done like Kraft Dinner

Kraft is in trouble. Accused of manipulating the derivates market to control the price of wheat, they are being investigated for misconduct.

But is this manipulation really as bad as it seams? The P4Capital executive team discusses the nature of the derivates market, and what crime, if any, Kraft has actually committed.

Stay tuned.

Transcript

In this week’s P4Capital discussion, the executive team talks about everyone’s favourite food – Macaroni and Cheese! Well, not really – instead they explore the controversy surrounding Kraft and their manipulation of the derivatives market.

So enjoy some Easy Mac and stay tuned.

Jim: Today’s topic is Kraft versus the CFTC

Jeremy: Yeah, now I don’t see what the big deal is here. Kraft is being accused of manipulating the derivatives market for futures on wheat because they bought some wheat futures that they didn’t intend to actually receive delivery on, and the CFTC apparently has a problem with that. But isn’t this pretty much the whole nature of the derivatives market?

Jim: Absolutely it is, and if we take a look at what is the regulators problem, is what they’re saying is that they don’t want others onto the market that can take the market into an artificial place. So for example we all know that Kraft is probably the single biggest buyer of wheat because of their cereal divisions in North America. So they can be a somewhat easy target for a regulator to go after, and it’s not actually Kraft that they’re after – it’s all the others that could come onto the market and play Kraft behaviour. So for example the Jeremy empire comes onto the market and buys a billion dollars of the wheat futures out there – what does that mean for Kraft? Kraft is now going to have to pay a premium on the remaining crop if you will. All sorts of interesting things can happen from that point in time on, including a major rise in consumer price.

Shaheerah: Yes and they usually only keep about two month supply in the inventory. They never actually had 15 million bushels wheat like with this transaction, which is actually three times their storage capacity. Some of the wheat that was involved in this transaction is actually used in other products like cookies and crackers which is not even made by Kraft group. That’s kind of fishy.

Jim: So there’s a famous case where, the three of you are far too young to remember, but it was the Hunt brothers cornering the silver market back in the late 70s. And again, that’s a traded future or a traded commodity if you will. I’m sure that the aged regulators that will be of my vintage will remember that, and are saying to themselves okay it’s not silver and the Hunt brothers, it’s wheat and Kraft. I’m sure that’s part of this ruling as well too.

Amanda: Could this impact stretch out beyond just Kraft and wheat?

Jim: I think it’s a slap on the wrist. Don’t know – Jeremy, what are your thoughts?

Jeremy: Well again, I think we’re kind of making a mountain out of a molehill. The actual amount that Kraft got on the trade was about 5.6 billion dollars, that’s probably a daily profit for them. I mean – what’s the big deal? Other people trading in and out of wheat futures can affect the market adversely as well. Are we going to stop allowing wheat future trading?

Jim: Yeah, I think it’s the precedent they’re after. I truly believe it’s the precedent of trying to corner a crop or a metal. That’s my contention at least.

Shaheerah: Yeah, so when they buy all these futures, why does it make the stock price go down?

Jim: Could be a couple of reasons for that one. A the major buyers off the marketplace being Kraft, so the rest of the crop from different wheat boards and the farmers involved in that could be doing a bit of panic selling, so that could be reason one. Or two, which is probably closer to the truth, and that is you have bumper crops which are plentiful, and you get more supply than normal, and since there is a spoilage factor you can’t keep that for years and years. You have the supply but what happens on the demand curve is that it doesn’t change at all and the pricing elasticity falls, and possibly that would be the main reason the price would fall.

Jeremy: Well spot price is the daily price, so I don’t necessarily see how when Kraft buys wheat futures how that would negatively affect the price today. How do you see that happening?

Jim: Yeah, I don’t disagree on crop pricing aspects of it, but usually spots are also used for trend too. I’m just saying it could be your computer generating systems are saying, “hey, wait a minute, the trend is going to be down.”

Jeremy: Yeah, it could be.

Shaheerah: And they actually went as far as to do an investigation and they found some internal emails from the procurement team at Kraft, which said that Kraft was in line to save seven million dollars on the commercial cost of wheat, and make up to three million from moves in the futures market if all goes according to plan.

Jeremy: I say well done Kraft!

Jim: Same here! Hoo Hah! It’s well done, and isn’t that what the corporate treasury is supposed to do?

Jeremy: Yes, agreed!

That was the P4Capital team discussing the derivates market, and mistakes that Kraft committed. Want to know more? Check out our website and previous posts at www.planet4it.com or follow us @p4capital. Thanks and see you next time.

Trends for top talent.

Skills become obsolete just as quickly as new talents are needed; continuously evolving as the world around them change.

The P4Capital team investigates what skills are desperately needed in the capital markets today, and how companies can capture them.

Stay tuned.

Transcript

Amanda: Who are the people your company should be looking for? What skills should you have to make yourself appealing to those employers? In this week’s round table discussion, the P4Capital executive team examines who the top talents are, and what skills they possess.

Stay tuned.

Jim: Today’s topic is about what needs we have seen in the technology/ capital markets area since the beginning of January of 2015.

Archana: For those of you just tuning into our weekly podcasts, a quick round of intros – we are the P4Capital team. A division of the established Planet4IT staffing agency, and we are the people who are close to the market makers – the Capital Markets as well as the wealth management professionals. And yes, we are nearing the end of the of the first quarter, and what we plan on doing, just like Jim said, just discussing in terms of where financial technology stands, and also a quick handbook for job aspirants; what are the skills that would be in demand for the rest of the year.

Shaheerah: I just want to start out with the importance of the capital markets: capital markets are where both Canadian and International companies from all over the world come to raise capital in order to run their businesses and to expand globally. And it’s going to be done both through debt and also through equity. And Capital Markets is also a place where companies can come out and they can seek advice on potential transactions and strategic advice on implementing their business plans. And although this is a male dominated industry, there is now a growing need for women in the field as well. And you will see a lot of companies are launching new programs in order to attract more females into this career.

Jim: The interesting part is in the trading side of the financial institutions business, is we’ve gone through 36 months of high frequency routers, dark pools, low latency – and the rationale behind all that was to get better analytics on the trade, get better understandings of liquidity; obviously there’s been a heavy influx of new regulations and reporting. And that’s kind of affected the old creaky systems that have populated the world. So the talent, not only are we looking for the best and brightest of the female and male side, but we’re also looking for difference makers now too. And we hope to carry on more conversation about that momentarily.

Jeremy: Risk Data Aggregation and Reporting, RDARR* as it’s written sometimes, seems to be a big hot button topic for all of our clients. There’s a Basel 3 deadline with 21 months to go now, December 21 2016 that needs to be met, and all the banks and financial players in town need people who understand risk and are able to put it together into a model that will make sense for decision makers.

Archana: Some of the trends that we’ve witnessed so far, and something that we’re definitely going to see more of, going forward, obviously the falling oil prices that’s been a hot button topic really, and a lot of the banks and financial services companies have been majorly impacted with the falling oil prices. Another thing that’s happening that we’ve witnessed is restructuring: a lot of banks are shutting down and really focusing on their core business and trying to automate a lot of these processes that don’t really have direct customer interaction. Another thing that we’ve witnessed, and this is definitely a growing, trend is I call it the deconstruction of the traditional walls that have surrounded the large investment banks and how they’ve been privy to customer information and access to all this data. So this deconstruction obviously is happening as we speak, because access to data in this changing market is majorly on the rise. And another growing trend where banks are losing out on hiring talent is definitely to the digital guys, so banks are revamping their strategy to attract the brightest minds that are out there.

Jim: The position growth, if you will, I’ve also kind of thought to myself was interesting it’s core programming: Java, C, C#, C++. I haven’t as yet seen the advanced analytics programming needs that the digital world is demanding, the R’s, the Matlabs, s and those types. We’ve also seen a heavy influx of business analysis. So people, as Jeremy alluded to, anything that has a strong element of risk process knowledge is in great demand out there. Traded products, front office products – also in great demand out there. Traditional, other support jobs like software package support or infrastructure support, not as much. But hardcore developers yes, hardcore business analysts with solid process knowledge, yes.

Archana: I agree with Jim that we haven’t seen so much of big data and data analytics on the capital markets, side, but I do think that’s something that’s set to change going forward. A lot of these data scientists have been employed by these capital markets firms. They’ve largely been restricted to governments, risk and compliance areas, but increasingly they are going to be used in the front office, and working hand in hand with the Quant guys.

Jeremy: Especially when we get to the phase where banks are going to be analyzing data in real-time, they’re really going to bring in some new and dynamic solutions. We’re really going to see that in the next year.

Jim: I’m hoping though that those people are still available for them Jeremy. We’ve seen in our Planet4IT part of the business, where people with knowledge of how to program advanced algorithms are being captured by game companies, big market data companies that have a service feel to them. And where do they draw them from? Obviously the traded markets, and the people that learned their skills there and have applied them successfully, and they’re being offered great sums of money to do so. I’m 100% in agreement that the front office people will have to come back onto the market, but I think they’re being overshadowed right now by the need for regulation people.

*RDARR stands for Risk Data Aggregation and Risk Reporting program

That was the P4Capital team discussing the Trends for Top talent, and how to be competitive in the workforce. Want to know more? Check out our website and previous posts at www.planet4it.com or follow us @p4capital. Thanks and see you next time.

Maybe stress the stress test.

In this weeks P4Capital discussion, the executive team continues to talk about something most of us try to forget – the great recession of 2008.

In a follow-up to the stunning news of all the American banks passing part one of the stress test we have some bad news – a few banks didn’t in fact pass part two.

The P4Capital team investigates what this means, and how it will protect the world economy should the worst come to pass again.

Stay tuned.

Transcript

Amanda: So much for our winning streak. Several american banks couldn’t hold it together in the final inning, and failed part two of the stress test. The P4Capital team continues their discussion about what these results mean for the future of the economy, and what these banks are going to do about their failing grades.

I don’t think they can simply apply for extra credit.

Jeremy: All right, this week we’re doing part two in our Stress Test series. A couple of big European banks just failed the Stress Test in New York – Deutsche bank and Santander of Spain.

Archana: Apparently even Bank of America just received a conditional pass. This was part two of the stress test which actually happened last week, in which all of the 31 banks were cleared. Part two was essentially in order to assess their terms of raising capital by way of dividends, and these two banks essentially failed.

Jeremy: Bank of America’s actually going to try to do about 4 billion dollars into share buybacks, which they got the green light on. So Deutsche bank and Santander are going to face penalties where they can’t do any share buybacks right now, or raise dividends, but they’re still able to issue the dividends as they stand

Amanda: What does part two entail?

Shaheerah: Well it’s called the Comprehensive Capital Analysis and Review, CCAR. And basically these banks that failed, now they have to make some changes in their plans or they could have to pay some financial penalties. Basically, it prevents these US entities of the foreign banks from distributing any capital to their parent companies.

Jim: With that said, the question Amanda asked was what does this all mean? It means basically that the United States has said that either you’re going to have enough cash to be banking in the US, or you’re not going to bank in the US. As simple as that. They want a very strong and healthy financial system to spur their growth into this new age of technology meeting business and new entities being created, which should sustain their economy for the next three to five decades.

Archana: I’m just curious to hear the thoughts of the P4Capital team here – do you think the introduction of these stress tests and various levels of scrutiny – what do you think about another 2008 like meltdown? Do you think we could avoid another one of those again?

Jim: Not a chance. As the elder statesman at the table by a considerable factor so, I have seen these financial games in various shapes and forms over four decades, well – let’s call it five. And there will be a new game at hand somewhere, sometime in the future, but the objective here is to get stability for at least a 10 year run, and then let the governing bodies a decade out from now worry with what’s on their plate at that point in time. But quite bluntly, we’re in full economic recovery right now Archana, but it is so tender. It could not support another meltdown of the magnitude that was unprecedented by the way, that happened in 2008.

Archana: I would actually agree with Jim. To me, the only constant there is change. And we’ve all witnessed this within the Capital Markets environment. Yeah I mean, this is a way for stabilizing the marketing and the economy as it stands right now, but 10 years from now something else might just crop up and the regulators at that point will try to put checks and balances in place too.

Jim: The interesting part about these Stress Tests, that’s probably also illustrative to all those other financial institutions is the absolute weakness of the underpinnings of technology. I had this discussion last week with a senior banker in downtown Toronto, and we talked about their base engine technologies, which was something that the group 20 years ago installed. So now, you’re trying to run a multi trillion business using ancient, antiquated technologies. It should be very interesting as they continue to work on stress tests to see if these banks, in this case the group of 31, are going to be able to sustain it in the future or not.

Jeremy: I think what caused the financial meltdown revolved around derivative products; credit derivatives, swaps, CDS’s they were called. That was-

Jim: MBS’s

Jeremy:-right, mortgage-backed securities. Basically predicated on the fact that banks were issuing mortgages to just about anyone with a pulse, and then bundling those mortgages off as fast as they could into securities. There were three different levels of risk – they were called trenches. The lowest trench were all sold at one price – medium. They had another price – the top-level; senior level they were called. Wasn’t even that much of a risk premium that companies were taking – companies such as AIG — and there ended up being massive defaults across all three levels of risk. Lots of problems there, and here we are six years later or so, and there is still not a clear picture of what risk looks like on balance sheets, especially in the derivatives business which is largely unregulated. There are lot of measures to see how they can measure this risk better, but we’re not there.

Jim: Yeah, but that’s symptomatic Jeremy. You know any time you try to modernize debt you’re running risk, full stop. Debt is debt. But the interesting part were the reverberations in the marketplace of 2008, and how it brought the global economy down to its knees, almost overnight. So, I look at it again and say can that game of taking, using your words – providing debt mortgages to anyone who can apply – is that going to be game on in the future? I doubt it

Jeremy: It will be a different game

Jim: Maybe it will be a different game, absolutely! We don’t know what that will be.

Jeremy: Maybe it’s going on already?

Jim: I would suggest it probably is, going on already.

That was the P4Capital team discussing the Stress Test, and what these failing grades mean for the banks going forward. Want to know more? Check out our website and previous posts at www.planet4it.com or follow us @p4capital. Thanks and see you next time.

Don’t stress the stress test

In this week’s P4Capital discussion, the executive team talks about something most of us try to forget – the great recession of 2008.

The news isn’t bad though; for the first time since they were invoked, all American banks have passed the Stress Test.

The P4Capital team investigates what this means, and how it will protect the world economy should the worst come to pass again.

Stay tuned.

Transcript

Amanda: Do you remember the recession of 2008? When the banks all caused the world economy to crumble? When jobs evaporated like shallow water and dollar values plummeted worldwide? Well, the banks certainly do, and to make sure the Great Recession doesn’t happen again, they introduced a series of stress tests. And for the first time, in 2015 all the American banks have passed.

Jim: This week’s topic is about the American banks passing stress tests, and the significance to not only the North American economy, but the global economy as well.

Jeremy: For those of you that don’t know what a stress test is, the top 30 or so US banks have all agreed to undergo stress testing, in which they will look at different factors and variables and examine how these would affect their capital reserves, and their ability to do business. So for example they might look at what would happen if unemployment was to rise by 2%, inflation were to rise by 3% and interest rates were to be cut by .5%.

Archana: Just backtracking a bit here, the stress tests were essentially introduced after the financial meltdown of 2008, and it’s seen as a huge step in boosting consumer confidence in the US financial system. In 2008, we all know how that story played out; the banks had to be bailed out, the government essentially funding about 700 billion to bail out the biggest lenders in the US.

Shaheerah: The whole purpose of these tests is to ensure that the banks will have enough capital, and they will be able to continue to lend to businesses and households even in a very dark economic recession. These stress tests focus on some important risks, and those risks are credit risk, market risk and liquidity risk.

Jim: The interesting part, now the US Greenback is soaring out there and the banks that support the US dollar are now passed all the latest stress tests, is that it looks like the US economy is now back on extremely firm foundation and footing, and will be the engine that drives the global economy. We haven’t seen that in a while. The argument can be at least 7 years, some argue all the way back to 2000.

Jeremy: It’s actually the sixth year anniversary today of the low of the S&P 500. It’s up over 200% over the past six years, so it’s been one heck of a bull market.

Amanda: The date we are recording this is March 9, 2015 for our listeners who are tuning in at a later date. What does this mean for the Canadian economy?

Shaheerah: Yes, so now bringing that discussion back to Canada, Canadian banks are ranked the world’s soundest for seven straight years by the world economic form. Canadian banks are actually outperforming the US banks even in the midst of the dropping oil prices, and part of the reason is we have fewer regulations and less competition than the banks of the US. And both TD and BMO, among other banks are also expanding in the US because the US will see more economic growth than Canada over the next two years.

Jim: Therefore, expansion equals more jobs and more overall health to the Canadian economy which has in fact had a phenomenal bull run itself for almost a decade, with the exception of that mid, let’s call it September 2008 to September 2009 period, which is very good news indeed. The interesting part was the measurement of risk as well, and watching how the different financial institutions are now responding by getting rid of their archaic technologies and moving into faster engines which are allowing them to monitor risk with more clarity and make better decisions going forward.

Jeremy: Also, if banks in the US don’t pass their stress testd then sanctions can be placed on them such as what happened with Citibank. I believe it was last year they failed some of the stress tests so they weren’t able to have any share buybacks or authorize any dividend increases. They did pass them sufficiently enough so they didn’t have to cut dividends though. Not coincidently there is a new CEO implemented there.

Jim: Yeah, no kidding! How many of the competent Citi people fled to get to financial institutions that would pay them appropriate bonuses and how many should have got fired?

Jeremy: True. Goldman actually didn’t do as well as expected on these tests, so their share price was down 1.7% the day the tests were released, largely as investors are concerned that the similar sanctions may be in the future for Goldman Sachs.

Jim: Well, considering the US government is one of the largest borrowers on the planet, and they’re only going to borrow money from their financial institutions that pass their rules-

Jeremy: and China!

Jim: -And China, yeah! I think it’s very important that these FI’s that are on the line get up to speed.

Archana: Incidentally, this is apparently the first year since the Dodd-Frank act stress test, or as it’s called DFast, that all the 31 US banks actually passed the test. Citigroup actually flunked the test last year and the CEO actually went on record saying that he is quite intent getting the books in order, or otherwise his job is on the line. And apparently they did well this year. Again, this DFast is apparently round one of the new stress test measures that the government has introduced. Part two is to be unveiled this week, which is primarily concerned with whether the Fed will announce whether the capital plans of these big banks are going to be accepted or rejected in terms of their share buyback and dividends. So it’s not exactly clear whether all 31 banks will go through – that remains to be seen.

Jim: Could be a lot of nervous executives wondering if they can get their bonuses paid or not!

That was the P4Capital team discussing the Stress Test, and how it will protect the economy going forward. Want to know more? Check out our website and previous posts at www.planet4it.com or follow us @p4capital. Thanks and see you next time.

Through the Crystal Ball Part 2

Last week we speculated on what the future might hold for fossil fuels and renewable energy. Now, the P4Capital executive team concludes that discussion with this week’s round table discussion.

Stay tuned.

Transcript

Amanda: And we’re back! Here is part two of through the crystal ball: the future of oil.

Jeremy: So that immediately suggests again that demand for oil will drop due to a technology shift. In fact, if one actually looks at the history of oil as a technology driver it’s less than 100 years old. In most economies it’s less than 75 years old. Which, that breakthrough that Shaheerah noted right now, will change the composition and make up of most trading markets around the world instantaneously as that becomes a commercialized venue for fuel.

Shaheerah: I also wanted to mention some predictions that scientists have made. So currently right now we are in 2015. By 10 years from now, scientists predict that by 2025, methods of converting and storing solar energy will be so advanced that solar energy is actually going to become the primary source of energy on the planet. A company called Tesla has predicted that by 2025, electric vehicles will take over the traditional vehicles we have. Batteries will store more energy in 2025, and batteries will recharge 10 times faster, resulting in electric vehicle fleets that can be used both on the ground and in the air. And so, small-scale commercial aircraft will be powered by light lithium ion batteries. This will actually be the preferred way of short-haul flights.

Jim: And again as a supplements to Shaheerah’s point right now, Tesla is a fine, fine automobile. There are no fossil fuels in Tesla what-so-ever. So how long will it be that one can drive your car from here to 500 km away without worrying about any refuelling. I think that day is within the next year.

Amanda: On a side note here, a car called the Strati is hoping to hit the roads later this year, that’s in 2015. This is a 3D printed car. It takes 24 hours from conception to finished product.

Jim: And when had I talked about the smart manufacturing that in fact is exactly prime example A of what smart manufacturing is. You walk in, you work with a 3D cartographer, and you’re able to come back the next day for your finished product. Mind blowing, is it not?

Archana: It sure seems like we’re living in exciting times, all the data that Shaheerah and Jim just provided to us, I mean it just seems like the amount of technological advances that we’ve made. Obviously, oil is going to become less and less relevant over the coming years. But a recent study by a US government backed energy information administration actually estimated that only about 11% of the world market energy consumption at the moment comes from renewable energy sources, which includes your geothermal, your hydro power, your solar, wind and other sources. BP actually puts this at 9% of world-wide energy consumption in 2013. So just about 9% of worldwide energy consumption was attributed to renewable energy resources in 2013. By estimates, they put this number by, 2040 at 15% of global energy needs coming from renewable energy sources. All these technology advances does make me wonder why has the adoption been so slow. One of the reasons that I, while I was researching this subject, that I can across was the cost of production, storage and the transportation of these bio fuels still remains very high.

Jeremy: There’s another point to be made here about how the future of manufacturing is dependent on oil. To look at it from a different angle that we have, and to quote the movie The Graduate, plastics – the future is plastics.

Jim: Again, somewhat interesting commentary by Jeremy. P4Capital is dedicated to the women and men who work within the trading systems; all sorts of products and monies as they’re being trading. This change in the way fuel is developed into the overall economy will mean dramatic, systematic shifts in the way money is moved around the world. I’m wondering if today’s technologies in the capital markets, and those that have invested in their wealth management portfolios, are quite aware of what’s going on in these changing times.

That concludes the P4Capital teams discussion on the future of fossil fuels. To listen to part one, or just check out some of our other round table discussions, check out our website at http://www.planet4it.com or follow us @p4capital. Thanks and see you next time.

Hedge Funds: The Wild West

Welcome to the wild, wild west. Have you heard about the Canarsie Hedge fund? More money was lost in three weeks than most of us will see in our entire lifetimes. How did this happen and why? The P4Capital team examines this in this week’s Round Table Discussion.

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Robbing the Bank

Ever wonder how easy it would be to rob a bank? Well, it happened recently at RBC in Vancouver by two ex-employees of the company. Find out how they pulled it off in this week’s Round table discussion.

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The next industrial revolution – The Conclusion

This week, the P4Capital team continues it’s discussion into the Next Industrial Revolution.

Stay tuned.

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The next industrial revolution

The first industrial revolution saw the creation of many incredible technologies that changed the very face of the planet. Today, with the advent of 3D printing, globalization and manufacturing, we are beginning another one. How will this change the face of the planet in the 21st century?

The P4Capital executive team investigates.

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