A Wartime First

August 29, 2013

  • “Everything will be possible” if war breaks out, Syrian hackers warn. Cybersecurity firms hear ringing cash registers…
  • Sequester-proof: A $16.1 billion line item in the federal budget, and the handful of favored players set to collect first
  • The very large country where gold prices are setting records
  • NASA figures out how to make rocket parts on a 3-D printer… and not a moment too soon!
  • Hiring practices of Home Depot become unlikely fodder for a lively thread of 5 reader mail

  “If the United States attacks Syria,” asserts Reuters this morning, “it will be the first time it strikes a country that is capable of waging retaliatory cyberspace attacks on American targets.”

The Syrian war drums are beating a bit more quietly this morning… and they’re not keeping the same beat. On the one hand, the president says he still hasn’t made up his mind. On the other hand, a top presidential aide says, “We’re past the point of no return.” Clarity.

In the meantime, we’re still teasing out the impact ordinary Americans are most likely to see once the dogs of war are unleashed.

  “It’s likely that the Syrian Electronic Army does something in response, perhaps with some assistance from Iranian-related groups,” says Richard Clarke, former White House cybersecurity and counterterrorism adviser.

The Syrian Electronic Army took down The New York Times website for a second straight day yesterday. For its part, the SEA said in an email to Reuters that “Everything will be possible if the U.S. begins hostile military actions against Syria… Our targets will be different.”

As for that Iranian assistance? “Cyber experts,” Reuters goes on, “have said that Iran increased its cyber capabilities after the United States used the Stuxnet virus to attack Tehran’s nuclear program.”

As noted in our virtual pages last Friday, Iranian hackers have taken down the websites of nearly every major U.S. bank. “Banks,” says Reuters, “have spent millions of dollars to fend off the hackers and restore service.”

100  Global spending on information security will total $64.4 billion this year, according to the tech research firm Gartner. And that’s set to grow 8.7% a year through 2017.

Venture capital firms are falling over each other to fund promising “InfoSec” firms. On Monday, a firm called HyTrust, which does security for so-called cloud computing, locked up $18.5 million in funding. That’s only the latest in a string of deals going back the last 20 months.

“The cybersecurity market is in a renaissance period that should enable the good guys to leapfrog the bad guys in prevention and detection capabilities,” Greg Fitzgerald tells USA Today. He’s chief marketing officer at a security start-up called Cylance.

  Cybersecurity is also sequester-proof in the federal government’s budget priorities.

President Obama’s 2014 budget proposal boosts information technology spending by 2%, to $82 billion. Of that total, $13 billion is devoted to cybersecurity — split among the Pentagon, Homeland Security, even the Commerce and Justice departments. And let’s not forget the National Security Agency.

  “We believe our [cyber] offense is the best in the world,” says Gen. Keith Alexander — who wears the hats of both NSA chief and commander of U.S. Cyber Command.

So he told the House Armed Services Committee last March. Given the NSA’s penchant for secrecy, we’re learning about it only this week from the transparency advocates at the Federation of American Scientists…. Heh.

Alexander claimed the U.S. government maintains a “deep, persistent and pervasive presence on adversary [computer] networks.

“We maintain that access, gain deep understanding of the adversary and develop offensive capabilities through the advanced skills and tradecraft of our analysts, operators and developers. When authorized to deliver offensive cyber effects, our technological and operational superiority delivers unparalleled effects against our adversaries’ systems.”

No doubt.

As we’ve mentioned the last several days, the Pentagon is due to issue $110 million in new contracts on Sept. 1 under a cybersecurity program with the rather unimaginative name of “Plan X.” It’s the first wave in a $16.1 billion tsunami of federal cash.

Our Byron King has drawn upon his extensive contacts in government and the defense industry to identify seven companies set to soar once the announcement is made. Byron describes them as the Lockheeds and Raytheons of tomorrow, capable of turning a modest $100 investment into as much as $5 million.

Note well: Sept. 1 is this Sunday. If you even think you’re interested in this opportunity, time is of the essence.

  Stocks are clambering their way back from Tuesday’s lows. The S&P is up 10 points, to 1,645.

Blue chips are lagging the small caps, with the Dow up a half percent and the Russell 2000 up more than 1%.

  The Commerce Department’s latest guess on second-quarter GDP rang in this morning at an annualized 2.5% increase — way more than the initial guess last month of 1.7%. The difference, we’re told, is revised export figures.

Whatever. We don’t even think GDP is a meaningful statistic, much less one that’s measured honestly. But because it can move markets, we nonetheless take note.

  The commodity complex is taking a breather today. Gold has drifted back to $1,406. Silver’s back below $24. Crude is down a buck, to $109.15.

  Gold has touched all-time highs priced in Indian rupees.

“The gold price has exploded in India since the low hit on June 28,” Sprott Asset Management’s David Franklin informs us, “increasing a whopping 30% in the span of only two months!”

As we’ve chronicled much of this year, both the rupee and India’s balance of trade are cratering. The Indian government has tried to fight back in part by taxing imports on gold at a rate that’s been raised five times in the last 18 months.

“With capital leaving the country, investors fleeing the stock market and dumping Indian bonds,” says Mr. Franklin, “the only asset that has protected capital has been gold” — even if imports are now taxed at 10%.

  “NASA hot-fired a rocket engine using an injector fabricated from layers of a nickel-chromium alloy powder,” the Wired article begins.

“That’s cool. What’s cooler?” Wired asks.

“They used 3-D printing to create it.”

The injector is part of the rocket engine that releases hydrogen fuel and liquid oxygen into the combustion chamber, where the thrust is created. The 3-D-printed injector withstood 20,000 pounds of thrust, nearly 10 times more than any printed part in the past.

NASA has high hopes for 3-D printing: “In addition to simply reducing the costs of rocket engine components,” says Wired, “the agency is also looking to use the technique to print tools on the International Space Station.”

Another idea being explored by NASA is food printers, not unlike the replicators on Star Trek that provided food and water on board the starships. Also, the potential ability to print parts onboard as needed hasn’t gone unnoticed, either.

[Ed. Note: “Tea. Earl Gray. Hot” is still a ways off, but it’s the analogy Chris Anderson uses in his book Makers, all about the new industrial revolution. We’ve identified four companies set to make the biggest early gains as this $8.4 billion industry moves to the next level. For our comprehensive briefing, look here.]

  Those 3-D-printed rocket parts have come along just in the nick of time.

“Russia’s Security Council,” according to an article at RT’s website, “is reportedly considering a ban on supplying the U.S. with powerful RD-180 rocket engines for military communications satellites as Russia focuses on building its own new space launch center, Vostochny, in the Far East.”

Yep, NASA’s getting rocket engines from the Russkies.

“Sorry, guys, we need these for ourselves…”

“Previously,” the article goes on, “Moscow has not objected to the fact that America’s Atlas V boosters, rigged with Russian rocket engines, deliver advanced space armament systems into orbit. If a ban were to be put in place, however, engine delivery to the U.S. would probably stop altogether, beginning in 2015.”

Now you know…

  “Geez,” a reader comes back at us after Tuesday’s episode, “I thought this was The 5, not Fox News. LOL.

“You stated, ‘Your case would be more credible if you got the facts right. Home Depot’s salaried workforce totals 21,000, per USA Today. Presumably, not all of the remaining 319,000 are part time; there are surely many who are full-time hourly and, thus, entitled to overtime.’

“Seems to be pure conjecture on your part. You might do a reality check with Home Depot part-time employees (and the former full-time employees that have been forced down to part-time, and not the corporate PR flacks). Home Depot keeps part-time employees to 15-25 hours per week and has a strong policy against overtime.

“As The 5 has written, quarterly corporate profits are lackluster. Home Depot and many other companies are engineering profits by transforming their workforce to part time, temporary equivalent, and benefit free. Ultimately, this will crush the consumer and the economy.

“And please, do not use anything from the Fed to justify your response. You and most of those with a brain have figured out that the Fed is simply another propaganda machine. Blaming Obamacare is a canard. The truth is American workers now have negative income growth, and that ain’t good.”

  “Your reader’s comments Tuesday about Home Depot really struck a nerve in our household. First of all, Agora needs to research ITS facts. While full-time employees are eligible for overtime, in practice, no overtime is allowed.

[That’s why we said they were “entitled” to overtime. But go on…]

“If you have to stay over to service a customer today, you have to cut that time tomorrow, NOT by coming in a little later or being able to leave earlier, but cutting it on your lunch time, sit around and do nothing for whatever time you were over the day before. In the store where my spouse works (12 years seniority), it has already come down from Georgia (Home Depot headquarters) not to hire any more full-time employees, and all part timers will be limited to no more than 27 hours due to Obamacare, and I suspect to make sure the ‘zombies’ get their fat bonuses.

“They also are on a campaign to eliminate all employees over 50 or making more than slightly above minimum wage. This, of course, is not ‘official,’ but all you have to do is look around and watch them disappearing one by one and it doesn’t take a college degree to figure it out.

“Breaks are mainly a thing of the past, lunchtime is when they happen to feel they can spare you for the 30 minutes, can be up to a half hour before you leave from an eight-hour shift. For the older worker, ‘write-ups’ are a daily threat, most of which are trumped up. Get enough and then they have ‘reason’ to fire you and replace you with an $8.50 per hour person.

“At least my spouse will soon be 62 and can get out of there. *IF* they aren’t fired first, at least Obamacare will be available IF we can afford it. Thank you, Mr. Obama, for spreading the poverty around!!”

  “I would like all the people who believe Corporate America is cheating the workers in this country to take several days and visit the accounts payable department and itemize each and every expense that is paid.

“Most understand the costs of labor and materials that are needed, but hardly anyone understands the indirect costs, of which a large percentage are required to follow the regulations from the federal, state and local governments. While there, please note the taxes that are paid every week including the 7.5 excise tax for each dollar of wages, the unemployment tax, the necessary business licenses that must be renewed every year, the insurance to protect the company from all lawsuits, the annual tax on assets, the rent, which includes a portion paid to the local government for real estate taxes, and last, but not least, the benefits paid for every employee, plus others I’m not recalling at the moment.

“These are all costs that every business owner must pay for every day. People like to put the highly recognized names in the limelight, but the fact is most companies will pay all of these costs and never make a profit — a small point most liberals and the MSM fail to mention.

“Now comes the time where people want the government to tell certain companies they must pay their employees more than one of their competitors pays. To some extent, this is happening today, by the government selecting different companies to apply regulations to that are not imposed on others — selective evolution, you might say. In the end, the consumer, the public, is the ultimate loser. Just ask the people who lived in the Soviet Union during the last half of the 20th century how things were.”

The 5: An interesting debate that’s gotten going here…

Best regards,

Dave Gonigam
The 5 Min. Forecast

P.S. “3-D printing is about to do to product manufacturing what the Internet did to music distribution.”

Gee, where’ve we heard that before?

This time it comes from Brian Garret, chief technology officer and co-founder of 3D Hubs in an interview with Forbes.

“And,” Garrett added, “we’re here to facilitate this revolution.”

“According to their press release,” Forbes writes of Garret’s startup, “3-D printer owners use their device less than 10 hours per week, and 3D Hubs plans on taking the remaining 95% of that idle time.”

The vision is to create an interconnected network of 3-D “Hubs,” each offering 3-D printing services in their own community. They already have the largest network of 540 printing locations across the Western world.

Each Hub decides how much it wants to earn and sets its own prices. 3D Hubs offers an automatic 3-D model repair check for each order using software that makes sure each uploaded model is printable and automatically repairs any problems if necessary. They also process all orders and collect all payments. They make money by adding a 15% commission on top of the price given by the Hub.

Well, we said this day would come. While 3D Hubs helps to crack the mainstream 3-D printing code, you still have an opportunity to invest in those who will reap the biggest benefits. Click here to get in on the action.


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