Wednesday, April 25, 2018

Société Générale's Albert Edwards Says "My Reputation For Calling Stocks Is In Tatters"

Well duh. He's been stubbornly fighting the central banks for a decade, a trait he shared with fellow bear David Rosenberg until Rosie flipped a few years ago and caught the last 35% or so of the up move.
But it isn't for the equity calls that Albert gets paid , and they're not why pros still listen to him:
The House Fed has thwarted his House Stark at every turn.
Now he's getting ready to roll but it may be too late for him.
"I fought. I lost. Now I rest. But you, Lord Snow… you'll be fighting their battles forever."
Albert addressing another standing room only investment conference crowd

Last seen in "Société Générale's Albert Edwards: Winter Is Coming".

Albert's twenty-year bullishness on bonds and what declining yields tell us about the underlying economy is why SocGen keeps him around.

Here he is via ZeroHedge:
SocGen's permabear skeptic Albert Edwards is best known for one thing: predicting that the financial world will end in a deflationary singularity, one which will send yields in the US deep in the negative, and which he first dubbed two decades ago as the "Ice Age." He is also known for casually and periodically forecasting - as he did a few weeks ago in an interview with Barrons - that the S&P will suffer a historic crash, one which will send it back under the March 2009 low of 666.
In this context, a couple of recent events caught Edwards' attention.

First, speaking of the abovementioned Barron's interview, Edwards was taken aback by one commentator who took the SocGen strategist to task for his relentless bearishness. Indirectly responding to the reader, in his latest letter to clients Edwards writes that "it’s good to have a little humility in this business because it’s so darn humiliating when forecasts are proved wrong. And the bolder the forecast, the more humiliating it is!" He continues:
That is one reason why most commentators on the sell-side never stray too far from consensus. When I was an avid consumer of sell-side research some 30 years ago, there was one  thing about the macro sell-side that I truly marvelled at – namely the analysts’ ability to totally reverse a view and pretend that had been their view all along! In the days before the internet and email, I had to rifle through our storage cupboards to find the evidence of what were often 180 degree handbrake turns. In the internet age, there is no hiding any more. 
One of the most levelling experiences at the end of an article or interview about my thoughts is to scroll down and read some of the readers’ comments. In my case, they often marvel that I am still in any sort of employment at all! Some are witty and make me smile -– like the one below in response to a recent interview I did with Barron’s.
Edwards refers to the comment titled "‘Prescient as a Broken Clock?" authored by one Gordon Gould from Boulder, Colorado who writes:
“Barron’s notes that Société Générale’s Albert Edwards is a permabear (“S&P 500 Could Still Test 2009 Lows,” Interview, April 7). However, your readers would surely like to know how some of his previous calls have turned out. A quick Google search revealed that nearly five years ago, Edwards called for the Standard & Poor’s 500 index to hit 450 and gold to exceed $10,000. While even a broken clock is correct twice a day, perhaps in Edwards’ case, we’re talking about a broken calendar on Saturn, which takes about 29 years to orbit the sun.”
Albert summarizes his response to this comment eloquently, using just one word: "ouch." Hit to his pride aside, Albert asks rhetorically "Where did it all go so wrong?" and explains that in the Barron’s interview, "I explain why in my Ice Age thesis I still expect US equity prices to fall to new lows in the next recession." To be sure, this is familiar to ZH readers, as we highlight every incremental piece from Edwards, because no matter if one agrees or disagrees, he always provides the factual backing to justify his outlook, gloomy as it may be....MUCH MORE 
Over the years we've had some fun at Albert's expense. As noted in a 2017 post:

Every time I am asked why we post on Mr. Edwards "when he's been wrong so often" I debate whether to explain or just give a glib answer.
The flippant rationale would be we get to go with headlines such as:

Société Générale's Albert Edwards Descends Into A Nightmare World of Dream Demons and Market Depravity
Société Générale's Albert Edwards: "Many Think I am Mad..."  
Société Générale's Albert Edwards Sees Blue Skies, Sunshine, the Lame Shall Walk Again
Of course it's possible I have misinterpreted the meaning of 
"the US economy is on crutches, and they are about to be kicked away"
Société Générale's Albert Edwards Has Some Troubling News He Reluctantly Shares
Société Générale's Albert Edwards Not His Usual Jolly Self (II)
Société Générale's Albert Edwards: "I Have Been Wrong – I’ve Been Too Bullish"
It May Be Time To Put Société Générale's Albert Edwards On Suicide Watch
Société Générale's Albert Edwards: Cry Havoc and Let Slip the...Ah Screw it

And many, many more.
The straight-up answer is: I can't think of anyone else who nailed the deflationary bias in credit markets as well as he has for as long as he has, pretty much the last 15-20 years.
And as far as equities go, absent the extraordinary measures of the world's central banks the landscape would look very, very different.

The biggest criticism you can lay on the guy is he didn't realize what he was up against re: the powers that be.
Plus that whole Albert-in-the-bathtub period was just stupid.
You do have to be careful you don't personally get into a David Koresh/Jim Jones-Drink-the-Kool-Aid frame of mind when gazing upon the dark side, whether Albert or Ambrose Evans-Pritchard or Jim Chanos. I mean it's okay to play around with melancholy:

Music For Albert Edwards. On A Cold Day. In February
In F flat minor.* 
And it's raining.
Season's Greetings From Société Générale's Albert Edwards (Nov. 14, 2012)
 Expect the New Year to bring nothing but disappointment....

But be attuned to when to take Mr. Edwards with utmost seriousness. 
UPDATED *****Alert***** Société Générale's Albert Edwards Bearish *****Alert***** (Sept. 6, 2011)
We passed a three year anniversary yesterday.
On September 5, 2008 we posted "Meltdown"-Société Générale" which linked to Albert's research note of a couple days earlier:

***Alert****Economic and equity market meltdown imminent****Alert***

A good call.

On September 7, 2008 Fannie Mae and Freddie Mac were placed into conservatorship.
On September 14, 2008 Merrill Lynch agreed to be acquired by Bank of America to avoid a Reg. T shut-down when markets re-opened.
On September 15 Lehman filed their bankruptcy petition.
On September 16 AIG became a 79.9% subsidiary of the U.S. Treasury.

Within 10 more days the Nation's largest thrift, WaMu was seized and five days later Wachovia gobbled up.

Good times, good times.

So take what you can use and make dumb headlines with the rest

"Fraud police quiz Bollore for second day over Africa graft allegations"

We've looked at M. Bolloré a few times, the last being in December 2016's "Follow ‘Buffett of France’ for a Three-Year Double (BOL.France) (BOIVF)" with the stock in his namesake company (BOL:Paris) at €3.29.
Things were looking to be on track, with the shares hitting €4.75 in late January of this year, up 44% with 23 (now 20) months to go.
Until the recent unpleasantness. €4.10 last.

Bolloré was also chair of media giant Vivendi but we were more interested in his forays into Bolivian lithium, links below.

From Reuters:
French fraud police questioned tycoon Vincent Bollore for a second day on Wednesday, a judicial source said, over allegations his company undercharged for work on behalf of presidential candidates in Africa in return for port contracts.

Bollore, whose logistics empire is a powerhouse in former French colonies across West Africa, is suspected of corrupting foreign public officials and complicity in corruption.
His lawyer has denied any wrongdoing by Bollore.

Shares in Bollore fell as much as 3 percent on Wednesday after shedding 6 percent in the previous trading session.

The probe involves two separate cases, one in Guinea and the other in Togo.
Groupe Bollore confirmed on Tuesday its African business interests were under investigation over the billing for work carried out in Guinea and Togo between 2009 and 2010 by its communications business Havas Worldwide.

The group also denied any wrongdoing.

Bollore, 66, is being quizzed alongside Groupe Bollore Chief Executive Gilles Alix, head of the international division at advertising group Havas Jean-Philippe Dorent, and Francis Perez, the head of Spanish hotel and casino firm Pefaco, a judicial source said.
“The four are still in custody,” the judicial source said....MUCH MORE

"The World’s Longest Multi-Asset Momentum Investing Backtest!"

Two quick points:

1) When implementing momentum as a strategy always, always keep in mind the little "Trend, Friend, Bend, End" rhyme. If the momo mamas start moving toward the exits the resulting countermoves can be disastrous for folks still on the dance floor.

2) Those equity databases going back 200 years have a whole lot of problems starting with survivorship bias, small sample sizes, reliance on financials (banks), i.e. no wooden turnpike companies, failed canals... etc. etc.
In his monumental “COMMON-STOCK INDEXES 1871-1937″ Mr. Cowles is quite explicit as to the reasons he and the Commission didn’t go further back than 1871. (pg. 4) 506 page PDF hosted at Yale.
I've mentioned "Common Stock Indexes..." and the Cowles Commission a few times, usually when referring to one of the industrial companies, New York Guano but also because of the Cowles Foundation's connection to some Nobelists:

Robert Shiller
Tjalling Koopmans
Kenneth Arrow
Gerard Debreu
James Tobin
 Franco Modigliani
Herbert Simon
Lawrence Klein
Trygve Haavelmo
Harry Markowitz

Not as prolific as Cambridge's Cavendish Lab, 29 Laureates, mainly in physics, at last count but then the econ version isn't one of the original Nobels and hasn't been around as long.

From Alpha Architect:
As evidenced by the image below, interest in momentum research has taken off since the original 1993 Jegadeesh and Titman paper:
Source: “Two Centuries of Multi-Asset Momentum (Equities, Bonds, Currencies, Commodities, Sectors and Stocks)”
Most of the research on momentum is repetitive and reaks of data torture, but Geczy and Samanov have been conducting some fascinating out of sample research on the topic.

We have discussed prior research by Gezcy and Samonov here on U.S. equity momentum over 200 years of data. The evidence is similar to the academic finding that, on average, intermediate-term winning stocks continue winning, while intermediate-term losing stocks continue losing–otherwise known as a continuation of momentum for stocks.(1)

But studying 200+ years of equity data was not enough for Gezcy and Samanov — they have a new paper titled, “Two Centuries of Multi-Asset Momentum (Equities, Bonds, Currencies, Commodities, Sectors, and Stocks).”

This paper builds on the original paper (mentioned here), but adds (1) other asset classes and (2) examines time-series momentum. The paper also looks at how momentum performs in other asset classes and international equities. (similar to what Asness, Moskowitz, and Pedersen show in, “Value and Momentum Everywhere:” the momentum premia exists in international equities as well as other asset classes.

To follow-up on the “Value and Momentum Everywhere” study, this paper digs into how momentum works both within and across asset classes, over a longer time-period. The image below gives a graphical depiction of the number of asset classes studied in the paper across time.
 Image result for "The World’s Longest Multi-Asset Momentum Investing Backtest!"
Source: “Two Centuries of Multi-Asset Momentum (Equities, Bonds, Currencies, Commodities, Sectors and Stocks)”
Below we dig into the results from the paper.
The Results
First, the paper examines how momentum works within (and across) each asset class. This is done by sorting securities into a relative “winner” and a relative “loser” portfolio by using the classic 12_2 momentum screen — this is the twelve-month momentum of each security excluding the last two months (so 10 months of returns). Within each universe, the top third are deemed “winners” and the bottom third are deemed “losers.”

The table below examines the returns for each asset class to the Winner, Loser, and Winner minus Loser portfolios....MORE

Machine Learning Guru Pedro Domingos on the Arms Race in Artificial Intelligence

From Der Spiegel: 

April 16, 2018:
The Power of the Algorithms
In an interview, best-selling author and machine-learning expert Pedro Domingos discusses the global competition to take the lead in artificial intelligence, the advance of autocrats and the threats modern technology presents to Western democracies.
It's a quiet hallway in the computer science department at the University of Washington in Seattle. To the right, young software engineers sit in front of their laptops in the windowless, artificially lit rooms. To the left, computer science professor Pedro Domingos opens the door to his office, which has a view of the massive trees on campus.

Domingos' book "The Master Algorithm," about the technology of artificial intelligence (AI), made him famous and is also considered a standard reference work. The best-selling book, published in 2015, describes how machines that can learn are changing our everyday lives -- from the social networks and science to business and politics and right up to the way modern wars are waged. The book drew praise from Microsoft founder Bill Gates and Google CEO Eric Schmidt.

Recently, a third prominent figure noted that he'd read the book: Chinese President Xi Jinping. When state television broadcast his new year's speech this year, viewers discovered that next to Marx's "Capital" and "Selected Works" by Mao Zedong, he also has a copy of "The Master Algorithm" on his bookshelf.

"The book is much read in China," says Domingos. "That's probably why Xi and his people became aware of it. It's possible that it has now become even more popular." The book has also been published in Russian, Japanese, Korean and in many other languages, but not yet in German.
DER SPIEGEL recently sat down with Domingos in his Seattle office for an interview.

DER SPIEGEL: Mr. Domingos, Russian President Vladimir Putin says that he who leads in artificial intelligence will rule the world. Is that true?
Domingos: I agree with him, realistically. Artificial intelligence is a very powerful technology, and there is an arms race going on. Fast forward 20 years into the future and one of the players could have won the race. China is more likely to win than Russia is, although Russia has a lot going on. So, we could end up in a world that China may not formally control, but they effectively do because they rule the cyberworld.

DER SPIEGEL: Why is this tantamount to world domination?
Domingos: AI lowers the cost of knowledge by orders of magnitude. One good, effective machine learning system can do the work of a million people, whether it's for commercial purposes or for cyberespionage. Imagine a country that produces a thousand times more knowledge than another. This is the challenge we are facing.

DER SPIEGEL: Chinese President Xi Jinping is very interested in artificial intelligence. Did you know before his new year's speech that your book was on his shelf?
Domingos: I didn't know before, but I found out pretty quickly. This is something that Xi Jinping regularly does. These books are on his shelf to send a message, and the message that I think he is sending by having my book is, "We really believe in artificial intelligence." So, when I found out about it I was not extremely surprised given that the Chinese government had announced before that it wants to dominate in AI.

DER SPIEGEL: Which sentiment prevailed when you saw your book there -- a sense of recognition or one of concern?
Domingos: It was both exciting and scary. Exciting because China is developing rapidly, and there are all sorts of ways the Chinese and the rest of the world can benefit from AI. Scary because this is an authoritarian government, going full tilt on using AI to control their population. In fact, what we are seeing now is just the beginning. Like any technology, AI gives you the power to do good and evil. So far, we have been focusing on the power to do good, and I think it is enormous. But the power to do evil is there, too.

DER SPIEGEL: Is it by coincidence that two autocrats like Xi and Putin take such an interest in AI?
Domingos: When I travel around America, Europe and Asia, it is interesting to see how differently people feel about this technology. The picture coming out of Silicon Valley is a very optimistic one, informed by libertarian ideas. The very opposite is true for Europe: I just came back from a conference in Berlin where I was struck by the sheer pessimism. Every other session was about: "Oh, we have to fear this. Who knows what may be going on here?" Until someone made a point that was really on the mark -- as the conference was called "Humanity disrupted." He asked: "Why don't we call the conference 'Humanity Enhanced'?" Sure, AI brings disruption -- but we are being much more enhanced than disrupted.

DER SPIEGEL: And China and Russia?
Domingos: They unfortunately see the authoritarian and less the libertarian potential. Xi Jinping and Vladimir Putin ask themselves: "What could we do with this technology?"

DER SPIEGEL: Are we Europeans losing out to the autocrats?
Domingos: There are many AI applications being used in the U.S. and China, be it on the local or the national level, in medical research or traffic management. Less so in Europe. So, yes, Europe is missing out to an extent, unfortunately.

DER SPIEGEL: Your book has been translated into Russian and Chinese, but not into German or French.
Domingos: My literary agent told me: "You are going to sell this book all over the world, but not in France and Germany." And that's what happened. "The Master Algorithm" was sold to Japan, China, Taiwan, South Korea. There are Polish and Russian translations. But my agent was right when he said: "The Germans and the French don't like these things."

DER SPIEGEL: Your book warns of the limitations, even dangers of this technology if it ends up in the wrong hands. Aren't we worried for good reasons?
Domingos: There are dangers, and in terms of regulating AI, Europe is ahead of the U.S. Unfortunately, there is too much regulation without understanding the technology that is being regulated.

DER SPIEGEL: What do you mean by that?
Domingos: The European Union's General Data Protection Regulation (GDPR) is putting too much value on the factor of explainability -- meaning why an algorithm decides this way rather than that way. Let's take the example of cancer research, where machine learning already plays an important role. Would I rather be diagnosed by a system that is 90 percent accurate but doesn't explain anything, or a system that is 80 percent accurate and explains things? I'd rather go for the 90 percent accurate system.

DER SPIEGEL: Why can't we have both -- accuracy and explainability?
Domingos: The best learning algorithms are these neural network-based ones inspired by what we find in humans and animals. These algorithms are very accurate as they can understand the world based on a lot of data at a much more complex level than we can. But they are completely opaque. Even we, the experts, don't understand exactly how they work. We only know that they do. So, we should not allow only algorithms which are fully explainable. It is hard to capture the whole complexity of reality and keep things at the same time accurate and simple....MUCH MORE

No Suicide Today: "A man tried to jump off a Detroit overpass. Then 13 truckers saved him"

Yes, even unbalanced to the point of considering public spectacle suicide people can be rational enough to realize that with the distance of the fall reduced from 25 to 10 feet they're probably just going to look silly and maybe twist their ankle. So a happy outcome and props to the folks who organized the intervention.

From the Detroit Police twitter feed:

HT to and headline from The Detroit Free Press.

"Quantum Blockchains Could Act Like Time Machines"

From IEEE Spectrum:

Quantum blockchain systems could resist hacks by quantum computers
A newly proposed "quantum blockchain" could lead to blockchain systems impervious from quantum-computer hacking, a new study finds.

This new quantum blockchain can be interpreted as influencing its own past, making it behave like a time machine, the researchers add.

A blockchain is a kind of database that holds records about the past, such as a history of financial or other transactions, that every node in the network can agree on and that does not require a centralized institution to maintain its ongoing accuracy. The most well-known application of blockchains is Bitcoin, but a diverse array of startup companies, corporate alliances, and research projects have explored other potential uses for the technology.

"It's expected that 10 percent of global GDP could be stored on blockchain technology by 2027," says lead author Del Rajan, a theoretical physicist at Victoria University of Wellington in New Zealand.
However, blockchains might face trouble from another up-and-coming technology, quantum computers. Whereas classical computers switch transistors either on or off to symbolize data as ones and zeroes, quantum computers use quantum bits or qubits that, because of the surreal nature of quantum physics, can be in a state of superposition where they are both 1 and 0 simultaneously.
Superposition lets one qubit perform two calculations at once, and if two qubits are linked through a quantum effect known as entanglement, they can help perform 2^2 or four calculations simultaneously; three qubits, 2^3 or eight calculations; and so on. In principle, a quantum computer with 300 qubits could perform more calculations in an instant than there are atoms in the visible universe. A powerful enough quantum computer could successfully break conventional cryptography, including that protecting blockchains. 

Now researchers in New Zealand suggest a quantum blockchain could resist hacking attempts from quantum computers. All the components of this system have already been experimentally realized, they add....

"Let’s destroy Bitcoin"

There's a post at recode that is getting some traction "Bitcoin is the greatest scam in history" that probably wouldn't even be noteworthy but for the fact it's by Bill Harris (Paypal, Intuit).

The piece hits the highlights: failure as a means of payment, failure as a store of value etc. but all I could think as I was skimming through it was "Permit me to introduce you to Izzy Kaminska at FT Alphaville." She was already moving beyond those critiques in 2016 and getting into some pretty funny stuff that is on the wry/world-weary end of the spectrum.
(while avoiding Alinksy's rule #5: "Ridicule is man’s most potent weapon. It’s hard to counterattack ridicule, and it infuriates the opposition, which then reacts to your advantage...." cruelty is too easy.)

I suppose Mr. Harris' effort has some value as a warning to the naifs but for us crypto dilettantes it's hard to beat a Google search of FTAV: site: bitcoin Izabella Kaminska

This piece, contra Mr. Harris, is new and fresh and creative and...a little bit evil.

From MIT's Technology Review:
Three ways Bitcoin could be brought down, co-opted, or made irrelevant.
In 2009, Satoshi Nakamoto served the world an entirely new kind of currency. It was one that people could move over the internet instantaneously and nearly free of charge. Issued and distributed not by a central bank but by its own users, it drew the drapes of privacy around financial transactions while making forgery—in theory, at least—impossible.

It’s nine years later, and there are now 24 million active Bitcoin wallets in use around the world. The value of a single bitcoin has risen from about a dollar in 2011 to as high as $19,700 in late 2017.
But success, of course, breeds competition. And Bitcoin is now clearly the dominant cryptocurrency; as of this writing, in early April, its market cap was three times that of Ethereum, its nearest competitor, and roughly equal to those of all other cryptocurrencies combined.

Yet while Bitcoin has established an economy in which it’s impossible to forge transactions, it provides no defense against replication of the idea itself. No one can copy an individual bitcoin, but anyone can copy the idea of Bitcoin. So how might a government, or a corporation, or even ordinary people, go about doing so in a way that makes Bitcoin useless or redundant? Here are a few scenarios.

Option one: Government takeover
The year is two-thousand-something-big, and it’s the day your taxes are due. But you don’t file them. Instead an algorithm automatically makes a withdrawal from your electronic wallet, in a currency called Fedcoin.

It’s the digital version of those crunchy bills you only vaguely remember from many years ago, back before the central banks began taking paper cash and redeeming it for fedcoins. Over the years, you’ve seen less and less hard currency. You don’t need it anymore, not when you can walk into a local bank, verify your identity, and set up a wallet on your phone. Sure, you still have a few dollar bills. But they are tucked away as souvenirs.
This hypothetical technology—a ­central-bank-issued digital currency built with a tweaked version of the Bitcoin blockchain—was described by David Andolfatto, a researcher at the Federal Reserve Bank of St. Louis, and later refined by Sahil Gupta, who as an undergraduate at Yale wrote a study on how a currency like Fedcoin would work. With some colleagues, he wrote code to test a simulation.

In their system, a blockchain records transactions, just the way it happens with Bitcoin. Instead of being updated by a network of unaffiliated peers, however, the Fedcoin ledger is managed by institutions certified by the Federal Reserve. “These authorized nodes could be things like Bank of America, JP Morgan—basically, trusted institutions,” Gupta told me.
Each bank is responsible for a chunk of addresses on the blockchain. When new transactions come through, the bank validates them in a new block and sends it to the Fed. The Fed then acts as the final arbiter, checking the entries and unifying the blocks into a master version of the blockchain that it makes public.

To use fedcoins, people must first show proof of identity and set up a wallet with the Federal Reserve or an affiliate bank, at which point they can buy the new currency with US dollars at a one-to-one ratio. A scheme like this, says Gupta, might gain popularity and ultimately result in the slow disappearance of physical cash.

“I’d imagine people first get comfortable spending Fedcoin on things like groceries and movie tickets,” he says. “As people realize it’s easier than cash, as businesses realize it’s cheaper than credit cards, and as banks realize it’s literally more secure, so goes the process by which dollars are phased out of the money supply and Fedcoin phased in.”

This isn’t just an academic thought experiment. The Bank of Canada built a simulation for such a currency, on a blockchain similar to Ethereum’s, in 2016.

What such researchers are finding is that a digital version of state-run currencies could match or even improve upon the efficiencies of Bitcoin. Gupta believes that transactions should be processed much faster when a central bank is behind the system (as opposed to the peer-to-peer network that currently records Bitcoin transactions). This efficiency could add up to a lot of saved money. The Bank of England, which has been furiously researching blockchain technology, reported in 2016 that even partial adoption of a central-bank-issued digital currency would result in a 3 percent increase in GDP as the cost of taxes and transaction fees went down.

A shift away from cash would also make it easier for governments to collect taxes and enact monetary policy, says Campbell Harvey, a professor of finance at Duke University. For example, if a government wanted to disburse stimulus payments, it could simply deposit money into people’s Fedcoin wallets. “You drop five hundred dollars in everybody’s wallet, a single line of code. You’re done … there’s nothing in the mail, no mail being intercepted. There’s no people trying to fraudulently take the money,” he says. “It’s no surprise that every major central bank in the world has got a team looking at the possibilities of moving to a blockchain-­based crypto national currency.”

Option two: Facebook sneak attack
Let’s voyage once more into the future, but not so far this time. Because this scenario could happen tomorrow if the right people got their acts together. This time Bitcoin is usurped by a social-media behemoth. To make it easy, let’s choose the one that claims to have over two billion users worldwide.
To imagine how Facebook could use its popularity to topple Bitcoin, look at how another large network, Telegram, approached the issue. In January of this year, the company, whose secure-­messaging app has over 200 million users worldwide, announced that it would create its own app-specific cryptocurrency, called Grams, that users could send each other or use to pay for services within the network. By February, Telegram had raised $850 million from investors by selling the currency in advance in an initial coin offering. By late March it had raised another $850 million in a second round.

So Facebook, like Telegram, could issue its own native currency. Or it could take the more insidious route: adopt Bitcoin itself and take it over.
Today, the rules of Bitcoin are enforced by a triad of network operators: the users who make transaction requests, the miners who process those requests and write them into the blockchain, and the validators who watch the blockchain to make sure everything is up to snuff. All of them are using interoperable software, which is what keeps them united on a single version of the blockchain.
Any subset of these network actors can decide at any moment to use another version of the Bitcoin software with slightly different rules to split off from the rest and form a parallel currency. Exactly that happened last year with the creation of Bitcoin Cash, an alternative blockchain with slightly different specifications that allow it to process more transactions in each block.

If Facebook could persuade a large enough fraction of Bitcoin users and miners to run its own proprietary version of the Bitcoin software, the company would thereafter control the rules. It could then refashion Bitcoin as a corporate version of the Fedcoin described above.

But there’s an even better way that doesn’t involve converting a bunch of true believers: Facebook could pull off a takeover before most people even realized what it had done. If you’re reading this, Mark, here’s how to do it....MUCH MORE

Capital Markets: "Dollar Regains Luster, but Consolidation Likely Ahead of Key Events and Data"

This actually appears to be a major move to and through the top of the recent range for the dollar index:
From Marc to Market:
The US dollar reversed lower yesterday after US yields softened and equities tumbled. However, the greenback has bounced back, and has extended its gains against the major currencies except the euro and sterling. The on-the-run and generic US 10-year yields are edging above 3%.

Despite a soft reception to yesterday's $32 bln sale of two-year notes, the yield is holding just below 2.50%. The 2-10 year yield curve, who's flattening has caused consternation among investors and pundits, is at 52 bp, which is where it was at the end of last year.

Equities are heavy after yesterday's sharp losses on Wall Street. Dow Jones Industrials were down for fifth consecutive session, and the S&P 500 post its biggest loss in two weeks. The NASDAQ extended its losing streak to four sessions. There is some disagreement over the cause. One camp attributes the equity losses to the rise in yields. The other sees less optimistic guidance by Caterpillar and 3M yesterday as the proximate cause, and ideas that expectations for strong earnings and been largely discounted.

The MSCI Asia Pacific Index fell 0.5%. It is the third loss in the past four sessions. Technology shares continues to lead the way. The benchmark sits at a two and a half week low. One of the flow stories we have been tracking is the foreign sale of Korean shares. The selling accelerated to $791 mln today, nearly twice the pace seen in the previous two sessions. Of the $2.8 bln liquidated this year so far, $1.65 bln has taken place this week.

The Dow Jones Stoxx 600 is off 0.9% in late morning turnover in Europe. Financials, energy, materials and industrials are all off more than 1%. Consumer staples are trying to buck the trend. Yesterday the benchmark traded at its best level since early February and today's drop brings it back to April 17 levels.

European bond yields are being dragged higher by the rising Treasuries. Core bond yields are up 1-2 bp in Europe, and that puts the 10-year Gilt yield at two-month highs (~1.55%) and the 10-year Bund at its highest yield (65 bp) since March 12.

The news stream is light, but the lull will not persist long. Tomorrow the ECB meeting concludes and Friday the BOJ meeting ends. Several countries, including the US and UK will report the first look at Q1 GDP ahead of the weekend....MORE

Tuesday, April 24, 2018

"This is Russia’s new North Pole base"

Trigger Warning: For those who remember Tsar Peter's trip to England (and who doesn't?) the mention of "Admiralty Yard" in the first paragraph may induce recollections of being declared insolent.*

From The Barents Observer:

It will house up to 62 people and be able to move autonomously around in Arctic ice for up to two years.
 The Arctic research platform is to be ready for operation in 2020. Illustration by
The Russian Hydrometeorological Service (Roshydromet) has signed a contract with the Admiralty Yard in St. Petersburg over the construction of the North Pole research platform.
The floating self-propelled installation will have ice classification Arc8 and fuel supplies sufficient for two years of autonomous sailing. It will have a crew up to 14 people and can house 48 researchers.
It is to be completed in year 2020. Construction is expected to start early 2019.

«Today’s event marks the start of a principally new and comprehensive phase in the battle for scientific knowledge in the Arctic under condition of melting ice», Roshydromet leader Maksim Yakovenko said as he signed the construction contract with Admiralty Yard Director Aleksandr Buzakov.

«We are proud that Russia here is in the lead», Yakovlenko underlines....

*Or maybe it's just me.
It was a different Admiralty and a different country, a different time and a different place, the past is a foreign land etc, etc.
At any rate, an old tale about Peter the Great's trip to England in 1698 and repeated in Prime Obsession: Bernhard Riemann and the Greatest Unsolved Problem in Mathematics:
From his British trip the following story is well known, though it is almost certainly apocryphal. Staying at John Evelyn's country house outside London, Peter marched into the drawing room one day with a shotgun over his arm and announced, in thick English, "I haff shot a peasant." "No, no, my dear fellow." replied his host, laughing. "You mean a pheasant." "Nyet," said Peter, shaking his head. "It voss a peasant. He voss insolent, unt so I shot him." 
Great story but not borne out by the facts. Pete stayed at Evelyn's home in Deptford which was handy to the naval dockyard (an Admiralty Yard) where the Tsar went incognito to learn the tricks of the navy biz.
Not that it is impossible the writer and the Tsar visited the country place but describing it as Evelyn's is wrong and shows a certain fast-and-loose approach to the truth. 

Evelyn didn't inherit the family estate from his brother until 1699 by which time Peter had returned to Russia and begun building his navy, but this story was told to me almost word-for-word the first time I was described as insolent.
So I looked it up.

And for some reason recalled it in a post about Crispin Odey.
So yes, it's probably just me.

All clear on the trigger warning.

"New South African church celebrates drinking alcohol"

S&P 500 down 1.45%
Nasdaq down  1.74%

From the Associated Press:
ORANGE FARM, South Africa (AP) — Dressed in a red robe and a gold-trimmed bishop’s miter, the clergyman pours whiskey into his cupped hand and anoints the forehead of the man sitting before him.

“You are hereby invested as a minister ... This is a double tot,” he says of the remaining whiskey in the chalice. He hands it to the new minister, who downs it.

“Hallelujah!” shout the congregation members who erupt in singing and dancing, swigging from bottles of beer.

Welcome to Gabola Church, which celebrates the drinking of alcohol. The South African church was started eight months ago and has found an enthusiastic following.

“We are a church for those who have been rejected by other churches because they drink alcohol,” Gabola’s founder and self-declared pope, Tsietsi Makiti, told The Associated Press. “Gabola Church is established to redeem the people who are rejected, who are regarded as sinners. We drink for deliverance. We are drinking for the Holy Ghost to come into us.”...MORE
A pool table served as the altar, adorned with bottles of whiskey and beer. Six ministers at the altar solemnly blessed the chilled jumbo bottles of beer bought by most churchgoers. A few drank whiskey, brandy or other beverages, all of them similarly blessed. The congregation sang hymns praising the positive effects of drinking. Three new Gabola members were baptized with beer which covered their foreheads and dripped down their faces.

Ha! This Marketing Lingo Isn't So Hard To Learn: Just Fancy It Up Beyond Recognition!

April 12's "Uber Is Launching A Car Rental Company Inside the App" mentioned in passing that in addition to renting cars Uber had purchased a dockless bicycle company, Jump.Bikes. And I. being a smart ass, declared:
Just so you know, in future we will be referring to the bikes as "A component of the multi-modal transportation system that is Uber"
A week later, April 19 SmartCitiesDive noted that rideshare company Via Transportation and bicycle co. Mobike had hooked up:

Dive Brief:

  • This week, Via and Mobike launched a joint Earth Day-inspired initiative allowing Via users in Washington, DC to purchase a 4-week "multi-modal transportation bundle," dubbed ViaPass, that includes unlimited access to Via rides and Mobike dockless bikes for one upfront fee....

Google Ventures General Partner: "Increasingly, it feels like people in our industry, the tech industry, are losing touch with reality."

From M.G.  Siegler at 500ish Words*:

Arrogance Peaks in Silicon Valley
As we slip out of touch with reality…
There’s something that has been in the back of my mind for some time now. And while it pre-dates the Facebook fiasco, that situation certainly brings it to the forefront. Increasingly, it feels like people in our industry, the tech industry, are losing touch with reality.

You can see it in the tweets. You can hear it at tech conferences. Hell, you can hear it at most cafes in San Francisco on any given day. People — really smart people — saying some of the most vacuous things. Words that if they were able to take a step outside of their own heads and hear, they’d be embarrassed by.

Or, at least, these are stances, thoughts, and ideas that these people should be embarrassed by. But they’re clearly not because they keep saying them.

This isn’t only about Facebook — far from it. That’s just the most high profile and timely example of a company suffering from some of this. And in that case, it’s really more in their responses to the Cambridge Analytica situation, rather than the situation itself (which is another matter, though undoubtedly related). They don’t know the right things to say because they don’t know what to say, period. Because they’ve slipped out of touch....MORE
*M.G. Siegler General Partner @ GV (née Google Ventures). In past lives I wrote at TechCrunch, VentureBeat, and ParisLemon. A man of few words. Except when writing
Note from the editor
As someone who used to write for a living, I believe most things that I read on the internet these days are far too verbose. With that in mind, I try to keep everything here around 500 words. Sometimes it will be a bit less. Often a bit more. Sometimes quite a bit more. But I try. Thanks for reading.

What Did George Soros Know When He Blasted Google and Facebook Last January?

"The owners of the platform giants consider themselves the masters of the universe, but in fact they are slaves to preserving their dominant position. It is only a matter of time before the global dominance of the US IT monopolies is broken. Davos is a good place to announce that their days are numbered." 
From Quartz, January 25:

At Davos, George Soros tears into Facebook and Google
Davos, Switzerland
Financier and philanthropist George Soros criticized Donald Trump and Vladimir Putin at his annual Davos dinner, decried the state of global democracy, and warned about the rising threat of nuclear war.
While his words were certainly chilling, Soros has sounded some of these warnings before. This year, though, he flagged a brand new threat—the unchecked power of Google and Facebook, which Soros feels now have “monolithic power” that they’re using to manipulate and deceive consumers. The net result could be totalitarian control, Soros said. Here is a transcript of his full remarks on the topic:
These companies have often played an innovative and liberating role. But as Facebook and Google have grown into ever more powerful monopolies, they have become obstacles to innovation, and they have caused a variety of problems of which we are only now beginning to become aware.
Companies earn their profits by exploiting their environment. Mining and oil companies exploit the physical environment; social media companies exploit the social environment. This is particularly nefarious because social media companies influence how people think and behave without them even being aware of it. This has far-reaching adverse consequences on the functioning of democracy, particularly on the integrity of elections.

The distinguishing feature of internet platform companies is that they are networks and they enjoy rising marginal returns; that accounts for their phenomenal growth. The network effect is truly unprecedented and transformative, but it is also unsustainable. It took Facebook eight and a half years to reach a billion users and half that time to reach the second billion. At this rate, Facebook will run out of people to convert in less than 3 years.

Facebook and Google effectively control over half of all internet advertising revenue. To maintain their dominance, they need to expand their networks and increase their share of users’ attention. Currently they do this by providing users with a convenient platform. The more time users spend on the platform, the more valuable they become to the companies....MUCH MORE

China and Pigs and Soybeans: It's Complicated

What if China doesn't really need as many American soybeans as they once did, what if China has hit Peak Pork?
From Asian AgriBiz:

Plunging prices slow down pig production in China
April 23, 2018
After years of expansion, Chinese pig producers are slowing down or postponing expansion projects as oversupply has dragged prices down to an eight-year low in March. A report by Reuters said this development indicates that “years of frenzied investment to boost hog production has been overdone” while growth in demand has not kept pace and global pork supply is at its highest. With the country being the biggest producer and consumer of pork, the glut is already affecting the global market, especially as many key pork exporters like the EU and the US are seeing higher pork production.
What if  the tariffs are just political theater making use of a situation that was going to happen anyway.
We'll have more later this week.


May-20181019'2 -1'4

Jul-20181030'4 -1'6

Aug-20181033'2  -1'2


Monday, April 23, 2018

Shipping: French Giant CMA CGM Looking to Expand Logistics Business with Investment in CEVA Logistics

Splash 24/7 headlined their report on last month's Maritime CEO Forum: "...Shipping Anywhere From 30 to 500 Years Behind the Technology Curve". Everyone is looking at logistics as the magic bullet with talk of blockchain being the silver bullet magic bullet. Some links below.

From gCaptain:
CMA CGM, the world’s third largest container shipping company by TEU capacity, will acquire 25% stake in supply chain management company CEVA Logistics as the French shipping giant looks to grow its presence in the logistics sector.

CMA CGM announced Friday that it has committed to subscribe for mandatory convertible securities of CEVA in an estimated amount between 380 and 450 million Swiss francs, or approximately USD $389-$461 million.

Headquartered in Hoofddorp, Netherlands, CEVA Logistics specializes in both freight management and contract logistics. The company employs approximately 56,000 employees and temporary/agency workers in 160 countries. In 2017, the company posted revenues of over US$7 billion....MORE
Shipping: Carriers Fear Becoming the "Uber Drivers of the Sea" (but quants to the rescue?)
"Maersk Tankers invests in quantitative hedge fund CargoMetrics"
"10 Startups Making Ocean Container Shipping Easier"
New Orwellian Hedge Fund Watches All The World's Shipping For Billionaires
Shipping: Freight Forwarder Flexport: "...Digitizing The Entire International Shipping Process"
Shipping: Every Link In The Global Trade Supply Chain That Blockchain Could (maybe) Transform
"10 Startups Making Ocean Container Shipping Easier"
Norwegian Government to Chip In $17 Million to Develop the First Electric Autonomous Cargo Ship
Shipping: "Value of Autonomy Questioned"
Shipping: "Amazon vs Maersk: The clash of titans shaking the container industry"
"TEU Tokens and Blockchain Could Shape the Future of Container Shipping"
Shipping: Despite $300 Million Revenue Hit From Cyber Attack Maersk Is Upbeat 
Shipping: "The True Implications of the Technology Revolution"
Shipping: Following Maersk,"Now CMA CGM signs with Alibaba for online booking of container space"
Shipping: A Warning To Freight Forwarders, The Good Times Are Over
Shipping: "Amazon Enters Trillion Dollar Ocean Freight Business" (AMZN)
Shipping: Maersk, Alibaba Team Up To Offer Space On Container Ships.    

"US Army Figures Out How To Do Facial Recognition in the Dark"

From Defense One:

New method uses machine learning to extrapolate features from thermal images.
It’s no mean feat for a computer to identify an individual’s face in daylight. The process involves precisely measuring a photograph — eye size, distance from nose to mouth, etc. — adjusting the distances for three dimensions, and searching a database for a match. But to do it at night, when all you have is far lower-resolution thermal images, the Army Research Lab used a technique that allows software to mimic the human brain.

Our brains “see” by extrapolating a picture from a relatively small amount of sensory data, filtered through the eye. The brain uses several times more neuronal mass to construct images from visual data than the eye does collecting the data.

The Army researchers saw a parallel with thermal images. Such images show what parts of the face are hotter and cooler, but generally contain fewer data points than a comparable optical image from a camera, making it hard to pick out distinct features. So they set up a convolutional neural network, or CNN, a deep-learning method that uses specific nodes similar to the brain’s, and set it to infer faces from limited data.

The method that the researchers use breaks a thermal picture of a face into specific regions and then compares them to an optical image of the same face. The network estimates where key features are in the thermal image in relation to the conventional image. The network’s final product is something like a police sketch — not a perfect match, but with enough overlap in key points to make a high-certainty match....MORE
Here's the US Army press release:
Army develops face recognition technology that works in the dark

"'Smart Condom' Tracks Thrust Speed and Velocity and Lets you Share the Data"

Share the data?
Even Facebook might demur.

From c|net:

Sex wearable is coming to track your performance and judge you
It's basically a Fitbit for your man bits that tracks thrust speed and velocity. But don't be too hard on yourself.
The i.Con Smart Condom, which markets itself as the "world's first smart condom," is actually a ring that fits over a boring, dumb condom and claims to track the exercise of your man bits, as well as detect chlamydia and syphilis.

The ring, first announced last July, is currently available for preorder on British Condoms for £59.99 (about $74, AU$97) with an unknown release date. But you can't actually put a ring on it yet -- the company says it won't take your money until the product has a firm release.

In short, the i.Con ring promises to answer every burning question you've ever had about your sex session. Don't worry, it will pair with an app for all your data visualization needs.
According to the preorder page, the ring will answer questions such as:
  • What's my thrust velocity?
  • How fast are my thrusts?
  • How many calories did that sesh just burn?
  • How many times did I just have sex? 

i.Con? Is that one of them psychomimes? (not to be confused with a Psycho Mime—the silent killer)

HT: Librarian Shipwreck who, like us, is a year late to the story.