Saturday, January 24, 2015

"Robots Can’t Dance: Why the singularity is greatly exaggerated"

From Nautil.us:
Can a robot be creative? Advances in cloud robotics—machines connected to supercomputers in the cloud—have given self-driving cars, surgical robots, and other “smart” devices tremendous powers of computation. But can a robot, even one supercharged with artificial intelligence, be creative? Will a mechanical Picasso paint among us?

Ken Goldberg is the ideal person to ask. For one thing, when he was getting his Ph.D. in computer science at Carnegie Mellon University, Goldberg built a robot that painted. For another, Goldberg, 53, is a computer engineer, roboticist, and artist himself. He grew up in Bethlehem, Pennsylvania, where he forged his creative path. “I was an outsider, at odds with what other kids were doing, and became very interested in art,” he says.
Today Goldberg is Professor of Industrial Engineering and Operations at the University of California, Berkeley, where he also directs a lab on automation sciences, a center for medical robots, an initiative on data and democracy, and a center for new media. He’s published more than 150 peer-reviewed papers on topics such as automation algorithms and his artwork has been exhibited at the Pompidou Center, Whitney Biennial, and Berkeley Art Museum.
Goldberg has strong views on creativity and how it differs in computers and people. His energy and intellect are infectious as his mind races from one idea to another. Our conversation ranged over his own projects and heroes, from gothic literature to Google Glass, Freud to philosopher Hubert Dreyfus. We spoke at his UC Berkeley lab and at a restaurant in Mill Valley, California, near his home, where he lives with his wife, Tiffany Shlain, a filmmaker and the founder of the Webby Awards, and their two daughters, Odessa and Blooma.

What’s been your most creative moment in science?
I spent a summer in graduate school trying to find the mathematical proof of completeness for an algorithm I had written to orient polygonal objects. I lived alone and every day I would write out ideas. To keep my sanity I made paintings of the rickety old stone stairs in the alley outside of my apartment. I woke up one morning and realized I could prove it using a step function. It was a true Aha! moment. The proof has been cited over 400 times.

Einstein talked about how the greatest scientists are also artists. For him all great achievements in science must start from intuitive knowledge.
Agreed. Intuition is a hunch, sensing there’s an opportunity—how to set up the problem. As an artist it’s finding the right idea or concept. Making an opera about Klinghoffer, for example—that’s not an obvious subject for composer John Adams to have come up with. In both science and art, one must rely on a gut feeling about which direction to go.

Tell us about your painting robot.
I liked the idea of a robot being able to demonstrate that a machine can go through the motions of painting but can’t capture the eloquence, the subtlety, the nuance of a human painter. What also fascinated me was how people responded to the robot. The performative aspect of a moving robot was very hypnotic and fascinating to them.
Carstensen_BREAKER-2Bloom: Goldberg and his collaborators transform seismic data into a display of color. A seismometer at the Hayward Fault measures the Earth’s motion and transmits this data over the Internet to the installation, where the data is processed in real time to produce an abstract field of unpredictable circular blooms.
Watch live online version here
Sounds like that laid the groundwork for your “Telegarden.” Tell us about that.
In 1993 I was teaching at USC. My students came to me and showed me this amazing thing called the World Wide Web. We sat around brainstorming about what we could contribute. Since we were working in robotics and had robots in the lab we thought, “Why don’t we connect a robot to this Web and let people control it from anywhere in the world?” We got super excited about the idea of having a robot do something that was ironic. We wanted to have it tend a garden. A garden is interesting because in some way it’s the last thing you expect a robot to be doing. I loved the juxtaposition of the natural and the digital worlds....MORE

Friday, January 23, 2015

"Hedge Fund Manager Blows Clients’ Money in Three Weeks"

From Barron's Focus on Funds:
Canarsie Capital has a grim message for clients: “a series of transactions over the last several weeks that have resulted in the loss of all but two hundred thousand dollars.”

Juliet Chung and Susan Pulliam report that Canarsie, named for the east Brooklyn neighborhood, told clients on Thursday Tuesday that the $60 million hedge fund lost all but $200,000 of its assets in about three weeks.

CNBC’s Lawrence Delevingne first reported that that Owen Li, the fund’s founder, was contrite about the massive loss:
“My only hope is that you understand that I acted in an attempt—however misguided—to generate higher returns for the fund and its investors. But even so, I acted overzealously, causing you devastating losses for which there is no excuse”
Li, a 28-year old former Galleon Fund Management trader, reportedly ran the firm with Kenneth deRegt, former head of risk management at Morgan Stanley....MORE

You Can Rent a Tesla to Sleep In, From Airbnb, for $595/Wk

I don't think this is what Menon, Negroponte et al had in mind when they were talking about technological convergence.
From Jalopnik:

Most Tesla Owner Ever Turns $118,000 Model S Into AirBnB
Innovative Tesla Man ponders to himself, "hm, how can I combine as many hip startup tech ideas together as possible at the same time? What about AirBnB... Tesla????"
 Most Tesla Owner Ever Turns $118,000 Model S Into AirBnB
Yes, this guy has actually listed his Tesla as a two-person bedroom, filling the Model S P85's spacious interior with a 36"-wide air mattress, a pillow and multiple sheets. The listing claims "it goes 0 to Sleep in 4.2 seconds!" ...MORE
Here's the airbnb page:
Description
The Space
Stay in the World's First TESLA HOTEL!

Price includes a Tesla pick-up & drop-off at Sky Harbor Airport IF our schedules match up! Or use the UBER app to get to the Tesla Hotel. It's less than $20 - or first time Uber users get it FREE with Promo Code: uberTeslaRenter

The airbed in back sleeps 2 in climate controlled comfort all night. Since the Tesla uses NO gas the Tesla's A/C or Heat can run all night without any problem locked securely in my attached garage. You can set the mood with your selection of any Internet music you would like on the huge 17" monitor. How often do you get to sleep in a $118,000 Electric Car?

The Twin Airbed is 6'6" long and 36" wide. The space in back is even wider, 40" wide near the wheels and up to 56" wide near the rear doors so you have extra room to move about. It comes with clean sheets, pillows and a blanket or comforter if you like.

**Sorry, NO NBA Players allowed. Despite my love for basketball, the Tesla is just too small for anyone over 6' 6". Please...stop asking....

"Mapping New York City's Most Expensive Homes Ever Sold"

From Curbed:
 top-20-sales-ever.jpg
New York's glassy One57 tower, the founding father of Billionaires Row, recently smashed the record for the most expensive home ever sold in New York City, with a $100.5M sale of the duplex penthouse, finally usurping the $88M sale at 15 Central Park West. To mark the occasion, and reminisce about "cheaper" days, appraiser and graphing guru Jonathan Miller pulled up the top 20 most expensive sales in the history of the city. We turned the list into a map, which conveniently doubles as a tour around southern Central Park. All of the sales are $50 million or more, only two are located Downtown, and just in case you didn't think the market was off the charts, more than half of these sales happened last year....
...MUCH MORE

A New Book Claims the Internet Has Bred a Different Type of Capitalism

From Motherboard:
On a former industrial patch five floors of glass and steel luxury rise skyward. Bebo founders Michael and Xochi Birch recently launched the Battery, a new hangout for the Silicon Valley elite which, in the owners’ words, will “build community and understanding in San Francisco.” There’s no dress code and they want a diverse clientele.

“So I asked if I could join,” said Andrew Keen. “And they start mumbling and looking at their feet. They say you have to be invited.”

In his new book The Internet is not t​he Answer, Keen rubs up against the “Silicon one percent” to document what he sees as a profound hypocrisy—an elite made wealthy by the internet, co-opting the language of “community” while privatizing public life in every direction.

“You’ve got wealthy Oakland residents crowd-funding thei​r own militias,” he told me in a phone interview. “Google have superimposed Google Bus on San Francisco’s public transit system. These companies are eating away at the idea of public society.” The so-called Google bus is the private shuttle service that recently​ sparked protests as a symbol of gentrification and over the way it used public stops.

A British-born writer and a prominent critic of the web since his 2008 best-seller The​ Cult of the Amateur, Keen occupies an unusual position in the Valley. He is an entrepreneur who’s worked on startups like Audiocafe but is now most famous as Silicon Valley’s rebel critic, a businessman-turned-pundit emphasising social responsibility. His new book fights the current tendency to recommend the internet’s model of networked capitalism as the solution to the world’s social, political, and economic problems.

“There’s this belief that the internet’s the answer to everything,” he explained, citing venture capitalist Shervin ​Pishevar’s call to “Uberize the government.” (Pishevar later tweeted that he was joking).

With the disintermediating tools of the digital sharing economy, traditional mediators like agencies/small-ads/labor exchanges are replaced by networks. Such networks have a phenomenal edge in matching supply and demand (hence the massive success of something like ​Airbnb) but in Keen’s view would make a disastrous choice for managing government and economies....MORE

"How The Swiss National Bank Almost Crushed George Soros"

Following up on "George Soros 'finally' retires".
From ZeroHedge:
Minutes after last week's Swiss National Bank shocker, jokingly we mused:
Will be ironic if Soros was long EURCHF
... because there would be nothing more ironic if the man who "broke the Bank of England" ended up being FXCMed himself by another central bank, over two decades later and just as he was set to finally retire, at the age of 84, formally, something he supposedly announced in Davos yesterday.

As it turns out, we were almost correct, and according to the WSJ, Soros Fund Management, which manages more than $25 billion for investor George Soros, was betting against the Swiss franc in the fall before it removed those bearish positions.  Why did the Soros so conveniently take off a bet which, with leverage, could have resulted in massive losses for his hedge fund? The WSJ says he did so after "viewing the risk as too high relative to potential gains, said people close to the matter." Well as long as "people close" think Soros did not have input directly from the Swiss central bank, or perhaps the occasional hint from Kashya Hildebrand, then one can't help but marvel at the octogenarian's impeccable timing.
As a result, the franc’s surge last week didn’t have a major impact on Mr. Soros’s firm’s profits, "these people said." Naturally, if Soros was still short the CHF, he would have suffered massive losses.
Curiously, Soros wasn't the only one to "luckily" pull his bearish CHF exposure ahead of the 30% move: Brevan Howard Asset Management, run by billionaire Alan Howard , was profiting from a negative bet on the Swiss franc against the dollar before it cut back shortly before the Swiss currency soared. Brevan’s flagship $23.7 billion fund gained 0.8% last week, taking gains for this year to 1.9%.
How lucky.
So Soros and Brevan were spared due to some truly impeccable timing. Others were not as lucky. Here is a quick recap of all the hedge funds (excluding the numerous retail FX brokers such as FXCM that blew up in the aftermath) that have been known to have suffered terminal or partial, but still cripppling, losses. We already know about
  • Marko Dimitrijevic, who survived at least five emerging market debt crises, is closing his largest hedge fund after losing virtually all its money when the SNB unexpectedly let the franc trade freely against the euro, according to a person familiar with the firm. Everest Capital’s Global Fund had about $830 million in assets as of the end of December, according to a client report. The Miami-based firm, which specializes in emerging markets, still manages seven funds with about $2.2 billion in assets. The global fund, the firm’s oldest, was betting the Swiss franc would decline, said the person. A spokesman declined to comment on the losses. Calls to Dimitrijevic weren’t returned.
  • Michael Platt’s BlueCrest Capital Management lost 5.5 percent in its macroeconomic fund through Jan. 16, two people with knowledge of the matter said. Amid the losses, Luke Halestrap and Peter McGarry left the $15 billion Jersey-based firm and BlueCrest shut a portfolio run by currency money manager, Peter Von Maydell, according to people with knowledge of the decisions. Von Maydell, Halestrap and McGarry didn’t reply to e-mails and telephone messages seeking comment.
  • Comac Capital, the $1.2 billion firm run by Colm O’Shea, is returning money to clients after it lost 8 percent from the franc surge. The declines bring its loss this month to 10 percent, according to a person familiar with the matter. London-based Comac will continue to trade with internal money, the person said. A spokesman declined to comment.
  • Fortress Investment Group’s main macro hedge fund lost 7.6 percent last week, a period during which markets were roiled by movements in the Swiss franc. The macro fund’s decline last week brought its losses this year to 7.9 percent, Reuters reported, citing a letter to investors. Fortress didn’t give a reason for the loss in the letter, according to Reuters. Gordon Runte, a spokesman for Fortress, declined to comment.
  • SaxoBank moments ago reported it would lose up to $107 million on the Swiss Bank move.
But while the vast majority of "hedged" speculators were massively short the CHF into the Swiss announcement, there were some who bet against the central bank, and made huge profits....MORE

Convergex on "What Oil Price Would Signal a Global Recession?"

As I noted in Jan. 8's "Of Schlumberger, Asian Tigers and $10 Oil (SLB; HAL)":
The key concern for folks who think about this stuff  is: "Are the oil markets telling us something about the larger economy or not."
And just to make things interesting, we're getting different messages from the equities than we're getting from the commodity....
Brent $49.16 up 64 cents; WTI $46.26 down a nickle.
From Forbes:
The decline of oil prices to less than $50 a barrel has an undeniably positive effect on the global economy. From the U.S. to China, people are driving more and spending more, a much needed economic boost in generally glum times.

But to investors, a too-low oil price can also be a sign of trouble. The price of oil has certainly dropped because of an increase in supply – specifically, OPEC’s refusal to cut production and the vast amount of shale oil and gas being pumped in the United States. But the price of oil is also a product of slowing economic growth and declining demand, especially from China, Japan and the Eurozone.

China, which is currently experiencing an economic slowdown, propelled roughly half of the annual world growth in oil demand over the last decade. “[T]he whole damn thing is driven by China. When the investment cycle turns down, everything goes down,” Andy Xie, a former economist for Morgan Stanley, told the Globe and Mail.

So what exactly is too low when it comes to oil prices? According to a recent survey of investors, the tipping point may be around $30.

Convergex, a brokerage house, recently surveyed 306 professional investors about what oil price would signal a global economic recession. Roughly a third of their respondents named a price of between $26 and $30.....MORE
See also:
The Opportunity In Shorting Energy Equities (XLE; XOP)

The 16 Trends Andreessen Horowitz Is Watching

From Quartz:
Andreessen Horowitz reveals the 16 trends it’s closely watching
It’s hard to predict what startups Andreessen Horowitz wants to get behind. The venture capital firm—arguably one of the most influential in the tech industry—invests in about 1 out of every 100 deals that come its way, making decisions not based on particular themes or topics, but rather people and ideas. That’s fine and dandy, but it’s not much to work off of for entrepreneurs, all of whom are inclined to believe they’re on the cusp of the next big thing, when they’re raising money.

Pulling back the curtain a bit, partners at Andreessen Horowitz recently revealed 16 trends they’re closely watching. The list is likely to change with time, but it at least provides a snapshot of the firm’s thinking at the start of 2015.

1. Virtual reality
Chris Dixon: “The next few decades of VR will be similar to the first few decades of film. Filmmakers had no idea what worked and what didn’t: how to write, how to shoot, how to edit, etc. After decades of experiments they established the grammar of film. We’re about to enter a similar period of exploration with VR.”

2. “Sensorification” of the enterprise
Scott Weiss: “For enterprise, the value of the sensors is in being a shortcut for the user interface, potentially even replacing typing so we can concentrate on the easy, fun, creative things.”

3. Machine learning and big data
Peter Levine: “Even though the early applications tend to show up in industries where data scientists have typically worked, machine learning as a property of all applications—especially when coupled with an accessible user interface—is democratizing who, what, and where this kind of real-time computing and learning can happen … and what great new companies can be built on top of it.”

4. The full-stack startup
Dixon: “[F]or end users, full-stack startups deliver a much better experience, because they have complete control. It’s the difference between buying a beautiful, pristine Apple product versus a crappy Frankenstein PC cobbled together from dozens of vendors.”

5. Containers
Levine: “Containers are another way of isolating an application from the underlying hardware. They’re objects that serve the same purpose as a virtual machine—instantiations or clones of the host operating system with a self-standing, self-executing application inside—but they also provide bare-metal performance, because there’s no virtualization layer between.”...MUCH MORE
And from Andreessen Horowitz:
16 Things
We don’t invest in themes; we invest in special founders with breakthrough ideas. Which means we don’t make investments based on a pre-existing thesis about a category. That said, here are a few of the things we’ve been observing or thinking about; we’re especially grateful to our founders/companies, and the entrepreneurs we meet with everyday, for their insights here…

[For other trends we’ve covered already elsewhere, please see our series on mobile eating the world (with lots of charts!), you bet your SaaS, and government x tech.]
...MORE 

"Harvard buys up water rights in drought-hit wine country"

From Reuters:
Harvard University has quietly become one of the biggest grape growers in California's drought-stricken Paso Robles wine region, securing water well drilling permits to feed its vineyards days before lawmakers banned new pumping, according to records reviewed by Reuters.

The investment, which began as a bet on the grape market, has turned into a smart water play as the wells boosted the value of its land in the up-and-coming wine region of Paso Robles. But it has also raised questions about the role of big investors in agriculture in the midst of a water crisis.

"It remains to be seen what commitment they have to the business of agriculture," said Susan Harvey of environmental advocacy group North County Watch, which has been following the drought closely. "Is Harvard going to keep pumping ground water, or cut back on returns to protect water quality and quantity?" 
Brodiaea Inc, wholly owned by the secretive $36 billion Harvard endowment fund, has spent more than $60 million to purchase about 10,000 acres in Santa Barbara and San Luis Obispo counties since 2012, making it one of the top 20 growers in Paso Robles.

Harvard Management Company, which runs the fund, declined to comment, citing a policy of not discussing individual investments. Brodiaea officials did not respond to repeated phone messages.

Dana Merrill, who owns a vineyard services firm near Paso Robles and sold land to Brodiaea in 2012, said the company was among several big investors that have entered the wine grape market in California in recent years. He said he didn't believe Brodiaea's land buys were part of a well-timed water play.

"You've got a value-added product, you've got agricultural real-estate as a hedge against inflation, and if you can be smart about operating it you can come up with a pretty consistent cash flow that can produce a return on investment that is not as volatile as other products," he said.

Real estate brokers said irrigable land in the heart of the Paso Robles region is running about $15,000 to $20,000 per acre, versus $3,000 for an acre of dry pasture - a spread that has widened sharply as the drought has tightened its grip....MORE

The Paso Robles area is in the most intense category of drought:

D4 - Exceptional Drought
U.S. Drought Monitor forCalifornia

"People Are Talking About Michael Bloomberg Buying the New York Times, Including Michael Bloomberg"

From New York Magazine's Daily Intelligencer:
For years now, it has been speculated in media circles that Mike Bloomberg could be a white knight and save the New York Times. Now it appears he may actually have tried to do it.

Near the end of Bloomberg's time as mayor, he told Times chairman and publisher Arthur Sulzberger Jr. that he was interested in buying the Times, according to a source with direct knowledge of the conversation. Sulzberger replied that the paper was not for sale.

Bloomberg’s overture, previously unreported, might be one reason why talk of a Bloomberg-Times eventuality has flared up among insiders in the wake of the most recent round of Times’ layoffs. Given the fact that both sides vehemently deny that there have been recent conversations (Sulzberger “can’t remember the last time he spoke with Bloomberg,” said a spokesperson), this may very well be wishful — or apprehensive — thinking being played out in the echo chamber of media gossip.

But it does seem that Bloomberg is in fact interested in the Times and that his interest has not waned. "Mike has muttered a lot about the Times to a lot of people," a Bloomberg adviser told me.
The strongest advocate for such a deal is said to be Bloomberg’s longtime political adviser Kevin Sheekey. In pushing Bloomberg to buy the Times, Sheekey is reprising a role he played in 2008, when he encouraged Bloomberg to run for president. According to a particularly knowledgeable source, in the summer of 2013, Sheekey held a private meeting with a person close to Sulzberger and asked how a deal for the Times could get done. “Sheekey basically said, 'we want to buy the company,'" a person familiar with the conversation said. A Bloomberg source told me: “Kevin has long been a vocal enthusiast to Mike about this. Sulzberger needs to go somewhere for money. We know they have a real issue, and Mike is an obvious person he’d turn to.” ...MORE

"George Soros 'finally' retires"

From Wealth Manager:
Legendary fund managers George Soros (pictured) said he is retiring for good.

The man who broke the Bank of England has toyed with the idea of retiring several times and confirmed at a private dinner he hosted at Davos last night that this time he meant it.

Soros, 84, stopped running client money in 2011, and told his guests he would be handing the money he runs on behalf of families to his investment firm's chief investment officer Scott Bessent.

‘I have retired many times before but this time it’s final,’ Soros is reported to have said. ‘I am devoting all my energies to what I call my political philanthropy and the two activities are not compatible.’

In a panel discussion at the World Economic Forum at Davos, Soros highlighted how conflicts across the globe are making things much more difficult for financial markets.

'With the spread of unresolved conflicts to Europe the dynamics of financial markets and international affairs have become more intimately intertwined,' he said.

'This has greatly increased the level of uncertainty, volatility and unpredictability both in financial markets and international affairs because financial events are extraneous to political dynamics and international affairs are extraneous to the dynamics of financial markets.'...MORE
[George Soros]
 
You have my word as a hedge fund manager....

See also: 

"Blackstone CEO: “We’ve Been Very Active Buyers In Real Estate In Europe”"

From ValueWalk:
The Blackstone Group L.P. (NYSE:BX) CEO Steve Schwarzman spoke with Fox Business Network’s (FBN) Maria Bartiromo regarding the European Central Bank (ECB) bond buying program, opportunities in Europe, the impact of the energy market and the 2015 outlook for Blackstone. Regarding the ECB bond buying program, Schwarzman said, “I think it’s a good thing,” and, “it’s probably a little bigger than most people anticipated.” Schwarzman went on to discuss the declines in the energy market, saying, “well I think this is one of the most consequential moves since I have been in finance,” and “when things collapse like this, a lot of people get into trouble and that gives you the opportunity to buy debt in companies that are not doing well.” As for the 2015 outlook for Blackstone, Schwarzman commented, “we have a lot of momentum at the firm in all of our areas.”

Blackstone CEO on the ECB bond buying program:
“I think it’s a good thing. I think it’s probably a little bigger than most people anticipated. He tends to be bold. It’s tough to get 17 countries together voting for anything and he managed to do it. This takes European interest rates, which are low, puts them even lower, should inject a little bit of growth into Europe and also some confidence in addition. It’s something we did in the US, some version of this three times, and so seeing it appear in Europe which has been years behind a US recovery, is important. But it still does not address substantive reforms that need to be done in Europe as well.”

Blackstone CEO on opportunities in Europe for investing:
“We’ve been very active buyers in real estate in Europe. In fact, we’ve been the largest buyer of real estate in Europe and we did it on the basis of a no growth Europe scenario overall. This can make things better for us in that sense and there’s been real confidence lacking in Europe, and frankly, not much money coming from the banking system which has been shrinking and so this is an attempt to reverse that to move asset values higher which would create better markets.”...MORE

Thursday, January 22, 2015

"Global Firestorm Generated By Dinosaur-Killing Asteroid Doubted - Videos"

False advertising in the headline.
No, we don't have videos of the Asteroid impact, all we have are these drawings from NASA and if you ask me that doesn't even look like the Yucatan, I mean, where are the people?

From Ideas, Inventions and Innovations:
Pioneering new research has debunked the theory that the asteroid that is thought to have led to the extinction of dinosaurs also caused vast global firestorms that ravaged planet Earth.

A team of researchers from the University of Exeter, University of Edinburgh and Imperial College London recreated the immense energy released from an extra-terrestrial collision with Earth that occurred around the time that dinosaurs became extinct. They found that the intense but short-lived heat near the impact site could not have ignited live plants, challenging the idea that the impact led to global firestorms.
An extra-terrestrial collision with Earth occurred around the time that dinosaurs became extinct. 

Image courtesy of  NASA
These firestorms have previously been considered a major contender in the puzzle to find out what caused the mass extinction of life on Earth 65 million years ago.

The researchers found that close to the impact site, a 200 km wide crater in Mexico, the heat pulse - that would have lasted for less than a minute - was too short to ignite live plant material. However they discovered that the effects of the impact would have been felt as far away as New Zealand where the heat would have been less intense but longer lasting - heating the ground for about seven minutes - long enough to ignite live plant matter....MORE

"Japan says won’t pay hostage ransom to ISIS as deadline looms"

From RT:
Japan will not pay a $200 million ransom for two of its citizens captured by the Islamic State, said PM Shinzo Abe.Tokyo has less than 24 hours left to respond to the jihadists’ threat to execute the Japanese nationals on Friday if the ransom is not paid.

Abe reiterated that he will stand by his country’s commitment not to pay ransoms while speaking on the phone with UK Prime Minister David Cameron on Thursday, Kyodo news agency reported.

“The government is doing everything it can, and saving lives is the top priority,” said Chief Cabinet Secretary Yoshihide Suga during a media conference in Tokyo on Thursday. However he added that the government had failed to contact the militants to negotiate the release....MORE 
And at the WaPo:
The subtle message behind a Japanese meme mocking the Islamic State

Yemen President Resigns Under Pressure From Abductors

The Associated Press seems too circumspect in their choice of suggested headline so we made our own.
From the AP via the Houston Chronicle:
SANAA, Yemen (AP) — Yemen's president resigned on Thursday under pressure from Shiite rebels who seized the capital in September and have confined the embattled leader to his home for the past two days.

Presidential officials said Abed Rabbo Mansour Hadi, a close U.S. ally in the fight against Yemen's powerful al-Qaida affiliate, submitted his resignation to parliament after being pressured to make further concessions to the rebels, known as Houthis, who are widely believed to be backed by Iran, charges they deny.

Hadi had earlier pledged political concessions in return for the rebels withdrawing from his house and the nearby presidential palace following days of clashes, but Houthi fighters remained deployed around both buildings throughout Thursday....MORE

Possibly related, our October 5 post: News You May Have Missed While Living Your Life: "Al Houthi rebels: Yemen’s new masters"

And from the Yemen Times Feb. 1: Oil: "Why the great Sunni-Shia conflict is getting ever closer to the surface"

Scientists Move Doomsday Clock Closer to Apocalypse

In other news:

Miley Cyrus Shares Kim Kardashian-Like Cleavage Selfie

The Bulletin of the Atomic Scientists story is at National Journal

Oil: In Which Izabella Goes Over To The Dark Side

This is just a quick note, there will be more to come after I do the risk manager thing in natural gas, down 5.28% at $2.82.
Yay!
As an intro, here's Goldman Sachs on speculation in the oil markets:
...Conversely, speculators bring fundamental views and information to the market, impacting physical supply management and facilitating price discovery. As a result, speculators have a loose relationship with price. In other words, as speculators buy, prices generally tend to rise, and vice versa. Accordingly, speculators also contributed to the extreme price movements over the last two years. For example, new data suggests that speculators increased the price of oil by $9.50/bbl on average during the 2008 run-up. Thus, speculators exacerbated the volatility that was nonetheless rooted in the fundamental imbalance.”
-Goldman Sachs, Global Economics Paper No. 194, page 7, March 30, 2010.*

This is, as far as I know, the first admission that speculation in futures had any effect on price whatsoever  and was a complete reversal of the party line GS had been promoting for the prior decade and it still didn't go far enough.
The mechanitions and manipulations of the giant traders during the run-up and collapse are to this day, very, very murky.

From FT Alphaville:

A right oil hotchpotch
Just a few developments to update oil watchers on. Plus one conspiracy theory.
First, John Kemp of Reuters observes on Thursday that gasoline demand is now at multi-year seasonal highs:
He directs us to this story, which notes:
Weekly U.S. gasoline demand soared to five-year highs last month, after a collapse in oil prices, in a worrying sign that previous gains in efficiency and emissions cuts may evaporate. The week of Dec. 26 2014 saw the highest weekly consumption since July 2010.
But you can check the updated EIA figures over here, and they too show that the seasonal demand uptick has continued into January.
Second, Olivier Jakob at Petromatrix says in his daily research report that the price of Brent in Swiss franc terms is now back at the lows of 2009 and most interestingly of all, that if the Brent contango narrows any more that this will start to challenge the economics of floating storage. Again, not your usual oil-price decline effect.
Jakob also notes that our favourite trade of 2009, the great ETF USO Fund inflow arbitrage, may be back because financial inflows into the fund are looking robust. We do wonder if that trade will be quite as successful this time round for the algo trading firms which like to play their own version of the contango trade by means of the fund.
Last of all, we want to draw attention to comments from Iranian Oil Minister Bijan Zanganeh two days ago, which noted:
“Even if the oil price goes down to $25 a barrel, the oil industry will not be threatened,” the Fars news agency quoted him as saying.
What’s striking about that statement, of course, is the very specific reference to $25 crude prices. Why $25? Why not $30? or $35? Perhaps because the last time Brent crude was at $25 was …:
… well, June, 2003. Which, of course, is just before crude prices broke range and started their epic rally.
On more prolonged terms, we should note, the last time oil was anywhere near $25 was between 2001 and 2002.

That’s worth noting because December 2001 was when Enron collapsed.
So what’s this a subtle reference to really? Could it be, perchance, the fact that the entire oil and commodity rally was something of a financial speculator-induced sham which detached commodities entirely from their fundamentals?

Some clues as to why that might be the case come by way of news headlines from the 2001-2003 period and a hint of the market-structure changes that were going on at that time....MUCH, MUCH MORE

*Google Webcache of Goldman Korea's PDF
Here's Scribd via Baidu.

Analyst Reactions to ECB Stimulus Plan; Is a Currency War Ahead?

From Barron's Income Investing:
The European Central Bank finally unveiled its hotly anticipated stimulus plans, — a bigger than expected bond-buying program that has the central bank snatching up €60 billion in bonds and other assets every month to boost prices and encourage lending across its member states.
For how long? ECB President Mario Draghi says the central bank will buy until lit sees sustained inflation improvement
With the news out of the barn, the euro weakened compared to the U.S. dollar. But bond prices rallied, yields fell and stocks across Europe rose.
In the U.S., the Dow industrials have had a volatile morning, opening 85 points higher before dropping into the red and rebounding again, all within the first hour of trading. Meanwhile, the price for the 10-year Treasury note rose 2/32 to 103-14/32 and the yield fell to 1.86%.
So how are market observers reacting?
Evercore ISI’s Dennis DeBusschere argues it could take time “for the dust to settle.” As he puts it:
Some concern on the drop in oil and muted reaction to the announcement so far, but most other indicators on our dashboard still ok as Euro is lower, inflation expectations higher and yield curve still steeper. With bund yields lower and European inflation expectations higher on the day, that is a decrease in real expected yields and positive in theory (rates dropping as expected inflation increases). Will take some days for dust to settle though, so still very hard to make bold calls on these policy moves. Next up on the agenda? The divergence between the Fed and the market on the path of Fed funds…
Sterne Agee chief economist Lindsey Piegza calls it a “step in the right direction,” but equates the move to “an attempt to put out a fire with a drop of water when clearly a bucket is needed.” She tells us:
Widely expected and already priced into the market, the ECB’s announcement gives hope (potentially unfounded hope) that the central bank will be able to spark growth into a sluggish euro area and counter declining prices. After all, Though the size was larger than expected – 60 vs 50- the relatively small size compared to what was done in the us, leaves confidence shaky in terms of how much benefit the program can actually have. 

With rapidly declining prices and minimal tenths of growth across the four largest European economies, the size of the program needed to jolt life back into Europe is likely to prove significantly larger than what was announced, putting more pressure on Draghi’s long standing commitment to “whatever it takes” to eventually translate into a markedly larger program over the next months or year
Nick Colas chief market strategist at Convergex agrees the ECB’s move was “well telegraphed,” but warns that some worry it could devolve into a currency war.
What I am hearing from clients is, ”fine, now what.” In other words, how does the money get to the real economy in Europe?. In the U.S., QE worked by moving asset prices up and made those who own financial assets wealthier which translates into greater consumer spending. In Europe, not as many people own financial assets, so the hope is that QE will drive down the euro and make the export base more competitive. The concern is that it is just a currency war now with the U.S. dollar…QE of any type is an imperfect means of improving an economy… If it is aimed at making European exporters more competitive than other countries will eventually have to respond.
...MORE

Uber Gets $1.6 Billion From Goldman Wealth Management Clients

From Bloomberg:

Uber Raises $1.6 Billion in Convertible Debt to Expand
 Uber Technologies Inc. raised $1.6 billion in convertible debt from Goldman Sachs Group Inc. (GS)’s wealth management clients, according to people with knowledge of the matter, as the mobile car-booking company builds its finances to expand internationally.

Uber is also still in talks to raise $600 million from hedge funds and international strategic investors to add to $1.2 billion in financing that it raised in December, said the people, who asked not to be identified because the information isn’t public. The funding last month valued San Francisco-based Uber at $40 billion, one of the highest valuations for a closely held technology startup....MORE

Early Commentary On the European Central Bank Announcement

From The Big Picture:

Finally the details . . .
The ECB said the combined monthly purchases which includes ABS and covered bonds and now include sovereign and agency bonds will total 60b euros per month and will continue to do so “until we see sustained inflation improvement.” The ratio will be based on the capital key where about half is made up of Germany, France, Italy and Spain. The ECB will coordinate the purchases but will be implemented decentrally which means at the national level. European institution paper (such as EFSF paper will be subject to loss sharing but national central bank purchases of other sovereign debt will not be subject to loss sharing which appeases the Germans). They also lowered the rate at which the TLTRO will be lent at to .05% from .15%.

Bottom line, as I doubt even the ECB believes that this news will directly increase bank lending, it is likely all about further weakening the euro. In trying to gauge what has been priced into markets, the euro is the main thing we should be watching which is down slightly after being up slightly. Second to that is the European sovereign bond market where the action in German and French bonds (making up 1/3 of the capital key) seems to have priced the news in as the 10 yr yields in both are little changed.  On the flip side, the bonds of Italy and Spain are higher with yields lower....MORE
And from FT Alphaville:

Draghi and the risk-sharers
The ECB just announced it will increase monthly buying of assets by €60 bn which will continue until September 2016, and will do so on a risk-sharing basis on 20 per cent of the assets purchased rather than on an entirely pooled based. More details: Everywhere.

For now, here’s the first comment in our inbox from Marc Ostwald at ADM Investor Services, who says the risk sharing component is limited:...
...MORE 

"Euro nosedives as ECB launches €1.3 trillion QE plan"

From CityWire:
The European Central Bank has narrowly exceeded market expectations of the scale of its total quantitative easing programme, saying it will buy  €60 billion of securities a month over a period of 1.5 years.

Opposition to the announcement was already building earlier today, with eurosceptic German lawyer and politician Peter Gauweiler saying he was exploring a legal challenge to prevent the ECB from taking on the ‘common liability’ of member state sovereign debt

Lawyers acting on his behalf would ‘closely analyse today's decision by the European Central Bank council and pre-emptively prepare a complaint,’ with the German Constitutional Court, he added.

Construction: Here Come the Autonomous Bulldozers and 3-D Mapping Drones

From the Wall Street Journal:

Drones’ Next Job: Construction Work
Construction-equipment maker Komatsu Ltd. has plans to solve a potential shortage of construction workers in Japan: Let drones and driverless bulldozers do part of the work.

Tokyo-based Komatsu said Tuesday it planned to use unmanned aircraft, bulldozers and excavators to automate much of the early foundation work on construction sites.

Under Komatsu’s plans, U.S.-made drones would scan job sites from the air and send images to computers to build three-dimensional models of the terrain. Komatsu’s unmanned bulldozers and excavators would then use those models to carry out design plans, digging holes and moving earth.

The drones, made by San Francisco startup Skycatch Inc., and construction equipment would move along largely preprogrammed routes. The goal is to automate the construction site, leaving humans to program the machines and then push a button to send them to work.

Human operators also would monitor progress and can jump in to take control of a machine if necessary. 
Komatsu plans to lease and operate the devices for customers—a departure from its core business of selling heavy machinery. The program, dubbed Smart Construction, will begin next month in Japan.

Akinori Onodera, president of the Komatsu unit overseeing Smart Construction, said Japan’s aging workforce is leading to a shortage of construction employees there. Automating job sites will help mitigate any shortage, he said, which is crucial as work ramps up on thousands of construction projects, including many tied to the 2020 Summer Olympics in Tokyo.

“We have to improve productivity,” Mr. Onodera said.

Mr. Onodera said Komatsu has been working on automating its machinery for years, but a lack of terrain data that was accurate and quickly available made it difficult to put the machines into practice....MORE

Wednesday, January 21, 2015

"How Good Would QE Be for European Equities?"

From MoneyBeat:
How much of a windfall will European Central Bank quantitative easing be for Europe’s equity investors?
U.S. and Japanese precedent suggest quite a lot. But there are good reasons to be cautious.

As we report Wednesday, the European Central Bank’s executive board is calling for a program of €50 billion ($58 billion) in monthly bond purchases for a minimum of one year, so a total €600 billion, according to people familiar with the matter. Forecasts among analysts have recently centered on a figure of around €500 billion or higher.

These are early days and the full program is yet to be formally announced but so far, here’s how markets have reacted:

Can we expect much more from European equities on Thursday and over the longer term? The Federal Reserve and Bank of Japan QE policies were spectacularly successful at igniting their domestic share markets. And investors are hoping for the same in the eurozone.

The Fed’s first asset purchase program was launched in November 2008, when it started buying mortgages. But Treasury bond sales were kick-started in March of the following year. Since then, the S&P 500 has risen one and a half times, with additional rounds of QE providing spurs to further gains.

In Japan, expectations of massive fiscal and monetary measures, come to be known as Abenomics, started to ramp up shares in the autumn of 2012, since when they’ve more than doubled.
So why think the same won’t happen in the eurozone?

For one thing, because European equities have already advanced by 50% since the worst of the eurozone crisis in the summer of 2012, when ECB President Mario Draghi promised to do “whatever it takes” to ensure the single currency’s existence. It’s worth bearing in mind that in Japan, equities are now up “just” 40% since the Bank of Japan unveiled its QE policy as part of Abenomics in April 2013....MORE

The Guy Who Called the Drop In Oil Prices

We thought it was noteworthy when he made the presentation and thought we should point it out to our long-suffering readers.*
From Bloomberg:

Druckenmiller Alums at PointState Make $1 Billion on Oil 
Hedge fund manager Zach Schreiber stood on stage at Avery Fisher Hall in New York eight months ago and made a bold prediction.

“We believe crude oil is going lower -- much lower,” Schreiber, 42, told the audience of roughly 3,000 investors, including some of the biggest money managers in the industry. “If you are long, I’m sorry for you.” Then he showed a slide of a car stuffed with clowns.

Crude was trading at $99 a barrel that day, bolstered by speculation that Russia’s annexation of Crimea and incursions into Ukraine would crimp shipments. Prices crept up over the next weeks peaking in June at $107. Then, as Schreiber predicted, the dive began.

Oil fell more than 50 percent through the end of the year as global supplies piled up, helping Schreiber’s PointState Capital make about 27 percent for the year after fees. The New York-based investment firm’s profit was about $2 billion in 2014 with about half of that from the oil trade, according to people familiar with the matter, who asked not to be identified because the firm is private.

PointState, which started 2014 with about $5.8 billion in assets, has been one of the biggest winners from the drop in oil as the U.S. energy industry ramped up production and Saudi Arabia and other OPEC nations chose not to cut supply in the face of increased competition.

Global Ramifications
The biggest drop in prices since 2008 has roiled global markets, pushing Russia towards recession, Venezuela closer to default and cutting into earnings for U.S. companies. It’s also punished hedge funds and other investors that were betting on the U.S. energy complex. Billionaire John Paulson was among the hardest hit, losing 36 percent in one fund last year in part because of energy company stocks.
When Schreiber spoke at the May conference, he was little known outside the $2.8 trillion hedge fund industry and had a low profile among peers....MORE
*  
Tuesday, May 6, 2014
Climateer Line of the Day: The Circus that is Oil Edition
The winner of today's CLoD:
...“There’s $33 billion that’s net long WTI,” he says. “Now, if you’re long, I’m sorry for you, but this could make you feel comfortable. At least you have friends.”

Or that could make you scared, he adds. “I’m sure that will be a smooth exit when all those clowns try to get out of the Volkswagen,” he says....
 -Zach Schreiber, CEO, PointState Capital LP
at the 2014 Ira Sohn Conference

Via the Wall Street Journal's MoneyBeat liveblog.
(1:37 pm)

Front month June's $99.58 up a dime.
We agree with Mr. Schreiber 

Chartology, Equities Edition: Stocks Turned Back at (declining) Resistance Line

A break above 2035 would be very bullish.
2031.61 last, up 9.06.

From Permabear Doomster:
Daily chart-
http://2.bp.blogspot.com/-Wvlv7qotbeo/VL_1RzHkfGI/AAAAAAABIpc/kScjzihUarc/s1600/spdaily5%2Bintra3%2Bjan21.png
 60 minute chart-
http://4.bp.blogspot.com/-0XS-eD5tDV0/VL_1BRxGgBI/AAAAAAABIpU/pxSgc8rssmw/s1600/sp60min%2Bintra1%2Bjan21.png

"The Staggering Challenges of the Online Grocery Business" (and why everyone's trying)

Earlier today one of the feed-readers dropped the news that if you absolutely, positively had to have kitty litter like, now, Petco had hooked up* with Instacart to make it so.
From the Washington Post:
The online grocery delivery business seems to get more crowded--and more competitive--by the minute.

 Tech giants Google and Amazon.com are offering it in some major cities, and so are upstarts such as Instacart, Postmates and FreshDirect.  These newcomers are battling with more established businesses such as Peapod, which has been delivering groceries for more than 20 years, and services from companies such as Wal-Mart that allow customers to place orders online and pick them up at a nearby store.

It's a business that everyone seems to want in on, even though new data show it's awfully hard to do profitably.

In some ways, the enthusiasm makes makes sense:  According to a report from IBIS World, a market research firm, online grocery sales grew at an annual rate of 14.1 percent over the last five years and they are expected to grow at a rate of 9.6 percent between 2014 and 2018.

But look more closely at the report, and you see the major challenges these companies will face as they try to make these fledgling businesses viable. IBIS World estimates that the online grocery business collectively brought in $10.9 billion in sales in 2014.  Profit, it estimates, was just $927.1 million, or 8.5 percent of total revenue.  By 2018, the researchers project that profit margins will slip to 6.9 percent of sales.  In part, that's because these operators will continue to contend with the high distribution costs associated with getting perishable items to customers.

The report also predicts that big players, particularly AmazonFresh, will play a role in compressing margins for the whole industry.  Amazon has often sought to vanquish its competitors by undercutting them on price, and the report suggests that the company may use that tactic in the grocery business, dropping their prices as low as possible and, in doing so, pressuring their competitors to make similar price cuts. (Jeffrey P. Bezos, the chief executive of Amazon, owns The Washington Post.)...MORE
HT: Abnormal Returns

*Xconomy Boston:
Petco Adds Online Delivery With Fast-Growing Startup Instacart 

Previously:
Grocery Delivery Service Instacart Raises $220 Million 

Davos Billionaire: "“America’s lifestyle expectations are far too high and need to be adjusted....."

From Bloomberg:
Billionaire Jeff Greene, who amassed a multibillion dollar fortune betting against subprime mortgage securities, says the U.S. faces a jobs crisis that will cause social unrest and radical politics.

“America’s lifestyle expectations are far too high and need to be adjusted so we have less things and a smaller, better existence,” Greene said in an interview today at the World Economic Forum in Davos, Switzerland. “We need to reinvent our whole system of life.”

The 60-year-old founder of Coral Gables, Florida-based Florida Sunshine Investments said his biggest fund was up more than 20 percent last year with bets on Apple Inc. (AAPL), Google Inc. (GOOG), bank stocks and mortgage-backed securities.

“I’m remarkably long for my level of pessimism,” he said. “Our economy is in deep trouble. We need to be honest with ourselves. We’ve had a realistic level of job destruction, and those jobs aren’t coming back.”
Greene, who flew his wife, children and two nannies on a private jet plane to Davos for the week, said he’s planning a conference in Palm Beach, Florida, at the Tideline Hotel called “Closing the Gap.” The event, which he said is scheduled for December, will feature speakers such as economist Nouriel Roubini....MORE
I'm thinking, "Just this once, can we kill the messenger?'

Marc Andreessen Advises the Financial Times to "ditch print entirely"

From the Financial Times:

Lunch with the FT: Marc Andreessen
The Netscape founder and tech investor talks about the trouble with stock markets, what he looks for in entrepreneurs and why illegal immigration is good for America  
Keen to avoid the San Francisco traffic, I arrive half an hour early at Tamarine, a sophisticated modern Vietnamese restaurant in Palo Alto. At 12.27pm, three minutes before he is due, Marc Andreessen texts from his car: “Be right there :-)”
As I contemplate the billionaire venture capitalist’s fine Midwestern manners, there is another beep. “Oops,” it reads. “Just got pulled over for cellphone violation for sending that email :-). No good deed goes unpunished :-).”
I prepare to wait. Tamarine has dark-panelled walls and spotlights illuminating orchids on each table. Cordoned off by an olive velvet curtain, I tune in and out of a conversation between tieless French executives about ebooks. Just before 1pm, Andreessen emerges from behind the curtain. At 6ft 4in and wearing a gingham shirt, he is unmissable: a genial man with a serene manner, unruffled by his encounter with the police who had pulled over his two-year-old Tesla, and in no hurry to order.
He asks what I have been struck by on this visit to Silicon Valley, and, when I cite its collaborative culture, he beams as if it is a personal compliment. “I couldn’t believe that people were volunteering to help [me],” he recalls of his own arrival 20 years ago. “It didn’t match anything where I grew up.”
In the 1990s he worked as a student programmer on Mosaic, one of the first internet browsers. In 1993 he moved to California for a job and met James Clark, who thought Mosaic could be commercialised. The company changed its name to Netscape, going public in 1995. Aged 24, Andreessen was worth $58m. The following year he appeared on the cover of Time magazine’s “Golden Geeks” issue, immodestly sitting atop a golden throne, barefoot.
“I’m terrible at self-introspection,” he confesses, as a spotlight creates a distracting halo on his bald head. “I had a sense, early on, I could build things be­cause I got involved early in computers and coding. The big discovery of my life was when I came to the Valley and discovered people would fund you to do it.”
He has since made his name as an investor, privately and co-founding Andreessen Horowitz, a $4bn venture fund, in 2009. His investments include Facebook, Skype, Airbnb and Twitter.
It is a long way from his small-town roots in New Lisbon, Wisconsin, when he recalls considering Chicago a “big cosmopolitan city, with all the fancy people”. His extended family farmed in Iowa. His father, Lowell, sold seed corn for an agricultural company; his mother, Patricia, was a housewife. “If you don’t plant the fields on time or get the fertiliser out, you have a real problem. You can’t talk yourself out of it — there goes your farm. People are incredibly practical, hard-working. Deferral of gratification is a huge thing. Calvinism runs very deep. It sets you up pretty well for engineering.”
He refers enthusiastically to an essay by Tom Wolfe about Robert Noyce, Intel’s founder and an Iowa farm boy. Wolfe links Intel’s open ethos and its cubicle culture to the egalitarianism of the farm. “When I finally read that, I was, ‘Oh!’ ” Recognition.
. . .
 ...MUCH MORE 

Lunch with the FT: Marc Andreessen

HT: Muck Rack

Here's the quote we pulled to make a headline:
“Business journalism ought to do extremely well . . . [people need to] know what’s going on.” But “for general news people want their biases and prejudices confirmed”. He goes on to advise the FT to ditch print entirely.

"IMF: India to Take Growth Lead"

From The Diplomat:

The debate over whether India is the “next China” will continue, but for now the robust growth is welcome.
The International Monetary Fund has joined the World Bank in downgrading its global growth forecasts, citing “persistent negative forces.” And on the same day China posted its slowest growth since 1990, the IMF said India would overtake its Asian competitor as the fastest growing major economy next year.
Releasing its latest forecasts Tuesday, the Washington-based lender said the world economy would expand by 3.5 percent this year and 3.7 percent in 2016, up from an estimated 3.3 percent in 2014 but both down 0.3 percentage point from its October “World Economic Outlook” report.

The prediction followed the World Bank’s decision last week to downgrade its forecast for global growth to 3 percent this year on the back of sluggish recoveries in the Eurozone and Japan.

While the rapid fall in the oil price has aided global growth along with the depreciation of the euro and Japanese yen, the IMF said these positives had been outweighed by the “lingering legacies” of the global financial crisis and lower potential growth in many nations.

“At the country level, the cross currents make for a complicated picture,” IMF economic counselor and research director Olivier Blanchard said in a statement.

“It means good news for oil importers, bad news for oil exporters. Good news for commodity importers, bad news for exporters. Continuing struggles for the countries which show scars of the crisis, and not so for others. Good news for countries more linked to the euro and the yen, bad news for those more linked to the dollar.”

Similar to the World Bank, the IMF noted an increasing divergence in advanced economies between the solid growth shown by the United States, and the softer Eurozone and Japanese economies.
While advanced economies are expected to post 2.4 percent growth both this year and next, the United States is set to lead the way with a 3.6 percent rise in 2015 and 3.3 percent next year, reflecting “robust private domestic demand,” cheap oil and accommodative monetary policy. In contrast, the Eurozone’s growth outlook was revised down to 1.2 percent this year and 1.4 percent in 2016, reflecting weaker investment.

For Japan, the world’s third-biggest economy, the IMF cut its projections to an estimated 0.6 percent expansion this year, rising only slightly to 0.8 percent in 2016 – both lower than the World Bank’s forecasts.
“Policy responses — additional quantitative and qualitative monetary easing and the delay in the second consumption tax rate increase — are assumed to support a gradual rebound in activity and, together with the oil price boost and yen depreciation, are expected to strengthen growth to above trend in 2015–16 [in Japan],” the fund said.

For emerging market and developing economies, the IMF projected 4.3 percent growth this year and 4.7 percent in 2016, both down on its October forecasts due to slower growth in China and Russia and the impact of weaker commodity prices on exporters.

China Slowdown
The fund said China would slow from an estimated 7.4 percent growth in 2014 to 6.8 percent this year and 6.3 percent in 2016, both down on its previous forecasts for the world’s second-biggest economy and below the World Bank’s predictions.

“Investment growth in China declined in the third quarter of 2014, and leading indicators point to a further slowdown. The authorities are now expected to put greater weight on reducing vulnerabilities from recent rapid credit and investment growth and hence the forecast assumes less of a policy response to the underlying moderation,” the IMF said.

While investment bank UBS also predicts 6.8 percent GDP growth for China in 2015, Oxford Economics has forecast 6.5 percent, indicating that this could be the last year the communist giant’s growth rate exceeds 6 percent....MORE

"Has Robocar Safety Been Hyped?"

From the brainiacs at IEEE Spectrum:
A study out today throws cold water on the accident-free paradise that proponents of autonomous cars have prophecied.

Not only may robocars never be as safe as the best drivers, their growing pains may temporarily lower overall road safety, say Michael Sivak and Brandon Schoettle, psychologists at the University of Michigan’s Transportation Research Institute. 

They note that some accidents will still be caused when human beings make mistakes for which robotic cars cannot compensate. If, for example, a child darts in front of a car from out of nowhere, even instantaneous braking may not stop the car in time.

Nor is it a foregone conclusion that the strengths of autonomous cars will outweigh those of good drivers.  True, autonomous cars never tire or get distracted, and they can respond to new information almost immediately, but these factors wouldn’t necessarily  “trump the predictive experience of middle-aged drivers.”

Middle age is the sweet spot for safety, because by that stage in life drivers are less likely to take risks and knowledgeable enough to intuit what other people are likely to do.
Then there is the problem of system failures, which, even in today’s human-piloted cars, cause about 1 percent of fatal accidents....MORE
The commenters pile on.

Questions America's Not Asking: "What Does 2015 Hold for the Accounting Industry?"

What with the whole 'E Pluribus Unum' thing I never know if America is singular or plural.
From Forbes:

The Future Of The Accounting Industry In 2015
As we begin 2015, the accounting profession industry is changing rapidly. One of the leading authorities in the accounting industry, Joseph Tarasco, president of Accountants Advisory Group, shares his predictions and identifies critical trends:
  • Fee pressures, rising staff labor costs, and lack of quality staff will force firms to carefully examine their mix of services, industry concentrations, and their positioning in their marketplace relative to their technical/consulting resources and competition. Industry, niche, and service segment profit centers will come under more pressure for better results as the competition stiffens.
  • Firms will continue to acquire consulting and advisory companies that compliment their traditional services to provide integrated solutions services to their clients.
  • Career development and leadership training will continue to grow as the need for quality professional staff at the managerial and partner levels turns into a crisis mode. Firms will have no choice but to invest heavily in their best and brightest in all stages of their careers in order to remain competitive and develop succession plans.
  • The firms who have grown through the consolidation of aging practices will begin to deal with intensified succession issues. This will fuel more mergers of mega-firms into larger firms.
...MORE

Same old, same old plus some SEC stuff we'll get to before month end.

Nomura (et al) Looks at the 1986 Oil Crash

Moi: "Hi Bob, how are things in Dallas?"
Bob: "Well....we're down to two hookers, and one of them's a virgin"
-contemporaneous commentary on how slow things in the oil patch were ca 1986.
From FT Alphaville:

Re-re-visiting the 1986 oil crash
As already mentioned, this may not be your usual oil-price decline. But it’s also not crude’s first appearance in the 50 per cent club:
Now, in absolute terms the falls aren’t comparable ($100 to $50 versus $30 to $15) but there are similarities. From Nomura:
Back then, the sluggish global economy and energy-saving initiatives had caused growth in crude oil demand to slow, while at the same time non-OPEC oil-producing countries were increasing production, causing the supply-demand balance in the crude oil market to loosen. OPEC members tried to cut oil production through end-1984, but they failed to gain cooperation both from within OPEC and also from non-OPEC oil-producing countries. OPEC leader Saudi Arabia decided that it could no longer cope with being the only country adjusting its production, and in July 1985 it announced that it would stop playing the role of the world’s swing producer. In September 1985 it increased its crude oil production and effectively lowered prices. At the OPEC meeting in December, OPEC members decided to switch from a policy of focusing on prices to one of focusing on market share, and thus effectively decided to allow crude oil prices to fall.
Sound familiar? It really should. Saudi deserves market share, right?...MORE

Chartology: Silver Just Crossed A Very Important Level (SLV)

March silver futures: $18.275 up 0.319.
The writer is using the iShares Silver Trust ETF which is priced a bit cheaper than the futures but either way this is a big deal.

See also last Thursday's "Chartology: A Possible Trend Change as Gold Rises Above Its 200-Day Moving Average (GLD)":
Following up on my earlier reasoned analysis, "*#$ @! Swiss".
Feb. gold $1262.10 up $27.10....
Now $1300.20 up $6.0.
From Alpha Global Investors:
http://2.bp.blogspot.com/-DzN7_zP1qE4/VL7At7TxQEI/AAAAAAAAQ3s/P2OI67eRrXA/s1600/sc.png

"I like… fat… tails and I cannot lie, You vol sellers can’t deny..."

From The Mercenary Trader:

Baby Got Black (Swan)
(With apologies to Sir Mix-a-Lot)
I like… fat… tails and I cannot lie
You vol sellers can’t deny
When a hot trend breaks with a well-timed stop
and a great big black swan pop you get
Paid… P&L year gets made
‘Cause you noticed that trade was packed
Buncha mean reversion suckers got jacked

Oh baby I wanna get lumpy
Long gamma for when it gets bumpy
Central banks tried to haze me,
But those carry trades just don’t faze me!...MORE
babygot 
Yo 
See also:
Aaarrrggghhh: I Can't Get Matthew Klein's Song Out Of My Head

"The End of Trickle-Down Technology"

From Stratechery:
One normally wouldn’t expect farmer psychology and technology to have much in common, but drawing unexpected connections is the mark of truly innovative thinkers, and Geoffrey A. Moore’s Crossing the Chasm is a truly innovative book.

Building on the work of three Iowa State professors studying the spread of hybrid seed corn, Moore developed the technology adoption cycle, which breaks the market for new technologies into five parts:
image-26
  • Technology Enthusiasts love tech first and foremost, and are always looking to be on the cutting edge; they are the first to try a new product
  • Visionaries love new products as well, but they also have an eye on how those new products or technologies can be applied. They are the most price-insensitive part of the market
  • Pragmatists are a much larger segment of the market; they are open to new products, but they need evidence they will work and be worth the trouble, and they are much more price conscious
  • Conservatives are much more hesitant to accept change; they are inherently suspicious of any new technology and often only adopt new products when doing so is the only way to keep up. Because they don’t highly value technology, they aren’t willing to pay a lot
  • Skeptics are not just hesitant but actively hostile to technology
Moore was primarily concerned with “crossing the chasm” from the early market – enthusiasts and visionaries – to the mainstream market – pragmatists and conservatives, and if there is one product that clearly crossed the chasm, it is the smartphone. There are an estimated two billion smartphones in use around the world, and in developed countries penetration is reaching the 80% mark – only the skeptics are left. Surely this is a mature market.

That, though, makes the fates of the three biggest smartphone companies – Apple, Xiaomi, and Samsung – particularly interesting:
  • Apple offers by far the most expensive phones on the market, but even though the early price-insensitive market has presumably been saturated, the iPhone is actually growing
  • Samsung phones are widely available at multiple price points, making them an easy choice for low information customers on the right side of the cycle, yet the company is struggling
  • Xiaomi has very aggressive prices, but their brand proposition is very much tuned to the left side of the cycle
All of this seems to fly in the face of Moore’s assumption that late-stage adoption would be driven by price and pragmatism (or, in the case of conservatives, necessity). Price and pragmatism might as well be Samsung’s motto, while Apple is super expensive and Xiaomi is avowedly geeky.1 I suspect the problem is that while Moore has updated “Crossing the Chasm” (the third edition came out last January), the book is still a product of 1991 when nearly all technology buyers were businesses located in developed countries. Smartphones don’t have either qualification: people buy smartphones, not businesses, and developing countries are just as much a market as developed ones....MUCH MORE

Tuesday, January 20, 2015

Proctor & Gamble: "Make Your Home Smell Like You’re Rich" (PG)

Way, way back in the day Grandmother supposedly got a call from her broker announcing that Proctor and Gamble were going to split. As the tale was told, her response was "But they've been together for so long."
Further? Your affiant stoppeth there.
From Bloomberg:
Procter & Gamble Co. (PG), aiming to revive stagnant sales by adding more premium products, is rolling out a line of upscale fragrances that it says can make your home smell like you have a butler.

The new products, called Unstopables, will roll out nationwide to discount chains in February, the Cincinnati-based company said. The lineup, which includes candles, oils, and air and laundry fresheners, comes in six scents and bears names such as Lush and Shimmer.

P&G, the world’s largest seller of consumer products, sees higher-end home fragrances as a category where it can lure away customers from department stores and specialty chains such as Yankee Candle Co. The company is pitching the collection with the slogan, “Smell like the lifestyle you deserve.”
“There is a big market for premium scents in the home,” Shailesh Jejurikar, P&G’s North America home-care president, said in an interview.

The new products, which cost about $5 to $7, are about two to three times as expensive as typical fragrance products sold at discounters, he said. S.C. Johnson’s Glade premium room spray, for instance, costs $1.34 at Target. But consumers are willing to spend $20 for a medium “Beach Walk” scented pillar candle at Yankee Candle.

Slimming Down
P&G is turning Unstopables into a stand-alone product line even as Chief Executive Officer A.G. Lafley works to eliminate as many as 100 slower-selling brands. The company agreed to sell its pet-food units and the Duracell battery brand in multibillion-dollar deals, and last month it said it would sell portions of its soap lineup to Unilever....MORE