Monday, November 20, 2017

"Mayoral Powers in the Age of New Localism"

One of the problems with politics is that the people attracted to power are exactly the ones who should not be allowed anywhere near it.
Go figure.

We've been watching the mission-creep trend in municipal governance for a while now, trying to get in front of it—"Il faut bien que je les suive, puisque je suis leur chef"*—to make a bucko or two but, to date, have only come up with the tautology that these people would rather jet off to Buenos Aires during the Northern Hemisphere winter for the Parliament of Mayors than stay home and fix potholes.
It was ever thus, or at least has been since 1967 when Lennon noted "4000 holes in Blackburn, Lancashire"

*Ledru-Rollin, 1848—schoolboy French translation: "I must follow them for I am their leader."

From CityLab:

U.S. mayors are on the front lines of major global and societal change. It’s time for them to lead beyond the limits of their formal powers.
Last week, residents of more than 30 U.S. cities voted to elect their top leader. Whether four-term veterans like Cleveland’s Frank Jackson or first-time politicians like Helena’s Wilmot Collins, U.S. mayors are now more than ever on the front lines of major global and societal change. The world’s challenges are on their doorsteps—refugee integration, climate change adaptation, economic transition—yet the federal government has withdrawn and many state governments are actively opposing cities’ agendas. What do these new leaders need to do to succeed in a climate that is at worst hostile and at best indifferent to pressing urban priorities?

Mayors must first recognize that we are in the midst of a paradigmatic shift in urban governance and problem solving that is catching up to an established fact on the ground: Cities are networks of public, private, and civic institutions that power the economy and shape critical aspects of urban life. This “new localism” is pragmatic and solution-oriented, and by design includes exemplary leadership across sectors and segments of society. Yet mayors, as the top political and executive office in cities, have a special responsibility to set the vision and activate their networks to design, finance, and deliver everything from basic services to transformative infrastructure projects.

For such an important office, we know frustratingly little about the specific mechanics that make mayors effective. A new Brookings Institution report, “Leading Beyond Limits: Mayoral Powers in the Age of New Localism” examined the sources and uses of mayoral powers and the capacities they need to lead and govern. Though cities and governance contexts vary tremendously around the world, there are plenty of common challenges—fragmented governance environments, the need for increasingly technical skill sets to address complex problems—and some broader recommendations that could strengthen mayoral leadership in cities everywhere....MUCH MORE

Sunday, November 19, 2017

Real Estate: "Indian man declares himself king of ungoverned land between Egypt and Sudan"

Location, location, location.
From The New Arab:
Indian man declares himself king of ungoverned land between Egypt and Sudan
A man traveled nearly 200 miles to become king of a piece of ungoverned land between Egypt and Sudan and made his dad president of his new kingdom as a birthday present for him.

Suyash Dixit, an Indian national travelled from India to the land of Bir Tawil, an unclaimed area of land between the Egyptian-Sudanese border to claim it for himself and declare himself king of the new-found "Kingdom of Dixit".

"I call myself, King Suyash First from today. I declare this unclaimed land of Bir Tawil as my country from now to the eternity of time. I pledge to continue to work for the prosperity of my people of the country and this motherland," Dixit announced in a Facebook post.

"I travelled 319KM (to and fro) in far desert with no roads to claim this unclaimed land of Bir Tawil. This 800 square miles of land belongs to no country. It is the only place on earth where humans can live and survive but is not a part of any state/country.

"Following the early civilization ethics and rule, if you want to claim a land then you need to grow crops on it. I have added a seed and poured some water on it today. It is mine," he added.
He also claimed his new country's national animal as a lizard, but only because he did not see any other animal there....MORE
There is, at minimum, one prior claimant. Via Opinio Juris:
The Man Who Would Be King, Daddy’s Little Princess, and their Territorial Claim

Somehow related: this morning's "The Financial Times' Izabella Kaminska Examines Seasteading and Is Bemused".

"Scientists are about to test a devastating hypothesis: 2018 will suffer a lot of big earthquakes"

From Quartz:
Every so often, the Earth’s rotation slows by a few milliseconds per day. This is inconsequential to the average human, and causes only mild annoyance to the people whose job it is to measure Earth’s rotation with great precision.

That may be about to change, if the hypothesis set out by two geologists proves true. In a study published in Geophysical Research Letters earlier this year, Roger Bilham of the University of Colorado and Rebecca Bendick of the University of Montana predict that, because of Earth’s slowing rotation, the world will see a significant spike in large earthquakes in 2018.

To make this prediction, Bilham and Bendick studied every earthquake since 1900 that recorded more than 7.0 on the moment magnitude scale. They found that approximately every 32 years, there is an uptick in these large quakes. The only factor that strongly correlates is a slight slowing of the Earth’s rotation in a five-year period before the uptick.

“Of course that seems sort of crazy,” Bendick told Science. But think through it a little and it might not seem so outlandish. The Earth’s rotation is known to go through regular decades-long periods in which it slows down and speeds up. Even seasonal changes, like a strong El NiƱo, can affect the planet’s rotation.

But to have the kind of effect that would produce more severe earthquakes, we have to look deeper. Starting from its very center, the planet is made of a solid iron and nickel “inner core,” liquid iron and nickel “outer core,” a thick liquid mantle, and finally a thin solid crust. Earthquakes occur on the crust, but the crust floats on the mantle.

Though Bilham and Bendick don’t know for sure, they believe that every so often the Earth’s mantle might stick a little more to the crust. That could change how the liquid outer core flows. And because it’s all metal down there, the change in flow will affect planet’s magnetic field, which would ever so slightly affect the Earth’s rotation and thus change the length of the day by milliseconds. The Earth’s rotation has been slowing down for the past four years....MORE
Always remember that earthquakes can be tricky for equity analysts.
From August 08's "Long-time bear joins bulls: Controversial Joe Granville says Dow could rise 800 points":
Published: January 11, 1981
Joseph Granville doesn't use the word ''forecasting.'' He prefers to say that he applies to the stock market a ''theory'' that he declines to reveal but whose results he communicates to clients in a weekly investment newsletter.
Last week, as his latest bullish issue was still in the mails, Mr. Granville's theory suddenly turned bearish and advised selling. That advice, transmitted to about 3,000 clients in emergency telephone calls, triggered a selloff that drove the Dow Jones industrial average down 23.80 points and resulted in a new one-day volume record on the New York Stock Exchange. The next day, Mr. Granville predicted an earthquake of Richter magnitude 8.3 would hit Los Angeles in May.

From the New York Times:

NOTES ON PEOPLE; As a Seismologist, He's a Good Stock Analyst

At Gettysburg, November 19, 1863

The Gettysburg PowerPoint presentation with technical support from Peter Norvig:

Author: Abraham Lincoln
Home Page:
Download presentation: Gettysburg.ppt
And now please welcome President Abraham Lincoln.
Good morning. Just a second while I get this connection to work. Do I press this button here? Function-F7? No, that's not right. Hmmm. Maybe I'll have to reboot. Hold on a minute.

Um, my name is Abe Lincoln and I'm your president. While we're waiting, I want to thank Judge David Wills, chairman of the committee supervising the dedication of the Gettysburg cemetery. It's great to be here, Dave, and you and the committee are doing a great job.

Gee, sometimes this new technology does have glitches, but we couldn't live without it, could we? Oh - is it ready? OK, here we go: 
 slide 1 of 6

slide 2 of 6

 slide 4 of 6


Speaker Notes

[Transcribed from voice recording by A. Lincoln, 11/18/63]
These are some notes on the Gettysburg meeting. I'll whip them into better shape when I can get on to my computer.
Four score and seven years ago our fathers brought forth on this continent a new nation, conceived in liberty and dedicated to the proposition that all men are created equal.

Now we are engaged in a great civil war, testing whether that nation or any nation so conceived and so dedicated can long endure.

We are met on a great battlefield of that war.

We have come to dedicate a portion of that field as a final resting-place for those who here gave their lives that that nation might live.

It is altogether fitting and proper that we should do this. But in a larger sense, we cannot dedicate, we cannot consecrate, we cannot hallow this ground.

The brave men, living and dead who struggled here have consecrated it far above our poor power to add or detract. The world will little note nor long remember what we say here, but it can never forget what they did here.

It is for us the living rather to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us--that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion--that we here highly resolve that these dead shall not have died in vain, that this nation under God shall have a new birth of freedom, and that government of the people, by the people, for the people shall not perish from the earth.
This is a repost of our 150th-anniversary-of-the-speech post.

Newspaper Retracts Editorial on Gettysburg Address
A Cutting-Edge Second Look at the Battle of Gettysburg
"The Improbable Origins of PowerPoint"
Power Corrupts, Powerpoint Corrupts absolutely

The Financial Times' Izabella Kaminska Examines Seasteading and Is Bemused

More accurately, she comes down on the concept somewhere between bemused and dubious.
We've looked at the idea of islands or ships full of geeks, nerds and billionaire geek/nerds a few times over the years:

Oops that's Brighton Pier by Landscape Photographer of the Year, 2017 finalist Matt Cooper via Geographical.
How embarrassing, the roller coaster should have been a tip-off. 
Here's Izabella. I'll go look for the intended picture.

From FT Alphaville:

On the (non) viability of start-up islands
“Governments just don’t get better,” Mr. Quirk said. “They’re stuck in previous centuries. That’s because land incentivizes a violent monopoly to control it.”
So noted Joe Quirk, president of the Seasteading Institute to the New York Times this week.

For those who don’t know, the Seasteading Institute aims to liberate the world from the tyranny of governments by constructing dozens of self-governing floating islands by 2020. Initially, they will be based in and around French Polynesia and feature everything from homes, hotels, offices, restaurants (and no doubt casinos) for the bargain price of $60m.

The project is being part-bankrolled by Facebook investor and PayPal co-founder Peter Thiel, but also aims to raise funds through the hottest fundraising mechanism in town: the initial coin offering. (Because… well, even independent islands are better off on the blockchain apparently.)

But Quirk’s vision doesn’t stop there. He believes one day (c. 2050) there will be thousands of such islands offering different forms of governance options to would-be citizens from all around the world. What’s more, due to climate-change these islands may one day prove to be the Noah’s Ark-type solution for low-level lands threatened by rising sea levels.

It’s a nice utopian dream. But how do you go about forging it?

In the introductory video a good wedge of time is spent explaining that there’s a shortage of shallow waters to place such islands in, because, who could have anticipated, such territories are mostly already claimed by nation states. Darn it....

Although she doesn't go there I could envision a whole "Lord of the Flies" societal breakdown or at minimum something along the lines of 2015's "The Billionaire Battle in the Bahamas".
Or maybe "Sardinians Want Rome to Sell Them to the Swiss".

November 2011
Genius Engineer/Can't Get an H-1b Visa? "Blueseed: A Startup That Plans to House Would-Be Immigrant Innovators 12 Nautical Miles from Silicon Valley"
January 2013
Blueseed (Bringing a Whole New Meaning to Offshoring) Gets an Initial Investor
October 2016
Silicon Valley Artificial Island Nears Government Backing
Ah, here we go, 2012's "Why Buy a Yacht When the Same Money Will Get You a Floating Island?":
Okay, maybe not exactly the same money. This 57,000 square foot beauty runs "hundreds of millions of euros to build.”
From GizMag:
Owning one's own yacht must surely be one of man's greatest indulgences. The ability to take your own tailored environment anywhere you want....MORE

Yacht Island Design creates tailored environment like no other. Following on from its "Streets of Monaco" design is the "Tropical Island Paradise", a 90 metre island with a top speed of 15 knots.
The main deck is a beach "cove" of cabanas surrounding a massive ocean view swimming pool, with a waterfall falling nearby from the volcano.
A bar area, outdoor dining, there's a private spa and four VIP suites for friends, all with their own private balcony.
There's also a helicopter landing pad so those friends can drop in....MORE 

Artificial Intelligence: "We build machines that read and write"

That pretty much cuts out the middle man.
It's also the sales pitch of a company called Primer:
Organizations today face a problem. The amount of data we are collecting is growing exponentially. At the same time the number of human analysts who can read it is at best growing linearly. We require new ways to close this intelligence gap and accelerate our understanding of the world.

Primer is a machine intelligence company that uses machine learning and natural language processing to automate the analysis of large datasets. We build systems that read documents, discover insights and automatically generate reports comparable to those of a human analyst....Primer homepage
_Technical Summarization
Intelligence Engines
Our products are built on top of a core set of computational engines. Their architecture is modular by design, allowing for continuous development on our analytic pipeline. These engines allow our customers to process a diverse set of document types across multiple languages. They do the work of extracting information, identifying key insights, performing analysis at scale, and generating output as human-readable text and graphics....MORE
In other news:

—University of Chicago Magazine

Saturday, November 18, 2017

On AI and Algos, Bayesian Optimal Portfolios and Bureaucracies and Culture


The Human Strategy
Alex "Sandy" Pentland [10.30.17]
The idea of a credit assignment function, reinforcing “neurons” that work, is the core of current AI. And if you make those little neurons that get reinforced smarter, the AI gets smarter. So, what would happen if the neurons were people? People have lots of capabilities; they know lots of things about the world; they can perceive things in a human way. What would happen if you had a network of people where you could reinforce the ones that were helping and maybe discourage the ones that weren't?

That begins to sound like a society or a company. We all live in a human social network. We're reinforced for things that seem to help everybody and discouraged from things that are not appreciated. Culture is something that comes from a sort of human AI, the function of reinforcing the good and penalizing the bad, but applied to humans and human problems. Once you realize that you can take this general framework of AI and create a human AI, the question becomes, what's the right way to do that? Is it a safe idea? Is it completely crazy?

ALEX "SANDY" PENTLAND is a professor at MIT, and director of the MIT Connection Science and Human Dynamics labs. He is a founding member of advisory boards for Google, AT&T, Nissan, and the UN Secretary General. He is the author of Social Physics, and Honest Signal. Sandy Pentland's Edge Bio page

The big question that I'm asking myself these days is how can we make a human artificial intelligence? Something that is not a machine, but rather a cyber culture that we can all live in as humans, with a human feel to it. I don't want to think small—people talk about robots and stuff—I want this to be global. Think Skynet. But how would you make Skynet something that's really about the human fabric?

The first thing you have to ask is what's the magic of the current AI? Where is it wrong and where is it right?

The good magic is that it has something called the credit assignment function. What that lets you do is take stupid neurons, these little linear functions, and figure out, in a big network, which ones are doing the work and encourage them more. It's a way of taking a random bunch of things that are all hooked together in a network and making them smart by giving them feedback about what works and what doesn't. It sounds pretty simple, but it's got some complicated math around it. That's the magic that makes AI work.

The bad part of that is, because those little neurons are stupid, the things that they learn don't generalize very well. If it sees something that it hasn't seen before, or if the world changes a little bit, it's likely to make a horrible mistake. It has absolutely no sense of context. In some ways, it's as far from Wiener's original notion of cybernetics as you can get because it's not contextualized: it's this little idiot savant.

But imagine that you took away these limitations of current AI. Instead of using dumb neurons, you used things that embedded some knowledge. Maybe instead of linear neurons, you used neurons that were functions in physics, and you tried to fit physics data. Or maybe you put in a lot of stuff about humans and how they interact with each other, the statistics and characteristics of that. When you do that and you add this credit assignment function, you take your set of things you know about—either physics or humans, and a bunch of data—in order to reinforce the functions that are working, then you get an AI that works extremely well and can generalize.

In physics, you can take a couple of noisy data points and get something that's a beautiful description of a phenomenon because you're putting in knowledge about how physics works. That's in huge contrast to normal AI, which takes millions of training examples and is very sensitive to noise. Or the things that we've done with humans, where you can put in things about how people come together and how fads happen. Suddenly, you find you can detect fads and predict trends in spectacularly accurate and efficient ways.

Human behavior is determined as much by the patterns of our culture as by rational, individual thinking. These patterns can be described mathematically, and used to make accurate predictions. We’ve taken this new science of “social physics” and expanded upon it, making it accessible and actionable by developing a predictive platform that uses big data to build a predictive, computational theory of human behavior.

The idea of a credit assignment function, reinforcing “neurons” that work, is the core of current AI. And if you make those little neurons that get reinforced smarter, the AI gets smarter. So, what would happen if the neurons were people? People have lots of capabilities; they know lots of things about the world; they can perceive things in a human way. What would happen if you had a network of people where you could reinforce the ones that were helping and maybe discourage the ones that weren't?

That begins to sound like a society or a company. We all live in a human social network. We're reinforced for things that seem to help everybody and discouraged from things that are not appreciated. Culture is something that comes from a sort of human AI, the function of reinforcing the good and penalizing the bad, but applied to humans and human problems. Once you realize that you can take this general framework of AI and create a human AI, the question becomes, what's the right way to do that? Is it a safe idea? Is it completely crazy?

What we've done with my students, particularly Peter Krafft, and with Josh Tenenbaum, another faculty member, is look at how people make decisions on huge databases of financial decisions, and also other sorts of decisions. What we find is that there's an interesting way that humans make decisions that solve this credit assignment problem and make the community smarter. The part that's most interesting is that it addresses a classic problem in evolution.

Where does culture come from? How can we select for culture in evolution when it's the individuals that reproduce? What you need is something that selects for the best cultures and the best groups, but also selects for the best individuals because they're the things that transmit the genes.
When you put it this way and you go through the mathematical literature, you discover that there's one best way to do this. That way is something you probably haven't heard of. It's called “distributed Thompson sampling,” a mathematical algorithm used in choosing the action that maximizes the expected reward over a set of possible actions.

It's a way of combining evidence, of exploring and exploiting at the same time. It has a unique property in that it's the best strategy both for the individual and for the group. If you select on the basis of the group, and then the group gets wiped out or reinforced, you're also selecting for the individual. If you select for the individual, and the individual does what's good for them, then it's automatically the best thing for the group. That's an amazing alignment of interests and utilities. It addresses this huge question in evolution: Where does culture fit into natural selection?...
...MUCH MORE, including video and/or audio  

To Create A "1%" In A Social Hierarchy You Don't Need An Economic Surplus, Just A Storable Form Of Wealth

This is a repost from January 2, 2017 which ties in to some ideas we'll look at next week.
Original post: 

So there I was, reading the abstract of "Hazelnut economy of early Holocene hunter–gatherers: a case study from Mesolithic Duvensee, northern Germany", thinking about Nutella and Frangelico when this grabbed my eye:
...High-resolution analyses of the excellently preserved and well-dated special task camps documented in detail at Duvensee, Northern Germany, offer an outstanding opportunity for case studies on Mesolithic subsistence and land use strategies. Quantification of the nut utilisation demonstrates the great importance of hazelnuts. These studies revealed very high return rates and allow for absolute assessments of the development of early Holocene economy. Stockpiling of the energy rich resource and an increased logistical capacity are innovations characterising an intensified early Mesolithic land use...
Stockpiling, storage, commodities, well that's right in our wheelhouse,* and if I can combine it with the last remnants of interest in Piketty's approach to inequality.....maybe I can synthesize something halfway original...

Yeah, it's already been done.

Here's VoxEU, September 2015:

Cereals, appropriability, and hierarchy
The Neolithic Roots of Economic Institutions
Conventional theory suggests that hierarchy and state institutions emerged due to increased productivity following the Neolithic transition to farming. This column argues that these social developments were a result of an increase in the ability of both robbers and the emergent elite to appropriate crops. Hierarchy and state institutions developed, therefore, only in regions where appropriable cereal crops had sufficient productivity advantage over non-appropriable roots and tubers. 
What explains underdevelopment?
One of the most pressing problems of our age is the underdevelopment of countries in which government malfunction seems endemic. Many of these countries are located close to the Equator.1 Acemoglu et al. (2001) point to extractive institutions as the root cause for underdevelopment. Besley and Persson (2014) emphasise the persistent effects of low fiscal capacity in underdeveloped countries. On the other hand, Diamond (1997) argues that it is geographical factors that explain why some regions of the world remain underdeveloped. In particular, he argues that the east-west orientation of Eurasia resulted in greater variety and productivity of cultivable crops, and in larger economic surplus, which facilitated the development of state institutions in this major landmass. Less fortunate regions, including New Guinea and sub-Saharan Africa, were left underdeveloped due to low land productivity.

In a recent paper (Mayshar et al. 2015), we contend that fiscal capacity and viable state institutions are conditioned to a major extent by geography. Thus, like Diamond, we argue that geography matters a great deal. But in contrast to Diamond, and against conventional opinion, we contend that it is not high farming productivity and the availability of food surplus that accounts for the economic success of Eurasia.
  • We propose an alternative mechanism by which environmental factors imply the appropriability of crops and thereby the emergence of complex social institutions.
To understand why surplus is neither necessary nor sufficient for the emergence of hierarchy, consider a hypothetical community of farmers who cultivate cassava (a major source of calories in sub-Saharan Africa, and the main crop cultivated in Nigeria), and assume that the annual output is well above subsistence. Cassava is a perennial root that is highly perishable upon harvest. Since this crop rots shortly after harvest, it isn't stored and it is thus difficult to steal or confiscate. As a result, the assumed available surplus would not facilitate the emergence of a non-food producing elite, and may be expected to lead to a population increase.

Consider now another hypothetical farming community that grows a cereal grain – such as wheat, rice or maize – yet with an annual produce that just meets each family's subsistence needs, without any surplus. Since the grain has to be harvested within a short period and then stored until the next harvest, a visiting robber or tax collector could readily confiscate part of the stored produce. Such ongoing confiscation may be expected to lead to a downward adjustment in population density, but it will nevertheless facilitate the emergence of non-producing elite, even though there was no surplus.

Emergence of fiscal capacity and hierarchy and the cultivation of cereals
This simple scenario shows that surplus isn't a precondition for taxation. It also illustrates our alternative theory that the transition to agriculture enabled hierarchy to emerge only where the cultivated crops were vulnerable to appropriation.
  • In particular, we contend that the Neolithic emergence of fiscal capacity and hierarchy was conditioned on the cultivation of appropriable cereals as the staple crops, in contrast to less appropriable staples such as roots and tubers.
According to this theory, complex hierarchy did not emerge among hunter-gatherers because hunter-gatherers essentially live from hand-to-mouth, with little that can be expropriated from them to feed a would-be elite.2
  • Thus, rather than surplus facilitating the emergence of the elite, we argue that the elite only emerged when and where it was possible to expropriate crops....

*See, for example:
The Golden Age of Commodities Market Manipulation: Corners, Storage and Squeezes

These days however, to purloin that wealth, you don't even need to be dealing with storables:
How to Manipulate Non-storable Commodities Markets
From September's "The Paradox of Profit Margins and Another Look at the Theory of Everything":
...If you're interested in the effect of hoarding on commodities prices Janet Netz, PhD did a paper I liked, "The Effect of Futures Markets and Corners on Storage and Spot Price Variability". I'll see if we have an ungated copy.

Remember, the spectrum runs from storage to hoarding to market corners.
And corners in commodities refers to physical, you can't corner a commod by simply buying futures or forwards, you also have to take up the physical supply.
Conversely, squeezes are accomplished in the futures..

A couple decent papers on this aspect of the abundance theory are:
"Large Investors, Price Manipulation, and Limits to Arbitrage: An Anatomy of Market Corners" and
"Market Manipulation, Bubbles, Corners and Short Squeezes"
The only way to combat abundance is with artificial scarcity, i.e. manipulation....
Well we don't have an ungated copy of the Netz but we do have a snappy little 66 page paper by Craig Pirrong who you may know by his nom de blog The Streetwise Professor. His is one of the few blogs that posts on Gazprom more than we do though we probably have more on Enron.

Via the University of Houston's Bauer College of Business and hosted at ScienceDirect:
On the other hand, storing electricity is pretty much the ultimate dream of venture capitalists:

Storage: How to Hoard Electricity (GE; SI)
Bill Gates: "It Is Surprisingly Hard to Store Energy"
Batteries: The Venture Capitalist's Holy Grail
And quite a few more, use the search blog box if interested.  

Somehow related:
Oil Tankers and Interest Rates and Scallywags and Time

Frontier Markets: Kyrgyzstan Stock Exchange

From Capitalist Exploits, October 25, 2017:

What Would You Do?
Kyrgyzstan: Does this place become Venezuela or Hong Kong?

Or something in between?

My buddy Kuppy was just there on his way through to look for opportunities in Greece. What he found was pretty interesting… not least because to a certain extent the question above matters less than you might imagine.

Here’s his take, and findings:

No pork tonight because this is a Muslim country, but don’t worry, we’ll drink twice as much vodka to make up for it.

Yup, I’m in Kyrgyzstan, checking off another box, on my long-postponed ‘Stan tour. Like all good adventures, this one started over drinks with some new-found friends.

Him: “You really should go visit our stock exchange.”

Me: “Sure, can you make an introduction to someone there?”

Him: “It’s not needed. Just show up. Don’t worry, they’ll be happy to see you”

The next morning, while shaking off my hang-over, I stumbled over to the Kyrgyz Stock Exchange—which isn’t the easiest place to find. I walked into a dimly lit atrium, past a fountain which hadn’t been used in years and started roaming around—doing my best impression of a lost foreigner who doesn’t speak Kyrgyz, while a security guard yelled at me, waving his arms emphatically to block me. After a few minutes of this, someone official came out and in broken English, motioned for me to come into his office.
Him: “Why are you here?”

Me: “I want to learn about your stock exchange”

Him: “Why?”

Me: “I’m an investor who’s invested in many frontier markets.”

Him: “There’s nothing to buy here.”

Me: “Isn’t this a stock exchange?”

Him: “Yeah, but too hard to buy anything.”

Me: “Huh?”

Him: “Not much trading.”

Me: “How much has traded so far today?”

Him: (scanning a 15 year old CRT monitor) “We haven’t had any trades yet today.”
Me: “What about yesterday?”

Him: “It was a huge day. Biggest in a while. There were 3 trades.”

Me: “That’s big?”

Him: “Huge!!”

Me: “How much dollar volume?”

Him: “Almost 200,000 Som.”

Me: “Wait, isn’t that less than US $3,000?”

Him: “Yea, it was a HUUUGGEEE day.”

Me: “What do you recommend that I buy?”
Him: “Nothing.”

Me: “Aren’t you supposed to attract investors to create volume?”

Him: “Maybe.”

Me: “What is the most popular stock on the exchange?”

Him: “The Manas Airport Company” (owner of all the country’s airports)
Having visited many frontier markets over the year, I’ve learned that earnings are an opinion, yet dividends are real. More importantly, dividends are what is left over after the local oligarchs have had their way with the company’s actual profits. It’s their way of sharing a bit of the wealth with their favorite friends who also own shares.

Dividends are also a way of showing the success of a business to the rest of the business community—hence they tend to stay constant or grow—rarely declining unless there’s an economic crisis. I tend to find them a useful benchmark for a company’s growth—however inaccurate the actual financials are.

Me: “So, what is the dividend yield?”

Him: “30%, but it is too low. By law, they have to pay out 25% of earnings as dividends, but we think they should pay out a higher percentage.”

Me: “Whoa!! Wait!! Your national airport is trading at less than one times cash flow and a 30% dividend yield? Your math must be wrong.”...


"The Improbable Origins of PowerPoint"

Power corrupts
PowerPoint corrupts absolutely
—Edward Tufte, Wired Magazine, September 1, 2003 

From IEEE Spectrum, October 31, 2017:

Here’s the surprising story behind the software that conquered the world, one slide at a time 
Walking into the hall to deliver the speech was a “daunting experience,” the speaker later recalled, but “we had projectors and all sorts of technology to help us make the case.” The technology in question was PowerPoint, the presentation software produced by Microsoft. The speaker was Colin Powell, then the U.S. Secretary of State.

Powell’s 45 slides displayed snippets of text, and some were adorned with photos or maps. A few even had embedded video clips. During the 75-⁠minute speech, the tech worked perfectly. Years later, Powell would recall, “When I was through, I felt pretty good about it.”

The aim of his speech, before the United Nations Security Council on 5 February 2003, was to argue the Bush administration’s final case for war with Iraq in a “powerful way.” In that, he succeeded. While the president had already decided to go to war, Powell’s speech—inseparable from what would become one of the most famous PowerPoint presentations of all time—did nothing to derail the plan. The following month, the United States, United Kingdom, Australia, and Poland launched their invasion.

Powell’s speech dramatized how PowerPoint had become, by 2003, a nearly inescapable tool of communication and persuasion in much of the world. Since then, its domination has only become more complete. The same tool used by U.S. State Department and CIA officials to pivot an international coalition toward war is also used by schoolchildren to give classroom reports on planets, penguins, and poets. Microsoft rightly boasts of 1.2 billion copies of PowerPoint at large—one copy for every seven people on earth. In any given month, approximately 200 million of these copies are used, and although nobody’s really counting, our cumulative generation of PowerPoint slides surely reaches well into the billions. So profound is PowerPoint’s influence that prominent figures have decried the software’s effects on thinking itself. Edward Tufte, the guru of information visualization, has famously railed against the “cognitive style” of PowerPoint, which he characterizes as having a “foreshortening of evidence and thought” and a “deeply hierarchical single-⁠path structure.”

PowerPoint is so ingrained in modern life that the notion of it having a history at all may seem odd. But it does have a very definite lifetime as a commercial product that came onto the scene 30 years ago, in 1987. Remarkably, the founders of the Silicon Valley firm that created PowerPoint did not set out to make presentation software, let alone build a tool that would transform group communication throughout the world. Rather, PowerPoint was a recovery from dashed hopes that pulled a struggling startup back from the brink of failure—and succeeded beyond anything its creators could have imagined.

PowerPoint was not the first software for creating presentations on personal computers. Starting in 1982, roughly a half-dozen other programs [PDF] came on the market before PowerPoint’s 1987 debut. Its eventual domination was not the result of first-mover advantage. What’s more, some of its most familiar features—the central motif of a slide containing text and graphics; bulleted lists; the slideshow; the slide sorter; and even the animated transitions between slides—did not originate with PowerPoint. And yet it’s become the Kleenex or Scotch Tape of presentation software, as a “PowerPoint” has come to mean any presentation created with software.

With PowerPoint as well as its predecessors, the motif of the slide was, of course, lifted directly from the world of photography. Some presentation programs actually generated 35-mm slides for display with a slide projector. In most cases, though, the early programs created slides that were printed on paper for incorporation into reports, transferred to transparencies for use on overhead projectors, or saved as digital files to be displayed on computer monitors.

The upshot was that personal computer users of the 1980s, especially business users, had many options, and the market for business software was undergoing hypergrowth, with programs for generating spreadsheets, documents, databases, and business graphics each constituting a multimillion-dollar category. At the time, commentators saw the proliferation of business software as a new phase in office automation, in which computer use was spreading beyond the accounting department and the typing pool to the office elites. Both the imagined and actual users of the new business software were white-collar workers, from midlevel managers to Mahogany Row executives.
PowerPoint thus emerged during a period in which personal computing was taking over the American office. A major accelerant was the IBM Personal Computer, which Big Blue unveiled in 1981. By then, bureaucratic America—corporate and government alike—was well habituated to buying its computers from IBM. This new breed of machine, soon known simply as the PC, spread through offices like wildfire....MUCH MORE

Institutional Investing: "Yale's Swensen Sees Low Volatility as `Profoundly Troubling':"

From Bloomberg via Pension Pulse, Nov. 17:
Janet Lorin and Christine Harper of Bloomberg report, Yale's Swensen Sees Low Volatility as `Profoundly Troubling':
David Swensen, Yale University’s longtime chief investment officer, said the lack of market volatility in the current geopolitical environment is a major concern and warned that another crash is possible.

“When you compare the fundamental risks that we see all around the globe with the lack of volatility in our securities markets, it’s profoundly troubling,” Swensen, 63, said Tuesday during remarks at the Council on Foreign Relations in New York. That “makes me wonder if we’re not setting ourselves up for an ’87, or a ’98 or a 2008-2009,” he said, referring to previous market crises.

“The defining moments for portfolio management” came in those years, “and if you ignore that you’re not going to be able to manage your portfolio,” Swensen said.

The investment chief, who was interviewed by former U.S. Treasury Secretary Robert Rubin, also said he’s expecting lower returns for the university’s endowment, which he’s run for 32 years with a 13.5 percent average annual rate of return.

For the past 12 to 18 months, Swensen said he has been warning university officials to expect much lower returns in the future, as little as 5 percent annually, which would be down from previous assumptions of 8.25 percent.

“It’s not a very popular change,” he said. “We’re victims of our own success.”

‘Strategic Positions’

Swensen’s widely copied strategy of shifting away from U.S. stocks to alternatives including private equity has generated billions of dollars in gains for the school in New Haven, Connecticut. The fund reached a record of $27.2 billion as of midyear.

“We have to take strategic positions in the portfolio,” Swensen told an overflow crowd. “One of the most important metrics that we look at is the percentage of the portfolio that’s in what we call uncorrelated assets, and that’s a combination of absolute return, cash and short-term bonds. Those are the assets that would protect the endowment in the event of a market crisis.”

Asked why Yale’s uncorrelated assets are higher now than in 2008, he said, "I’m not worried about the economy so much, what I’m concerned about is valuation."
Janet Lorin of Bloomberg also reports that Mr. Swensen talked about China, quants, and manager selection:

Yale University chief investment officer David Swensen, in a rare public appearance, spoke Tuesday to former U.S. Treasury Secretary Robert Rubin at the Council on Foreign Relations.

During the hour-long session, Swensen, 63, disclosed that annualized returns over his 32-year tenure have been 13.5 percent, higher than the endowment’s assumption of 8.25 percent a year.

Swensen said he favors private equity and doesn’t like quants, and talked about his efforts to get university officials to lower expectations for future returns. The endowment has swelled to a record $27.2 billion, the second-largest in U.S. higher education.

During the interview, Swensen shared thoughts about investing and opportunities:

On where to invest: “The types of questions that you need to ask with respect to where you are investing are the bedrock for putting together your asset allocation. When I look around the world, there are places that we just won’t invest. Russia. If the rule of law does not follow, then do you know whether or not you own anything? And if you don’t know whether or not you own it, then why would you put your funds there? As we look around the world in spite of the problems we face in the United States, this is one of the best environments in which to invest. I think that the breadth of emerging markets that we were interested in 20 years ago has narrowed dramatically.”

On China: His level of concern about China has been “pretty constant” over the past 12 or 18 months. “China is an area that makes me incredibly nervous, but at the same time, we’re heavily committed there. I’ve had great relationships with a handful of managers in China that have produced extraordinary returns. The party commitment to capitalism doesn’t seem as steadfast as I might have thought five or ten years ago.” ...MORE

The New York Fed Is Puzzled By Low Volatility

From the Federal Reserve Bank of New York's Liberty Street Economics blog, Nov. 15:

The Low Volatility Puzzle: Is This Time Different?
As stock market volatility hovers near all-time lows, some analysts are questioning whether investors are complacent, drawing an analogy to the lead-up to the financial crisis. But, is this time different? We follow up on our previous post by investigating the persistence of low volatility periods. Historically, realized stock market volatility is persistent and mean-reverting: low volatility today predicts slightly higher, but still low, volatility one month and one year from now. Moreover, as of mid-September, the market is pricing implied volatility of 19 percent in one to two years’ time. This level contrasts with the pre-crisis period when the term structure of implied volatility was relatively flat, which suggests this time may indeed be different, at least as measured by market participants’ pricing of risk.

Realized Volatility Forecasts When Volatility Is Low
When realized volatility is low, does it tend to stay low the next month? What about twelve-months ahead? The chart below answers this question by plotting current realized volatility on the horizontal axis against realized volatility one-month and twelve-months ahead on the vertical axis. Realized volatility is computed as the sum of squared daily Center for Research in Security Prices (CRSP) value-weighted returns obtained from Kenneth R. French’s website, reported in annualized volatility units.

The chart shows that realized volatility is persistent and mean-reverting. To see this, note how low volatility today forecasts low volatility one-month and twelve-months ahead. The volatility forecasts are above the 45 degree line when volatility is low but below the 45 degree line when volatility is high. Moreover, there is no evidence of a nonlinearity when volatility is at the lower end of its historical distribution. On average, extremely low volatility today predicts low volatility in the future, not higher. This evidence weighs against the narrative discussed in the previous post that low volatility, in and of itself, may be a concern.
Nonetheless, it may be that this analysis masks an increased probability of a jump in volatility when volatility is extremely low. To consider that possibility, the next chart shows the probability of moving into a high volatility state, defined as realized volatility above 16 percent (the seventy-fifth percentile of the historical distribution), based on the current level of realized volatility. Similar to the volatility forecasts, we find no evidence that being in a low volatility environment raises the probability of jumping to a high volatility state, as compared to a “normal” volatility environment of, say, 15 percent.

The Low Volatility Puzzle: Is This Time Different?

The Term Structure of Implied Volatility... 

How to Write A Man Booker Prizewinning Novel In Four Weeks

And maybe set yourself up for a Nobel in Literature as well.

...Until that point, since giving up the day job five years earlier, I’d managed reasonably well to maintain a steady rhythm of work and productivity. But my first flurry of public success following my second novel had brought with it many distractions. Potentially career-enhancing proposals, dinner and party invitations, alluring foreign trips and mountains of mail had all but put an end to my “proper” work. I’d written an opening chapter to a new novel the previous summer, but now, almost a year later, I was no further forward.

So [my wife] Lorna and I came up with a plan. I would, for a four-week period, ruthlessly clear my diary and go on what we somewhat mysteriously called a “Crash”. During the Crash, I would do nothing but write from 9am to 10.30pm, Monday through Saturday. I’d get one hour off for lunch and two for dinner. I’d not see, let alone answer, any mail, and would not go near the phone. No one would come to the house. Lorna, despite her own busy schedule, would for this period do my share of the cooking and housework. In this way, so we hoped, I’d not only complete more work quantitively, but reach a mental state in which my fictional world was more real to me than the actual one. ...

This, fundamentally, was how The Remains of the Day was written. Throughout the Crash, I wrote free-hand, not caring about the style or if something I wrote in the afternoon contradicted something I’d established in the story that morning. The priority was simply to get the ideas surfacing and growing. Awful sentences, hideous dialogue, scenes that went nowhere – I let them remain and ploughed on. ...

I kept it up for the four weeks, and at the end of it I had more or less the entire novel down: though of course a lot more time would be required to write it all up properly, the vital imaginative breakthroughs had all come during the Crash.

I should say that by the time I embarked on the Crash, I’d consumed a substantial amount of “research”: books by and about British servants, about politics and foreign policy between the wars, many pamphlets and essays from the time, including one by Harold Laski on “The Dangers of Being a Gentleman”. I’d raided the second-hand shelves of the local bookshop (Kirkdale Books, still a thriving independent) for guides to the English countryside from the 1930s and 50s. The decision when to start the actual writing of a novel – to begin composing the story itself – always seems to me a crucial one. How much should one know before starting on the prose? It’s damaging to start too early, equally so to start too late. I think with Remains I got lucky: the Crash came just at the right point, when I knew just enough....
--Kazuo Ishiguro in The Guardian

Mr. Ishiguro has been nominated for the Man Booker Prize four times and won in 1989 for his novel The Remains of the Day.
On October 5 it was announced he had been awarded the 2017 Nobel Prize in Literature.

HT:The .Plan: A Quasi-Blog

Friday, November 17, 2017

Russia, China to set up $1billion fund for metal, mining projects

China and Russia sure seem to be doing a lot of deals. If I were in the Indian Government I'd possibly be tempted to enquire: "What up, dawg".

And if I were Japan I might ask: "Wasn't the Greater East-Asia Co-Prosperity Sphere simply a good idea that got a little bit out of hand?" ( reading room link)

From Asia Times:
The investment push is part of China’s Belt and Road Initiative, and also of a program of economic cooperation the country has drafted with Russia

Russia’s Far East Development Fund and China’s state-owned gold mining company, China National Gold Group, are to sign an accord by the end of this year on setting up a joint US$1 billion investment fund targeting new projects in the metals and mining sector.

“Ourselves and China Gold are creating a fund in which private investors too can take part and turn a profit. Our first goal is to invest in projects to mine gold, precious metals and copper,” Far East Development Fund head Aleksey Chekunov told media.

The fund is slated to begin dispensing funds for projects next year and will have an initial capital of US$500 million to put to work. That will increase with contributions from both sides, as well as private investors.

The Far East Development Fund (FEDF) was established in 2011 to provide soft loans for the implementation of investment projects in Russia’s Far East. Its only shareholder is the state lender Vnesheconombank, whose mission is to aid in development projects and foreign economic relations. FEDF assets as of June 2017 stood at US$614 million.

China’s Metropoly Holdings and Sinohigh Investment have also expressed interest in establishing two joint Russia-focused investment funds, one in mining and metals and another for infrastructure and development projects....MORE

Paranoid? New Antipsychotic Drug Tracks and Reports Whether You Take It

Well that should take care of any paranoid delusions.
By turning them into paranoid realities.

From Forbes:

FDA Approves First Digital Pill That You (And Others) Can Track
"Did you take that pill?'
Response: "Yes."

"Are you sure?"
Response: "Absolutely. I'm fairly certain. I think so. Maybe. What was your question again?"

"Let's ask the pill."

Today the Food and Drug Administration (FDA) announced that they approved the first drug in the U.S. that can tell you and others that you swallowed it. Abilify MyCite are aripiprazole tablets with sensors embedded in them. Once the pill goes down your hatch, the sensor can then send a message to a patch that you wear, essentially saying that "the pill has landed. Houston, we've reached the stomach." The wearable patch can then transmit this information to an app on your smart phone.

From the smartphone, this information can go anywhere via the Interwebs, to, for instance, your family members or your doctors, granted that you give them permission to see this information. Otsuka Pharmaceutical Co., Ltd. makes the drug and Proteus Digital Health makes the sensor technology Abilify MyCite. And you thought a talking tablet was just Siri on an iPad.

While Abilify is a very specific medication, approved by the FDA in 2002 for the treatment of schizophrenia, approval of such a pill-technology combo opens up a whole new avenue of possibilities for many other types of treatments. As Marie T. Brown, MD from Rush University Medical Center and Jennifer K. Bussell, MD, from the University of Chicago described for the Mayo Clinic Proceedings, around half of patients fail to take their medications as prescribed, and there are many reasons why they don't. Some may not understand the directions. Others don't like the side effects. And others just forget or lose track. Remembering to take medications has become more and more challenging as more Americans are taking more pills. A study published in JAMA in 2015  found that from 1999–2000 to 2011–2012, the percentage of adults taking 5 or more prescription drugs rose from an estimated 8.2% to an estimated 15%. With so many pills, remembering to take the right pill at the right time can be quite a pill....MORE

"Bad news from Mashable, BuzzFeed, and Vice shows times are rough for ad-supported digital media"

We had gathered the three stories with the aim of putting a post together, starting with the Wall Street Journal headline:
BuzzFeed Set to Miss Revenue Target, Signaling Turbulence in Media 
which got me snarking (to myself) "That was the signal? BuzzFeed coming in 20% light in November 2017 was the signal?" which reminded me of a 2013 post "Huffington Post Doesn't Hit the Numbers, Gets a Pass From AOL" which naturally enough led to "Nation’s Journalists Remember Quaint Time When ‘Huffington Post’ Seemed Like Death Of News Industry"* when, thank goodness, NiemanLab staged an intervention before things had spun completely out of control.

From NiemanLab:

The rapid growth of Google and Facebook continues to take its toll on digital media companies.

Thursday was a rough day for digital media. Within hours, a series of reports, some unofficial and others confirmed, underscored a bitter reality that’s become increasingly harder to avoid: Not even the biggest digital media startups are immune from the seismic shifts in digital advertising affecting the whole industry. The upshot: Ad-supported digital media is hard, and getting harder. Meanwhile, the duopoly — Google and Facebook — continue to see their own ad businesses thrive.
Here’s a rundown:

More layoffs at Oath. Early in the day, Digiday’s Lucia Moses reported that Verizon’s Oath, which includes The Huffington Post, AOL, Yahoo, and some ad tech products, was laying off 560 staffers, around 4 percent of the company’s overall headcount. Those cuts were in addition to the 2,100 Verizon laid off when it acquired Yahoo in June.

Mashable sells low. Probably the most brutal news of the day came from The Wall Street Journal, which reported that Mashable, a one-time digital media darling, had agreed to sell itself to Ziff Davis to $50 million. For Mashable, that was a significant haircut from its 2016 valuation of $250 million. The low price suggests that, for potential buyers, digital media is an increasingly uncertain bet....

*Nation’s Journalists Remember Quaint Time When ‘Huffington Post’ Seemed Like Death Of News Industry
NEW YORK—Laughing and smiling as they shared stories with one another about the deep-seated professional concerns they held at the time, the nation’s journalists reminisced Friday about the quaint bygone days when the The Huffington Post seemed like the death of the news industry, sources reported. “Gosh, I remember when The Huffington Post first appeared and its strategy of aggregating sensationalistic content and printing hyper-partisan drivel with no discernible editing or fact-checking seemed like the absolute nadir of this industry, but now, having to compete against sites that peddle wholesale fabrications and being beholden to secret Facebook algorithms that control the dissemination of everything we write, those early HuffPo days actually seem pretty wonderful,” said Reuters reporter Casey Sandoval, who explained....MORE

"How To Forecast Markets": A Departing Top JP Morgan Strategist Reveals What He Learned After 30 Years

Unlike most "A Look Back at my Illustrious Wall Street Career and Lessons Learned"—type stories (Henry Clews' Fifty Years in Wall Street excluded) this piece, despite the clickbaity headline, is pretty good.
From ZeroHedge:
One of the most popular JPMorgan analysts, traders and commentators, Jan Loeys, head of global asset strategy and author of the weekly "The JPMorgan View" piece is moving on (to a different, non-client facing part of the company), and is using his last weekly address to JPM clients to recap the main lessons he has learned over his 30 year career.

For those carbon-based traders who still trade on the basis of fundamental analysis, inductive reasoning, and discounting, and forecasting the future - instead of merely relying on the fastest laser-based algos to react to the news or hoping for central bank bailouts - we have excerpted the entire piece, and are excited to note that while Loeys may be leaving, he will be replaced by two of our favorite JPM analysts and commentators, Nikos Panigirtzoglou and Marko Kolanovic, who under John Normand will take over as JPM's new Cross-Asset Strategy team.

So, without further ado, here is the latest, and last, from JPM's Jan Loeys, explaining "What have I learned?" after 30 years of doing this...

What have I learned?
How to forecast markets?
  • The theory and empirical literature of Finance are the best starting point as they deal directly with asset prices. Next are macro economics and statistics. Markets are not Math or Engineering, but a forever learning and adapting system with all of us observing and participating from the inside. Quantitative techniques are indispensable, though, to deal with the complexity of financial instruments and the overload of information we face. Empirical evidence counts for more than theory, but you need theory to constrain empirical searchers and avoid spurious correlations.
  • The starting point of Finance is the Theorem of Market Efficiency which posits that under ideal conditions what we all know should be in the price. Only new information moves the price. Hence, it is changes in expectations about the future that drive asset prices, not the level of anything.
  • How to forecasts view changes? The good news is that changes in opinions about fundamentals such as growth and inflation tend to repeat. This is one driver of momentum in asset prices, and is likely driven by the positive feedback between risk markets and the economy that forecasters naturally find very difficult getting ahead of.
  • I live by Occam’s Razor: If you can explain the world with one variable, don’t use two. This keep-it-simple rule does not deny that reality is complex, nor does it say anything about simple minds. It forces one to focus on the most important fundamental drivers of markets and to cut out the clutter. It reduces the risk of becoming a two-handed strategist.
  • The mode and the mean. There is a fundamental difference between an asset price and a forecast. A forecast is a single outcome that you consider the most likely, among many. In statistics, we call this the mode. An asset price, in contrast, is closer to the probability-weighted mean of the different scenarios you consider possible in the future. When our own probability distribution for these different outcomes is not evenly balanced but instead skewed to, say, the upside, the market price will be above our modal view. Asset prices can thus move without a change in modal views if the market perceives a change in the risk distribution. An investor should thus monitor changing risk perceptions as much as changing modal views.
  • Do markets get ahead of reality? They do, yes, exactly because asset prices are probability-weighted means and the reality we perceive is coded as a modal view. Information arrives constantly and almost always only gently moves the risk distribution around a given modal view. Before we change our modal view of reality, the market will have seen the change in risk distribution and will have started moving already.
  • Are some markets faster than others? I hear frequently in one market, say equities, that they are monitoring other markets, such as credit or bonds, for early signs on what stocks will do. But I hear the reverse frequently in the bond world. I do not like either view and just assume that all markets react at the same speed as they see all information at the same time....

The Fiftieth TOP500 List of the Fastest Supercomputers in the World

We'll be back with more commentary on what's up in High Performance Computing but as a placeholder here's Top500 with the highest of the HPC crowd:

November 2017 
The fiftieth TOP500 list of the fastest supercomputers in the world has China overtaking the US in the total number of ranked systems by a margin of 202 to 143. It is the largest number of supercomputers China has ever claimed on the TOP500 ranking, with the US presence shrinking to its lowest level since the list’s inception 25 years ago.

Just six months ago, the US led with 169 systems, with China coming in at 160. Despite the reversal of fortunes, the 143 systems claimed by the US gives them a solid second place finish, with Japan in third place with 35, followed by Germany with 20, France with 18, and the UK with 15.

China has also overtaken the US in aggregate performance as well. The Asian superpower now claims 35.4 percent of the TOP500 flops, with the US in second place with 29.6 percent.
The top 10 systems remain largely unchanged since the June 2017 list, with a couple of notable exceptions.

Sunway TaihuLight, a system developed by China’s National Research Center of Parallel Computer Engineering & Technology (NRCPC), and installed at the National Supercomputing Center in Wuxi, maintains its number one ranking for the fourth time, with a High Performance Linpack (HPL) mark of 93.01 petaflops.

Tianhe-2 (Milky Way-2), a system developed by China’s National University of Defense Technology (NUDT) and deployed at the National Supercomputer Center in Guangzho, China, is still the number two system at 33.86 petaflops.

Piz Daint, a Cray XC50 system installed at the Swiss National Supercomputing Centre (CSCS) in Lugano, Switzerland, maintains its number three position with 19.59 petaflops, reaffirming its status as the most powerful supercomputer in Europe. Piz Daint was upgraded last year with NVIDIA Tesla P100 GPUs, which more than doubled its HPL performance of 9.77 petaflops.

The new number four system is the upgraded Gyoukou supercomputer, a ZettaScaler-2.2 system deployed at Japan’s Agency for Marine-Earth Science and Technology, which was the home of the Earth Simulator. Gyoukou was able to achieve an HPL result of 19.14 petaflops. using PEZY-SC2 accelerators, along with conventional Intel Xeon processors. The system’s 19,860,000 cores represent the highest level of concurrency ever recorded on the TOP500 rankings of supercomputers.

Titan, a five-year-old Cray XK7 system installed at the Department of Energy’s (DOE) Oak Ridge National Laboratory, and still the largest system in the US, slips down to number five. Its 17.59 petaflops are mainly the result of its NVIDIA K20x GPU accelerators.

Sequoia, an IBM BlueGene/Q system installed at DOE’s Lawrence Livermore National Laboratory, is the number six system on the list with a mark of 17.17 petaflops. It was deployed in 2011.
The new number seven system is Trinity, a Cray XC40 supercomputer operated by Los Alamos National Laboratory and Sandia National Laboratories. It was recently upgraded with Intel “Knights Landing” Xeon Phi processors, which propelled it from 8.10 petaflops six months ago to its current high-water mark of 14.14 petaflops.

Cori, a Cray XC40 supercomputer, installed at the National Energy Research Scientific Computing Center (NERSC), is now the eighth fastest supercomputer in the world. Its 1,630 Intel Xeon "Haswell" processor nodes and 9,300 Intel Xeon Phi 7250 nodes yielded an HPL result of 14.01 petaflops.

At 13.55 petaflops, Oakforest-PACS, a Fujitsu PRIMERGY CX1640 M1 installed at Joint Center for Advanced High Performance Computing in Japan, is the number nine system. It too is powered by Intel “Knights Landing” Xeon Phi processors.

Fujitsu’s K computer installed at the RIKEN Advanced Institute for Computational Science (AICS) in Kobe, Japan, is now the number 10 system at 10.51 petaflops. Its performance is derived from its 88 thousand SPARC64 processor cores linked by Fujitsu’s Tofu interconnect. Despite its tenth-place showing on HPL, the K Computer is the top-ranked system on the High-Performance Conjugate Gradients (HPCG) benchmark....MUCH MORE, including links to all 500 of the fastest machines on earth.

Is Bob Lutz Correct? Is the Entire Car Industry Really Doomed?

Following up on yesterday's Former GM Vice-Chair Lutz: "'Everyone will have 5 years to get their car off the road or sell it for scrap'".

From The Drive, Nov. 13:

Is the Entire Car Industry Really Doomed?
Bob Lutz drops a nuclear bomb on everything we know and love. But is he right?
Last week, Bob Lutz—former vice chairman and head of product development at GM, veteran of Ford, Chrysler, BMW & Opel, father of the Dodge Viper, and the automotive world’s most honest man—published a flamethrowing op-ed targeted titled “Kiss The Good Times Goodbye.” It echoes all the arguments of the Kool-Aid drinking mobility “experts” and everyone in Silicon Valley betting fortunes on the end of human driving as we know it. And not just human driving. Dealerships. Car magazines. Brands. If you believe Lutz, everything we know, love, or hate is utterly doomed by the arrival of self-driving cars.

Is Lutz right?

I’ve been saying the same thing as Lutz since 2015, with one crucial difference. I think it’s all over in 50-70 years. Lutz? Twenty.

That’s a big difference. If this had come from some idiot on LinkedIn whose bio said “Change Agent” or “Radical Disruptor,” I’d answer with customary wrath. But this is Bob Lutz, who delivers insight even when he misses the target. Also, the Dodge Viper wouldn’t exist without him. He’s a true car guy, and has nothing to gain by repeating the self-driving agenda. His argument deserves real analysis.

Let’s dissect this line-by-line.

“Everyone will have 5 years to get their car off the road or sell it for scrap”
By Bob Lutz
It saddens me to say it, but we are approaching the end of the automotive era.

To suggest the “automotive era” is over suggests a binary change, as if everything is going to flip, very, very quickly. Lutz is obviously a fan of Malcolm Gladwell’s The Tipping Point. I’d argue that we’re approaching the end of the beginning, which started with the Darpa Challenge back in 2007, and probably ended this week with Waymo’s announcement that they were removing the human monitors from their test vehicle fleet in Phoenix.

The auto industry is on an accelerating change curve. For hundreds of years, the horse was the prime mover of humans and for the past 120 years it has been the automobile.
Was the horse ever the prime mover of humans? Not for the humans who didn’t have horses. The horse metaphor is very popular, but it’s not really accurate. At peak horse, the majority of humans in the world had never owned, leased, financed or rented a horse, let alone ridden one. In the United States, cradle of car culture, peak horse occurred just over 100 years ago, when there were approximately 20 million horses in a human population of just over 100 million. Today there are approximately 323 million humans in the United States. Human driven cars? About 274 million, with an annual turnover of 17 million. The average vehicle's lifespan is 11.5 years. Even if 100% of cars sold starting tomorrow were capable of Level 4 self-driving, it would take 16 years to get to 100% ubiquity.

Sixteen years from today.
And the tech doesn’t work yet except in limited conditions, even now. In fact, it doesn’t even work in limited conditions. Thank you, Navya.

A lot has to happen to meet Lutz’s timeline. A lot that technology can’t solve, which is human nature. Fortunes have been lost betting against it, and culture is as powerful as the tides. Both can shift, but nothing can force them.

Now we are approaching the end of the line for the automobile because travel will be in standardized modules.

Lutz is describing what I call the Autonomotive Singularity, which will manifest the day after the last person with the option of using a steering wheel chooses not to. Hold your horses, because Lutz is skipping over everything in between now and then. You know, the part where people still have choices. People like having agency over outcomes, or at least the sense of it. Human driven car sales are at an all-time high. Cars aren’t merely transportation, but transformation. People don’t just buy cars because they need to get from A to B, and even when they do, they’re willing to pay extra for personalization as an extension of self, which the zero-agency standardized module does little to address. Luxury pods? Sure, but those are statements of wealth. The id requires more. It requires agency and control over machines as a statement of power, and Lutz’s Wall-E scenario will be Kryptonite to anyone who can afford to avoid it. Right now, that’s everybody....

Felix Salmon Talks Da Vinci: "Notes on $450,312,500 "

November 16, 2017
Nota bene #10
Notes on $450,312,500 
  1. The hammer price was a round $400,000,000, which means that the buyer's premium alone was more than $50 million. By convention, the buyer's premium goes to the auction house for its troubles, but you can be sure that Christie's grossed much less than $50,312,500 last night. The seller will have negotiated "enhanced hammer," which means that the Rybolovlev family will be receiving significantly more than $400 million. On top of that, the lot had a third-party guarantee, which means that Christie's has to split its profits with the guarantor. That said, even after a multi-million-dollar marketing campaign, Christie's surely made a healthy profit on this lot.
  2. The last time this painting was sold by an auction house was only four years ago, in 2013, when Sotheby's sold it privately to Yves Bouvier for $80 million. That decision, to go with a private sale rather than a glitzy public auction, now looks very, very stupid.
  3. Bouvier then flipped the work to Rybolovlev for $127.5 million. When Rybolovlev found out how much Bouvier made on the deal, he was furious, and basically gave up art collecting entirely. His decision to sell the painting was made in anger, out of pique that he had been ripped off. Now it seems he has made more money off one painting, in four years, than most art collectors dream of making in a lifetime. There's probably a moral here, but I have no idea what it is.
  4. The difference between the 2013 sale and the 2017 sale isn't just four years and $300+ million, it's also the difference between a private sale and a public sale. A public sale, at least when it's orchestrated by Christie's in the way that this one was, involves glitz and expensive marketing videos and hour-long lines and lighting worthy of a Thomas Kinkade store...MUCH MORE

Sure, Come On In: "Amazon Key Flaw Could Let Rogue Deliverymen Disable Your Camera" (AMZN)

They say a fix is coming.
From Wired:
When Amazon launched its Amazon Key service last month, it also offered a remedy for anyone—realistically, most people—who might be creeped out that the service gives random strangers unfettered access to your home. That security antidote? An internet-enabled camera called Cloud Cam, designed to sit opposite your door and reassuringly record every Amazon Key delivery.

But now security researchers have demonstrated that with a simple program run from any computer in Wi-Fi range, that camera can be not only disabled but frozen. A viewer watching its live or recorded stream sees only a closed door, even as their actual door is opened and someone slips inside. That attack would potentially enable rogue delivery people to stealthily steal from Amazon customers, or otherwise invade their inner sanctum.

And while the threat of a camera-hacking courier seems an unlikely way for your house to be burgled, the researchers argue it potentially strips away a key safeguard in Amazon's security system. When WIRED brought the research to Amazon's attention, the company responded that it plans to send out an automatic software update to address the issue later this week.

"The camera is very much something Amazon is relying on in pitching the security of this as a safe solution," says Ben Caudill, the founder of the Seattle-based security firm Rhino Security Labs, whose researchers discovered and demonstrated the Amazon Key attack. "Disabling that camera on command is a pretty powerful capability when you’re talking about environments where you’re relying heavily on that being a critical safety mechanism."...MORE
In other Amazon news, From AFNS:
"Popular New Amazon Service Just Comes To Your House And Kills You"

Currencies: "Euro, Yen and Sterling Regain Footing"

From Marc to Market:
The US dollar is trading with a heavier bias against the euro, sterling, and yen, but is firmer against the Antipodean currencies and many of the actively traded emerging market currencies. This mixed performance is the story of the week.

The US 2-10 yr yield curve is flattening further today with the two-year pushing above 1.70% for the first time since the financial crisis. The 10-year yield is slipping toward the middle of this week's 2.32%-2.41% trading range.

There are two big US stories being discussed today. The progress on US tax reform and news that the special prosecutor had subpoenaed documents from more than a dozen Trump campaign officials several weeks ago.

The House of Representatives passed its version of tax reform yesterday. The Republican majority in the Senate is narrower, and only a third face voters next year compared with the entire House. In its current form, it is difficult to see the current bill pass. It did pass the Senate Finance Committee late yesterday. The bill will be debated by the entire Senate after the Thanksgiving break. There will be a dozen legislative sessions between Thanksgiving and the holiday break in December.

The Joint Committee on Taxation, which does for taxes what the CBO does for budgets: official arbiter. It found that the Senate's plan, without including the repeal of the estate tax, leads to higher taxes for those households earning less than $75k a year. Note that the median household income in the US is around $55k. The JCT estimates that 65% of households will experience higher taxes, while 24% will get a cut. Oscar Wilde once quipped that there are only two tragedies in life. One is not getting what one wants, and the other is getting it. The Senate does not seem to know which tragedy it is writing.

There are seven Republican Senators that have expressed some misgivings, sometimes in contradictory ways. For example, Senator Paul wants broad tax cuts, while Senators Corker, Flake, and Lankford are concerned about adding to US indebtedness. A couple of other Senators are concerned about adding the repeal of the individual health care mandate.

There are several other developments to note today, including Moody's decision to raise India's sovereign debt rating (first time since 2004) to Baa2 from Baa3, with a stable outlook (from positive). This puts it one notch above the other two major rating agencies, Fitch and S&P. Moody's cited progress on institutional and economic reforms. Investors responded favorably, as one would expect. The current 10-year benchmark yield slipped nine bp. The rupee gained 0.25% against the US dollar, and Indian equities rose a little more than 0.5%. The other rating agencies did not comment, but they are likely to wait until after next year's budget is passed. There is some speculation that the upgrade will encourage the central bank to cut rates at its next meeting on December 6.

Meanwhile, German efforts to forge a four-party coalition government continued to be bogged down, as the self-imposed deadline passed. These are still so-called exploratory talks; the concrete coalition negotiations have not begun. There are some genuine policy disagreements on immigration, climate change, fiscal policy, internal security, and Europe. The negotiations are further troubled by the reported leadership challenge within the CSU, the Bavarian sister party to Merkel's CDU. The talks are set to continue. The underlying threat is that if the talks fail, new elections would be necessary, and many fear that the AfD would gain more support....MUCH MORE
I have no idea what, if anything, the euro chart is telling us although, if this were an equity I'd be watching for a developing cup-n-handle formation to challenge the September highs: