Wednesday, November 26, 2014

Dressing: "The Urbane Turkey"

 From the Paris Review:

“Boys, I feel I’m going to a change of climate.” A vintage Thanksgiving card.
As fans of holiday ephemera know, there are several primary genres of Weird, Old-Timey Thanksgiving Cards. There is the Greedy Child. There is the Doomed Turkey. There is the Turkey in Vehicle, which is sometimes a Corncob Car. There is the Anthropomorphic Root Vegetable. It hardly needs saying that Thanksgiving pinups are a thing unto themselves. Sexy Pilgrims, under-dressed squaws, and women cooking in lingerie and filmy cocktail aprons are all fairly ubiquitous.

By far my favorite subgenre is that of the Urbane Turkey. This foppish specimen is usually in evening dress, so as to indicate his sophisticated couth. Needless to say, he sports a top hat. Sometimes a monocle, or a cigarette. All in all, he has the trappings of a big-screen rich nincompoop, which I suppose added a certain glee to his consumption.

The Urbane Turkey is not always complacent. Sometimes he’s a sharp. He’s in the know. This Urbane Turkey is the turkey who knows where to find the best feed and the keenest pea-hens.
As befits his man-of-the-world air, he smokes a cigar; and his citified duds are less Union Club than pool hall. This tom doesn’t take any wooden nickels; he sees the way the wind’s blowing and he’ll be out on the next train, before the axe is even sharpened. He doesn’t need pardoning; he makes his own luck....MORE 
For some more examples of how truly awful the various genres can be see Vintage Everyday's:
20 Funny and Cute Vintage Thanksgiving Postcards

"Corporate profits juggernaut continues"

From Calafia Beach Pundit:
In my view, one of the most enduring and extraordinary features of the current business cycle expansion has been the strength of corporate profits. According to the GDP stats released yesterday, third quarter after-tax corporate profits hit a new nominal high of $1.87 trillion, and a new high relative to GDP of 10.3%. So it's no wonder that equities are hitting new highs. Indeed, despite profits hitting all-time record highs, PE ratios today are only slightly above average. Stocks by this measure still look quite attractive.
From 1958 through 2004, after-tax corporate profits averaged about 5.3% of GDP. Since then, and including the profits collapse of the Great Recession, after-tax corporate profits have averaged 8.8% of GDP. As the chart above shows, over the entire period since 1958, corporate profits have averaged about 6% of GDP. For the past 5 years, equity bears have in effect argued that profits were unsustainably high because they had a strong tendency to be mean-reverting to, say, 6% of GDP. Instead, profits have just continued to grow, both nominally and relative to GDP. A pessimistic outlook for corporate profits has essentially been the driving force behind the equity market's gains, because profits have far exceeded expectations. In a sense, the market has been forced higher because profits have been much stronger than expected....MUCH MORE

"Space station's 3-D printer pops out 1st creation"

From the Associated Press' The Big story feed:
The first 3-D printer in space has popped out its first creation.

The 3-D printer delivered to the International Space Station two months ago made a sample part for itself this week. It churned out a faceplate for the print head casing.

Space station commander Butch Wilmore removed the small plastic creation from the printer Tuesday for eventual return to Earth. About 20 objects will be printed in the next few weeks for analysis back home, NASA said. The space agency hopes to one day use 3-D printing to make parts for broken equipment in space.

Made in Space, the Northern California company that supplied the space station's 3-D printer, called it "a transformative moment." The newly created, rectangular faceplate — considered functional by the company — includes the Made in Space name, as well as NASA's.

"When the first human fashioned a tool from a rock, it couldn't have been conceived that one day we'd be replicating the same fundamental idea in space," Aaron Kemmer, chief executive officer, said in a statement....MORE

Deere Warns of Accelerating Ag Market Decline (DE)

Ya think?
From Agrimoney:
Deere & Co warned of an accelerating decline in the global farm equipment market as the agricultural machinery giant cautioned of a 40% tumble in earnings over the next year, a bigger drop than Wall Street had expected.
The maker of John Deere machinery unveiled results for the August-to-October period, the fourth quarter of its financial year which, while down 10.6% at $3.16bn, exceeded market forecasts.
The results were equivalent to $1.83 per share, ahead of the $1.57 per share that analysts had pencilled in.
Samuel Allen, the Deere & Co chairman and chief executive, said the company had achieved a "solid performance in spite of weaker conditions in the global farm sector", for which profits are being undermined by lower crop prices.
Sales drop
However, the group cautioned of a deepening decline in the ag machinery market, expecting the group's own sales in the sector to fall by 20% in the year to October 2015.
Deere reported a drop of 9% in sales in the year to the end of last month, and 13% in the August-to-October period....MORE
Here's the last three quarter's price action from FinViz:

"Prepare for the rare 'deflationary boom"'

From Jon Markman via Yahoo:
"Deflation" and "boom" are not two words that normally go together. They are almost like "sad happiness," "lo-cal donut." But in their very unlikely pairing they appear to do a good job of explaining the unusual economic and market environment that may lie ahead.

It’s a term discussed this week by Cornerstone Macro analyst Francois Trahan to describe a rare condition in which a country’s economic activity rises but inflation falls. He believes that is the right interpretation of the Philadelphia Fed data released on Tuesday that showed output in the region up but prices paid falling, as shown in the chart below.
The improvement of the Philly Fed can be seen in part as a result of the stimulative effect of falling crude oil prices, and their ripple effect on the broad economy. The chart below, created by Cornerstone, shows the Philly Fed Index (green line) charted against the six-month percent change in the price of Brent Oil, advanced four months (gray) and inverted.
The oil price is advanced four months to show the lagged effect that oil has on economic activity. In other words, when oil falls in price it takes about four months for the change to have an effect on end users’ decisions....MORE

Feldstein: The Geopolitical Impact of Cheap Oil

WTI $73.59, last. Our target is $70.00 but if the shale guys don't cut back on their drilling the price is going quite a bit lower. Brent $77.95.
From Project Syndicate:
The price of oil has fallen more than 25% in the past five months, to less than $80 a barrel. If the price remains at this level, it will have important implications – some good, some bad – for many countries around the world. If it falls further, as seems likely, the geopolitical consequences on some oil-producing countries could be dramatic.

The price of oil at any time depends on market participants’ expectations about future supply and demand. The role of expectations makes the oil market very different from most others. In the market for fresh vegetables, for example, prices must balance the supply and demand for the current harvest. By contrast, oil producers and others in the industry can keep supply off the market if they think that its price will rise later, or they can put extra supply on the market if they think the price will fall.

Oil companies around the world keep supply off the market by reducing the amount of oil that they take out of the ground. Oil producers can also restrict supply by holding oil inventory in tankers at sea or in other storage facilities. Conversely, producers can put more oil on the market by increasing production or by running down their inventories.

The market expectations reflected in today’s price reflect lower future demand and increased future supply. Lower demand reflects both the current weakness of economic activity, particularly in Europe and China, and, more important, the longer-term changes in technology, which will increase cars’ fuel efficiency and induce the use of solar power and other non-oil energy sources. The increase in the future potential supply of oil reflects new output produced by fracking, the development of Canada’s tar sands, and Mexico’s recent decision to allow foreign oil companies to develop the country’s energy sources.

These changes in demand and supply suggest that the future price of oil will be lower than industry participants expected until just a few months ago. Some of the recent changes in expected future demand and supply could have been anticipated earlier. But there is no way to know when attitudes and expectations will change. The historic volatility of oil prices reflects these psychological shifts as well as changes in objective reality.

Today’s oil price is also linked to anticipated future interest rates. More specifically, oil producers have an investment choice: They can increase production now, selling the additional oil at today’s price and investing the proceeds at the existing long-term interest rate, or they can leave the oil in the ground as an investment.
A low rate of interest encourages producers to leave oil in the ground. When the current abnormally low interest rates on long-term bonds rise over the next few years, it will become more attractive for producers to increase the supply of oil and invest the resulting income at the higher rate. Unless expectations about the fundamentals of future supply and demand change, the rise in the interest rate will cause oil prices to fall further.

The low price of oil is good news for the United States economy, because it implies higher real incomes for American consumers. Within the US, the lower price is transferring real income from oil producers to households, which raises short-term demand because households spend a higher proportion of their incomes than oil firms do. For the same reason, the lower price also gives a boost to aggregate demand in Europe, Asia, and other oil-importing regions....MORE

Forget the Market, The Earth's Magnetosphere is Collapsing (and there's a little black spot on the sun today)

Among the things to be thankful for that we so often take for granted are things like the magnetosphere...
Sometimes it's hard to stay topical
A repost from Feb. 4, 2014: prompted by last month's "Earth's Magnetic Field May Be About to Flip":

I fear I am becoming addicted to the Daily Mail.
From the Daily Mail:
  • Earth's magnetic field has weakened by 15 per cent over the last 200 years
  • Could be a sign that the planet's north and south poles are about to flip
  • If this happens, solar winds could punch holes into the Earth's ozone layer
  • This could damage power grids, affect weather and increase cancer rates
  • Evidence of flip happening in the past has been uncovered in pottery
  • As the magnetic shield weakens, the spectacle of an aurora would be visible every night all over the Earth
Deep within the Earth, a fierce molten core is generating a magnetic field capable of defending our planet against devastating solar winds.

The protective field extends thousands of miles into space and its magnetism affects everything from global communication to animal migration and weather patterns.

But this magnetic field, so important to life on Earth, has weakened by 15 per cent over the last 200 years. And this, scientists claim, could be a sign that the Earth’s poles are about to flip.
Scroll down for videos...
The Earth's protective field extends thousands of miles into space and its magnetism affects everything from global communication to animal migration and weather patterns
The Earth's protective field extends thousands of miles into space and its magnetism affects everything from global communication to animal migration and weather patterns
Experts believe we're currently overdue a flip, but they're unsure when this could occur.
If a switch happens, we would be exposed to solar winds capable of punching holes into the ozone layer.

The impact could be devastating for mankind, knocking out power grids, radically changing Earth’s climate and driving up rates of cancer.

‘This is serious business’, Richard Holme, Professor of Earth, Ocean and Ecological Sciences at Liverpool University told MailOnline. ‘Imagine for a moment your electrical power supply was knocked out for a few months – very little works without electricity these days.’

The Earth's climate would change drastically. In fact, a recent Danish study believes global warming is directly related to the magnetic field rather than CO2 emissions.

The study claimed that the planet is experiencing a natural period of low cloud cover due to fewer cosmic rays entering the atmosphere.

Radiation at ground level would also increase, with some estimates suggesting overall exposure to cosmic radiation would double causing more deaths from cancer.

Researchers predict that in the event of a flip, every year a hundred thousand people would die from the increased levels of space radiation.
The magnetosphere is a large area around the Earth produced by the planet's magnetic field. It presence means that charged particles of the solar wind are unable to cross the magnetic field lines and are deflected around the Earth

The magnetosphere is a large area around the Earth produced by the planet's magnetic field. It presence means that charged particles of the solar wind are unable to cross the magnetic field lines and are deflected around the Earth
'Radiation could be 3-5 times greater than that from the man-made ozone holes. Furthermore, the ozone holes would be larger and longer-lived,' said Dr Colin Forsyth from the Mullard Space Science Laboratory at UCL....MORE
Daily Sun: 26 Nov 14
Earth-facing sunspots AR2216 and 
AR2217 pose a threat for M-class 
solar flares. Credit: SDO/HMI

Finally, from Mudvayne, a nasty little version of King of Pain

Seven global trends to be really, really thankful for

From the Washington Post's Wonkblog:
Journalists may have many biases, but among the most important is that they always see the glass as half empty. It's a phenomenon researchers call "negativity bias," and studies show all humans share it. This is why Thanksgiving is a useful holiday. It gives us a reason to think about what's actually in the bottom half of the glass.

The facts, once you look at them, are indisputable. The world in the 21st century is really a remarkable place to live, and it's getting better all the time, even for its poorest inhabitants.
-- Wars claim fewer lives today than ever in human history, by several orders of magnitude. Here's the Associated Press:
Before there were organized countries, battles killed on average more than 500 out of every 100,000 people. In 19th century France, it was 70. In the 20th century with two world wars and a few genocides, it was 60. Now battlefield deaths are down to three-tenths of a person per 100,000.
-- Just in the last two decades, global poverty has declined by half, and there's reason to think we could nearly eliminate it in the next two decades.
-- Also just in the last two decades, the infant mortality rate has similarly declined by about half, according to the World Health Organization....MORE

BuzzFeed's Chairman Is Invested In A Uber Competitor

Is it "a Uber" or "an Uber"?
I know Churchill went with "A History of the English-Speaking Peoples" rather than "An History..."
Anyhoo, there's more to the BuzzFeed/Uber contretemps than we got to last week.

From The Federalist, Nov. 19:

BuzzFeed’s Executive Chairman Is Invested In Uber’s Competition
There’s been a bit of controversy over the past several days regarding a piece that BuzzFeed published about an executive for Uber, a large ride-sharing company. According to BuzzFeed editor-in-chief Ben Smith, an Uber executive revealed that he wasn’t above digging up dirt on journalists in order to influence news coverage of the company.

Smith disclosed this admission from Uber in an 800-word exclusive on Monday. The piece is written in the third person in order to deliberately obscure the fact that Smith himself was the BuzzFeed editor who attended the off-the-record event at which the Uber executive’s remarks were made.

Ben Smith also failed to disclose his boss’s investment in Sidecar, one of Uber’s main competitors. Ken Lerer, the executive chairman of BuzzFeed, is also the managing director of Lerer Hippeau Ventures (previously known as Lerer Ventures), a New York City-based venture capital firm. Lerer, through Lerer Ventures, was an early investor in Sidecar, a ride-sharing competitor of Uber. From TechCrunch:
Sidecar is announcing this morning that it’s raised a Series A round of $10 million led by Lightspeed Venture Partners and Google Ventures. The funding follows on a seed round raised late last year from investors that include Spring Ventures, Huron River Ventures, SV Angel, Lerer Ventures, First Step Fund, Jeff Clarke, Lisa Gansky, Robert Goldberg, Jared Kopf, Konstantin Othmer, Mark Pincus, Martin Roscheisen, Josh Silverman, and Thomas Varghese.
Sidecar is also listed as a portfolio company on the web page for Lerer’s VC firm:
Ken Lerer Sidecar
The seed stage deal between Sidecar and its group of investors, which included Lerer Ventures, was first announced in a press release after the deal official closed on December 1, 2011, according to Marketline/Datamonitor.

Lerer isn’t just a top BuzzFeed executive, though. He’s also an investor in the company:
Lerer Buzzfeed
In his broadside against Uber’s dirt-digging executive, Ben Smith never disclosed that his boss, one of BuzzFeed’s top executives, has an ownership stake in one of Uber’s competitors. Nor is there any such conflict-of-interest disclosure in any of BuzzFeed’s numerous other hit pieces on Uber (including this one, which was posted mere hours ago)....MORE
HT: Scott Adams (yes, Dilbert's boss. the comments are also worth a look)

"Uber Executive Suggests Digging Up Dirt On Journalists"
UPDATED--Here's the Real Problem With Uber: You Can't Trust Them

You may also be interested in:
Buzzfeed Story Generator
Journalism: BuzzFeed Releases Internal Style Guide--Updated
The Wolf of Buzzfeed-Official Trailer

Let's Get Ready to Rumble: "Gross Vs. Gundlach: Who Has More Skill?"

Y'all ready for this?

From Advisor Perspectives:
Mankind has landed a spacecraft on a comet 300 million miles away. Yet, after decades of academic research, the challenge of distinguishing skill from luck among actively managed mutual funds has remained largely unsolved.

Much is at stake in this challenge. If skill can be identified, then it is likely to persist, affording clients superior performance. But a manager who is merely lucky will eventually succumb to underperformance.

If rocket science has a counterpart in financial analysis, it is in the quantitative analytics from companies like Boston-based Northfield Information Services. Last week, I spoke with Dan di Bartolomeo, founder and CEO, to see if he could detect skill or luck among the two biggest fixed-income managers: Bill Gross, when he managed the PIMCO Total Return Fund (PTTRX), and Jeffrey Gundlach, manager of the DoubleLine Total Return Fund (DBLTX).

Northfield has been providing risk analysis and tools for portfolio construction to institutional asset managers for 30 years. Among its noteworthy accomplishments, Northfield’s analysis was used by Harry Markopolos to confirm that Bernie Madoff was engaged in a massive Ponzi scheme.

Scores of academicians and commercial vendors have attempted to identify skillful managers. The problem, di Bartolomeo said, is that most people “do this badly” and don’t deal with all the issues in sufficient detail.
Northfield’s methodology was originally published in this 2006 paper. Di Bartolomeo said the published results documented predictive power that was three times stronger than what was previously reported in the academic literature. It was both economically and statistically significant.

I’ll discuss the results of the Gross versus Gundlach analysis, but first let’s review Northfield’s system for distinguishing skill from luck.

A four-step process
Northfield’s methodology is based on the assumption that skill –once identified—will persist. If a manager’s performance is due to skill, that skill – or lack thereof – will continue. If a manager’s performance is due to luck, however, the best guess for future performance is the average of an appropriately constructed peer group. In other words, if a manager’s outperformance is due to luck, it will eventually revert to the mean.
According to di Bartolomeo, the academic literature has found that performance is persistent over a relatively short time horizon, “one to three years, depending on who you believe.” Northfield tested its results over a one-year time horizon.

Each fund is analyzed using a four-step process. Northfield first determines the appropriate peer group for each fund. An iterative methodology with returns-based analysis is used, a tool first developed by William Sharpe. Di Bartolomeo described this as a “very numerically intensive” processes, which uses a large group of funds to find ones that act similarly. For every fund, Northfield determines a distinct and custom peer group.

“Unless you correctly classify funds, there is no persistence in fund performance,” di Bartolomeo said. “If you don’t, you might as well be throwing darts.”

The second step is to identify how much history should be used in that fund’s analysis. Northfield does this with a tool known as CUSUM. Developed in the 1950s, CUSUM is a sequential probability test that was first used to measure quality control on assembly lines. It looks for trends in the number of rejects. Bad performance for a mutual fund is like a reject on an assembly line....MORE
Previously on the pump up the music channel:

UPDATED--Cliff Asness vs. Paul Krugman: Let's Get Ready To Rumble
Let's Get Ready To Rumble II: Paul Krugman Responds to Cliff Asness

"SCOTLAND to tax its millionaires because they could never find anywhere nicer to live."

From the Daily Mash:
The country, which has lured oligarchs from across the globe with its mix of urban realness and refreshing weather conditions, will hugely increase the top rate of tax knowing they are too enraptured with Scotland to consider moving elsewhere.

Oil magnate Roy Hobbs said: “Scotland is both an Eden and a trap.

“Barbados is worthless after an afternoon on the beach at Broughty Ferry and once you’ve seen Glasgow, how could New York ever satisfy?...MORE

Tuesday, November 25, 2014

Former Soros Sidekick Buying Assets In Russia

From FT Alphaville:

Jim Rogers’ contrarian view on Russia
The rouble may be down more than 25 per cent versus the dollar this year, but the currency’s recent slide won’t be enough to dissuade legendary investor and author Jim Rogers from adding to his Russia investments.
Rogers told the Financial Times on Tuesday his bullish case was based on the view there had been a fundamental change in the Kremlin’s mindset when it came to the treatment of foreign investors. This, he said, had led him to about-turn on his previous scepticism about the country’s potential and views he had set from the moment he had first visited the country over 46 years ago.

“They understand that they can’t treat investors the same way Stalin did anymore, and that you have to treat them properly.”
Rogers caveated the point with the assertion that investors had at least been treated better until the international community implemented sanctions on Russia in response to its activities in Ukraine earlier this year. But he added he had no doubt the current crisis would pass like most other crises he had experienced over his lifetime. He said his views were ultimately based on looking to the long term because he was a terrible market timer, and his aim was to invest in an economy while it was still in a depressed state.

Rogers’ Russian investments now include stakes in fertiliser maker Phosagro, airliner Aeroflot, a Russia ETF and the Russian stock exchange, but he said was looking to expand into different sectors as well.

With respect to his position in Phosagro, Rogers’ cited GMO’s Jeremy Grantham longstanding position that because phosphorus cannot be made or substituted there isn’t enough of the vital fertiliser element to serve the needs of a growing global farming industry....MUCH MORE
 On peak fertilizer Rogers and Grantham are either very, very early or flat out wrong.
See for example the backround pieces:
"Has The Earth Ever Run Out of a Natural Resource?"
"Jeremy Grantham on Tesla, Fertilizer Wars" (and lessons learned from 47 years at the market)
The Lore and Lure of Fertilizer: A Century of Potash Intrigue (POT; MOS; IPI)

and more importantly:
Vaclav Smil Takes on Jeremy Grantham Over Peak Fertilizer

5-foot-tall ‘Robocops’ start patrolling Silicon Valley

From RT:

Phorto from
Phorto from
Autonomous “Robocop”-style robots, equipped with microphones, speakers, cameras, laser scanners and sensors, have started to guard Silicon Valley.

The security robots, called Knightscope K5 Autonomous Data Machines, were designed by a robotics company, Knightscope, located in Mountain View, California.

The robots are programmed to notice unusual behavior and alert controllers. It also has odor and heat detectors, and can monitor pollution in carpets as well. Last but not least: with cameras, the Robocops can remember up to 300 number plates a minute, monitoring traffic.

It works like this: someone steps in front of a robot, which stops and moves around the person while sending video to a control center. If a burglar doesn’t leave, then “the robot is looking at the video, listening for glass breakage, any loud sound that breaking in would cause. We'll get the license plate, picture of the vehicle, geotag location, and time,” says project co-founder Stacy Stephens....MUCH MORE 

Ahead of The Big East Coast Thanksgiving Snow Storm: "Watch Out for that Snowbank! How to Recover from 5 Types of Skids"

From The Art of Manliness:
Editor’s Note: This is a guest post from Wyatt Knox from Team O’Neil Rally School.
With winter comes a whole new range of driving hazards — darkness sets in much earlier, wind and snow reduce visibility, and ice makes roads slippery and treacherous. Annually, there are over 100,000 injuries that occur from car accidents on snowy or icy pavement. If you live in an area where snow is a winter reality (roughly 70% of the U.S. population lives in areas that average at least 5 inches of annual snow), then it’s vital to have the skills necessary for driving safely in inclement conditions. One of those skills is how to recover from a skid. The feeling of losing control of one’s vehicle can be quite scary, and it’s easy to panic and make the wrong moves if you don’t know what to do.

Below we outline the 5 most common types of skids on wintery pavement, and how to recover when they happen. In general, if you stay calm, restrain yourself from making drastic movements, and follow the tips below, you’ll be able to safely travel the nation’s highways and byways throughout the winter months.
1. Wheelspin
Wheelspin occurs when you try to accelerate too abruptly or enthusiastically for the available traction. The tires will start to spin at a faster rate than the vehicle is actually traveling, which can lead to different outcomes depending on whether the vehicle is front, all, or rear-wheel drive. The cure for wheelspin is simple: just back off the throttle until the tires regain traction, and try ramping it up more slowly and cautiously next time. This makes wheelspin a very easy litmus test for how much grip you actually have. For example, intentionally hitting the gas while leaving your driveway on a snowy day to see how easily the tires spin is like dipping your toes into a pool to test the temperature.

Wheelspin is generally to be avoided in turns, but can often actually work to your advantage when moving in a straight line. On pavement or glare ice, there is no real benefit to spinning the tires, but we need to think of the road surface as three dimensional in many cases. Say you have a few inches of snow on top of a good paved or gravel surface; spinning the tires will chew through the fluff and catch good traction on the underlying surface, which can often make the difference between getting up a snowy hill or sliding back down. The same is true in mud or anywhere else there is a slippery material on top of a hard, grippy material.
Traction control in some vehicles will not allow your tires to spin in this fashion. It will either cut the throttle, apply brakes to the spinning wheels, or both. This might mean that your vehicle can’t make it up slippery hills or even get out of your parking space if there’s snow. Try the same thing with the traction control off and you might find that you have no problem at all.
2. Wheel Lockup
Wheel lockup occurs when you try to brake too aggressively or suddenly for the surface you’re on. The tires will essentially stop turning while the vehicle is still moving. The solution is thankfully very simple: release the brakes until the tires start to turn again. You may need to release the brakes completely, and try braking again more softly and progressively.

You may find that you can actually brake fairly hard on a slippery road, as long as you do it smoothly. If you suddenly go from 0% to 50% brake on the snow, for example, the tires will probably lock up. If you build up the brake pressure slowly and progressively, however, you might be able to brake well beyond 50% on the same surface. Just like with wheelspin, wheel lockup can be a very handy gauge to have in changing conditions. Occasionally test the brakes in a straight line as you’re driving on a slippery road to feel for wheel lockup; this is a good indication of how much grip you’re working with.

Wheel lockup can also be an advantage in a straight line, in the same conditions that spinning the tires would have benefit. On a loose surface, locking the tires will scuff away the top surface, often digging in and plowing the soft stuff out of the way to find better grip. On snow, gravel, and especially sand, locking the tires up can stop the vehicle very quickly.

Anti-Lock Brake Systems (ABS) will not allow your wheels to lock up; they’ll pulsate brake pressure at all four wheels so that the tires keep turning.  This means that on a loose surface, your car may not decelerate very well, and you’ll need to leave extra braking and following distances to compensate.
3. Understeer...

"Venture Money Pours into Robotics Startups"

From Real Time Economics:

Google snapped up Boston Dynamics, which builds an experimental robot funded in part by the U.S. Marine Corps. that can carry 400 pounds of gear over 20 miles of rough terrain. The legged squad support system robot made an appearance at a Marine expo in Quantico, Va., in September.
Robots are creating work for at least one kind of human: venture capitalists.

They poured $172 million into robotics startups last year, according to an annual survey by PricewaterhouseCoopers LLP—nearly triple the $60 million two years earlier. Travis Deyle, a robotics blogger who keeps his own yearly tally, pegs it even higher—at least $250 million in 2013.

“There’s definitely been a big uptick,” says Mr. Deyle, who notes this year appears headed for another record.

Mr. Deyle attributes the surge in part to high-profile acquisitions of small companies by the tech giants. bought Kiva Systems, a maker of warehouse robots, for $775 million in cash in 2012. Google GOOGL -0.03%, meanwhile, recently went on a shopping spree—snapping up a number of small robotics companies, including one that builds an experimental robot funded in part by the U.S. Marine Corps. that can carry 400 pounds of gear over 20 miles of rough terrain. “That’s attracted a lot of attention for the sector,” he says.

The wave of money is funding a new breed of robots.

In the past, robots worked mostly on factory floors—often locked behind gates to keep them from smashing into people as they did their jobs. But new technologies, including sensors and wireless connections that allow robots to move around obstructions and even find their way around a busy hotel or office, have enabled robots to do more varied tasks as well as function alongside people....MORE
HT: Abnormal Returns

"General Electric: ‘A Generation of Portfolio Managers Has Been Rewarded For for Staying Underweight’" (GE)

The stock is lower today than it was the day Jeff Immelt took over as CEO 13+ years ago.
We've had some thoughts on the management of Tom Edison's baby, links below.
From Barron's Stocks to Watch:
RBC’s Deane Dray and team note that a “generation of PMs, it would seem, has been rewarded for staying underweight” General Electric (GE). That, however, may be about to change. They explain:
GE stock has been a chronic underperformer in the Multi-Industry sector by most measures. Over the past 10 years, GE has underperformed the S&P 500 by 100 ppts. A generation of PMs, it would seem, has been rewarded for staying underweight GE. Without trying to rank-order these negatives, the list of investor grumblings about GE has included: (1) earning mix has been slanted too much (+50%) from GE Capital; (2) quality-of-earnings issues, often with a low GE Capital tax rate or a gain helping to make the quarter; (3) nagging long-tailed liabilities associated with discontinued businesses, creating ongoing “one-time charges.” This has been the case with Japanese retail finance and WMC, GE’s brief but expensive delve into subprime mortgages. (4) GE rarely has a clean quarter. There always seems to be some surprise shortfall detracting from all the other positives…

Theme now at GE is “change”. In our view, there are more changes happening at GE today than during any previous period in the company’s history. We note that CEO Jeff Immelt has now divested, including pending transactions, more than half of the revenues inherited from the Jack Welch era....MORE
Monday, September 10, 2001 was the day that Mr. Immelt took over at GE. The stock closed that day at a split adjusted $32.86. Today it is changing hands at $26.88.

I haven't owned the stock since '99. I was fortunate to not own this stock for the last decade-point-five. In the late '90's a very wealthy and very smart investor said to me:
"GE's phony-baloney earnings smoothing is going to have to end, it's approaching the level of a joke, in addition to violating the '33 act".
Sometimes you get lucky.

Some of our prior posts:

GE's Immelt reduced to whining after homicidal rant from Jack Welch (GE)
Mean Street: The Lost Cause of General Electric and Jeff Immelt (GE)
General Electric; Jeff Immelt: FAIL (GE)
Immelt’s Plans May Comfort Investors as Profit Falls (GE)
General Electric Beats Low Expectations; Speculators Confused (GE)
General Electric has been an investor disaster under Jeff Immelt (GE)
"Can General Electric Still Manage?" (GE)
Jeffrey Immelt to Replace Paul Volcker: Yeah, Right. (GE)
Compared to Volcker Immelt is a dwarf among pygmies.

[I think he is making a reference to Volcker's 6'7'' height while expressing disdain 

for Immelt and the President's other advisers. It can get confusing -ed] 
How General Electric Became a Basket Case (GE)
"Grading Jeff Immelt" (GE)
...Welch used to say that GE's CEO has only two jobs: allocating capital -- deciding where and how much to invest -- and evaluating people. Ask a wide range of expert GE observers -- current and former managers, other top-tier CEOs, Wall Street analysts -- to identify Immelt's wrong turns, and they focus on exactly those two categories...
And many more.

How Big Can Uber get?

Beats me. People see the slide deck and come out of the presentation wishing they had more money to invest into Uber.

From Stratechery:

Why Uber Fights
In his, to my mind, fair defense of Uber, Mark Suster made a very important observation about the reality of business:
Let’s put this into perspective. As somebody who has to rub shoulders with big tech companies often I can tell you that there is much blood spilled in the competitive trenches of Apple, Twitter, Facebook, Google and so on. Changes to algorithms. Clamping down on app ecosystems. Changing how third-parties monetize. Kicking ecosystem partners in the nuts.
Be real.
It’s a brutally competitive world out there because there are extreme amounts of money at stake. I’ve been on the sharp end of it and it doesn’t feel nice. And I pick myself back up, dust off and think to myself that I need to think through the realpolitik of power and money and competition and no matter how unpleasant it is – it’s a Hobbesian world out there. It ain’t pretty – but it’s all around us.
This is particularly relevant to Uber: the company is looking to raise another $1 billion at a valuation of over $30 billion, and, as I wrote when the company raised its last billion, they are likely worth far more than that. Still, though, skeptics about both the size of the potential market and the prospects of Uber in particular are widespread, so consider this post my stake in the ground1 for why Uber – and their market – is worthy of so many sharp elbows. I expect to link to it often!

There are three perspectives with which to examine the competitive dynamics of ride-sharing:
  1. Ride-sharing in a single city
  2. Ride-sharing in multiple cities
  3. Tipping points
I will build up the model that I believes governs this market in this order; ultimately, though, they all interact extensively. In addition, for these models I am going to act as if there are only two players: Uber and Lyft. However, the same principles apply no matter how many competitors are in a given market.

Ride Sharing in a Single City

Consider a single market: Riderville. Uber and Lyft are competing for two markets: drivers and riders.
There are a few immediate takeaways here:
  • The number of riders is far greater than the number of drivers (far greater, in fact, than the percentage difference depicted by this not-to-scale sketch)
  • On the flip side, drivers engage with Uber and Lyft far more frequently than do riders
  • Ride-sharing is a two-sided market, which means there are two places for Uber and Lyft to compete – and two potential opportunities for winner-take-all dynamics to emerge
It’s important to note that drivers in-and-of-themselves do not have network dynamics, nor do riders: Metcalfe’s Law, which states that the value of a network is proportional to the square of the number of connected users, does not apply. In other words, Uber having more drivers does not increase the value of Uber to other drivers, nor does Lyft having more riders increase the value of Lyft to other riders, at least not directly.

However, the driver and rider markets do interact, and it’s that interaction that creates a winner-take-all dynamic.
HT: FT Alphaville's Further Reading post

The Hedge Fund Name Generator

You've done your homework:
"How to Start a Hedge Fund" and "Budding Gordon Gekkos Get Tips on Ponzi Scams in 'History of Greed'"

You've decided on the type of investing you will pursue:
"Asset International's Periodic Table of Hedge Fund Strategy Returns"

 You have set your personal goals:
"The Top 25 Highest Earning Hedge Fund Managers"

You have searched your soul:
"More on The Top Earning Hedge Fund Managers and The Metaphysics of Moolah"

You have begun to spread the word that you are serious:
"Dogbert on Hedge Fund Marketing, Structured Products and Virtual Currency"

There's one last thing to do which may be critical to your success:
Pick a name!

Stumped for ideas? There's always the Hedge Fund Name Generator

Don't use one of these:

Most disliked names
Top 10 Hedge Fund names, the Hedge Fund Name Generator users seem to be trashing. If you like them ... well you might be the only one :) 
Hedge Fund name Average Rating
YellowMount Partners 1.00
SummerTree Brothers 1.00
OakBay 1.00
BrownField Holdings 1.00
StateView Sons & Co 1.00
YellowView Funds 1.00
SpringRoad Sons & Co 1.00
BrownStream Markets 1.00
YellowCrescent Sons & Co 1.00
StateVille Advantage 1.00

Rather, keep spinning until you see something like this:

Most liked names
Top 10 Hedge Fund names favoured by the Hedge Fund Name Generator users. If you like them too, you'd better hurry up as some other traders might already be running with the name. 
Hedge Fund name Average Rating
OakStone Holdings 5.00
RedHill Sons & Co 5.00
OakHill Advisors 5.00
SolidMount Advantage 5.00
BrownTree Trust 5.00
SilverRock Advisors 5.00
StateStreet Funds 5.00
FallStream Funds 5.00
WinterStream Partners 5.00
BlackCity Partners 5.00

Fame and fortune await.

Ground Floor: Seeking Out Startups Before They've Even Formed

And no, this isn't the hipsters/cloners/ripoffs at Berlin's Rocket Internet:

Climateer Line of the Day: Venture Capital Economy Edition

"Our proven winners generated aggregated net losses of €442 million" ($568 million)
-Rocket Internet prospectus via "How Do You Say 'Dot-Com Crash' in German?"

According to the WSJ:
"Rocket is a cross between a venture-capital fund and a consulting firm that founds startups and helps them grow."
RKET was able to price their Oct. IPO at the top end of the expected range.

From Venture Capital Dispatch:
YL Ventures Seeks Out Israeli Startups Before They Even Form 
Israel is a hotbed for startups focused on hard technology like cybersecurity, partly because of the training that founders receive in the Israel Defense Forces, which drafts both men and women and trains some of them in cutting-edge technical skills.

But for investors, backing the best startups is getting harder.

“There are more and more funds that have figured out Israel has great technologists and are operating in the country, competing with us for deal flow,” said Yoav Andrew Leitersdorf, managing partner of YL Ventures, a seed-stage investor focused on Israeli startups. “There was much less competition seven years ago when we started.”

YL Ventures, which is based in the Bay Area with an office in Israel, has developed an unusual approach to ferreting out Israeli startups–it tries to find them before they’re officially formed. The firm has in-house software and teams in India that track about one million people in Israel, watching for signals online to see who might be coming together to form a company.

The firm receives about 100 alerts a month based on the background of a potential founder and whether their social media activity has changed. Indicators of interest include whether they’re in the IDF, working for a tech company or at a university.

The alerts are given a score, and the firm makes contact with a couple of dozen of the potential entrepreneurs each month to see what’s going on.

YL Ventures found the first two investments from its second fund before the founders had registered their companies or contacted any investors, Mr. Leitersdorf said. They are FireLayers Inc., which protects cloud applications and data, and Hexadite Ltd., which automatically alerts users of cyber incidents....MORE

War On Coal: Hedge Funds Bet On Miners Failure

From the Wall Street Journal:

Hedge Funds Bet on Coal-Mining Failures
Investors Make Trades in Anticipation of Bankruptcies
Hedge funds are betting that some of the largest U.S. coal companies are heading for the financial slag heap.
The coal industry is in a prolonged slump with a long list of causes topped by sluggish demand and competition from cheap natural gas, which have pushed prices to historic lows. Many investors have abandoned the sector. Eight coal-mining companies traded on the New York Stock Exchange are down an average of 29% in the last year. The conditions are ripe for hedge funds that target distressed investments. They are first betting against the stock and debt of mining firms such as Walter Energy Inc., then snapping up the bonds when their prices fall as low as 40 cents on the dollar.

The endgame: swapping that debt for controlling shares of the companies if they go bankrupt. Once coal prices rebound, mines and other assets can be sold at a profit.

“People see blood in the water, and that presents an opportunity,” said Ted O’Brien, president at Doyle Trading Consultants LLC. He said he is advising more than a dozen investment firms that specialize in risky debt that have bought or are considering buying coal-company bonds.

So-called vulture funds have used these tactics in other ailing industries, like air travel and paper manufacturing, generating average annual returns of 7.5% from 2011 to 2013, compared with an average of 3.4% for all hedge funds, according to HFR Inc. But an improving economy has left them with few new targets this year, and returns are down. More of the funds are descending on big coal as declining coal prices finally catch up with mining companies that borrowed heavily to spur growth.

Walter Energy is a particular favorite of distressed-debt investors, including Apollo Global Management LLC, Brigade Capital Management LP, Caspian Capital Management and Knighthead Capital Management LLC, people familiar with the matter said....MUCH MORE
HT: Abnormal Returns

Monday, November 24, 2014

"30 Buildings That Are Going to Radically Change the NYC Skyline"

Think you have a lot of cranes in your city?
From the New York Post:

NYC’s skyline will be radically different in 2018
The high times aren’t going away in New York.

The city of just six years from now will be dramatically taller, with a series of luxury high-rises towering above Central Park, a new West Side development and downtown spires.

“The skyline is changing so much,” said Ondel Hylton, content director for CityRealty, the real-estate search site that generated this rendering of New York in the near future. “To see [the towers] together in one image takes people by surprise. A lot of people are shocked.”

The mega-developments include the 96-story 432 Park Ave., which at 1,396 feet is the tallest residential property in the western hemisphere.

The 104-unit condo, where one penthouse sold for $95 million, is slated to open next year.
The Nordstrom Tower — at 225 W. 57th St. — will rival it at 92 stories once completed in 2018.
At 1,775 feet tall, it will be the city’s second-tallest building and just a foot shorter than One World Trade Center (and that’s only if you include the WTC spire).

Here’s a rundown of what buildings will reach for the sky....MUCH MORE

"Thinking Clearly About Forecasting"

James Picerno writing at The Capital Spectator:
There’s a pernicious rumor making the rounds that economic and market forecasts are accurate. There’s also a misguided notion embraced in some corners that all predictions are worthless at all times under all conditions. Both of these extreme views are unproductive, bordering on dangerous. Yes, peering into the future is hazardous work and it’s a field that’s burdened with an excess of landmines. But avoiding what can be a nasty business is impossible when it comes to the money game. Thinking clearly about forecasting, as a result, is crucial. Unfortunately, a sober-minded perspective on this hot-button topic seems to be the exception to the rule in a world that’s awash with projections.

There’s a fine line between prudent and reckless behavior with generating and consuming predictions. Defining one vs. the other can be tricky at times. It’s even tougher to steer a middle course between those two extremes, in part because we’re all bombarded with a mix of useful and not-so-useful predictions on a daily basis. With that in mind, what follows are some thoughts on how to manage expectations on matters of prognosticating, guesstimating, and otherwise developing a healthy relationship with a treacherous subject. The list is hardly definitive, but it’s a start, if only as a reminder that predictions typically don’t come with instructions.

1. Recognize the inevitable. Imagining yourself as immune to forecasting is the equivalent of thinking that you can live without breathing. Everyone is swayed by predictions of one form or another, and by necessity. We all need guidance about the morrow, and for good reason: that’s where we’ll spend the rest of our lives. Some folks like to assume otherwise. Even a dyed-in-the-wool passive investor with a strict buy-and-hold investment regimen relies on an assumption — a forecast. An investment, regardless of time horizon, is at its core a prediction. Whether you’re buying shares as a short-term speculation or on the basis of a 30-year outlook, you’re making a bet that a transaction today will yield a profit tomorrow. How do you know that you’ll end up in the black? You don’t, but your forecast gives you confidence that you’ll triumph. You may be wrong, of course — in fact, you can count on no less, at least some of the time. But there’s no alternative. Investing sans forecasting is a conflict with no solution. A similar rule applies to macro, starting with the big-picture view that economic growth will, through time, endure, albeit punctuated with bouts of volatility. How do we know that such a future awaits? We don’t, but we have a forecast....

We have so many posts on forecasting, from ""How To Win At Forecasting" (Philip Tetlock and the Intelligence Advanced Research Projects Agency)" to "Pseudo-Mathematics and Financial Charlatanism...." that it is probably easier to just give gentle-yet-wary reader a couple searches of the blog:

Google site search: forecasting
Search blog box, above left

British SAS Hunter-Killer Teams Terrorizing ISIS

Following up on August's "U.S. Special Forces, British S.A.S Form Hunter Killer Groups to 'Smash' ISIS".
These guys pretty much define the term badass.*
From the Daily Mail:

SAS quad bike squads kill up to 8 jihadis each day... as allies prepare to wipe IS off the map: Daring raids by UK Special Forces leave 200 enemy dead in just four weeks  
  • Targets are identified by drones operated by SAS soldiers 
  • Who are then dropped into IS territory by helicopter to stage attacks 
  • The surprise ambushes are said to be 'putting the fear of God into IS'
SAS troops with sniper rifles and heavy machine guns have killed hundreds of Islamic State extremists in a series of deadly quad-bike ambushes inside Iraq, The Mail on Sunday can reveal.

Defence sources indicated last night that soldiers from the elite fighting unit have eliminated ‘up to eight terrorists per day’ in the daring raids, carried out during the past four weeks.

Until now, it had been acknowledged only that the SAS was operating in a reconnaissance role in Iraq and was not involved in combat. But The Mail on Sunday has learned that small groups of soldiers are being dropped into IS territory in RAF Chinook helicopters – to take on the enemy.
Targets are identified by drones operated either from an SAS base or by the soldiers themselves on the ground, who use smaller devices.

The troops are also equipped with quad bikes – four-wheeled all-terrain vehicles that can have machine guns bolted on to a frame. They then seek out IS units and attack the terrorists using the element of surprise and under the cover of darkness.
The missions have taken place on a near daily basis in the past four weeks and the SAS soldiers have expended so much ammunition that regimental quartermasters have been forced to order a full replenishment of stocks of machine-gun rounds and sniper bullets.
An SAS source said: ‘Our tactics are putting the fear of God into IS as they don’t know where we’re going to strike next and there’s frankly nothing they can do to stop us....MORE
*The last time the S.A.S. did a Task Force Black  they killed 3500 al-Qaida-in-Iraq fellows, 2006-2008.

"High status voices have a different sound"

So what does it mean if you sound like Barry White even when you're just schmoozing?
From EurekAlert:
The sound of status: People know high-power voices when they hear them
Being in a position of power can fundamentally change the way you speak, altering basic acoustic properties of the voice, and other people are able to pick up on these vocal cues to know who is really in charge, according to new research published in Psychological Science, a journal of the Association for Psychological Science.
We tend to focus on our words when we want to come across as powerful to others, but these findings suggest that basic acoustic cues also play an important role:
"Our findings suggest that whether it's parents attempting to assert authority over unruly children, haggling between a car salesman and customer, or negotiations between heads of states, the sound of the voices involved may profoundly determine the outcome of those interactions," says psychological scientist and lead researcher Sei Jin Ko of San Diego State University.

The researchers had long been interested in non-language-related properties of speech, but it was former UK prime minister Margaret Thatcher that inspired them to investigate the relationship between acoustic cues and power.

"It was quite well known that Thatcher had gone through extensive voice coaching to exude a more authoritative, powerful persona," explains Ko. "We wanted to explore how something so fundamental as power might elicit changes in the way a voice sounds, and how these situational vocal changes impact the way listeners perceive and behave toward the speakers."

Ko, along with Melody Sadler of San Diego State and Adam Galinsky of Columbia Business School, designed two studies to find out.

In the first experiment, they recorded 161 college students reading a passage aloud; this first recording captured baseline acoustics. The participants were then randomly assigned them to play a specific role in an ensuing negotiation exercise.

Students assigned to a "high" rank were told to go into the negotiation imagining that they either had a strong alternative offer, valuable inside information, or high status in the workplace, or they were asked to recall an experience in which they had power before the negotiation started. Low-rank students, on the other hand, were told to imagine they had either a weak offer, no inside information, or low workplace status, or they were asked to recall an experience in which they lacked power....MORE
HT: Marginal Revolution's Assorted Links
Also at MR: "Best non-fiction books of 2014"

In a Stunning Development It Appears Izabella Kaminska Has Staged A Coup At FT Alphaville (FTAV)

In league with Keohane she has apparently implemented the tactics from Luttwak's Coup d'État: A Practical Handbook, beginning with seizing the means of communication.

Has anyone heard from Paul Murphy since this morning?

The headlines and datelines at Alphaville:

Oil-price decline: the bank-exit liquidity theory
| |

Lies, damned lies, and liquidity expectations
| |

Markets Live: Monday, 24th November, 2014
| |

Signal vs noise from the PBoC
| |

On the hypothetical eventuality of no more petrodollars
| |

Further reading  
| |

FirstFT, the email briefing formerly known as The 6am Cut

schedule of events:
DURING the past 23 years, more than half of the world's governments have been overthrown by coups d'etat. Conspirators are increasingly aware that complex societies are vulnerable to attack. Slash a wire, start a rumor, dump LSD into reservoirs: today any determined guerrilla can stop The System. One man with one bullet can change history. A handful can take over a country.
Acid in the FTAV reservoir?

How to Plot Your Takeover
-Eric Hobsbawm at the New York Review of Putsch's

"Goldman Sachs Has Invested In A Company That Could Replace Analysts With Algorithms"

Ha, replace analysts with software. Like that will ever hap...

From the Financial Times:

Goldman Sachs leads $15m financing of data service for investors
Goldman Sachs has emerged as the largest investor in a financial analytics start-up that enables institutions to mine a wealth of big data, underscoring Wall Street’s drive to tap new technology.
Goldman led a $15m round of financing in Kensho, an analytics platform that can instantly answer millions of complex financial questions by automating previously human-intensive research. The bank will roll out the platform across its business as well as to some of its big clients.

Kensho, which has been likened to a Siri-style service for investors, analysts and traders, enables them to ask questions such as, “What happens to US homebuilder stocks if a category three hurricane makes landfall?”

Analysts said Goldman was probably seeking to save on costs while also tapping into a wealth of so-called “unstructured” data. Such information involves text as opposed to the numeric “structured” data that have traditionally been easier for computers to digest.

Research scientists estimate that 80 per cent of all data come in unstructured form; being able to quickly analyse this wealth of information is the holy grail for banks seeking to use big data to augment their business.
“Wall Street historically was constrained to playing in the 20 per cent of data that move markets,” said Daniel Nadler, chief executive of Kensho. “Every Wall Street bank could only look at – with any real speed or automation – financial statistics: P/E ratios, and book value and market cap and similar things.”...MUCH MORE
Hurricanes? What the hell...
HT to and headline from: Business Insider.

"Can the Bloomberg Terminal be “Toppled”?"