Tuesday, January 27, 2015

Auschwitz Liberation

I think the Jews mean it when they say "Never Again".

File:IAF F-15 over Auschwitz extermination camp.jpg

Those are a couple Israeli Air Force F-15's the Polish government invited to do a flyover of Auschwitz-Birkenau on September 4, 2003.

Monday, January 26, 2015

"In the mood to trade? Weather may influence institutional investors' stock decisions"

From ScienceDaily:
January 15, 2015
Case Western Reserve University
Weather changes may affect how institutional investors decide on stock plays, according to a new study. Their findings suggest sunny skies put professional investors more in a mood to buy, while cloudy conditions tend to discourage stock purchases.
Weather changes may affect how institutional investors decide on stock plays, according to a new study by a team of finance researchers. Their findings suggest sunny skies put professional investors more in a mood to buy, while cloudy conditions tend to discourage stock purchases.

The researchers conclude that cloudier days increase the perception that individual stocks and the Dow Jones Industrials are overpriced, increasing the inclination for institutions to sell.

The research paper, "Weather-Induced Mood, Institutional Investors, and Stock Returns," has been published in the January 2015 issue of The Review of Financial Studies. The research was collaborated by Case Western Reserve University's Dasol Kim and three other finance professors (William Goetzmann of Yale University, Alok Kumar of University of Miami and Qin Wang of University of Michigan-Dearborn).
Institutional investors represent large organizations, such as banks, mutual funds, labor union funds and finance or insurance companies that make substantial investments in stocks. Kim said the results of the study are surprising, given that professional investors are well regarded for their financial sophistication....MORE
Possibly related:
"Cascading effects of mental accounting by traders in the natural gas markets."
World's Oldest Weather Report Found in Egypt: It Was Raining, People Were Crabby
Previous Climate Change Created a Race of Angry Runts
"Weather Related Markets"
From the Points and Figures blog:
Snow has shut down Heathrow Airport in London.  It’s become a roach motel.  No one gets in, no one gets out. Snow has also shut down “The City” too.  The lower volume holiday markets already were here.  This snow has made it tougher for everyone to get to work in London.  Meanwhile, the weather hasn’t been outstanding in NYC or Chicago.  Volumes are light.

This week is a holiday shortened week.  I would expect the trends of the year to continue.  Bull markets in commodities and in stocks should continue. Keep in your back pocket that on the last trading day of the year, the funds will buy to paint the tape. Then on the first trading day of January, they buy again as fresh cash gets put to work. There is data this week, but action should be muted.

Weather is not given enough credit for its influence on markets.  Weather affects business tremendously....
Mood of the Market: "Rainy and gray, then colder and darker"
Sun Photo/Algerina Perna 2005

Natural gas futures drop 3% despite Northeast blizzard

Most active, March's, $2.838 down 12.0 cents.
From Investing.com:
Investing.com - U.S. natural gas prices fell sharply on Monday, despite forecasts for heavy snowfall in the heavily populated Northeast region over the next two days.

On the New York Mercantile Exchange, natural gas for delivery in March tumbled 6.8 cents, or 2.3%, to trade at $2.890 per million British thermal units during U.S. morning hours, after hitting a daily low of $2.821.

On Friday, natural gas surged 13.1 cents, or 4.63%, to settle at $2.958.

Futures were likely to find support at $2.762 per million British thermal units, the low from January 22, and resistance at $2.967, the high from January 23.

The National Weather Service said that the storm would bring heavy snow, powerful winds and widespread coastal flooding through Tuesday....MORE
The recent action via FinViz:

Poland To Help Holders Of Swiss Franc Denominated Mortgages

Speaking of borrowing in a currency other than the one you earn your income in.*
From Reuters:

REFILE-Poland may help CHF loan holders at banks' expense -PM Kopacz
(Removes extraneous word from headline)
* Polish PM is considering help for CHF mortgage holders
* Details to be presented later this week
* Poland faces presidential and general elections this year
By Marcin Goclowski
WARSAW, Jan 26 (Reuters) - Poland may help financially troubled holders of Swiss franc-denominated mortgages at the expense of the banks and will present specific proposals by the end of the week, Prime Minister Ewa Kopacz said on Monday.

Kopacz, who faces an election this year, did not spell out what form such help might take. She was speaking after hundreds of people staged protests in several Polish cities at the weekend demanding the government's help in repaying Swiss franc-denominated mortgages following the currency's sharp rise....MORE

Oil: U.S. Well Count To Fall By 26% in 2015, Wood Mackenzie

From Rigzone:
Wood Mac: US Onshore Well Count to Fall by 26% in 2015 
The U.S. onshore well count will decline by 26 percent, from more than 37,000 in 2014 to an estimated 27,000 in 2015, as the decline in oil prices prompted many operators to cut their 2015 spending plans, according to a recent estimate by Wood Mackenzie.

North American drilling and completion expenditures exceeded $140 billion in 2014, but Wood Mackenzie expects operators to commit less than $90 billion to upstream development over the next 12 months.

“Such sizeable cuts will have serious implications across the oilfield services sector,” said Wood Mackenzie in a statement.

Using its North America Supply Chain Analysis Tool, Wood Mackenzie forecasts that rig day rates will decline by 30 percent, while the rig count will drop from an annual average of nearly 1,800 in 2014 to under 1,300 in 2015. This decline will curtail demand in other services sector markets, including tubulars, drilling services, frac proppant and pressure pumping....MORE

"Alternatives to Stocks in Deflationary Environments..."

From Victor Niederhoffer's Daily Speculations:
What are the alternatives to stocks in a deflationary environment?
1. playbook of scenario of Japan since 1990 : )

2. Year book 2012 by Prof. Dimson/ Marsh/ Staunton (or fondly called the optimist trio) has a thorough investigation of historical deflationary events...MORE
See also both "The Enigma Inside The Credit Suisse Global Investment Returns Yearbook 2014" and 2013's "Credit Suisse Investment Returns Yearbook 2013":
Last year I referred to the authors of the Credit Suisse Global Investment Returns Yearbooks as "the hot new boy band Dimson, Marsh and Staunton" while looking at a picture of Professor Dimson.

Cracks me up but hasn't gained much traction in the academy.*

"The Swiss franc appreciation and the sorry saga of FX lending"

From our Dec. 7 post: Evans-Pritchard: "Dollar surge endangers global debt edifice, warns BIS":

Two quick points*:
1) This is the second BIS warning in under six months.
2) It is very dangerous to borrow in a currency other than the one in which you earn your income.

True at retail, true at wholesale....
Reprised in "'Russian ruble's fall: A classic 'currency collapse'" and Why It's Such a Big Deal".

From A Fistful of Euros:
Back in the 1980s Australians, many of them farmers, were offered low-interest loans, appealing in a high-interest environment. With changes in currency rates the loans in Swiss francs and Japanese yen quickly became much beyond the means of the borrowers to service with ensuing pain and suffering. Icelanders felt the pain of FX loans as the Icelandic króna depreciated in 2008 as did many Eastern-European countries. – The same story has played out in country after country with the obvious lesson reiterated: for people with income only in their domestic currency FX borrowing is far too risky. All these loans, often the result of predatory lending, follow the same pattern and it is no coincidence where they hit. There is now ample case for countries to take action: banks should be forbidden to lend in FX to private individuals with no FX income. 

Australia in the 1980s, New Zealand in the 1990s, Iceland and a whole raft of other European countries in the 2000s saw liberalised markets but inflation was high and so were interest rates. By taking an FX loan or even just a loan pegged to FX the high domestic interest rates could be avoided – it seemed too good to be true.

Sadly it was indeed too good to be true: currency fluctuations changed the circumstances and servicing FX loans for those with income in the domestic currency became unsustainable. For loans running over many years this was, statistically seen, almost unavoidable. FX loans have turned into a huge problem in countries such Croatia, Bosnia, Bulgaria, Montenegro, Poland and Ukraine but politicians and banks have ignored the problem.

These cases were spelled out at a conference on CHF/FX loans in Cyprus in December. Organised by Katherine Alexander-Theodotou president of the UK Anglo-Hellenic and Cypriot Law Association and various representatives of organisations fighting FX loans, the organisers have recently set up European Legal Committee for Consumer Rights to co-ordinate their work in the various countries marred by FX loans....MUCH MORE
HT: The Big Picture

Andreessen Horowitz On Insurance: "Software rewrites insurance" (nudge, nudge)

From Andreessen Horowitz:
Insurance is all about distributing risk. With dramatic advances in software and data, shouldn’t the way we buy and experience our insurance products change dramatically? Software will rewrite the entire way we buy and experience our insurance products — medical, home, auto, and life. Here’s how:
By changing the way insurance companies price risk
So many more signals are available for insurance companies to better price the premiums we should pay. Drivers that drive carefully in safe neighborhoods vs. recklessly through accident-prone intersections ought to pay different amounts to insure the same car — but all that data isn’t reflected in an annual odometer reading. Water damage is one of the top sources of claims for home insurance customers: Why don’t we charge customers with water sensors less, since if they know water is leaking, they can stop it before the damage gets expensive to repair.

New data sources, better data, ongoing data reporting — all are possible now with mobile phones and inexpensive Internet of Things devices.

By empowering an ongoing relationship between an insurer and insured
Today, our relationship with an insurer revolves mostly around a monthly billing statement sent to us from a mainframe application. You can tell because big chunks of the billing statement are printed in ALL CAPS IN A FIXED WIDTH FONT … the only fonts that existed at the time the applications were written.

How about an insurance company that empowers you to make smart lifestyle decisions? Examples: the car insurance company that routes you around dangerous intersections; the home insurance company that automatically summons a plumber when it detects water on the floor near the water heater; or the health insurance company that connects you with friends that are also trying to lose weight?

By encouraging us to keep safe, insurance companies can keep their payouts low. And we all bask in the glow of an insurance company that has our best interests at heart — because even though our interests are really aligned, it doesn’t always feel that way.

By changing the way insurance companies pool capital
Historically, we’ve seen mutual insurance companies (insurance companies owned by policyholders) and stock insurance companies (insurance companies owned by shareholders). We expect to see more crowdsourced insurance companies, just as we’ve seen in other parts of the financial system. Crowdsourcing works great for personal loans, student loans, small business loans — why not for insurance? From the investor’s point of view, it’s great to diversify by investing in an asset class that should move independently of the stock or bond markets. From the insurance company’s point of view, it should be a cheaper way to pool capital....MORE

"It Don’t Come Easy – Low Crude Prices, Producer Breakevens And Drilling Economics – Part 3"

From RBN Energy:
On Friday (January 23, 2015) West Texas Intermediate (WTI) futures prices closed under $46/Bbl for the second time this year. RBN’s analysis of producer internal rates of return (IRRs) for typical oil wells indicates that Bakken IRRs have fallen from 39% in the fall of 2014 to just 1% today. IRRs for typical Permian wells are down to 3% and typical Eagle Ford wells are at breakeven. Everything is underwater or close to it except for the sweet spot wells with higher production. Today we present highlights from RBN’s IRR and breakeven analysis – published in full today in our latest Drill Down Report.
In Episode 1 of this series we reviewed recent price carnage in crude, natural gas and natural gas liquids (NGL) markets that have crushed the IRRs producers enjoyed in the summer of 2014 and resulted in much speculation about the impact on current and future production. We noted that existing wells currently flowing will continue to produce – there is no value to shutting in output because of falling prices.  That is because even at today’s prices, the per-unit revenues of existing wells are significantly above operating costs. In fact, production is likely to increase in the near term. Our expectations of production increases in 2015 are reinforced by recent investor presentations (see Rig Cuts Deep Output High). In Episode 2 we ran through the inputs and model assumptions behind our IRR and breakeven sensitivity analysis using RBN’s Production Economics model. Coming up with representative input variables for the model is as much art as science but the main goal is to understand how the numbers relate to each other.  Most analysts make you guess what the input variables are, so you really don’t know what you are looking at.  We lay it out for you so you can make your own judgments about whether or not our data is truly representative. In this final episode in the series we present highlights of our analysis results. The full results are available exclusively to RBN Backstage Pass subscribers in our latest Drill Down report (for more details see the Ad below).

The primary goal of our analysis was to identify typical IRRs in different crude oil and natural gas price scenarios for major shale plays across the U.S. at various crude and natural gas price levels. We analyzed data from a range of wells for each of the basins in Table #1 and aggregated the results to provide values for representative wells in oil, liquids (NGLs) and natural gas categories.  From the set of representative wells for each play we then extracted a super set of “sweet spot” wells having the highest IP rates that produce the highest IRRs. We used these wells to identify sweet spot well characteristics.
Table #1 Source: RBN Energy (Click to Enlarge)
Then and Now
The following snapshots provide a summary of our results for typical IRRs seen in oil, wet gas (NGLs) and dry gas plays under different price scenarios during the fall of 2014 and in January of 2015. The complete results along with summarized input data that generated these outputs are available in the Drill Down Report....MORE

"Technical hurdles have been overcome for the first human head transplant"

That's old news, July 1, 2013 to be precise. Here's our post from that day.
This more recent (Dec. 2014) item is from Slate:

We Might Be Able to 3-D-Print an Artificial Mind One Day
I’m an artificial-intelligence skeptic. My problem isn’t with the software, but the hardware. Current computer technologies may give us faster, lighter laptops, but AI needs more than the PC equivalent of go-faster stripes—it needs a revolution in how we build processors. Such a revolution may be just around the corner though. As I discuss in a new article in the journal Nature Nanotechnology, the convergence of technologies such as 3-D printing, advanced processor architectures, and nanotechnology are opening up radical new possibilities in how we might construct brain-inspired computers in the future.

If what we think of as the human mind is the product of a biological machine (albeit a complex one), there is little to suggest that we won’t one day have the ability to emulate it. This is what’s driving artificial intelligence research and the emergence of computers like IBM’s Watson that are getting close to thinking like a person. Yet powerful as Watson is, current manufacturing techniques will never enable such technologies to become ubiquitous.
It’s a problem of dimensions.

Imagine drawing five points on a piece of paper and trying to join each point to every other, without any of the interconnecting lines touching. You can’t do it. A second piece of paper layered over the first helps make the connections. But the more points you add and the more connections there are, the harder it gets to connect every point to every other one.

It’s a simple illustration of how hard it is to replicate the physical structure of the human brain—a 3-D matrix of billions of neurons tied together by hundreds of trillions of synaptic connections. Conventional manufacturing techniques can get us partway there. For instance, companies like IBM are pushing the limits of conventional approaches using to create brain-like processing architectures. But like the points on the paper, the technology is still inherently two-dimensional, meaning that additional complexity comes with a massive price tag.
If brain-inspired processors are to become an everyday reality, we’ll need radically different manufacturing processes....MORE

"Oil prices turn positive as OPEC secretary general calls bottom to market"

OPEC Is a revenue maximizing cartel, not a truth dispensing charity. We're going lower.
WTI $45.38 down 21 cents:
From Reuters:

Oil prices turned positive on Monday, erasing early losses after the Secretary-General of the OPEC producer group said he expected the market to bottom out around current levels.

March Brent crude LCOc1 was trading at $49.13 per barrel by 1317 GMT, up 34 cents, bouncing from an early low of $47.57.

"Now the prices are around $45-$55 and I think maybe they reached the bottom and will see some rebound very soon," Abdullah al-Badri, Secretary-General of the Organization of the Petroleum Exporting Countries said in an interview.

West Texas Intermediate (WTI) crude for March delivery CLc1 was at $45.94 a barrel, up 35 cents. Front-month WTI had touched an intraday low of $44.35, just above the $44.20 hit on Jan. 13, which was its lowest level since April 2009....MORE

"Greek austerity after Syriza" What Next?

From FT Alphaville:
A brief collection of reaction to Sunday’s election in Greece follows. Before we hear from the professional financial crowd, however, a word from Eric LeCompte, executive director of Jubilee USA…
This election was a referendum on austerity and debt policies. The people of Greece voted and said no to austerity and yes to renegotiating Greece’s debt.
Austerity programs can be likened to trying to help a patient on life support by punching them.
So, this could get interesting. Greece’s pile of sovereign debt is almost twice the size of annual economic output, the International Monetary Fund, European Central Bank and European Union have helped to fund the country since 2010, imposing vicious/essential (delete as appropriate) cutbacks and reforms on the state to fix the problems/keep the euro intact. There are more young people out of work than in it, while Greece is supposed to dedicate almost 5 per cent of its economy to repaying debt in 2016.

First there are the assessments of Alexis Tsipras, leader of the radical Syriza party, which won Sunday’s election in Greece. The FT’s Tony Barber wonders whether the radical will in fact govern like a pragmatist, a Brazilian Lula rather than a Venezuelan Chávez.

David Mackie and co at JP Morgan set out some of the areas where the so-called Troika of multinational institutions and a new Greek coalition will have to work things out.
Assuming a coalition is formed, which seems very likely at this stage, the new government will need to decide relatively quickly how it will approach the Troika. A proposal from the new government will be needed to start discussions with the Troika on a further extension of the [European Financial Stability Facility] program—which is due to expire at the end of February. The Troika may only agree on a further extension of the EFSF program if the new government makes certain commitments. The new Greek government will also need to make proposals to the Troika in order to start discussions on how to successfully conclude the EFSF program (and receive the delayed €7bn of disbursements) and on how to structure further financing arrangements (most likely an ESM Enhanced Conditions Credit Line)....

Davos Man: Google's Chairman Says "The Internet Will Disappear" (GOOG)

These folks have big plans for you.
From The Daily Mail:
Google's Eric Schmidt claims the 'internet will disappear' as everything in our life gets connected 
  • Claims sensors and devices will be so widespread we won't sense them 
  • Says rooms will begin to personalise themselves as we walk in
Google's executive chairman Eric Schmidt has predicted the end of the Internet as we know it - but said technology would lead to new jobs for people.

Speaking at the World Economic Forum in Davos, Switzerland, he was asked for his prediction on the future of the Web.

'I will answer very simply that the Internet will disappear,' Schmidt said.

'There will be so many IP addresses…so many devices, sensors, things that you are wearing, things that you are interacting with that you won't even sense it,' he explained, according to Hollywood Reporter. 
'It will be part of your presence all the time. 

'Imagine you walk into a room, and the room is dynamic. 

'And with your permission and all of that, you are interacting with the things going on in the room.'
He said the move would be a big opportunity for technology firms, saying: 'A highly personalized, highly interactive and very, very interesting world emerges.'

The panel, entitled The Future of the Digital Economy, also featured Facebook COO Sheryl Sandberg and others....MUCH MORE, including video
Now we have the Hollywood Reporter scooping the rest of the media.

As soon as one 'Uber for weed' startup gets cut down, another grows in its place

From The Verge:
It was only a matter of time before someone spun the "Uber for __" wheel and landed on WEED. More and more states are voting in favor of legalization. Congress recently instructed the feds to back off medical marijuana. Peter Thiel's venture capital fund just bet millions that legal cannabis is gonna be huge. Why not pair pot with our newfound appetite for on-demand delivery via smartphone?

"Uber for weed" was so inevitable that at least six startups attempting to deliver medical marijuana to your door launched in the past eight months: Eaze, Nestdrop, Meadow, Grassp, Time for Dave, and Canary. That doesn't include standard offerings like the "dozens" of delivery services in Seattle, for example, that will let you call in and place an order.

Even Uber itself has partnered with Weedmaps, a popular dispensary locator, as well as a Denver-based pot shop called the Clinic, in order to raise money for multiple sclerosis research. Would you believe there's something in it for Uber, too? The partnership lets Uber sow the seeds for its rumored API, which would insert a "Get an Uber" button into every app on Earth.

The only thing more obvious than the demand for these apps is the inevitable crackdown. Imagine Uber's bitter clashes with city governments and then factor in the political pressure around a federally controlled substance.

Last month, a Los Angeles Superior Court judge shut down Nestdrop, which tried to argue that its weed delivery app was "simply a communication technology" — just as Uber used to argue that it was a tech company that didn't own any cars. Before the ruling against Nestdrop, LA's city attorney publicly announced his intention to squash the startup. Time for Dave was supposed to launch in Seattle last month, but try to download the app in the Google Play store and you'll find the link has been disabled for "violating our Terms of Service."...MORE

Sunday, January 25, 2015

Izabella Kaminska and the Trouble With Silicon Valley

Just so you know, we're not linking just because Ms. Kaminska mentioned Climateer.
From Dizzynomics:
Man of marble and of code
Over the course of the last few weeks I’ve been quietly testing a theory on a number of trusted sources, friends and acquaintances whose opinions on economic and technological matters I value.

The hypothesis very loosely speaking is that the Internet revolution was founded on an extremely precarious and highly politicised social equilibrium which may not be as robust as we like to think it is. Our failure to understand this presents us with a false sense of security.

Don’t get me wrong. We’ve clearly benefited from the Internet in amazing ways and it has allowed us to achieve things that were previously unthinkable.

But…. I am increasingly concerned that we have all overlooked the precarious nature of the system we have created, how dependent it is on collaboration and how vulnerable that makes us in the long run if those social systems fall apart.

What we have been experiencing in terms of benefits and advantages is akin to a Bob Geldof-organised charity concert.
I.e. These concerts reveal precisely what we as a social group can achieve if and when we actually choose to a) all get along b) act in a United way and c) focus our efforts on one particular benevolent and altruistic effort.

But it’s also something that is by definition a bit of a one off event.

No doubt what we can achieve is mind blowing. Like building the Tower of Babel.
But the problem with charity concerts is that after a while we do all want to go home and get back to our own selfish existence.

The Internet charity concert has now lasted nearly 30 years. That’s a very long time. But what we are starting to witness now is the rise of increasingly exploitative and manipulative agents (hackers), not to mention proprietary businesses, all of whom don’t play by the collaborative rules and whose key focus is taking advantage of the goodwill within the concert for their own selfish purposes. They even label their companies “concert x y or z” to better manipulate us — not unlike the the cottage industry of unofficial vendors that spring up on the sidelines of concerts to try and charge you twice as much as usual to get home. That to me indicates the party may soon be over — unless, of course, we quickly find a better way to keep it protected from malevolent agents.

On that basis I increasingly side with the thoughts of Jaron Lanier. If we want the concert to continue we’re going to have to start compensating people for taking part in the concert, for concert fatigue and for holding themselves back from returning to their old lives.

Climateer linked to this story on Motherboard about a new book by Andrew Keen that argues a very similar point. Namely that the web Revolution has led to the creation of a very weird form of capitalism (which in my humble experience resembles increasingly the story of Animal Farm).
From the article:
In his new book The Internet is not t​he Answer, Keen rubs up against the “Silicon one percent” to document what he sees as a profound hypocrisy—an elite made wealthy by the internet, co-opting the language of “community” while privatizing public life in every direction.
“You’ve got wealthy Oakland residents crowd-funding thei​r own militias,” he told me in a phone interview. “Google have superimposed Google Bus on San Francisco’s public transit system. These companies are eating away at the idea of public society.” The so-called Google bus is the private shuttle service that recently​ sparked protests as a symbol of gentrification and over the way it used public stops.
Profound hypocrisy I think is a great way to put it.

Now, I am not by any stretch of the imagination a tech expert. I can’t even code. Apart from some very very very very basic html....MUCH MORE
The first thing I thought of when I saw Geldof's name was this post from 2007 on his buddy:
Africans to Bono: 'For God's sake please stop!'

Mohamed El-Erian: "What Syriza's Sweep Means for Greece and Europe"

From Bloomberg:
The Coalition of the Radical Left, known as Syriza, placed first in the Greek elections today, with at least 36 percent of the vote, according to exit polls. The result could even give Syriza an absolute majority and, if it wishes, allow it to govern without a coalition partner. With these outcomes going beyond what markets expected and priced in, here is a Q&A before trading resumes Monday.

QUESTION: What happened and why will it matter for markets?:

ANSWER: The early parliamentary elections have given Syriza a significant and historic victory that surpasses the market consensus.

This is the first time Syriza is in a position to form and lead a government. Its popularity reflects intensifying economic and social frustrations among Greek citizens, including the perception that their long sacrifice hasn't yielded any meaningful gains, let alone any hint of an end to what they see as years of austerity and deprivation.

An alternative economic approach was the core of Syriza's electoral campaign. Its program, which rejects austerity and seeks debt reduction, was pursued with vigor by the party's leader, Alexis Tspiras, who frequently took swipes at Germany, including personal attacks on Chancellor Angela Merkel. He argued that the most influential power in the euro zone was too austerity-obsessed in its approach to Greece.

This has led to concerns that Greece could exit the euro zone. A so-called Grexit would entail the return of a national currency to replace the euro, losing access to European Central Bank financing windows and, most probably, less financial support from the European Union and the International Monetary Fund. It would also raise doubts about some other countries in the region, leading to a repricing of individual and collective risk factors....MORE

On Greece: "Alexis Tsipras: Greece’s radical or realist?"

The comments are, as usual, pretty interesting.
From The Financial Times' The Big Read 7:05 pm:
As Syriza leader eyes election win, everyone wants to know what really motivates him 

They were the biggest student protests since the 1973 Athens Polytechnic uprising that helped bring down Greece’s military dictatorship. Angry at education reforms proposed in late 1990 by Greece’s centre-right government that would have slashed benefits such as free textbooks, students occupied schools across the country. More than 90 per cent of academic institutions were taken over.

To co-ordinate demands, student leaders from all over Athens came to Ampelokipoi high school. At the front of the assembly stood the school’s own delegate, a 16-year-old member of the local Communist youth, Alexis Tsipras.

Many of the students, particularly on the leftist fringes, were pushing for a radical overhaul of the country’s education system. “We didn’t want exams, we didn’t want grades, we wanted an open school,” recalls Matthaios Tsimitakis, an Athens journalist who was one of the student leaders at the assembly.

But not Mr Tsipras. Despite his leftist credentials, Mr Tsipras urged only one demand: withdraw the reforms. Although the protests would grow tense — a teacher was killed in clashes between rival groups in January 1991 — Mr Tsipras, who became one of the main negotiators with the government, held his line. And, three months after they were proposed, the government sacked its education minister and withdrew the reforms. The protests ended.

Twenty-five years later, Mr Tsipras, now 40, is on the verge of becoming Greece’s prime minister as leader of Syriza, the radical leftist party poised to win Sunday’s parliamentary election. If it emerges victorious, Syriza would become the first of the burgeoning populist parties rocking the eurozone to come to power in a national capital since the debt crisis first hit the EU’s common currency in 2010.

Those who have worked closely with Mr Tsipras say the qualities he showed during that 1990 political baptism — preternatural maturity, an ability to co-opt and diffuse the demands from more radical rivals, a single-minded focus on the end goal — are the same that have marked every step of his stunning rise.
“What he says is: even if you have the greatest agenda, and the smartest programme, if you’re not powerful enough to form a majority to implement it, it only stays on paper,” says Nikos Pappas, Mr Tsipras’ chief of staff.

But those same tendencies have led critics to argue that rather than the idealistic hero of struggling Greeks he is presenting to voters, Mr Tsipras is really a far more cynical and calculating operative, using his charisma and boyish good looks to present a friendly face as he elbows his way to the top.
“I think he’s very ambitious,” says one former member of the party’s central committee who broke with the group during Mr Tsipras’s rise. “That’s the only thing motivating him. He’d like very much to be the prime minister.”

Even Mr Tsipras’s predecessor as Syriza chief, Alekos Alavanos, questions whether the party’s rhetoric matches its intentions. “It has radical left origins, but Syriza now is a moderate party,” says Mr Alavanos, credited by many with orchestrating Mr Tsipras’s rise....MUCH MORE 
Alexis Tsipras: Greece's radical or realist?

Elon Musk On the Simpson's: "I Don't Care About the Money"

There is some ambiguity in the headline but I'm pretty sure our loyal (and long suffering) readers know what we meant.
From BusinessWeek, Jan. 23:

Elon Musk: Guest-Starring on The Simpsons Was 'Kind of Trippy'
While attending the University of Pennsylvania, Elon Musk was a busy dude. He pursued degrees in business and physics during the week, and on weekends threw raging parties at a rented multi-bedroom house-turned-nightclub to earn extra money. By the time Sunday night came around, Musk wanted to relax, and did so with a ritual shared by millions of people. “I had this lousy TV that was always fuzzy and made it really challenging to watch anything,” he said. “The only thing we would tune in for was The Simpsons every week.”

This Sunday, Musk, the head honcho at Tesla Motors and SpaceX, will enjoy the rare experience of watching himself in a Simpsons episode called “The Musk Who Fell to Earth.” The episode was inspired by a meeting Musk had with James L. Brooks, the longtime executive producer of the show. The men were spitballing ideas, and by the end of their discussion Brooks knew he wanted Musk to play a fictionalized version of himself on the show.

The episode begins, naturally enough, with Musk traveling through space in a craft of his own design. He’s taking the genius engineer version of a Sunday drive because he’s struggling to come up with new ideas. Then, by happenstance, Musk lands in the Simpsons’ backyard and meets Homer. “Homer then becomes this incredible inspiration to him,” said Al Jean, the head writer and show runner for The Simpsons.

Musk forms an unlikely partnership with Montgomery Burns and seeks to electrify and modernize Springfield, while on a quest to build a model community. The cars are electric and drive themselves. There’s a Hyperloop taking people around the city at record speeds. “Burns thinks it will make him a fortune, but it turns out that he’s going to lose $50 million a quarter,” said Jean. “Musk, of course, thinks that’s fine. This leaves Burns so livid that he attempts to kill Musk.”...MORE
And via Fox's Animation Domination YouTube channel:

"Factoring Global Demand into the Price of Oil"

We've followed -and linked to- Political Calculations for quite a few years. One of our 2009 posts prompted this response from P.C.:
Welcome to the Friday, April 24, 2009 edition of On the Moneyed Midways, where we catch you up with the best money and business-related blog posts that we found in the past week's best money and business-related blog carnivals.

It seems Climateer believes we here at Political Calculations are "quirky." Here's Climateer's dilemma:
Political Calculations is quirky. On the one hand they link to Prof. Shiller's merged Cowles/S&P data (first rate scholarship/database). On the other they do a "On the Moneyed Midways" linkfest that seems aimed at a totally different target audience.
As it happens, we do have two very different, but somewhat overlapping audiences, which we discovered long before we first launched OMM. There's the (mostly) serious core crowd who enjoy the analytical power we bring to a number of different topics, and then there's the (more fun-loving) community of money and business-focused bloggers with whom we interact in other forums.... 
Here's some of that analytical power on display: 
Brent Crude Oil Price Projections - 1987-2040 - Source: AEO2014 EARLY RELEASE OVERVIEW, http://www.eia.gov/forecasts/aeo/er/early_prices.cfm
How much of a change in global oil prices can be attributed to changes in the relative demand for oil? And how much might be attributed to changes in the relative supply of oil?

Those are questions that we've asked and answered before, but now, for the first time, we can finally quantify the extent to which either of these economic factors may be driving the price!

We can do that math now thanks to the work of James Hamilton, who built a model of how much world oil prices change in response to changes in the prices of other commodities - ones that are particularly sensitive to changes in the demand for them: copper, U.S. dollars, and 10-Year Constant Maturity U.S. Treasuries.

Our tool below is built to do that math, with the default values being the values recorded for the week of 4 July 2014 (for the "Previous Values" and for the week of 12 December 2014 (for the "Current Values"), which Hamilton recommends because they smooth out some of the big swings in values that are recorded in the day-to-day data....MORE
HT to professor Hamilton and his post "What’s driving the price of oil down?":
In December I provided some simple calculations of the extent to which a slowdown in the growth of global oil demand may have contributed to the spectacular drop in oil prices since last summer, and I updated those estimates two weeks ago. Some of you have suggested that as conditions keep changing, perhaps I should update those calculations every week. Thanks to the always-helpful Ironman at Political Calculations, I can now go that a step better, and provide eager Econbrowser readers a quick tool they can use to update these calculations on their own on a daily basis, if your heart so desires....MORE

Get ready for the most sweeping business change since the Industrial Revolution: "The algorithmic CEO"

From Fortune:
The single greatest instrument of change in today’s business world, and the one that is creating major uncertainties for an ever-growing universe of companies, is the advancement of mathematical algorithms and their related sophisticated software. Never before has so much artificial mental power been available to so many—power to deconstruct and predict patterns and changes in everything from consumer behavior to the maintenance requirements and operating lifetimes of industrial machinery. In combination with other technological factors—including broadband mobility, sensors, and vastly increased data-crunching capacity—algorithms are dramatically changing both the structure of the global economy and the nature of business.

Though still in its infancy, the use of algorithms has already become an engine of creative destruction in the business world, fracturing time-tested business models and implementing dazzling new ones. The effects are most visible so far in retailing, creating new and highly interactive relationships between businesses and their customers, and making it possible for giant corporations to deal with customers as individuals. At Macy’s, for instance, algorithmic technology is helping fuse the online and the in-store experience, enabling a shopper to compare clothes online, try something on at the store, order it online, and return it in person. Algorithms help determine whether to pull inventory from a fulfillment center or a nearby store, while location-based technologies let companies target offers to specific consumers while they are shopping in stores.

Now the revolution is entering a new and vastly expansive stage in which machines are communicating with other machines without human intervention, learning through artificial intelligence and making consistent decisions based on prescribed rules and processed through algorithms. This capability has rapidly expanded into potential connections between billions and billions of devices in the ever-expanding “Internet of things,” which integrates machines and devices with networked sensors and software, allowing the remote monitoring and adjustment of industrial machinery, for instance, or the management of supply chains.

Take, for example, General Electric GE 0.82% , which has already turned itself into a math house. It has assembled a staff in Silicon Valley to provide customers with advanced analytics that do such things as predict when equipment maintenance is due. As of the middle of last year, this quintessential industrial company had about two-thirds of its $250 billion backlog in orders from services based on its mathematical intellectual property....MORE
HT: Abnormal Returns

Saturday, January 24, 2015

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

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

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

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

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

Tell us about your painting robot.
I liked the idea of a robot being able to demonstrate that a machine can go through the motions of painting but can’t capture the eloquence, the subtlety, the nuance of a human painter. What also fascinated me was how people responded to the robot. The performative aspect of a moving robot was very hypnotic and fascinating to them.
Bloom: Goldberg and his collaborators transform seismic data into a display of color. A seismometer at the Hayward Fault measures the Earth’s motion and transmits this data over the Internet to the installation, where the data is processed in real time to produce an abstract field of unpredictable circular blooms.

Watch live online version here

Sounds like that laid the groundwork for your “Telegarden.” Tell us about that.
In 1993 I was teaching at USC. My students came to me and showed me this amazing thing called the World Wide Web. We sat around brainstorming about what we could contribute. Since we were working in robotics and had robots in the lab we thought, “Why don’t we connect a robot to this Web and let people control it from anywhere in the world?” We got super excited about the idea of having a robot do something that was ironic. We wanted to have it tend a garden. A garden is interesting because in some way it’s the last thing you expect a robot to be doing. I loved the juxtaposition of the natural and the digital worlds....MORE

Friday, January 23, 2015

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

"How The Swiss National Bank Almost Crushed George Soros"

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

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

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

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

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

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

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

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

The 16 Trends Andreessen Horowitz Is Watching

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

D4 - Exceptional Drought
U.S. Drought Monitor forCalifornia

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

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

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

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

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

"George Soros 'finally' retires"

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

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

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

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

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

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

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

See also: 

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

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

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

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