Sunday, May 28, 2017

Something Is Very Wrong In Connecticut

First it was this November post:
"One of America’s Richest Towns Could Be In For a Housing Market Meltdown"

Then we watched it in residential real estate listings, month after month, for homes in the $4 to $40 million range:
$11.5 Million Stone Georgian Mansion In Greenwich, CT
$6.75 Million Estate In Greenwich, CT
Billionaire Businessman Lists Historic Connecticut Estate For $31.5 Million
$16.5 Million Historic Georgian Mansion In Greenwich, CT
11,000 Square Foot Stone Mansion In Greenwich, CT
Lionshare Farm – A 95 Acre Equestrian Estate In Greenwich, CT
$25 Million Historic Waterfront Mansion In Greenwich, CT
50 Cent Re-Lists Connecticut Mega Estate For $5.995 Million 
There are dozens and dozens of these things that hit the market over the last six months.
On May 14 it was:

Big Old Connecticut Estate Going to Auction, No Reserve
Well this is interesting....

General Electric is moving their headquarters from Fairfield, CT to Boston, broke ground on the new place a couple weeks ago.

Yesterday we read:
...The state’s population is falling: Its net domestic out-migration was nearly 30,000 from 2015 to 2016. In 2016, it lost slightly more than 8,000 people, leaving its population at 3.6 million. Indeed, recent national moving company surveys underscore the trend, showing more people leaving Connecticut than moving in. In 2016, the state also saw a population decline for the third consecutive year, according to Census Bureau estimates.

One of the companies, United Van Lines, reported that of all their Connecticut customers, 60 percent were leaving compared to 40 percent who were moving there. Only three other states had higher rates of people moving out – New York, New Jersey and Illinois. One out of five of those leaving said they were retiring....
Later in the day ZeroHedge posted:
Connecticut Credit Risk Soars To Record High As Tax Receipts Tumble
Connecticut’s general-obligation bonds are riskier than ever as plummeting income-tax collections and a $2.3 billion budget deficit moved all three credit rating companies to downgrade its debt.
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170526_CT.jpg
As Bloomberg details, tax receipts for the current fiscal year ending in June will be about $451 million short of estimates from January, prompting Governor Dannel Malloy to empty the state’s already small budget stabilization fund. To help close the gap, public employees agreed to accept a 3-year wage freeze and to contribute more for their pension and health-care benefits under a tentative deal that would save more than $1.5 billion over the next two years.

As we previously detailed, The state of Connecticut has been hit hard by the double whammy of a deteriorating local economy, coupled with a plunge in hedge fund profits - as well as hedge fund managers permanently relocating to Florida - leading to a collapse in tax revenues. According to the the latest Connecticut budget released last week, the state is reeling from the consequences of sliding tax revenue from the super-rich, i.e. the state's hedge fund managers. The latest figures showed that tax revenue from the state’s top 100 highest-paying taxpayers declined 45% from 2015 to 2016. The drop adds up to a $200 million revenue loss for Connecticut....MORE
Two quick thoughts:

1) I appreciate the arrows-for-the-directionally-challenged on ZeroHedge charts.

2) The only people who seem to have any money are the colleges and universities.
The GE campus, appraised at $70 million was sold to Sacred Heart University for $31.5 mil. and taken off the tax rolls due to the uni's tax status.
And the state is eyeing Yale's $25.6 billion tax-free endowment, introducing a bill to tax the unspent earnings of any endowment located in the state with assets over $10 billion.
There's only one institution that fits the bill, so to speak.

That last is illegal as hell but Hartford is already trying to craft another way to get at the moola moola held in New Haven.
The school is resisting fiercely, here's the Yale fight song:

Alphaville's Kadim Shubber Discovers Some World Class Bloviating

As a self-proclaimed connoisseur of orotund obsfucation I appreciate a fine bit o'bloviation from a scammer:
How to Spot a Hedge Fund Fraudster 
Bombast. In my experience they are all bombastic.
And stripper poles.
You would not believe the number of stripper poles that crooks collect....
That's me, quoting myself quoting myself.
More below.

Here's Mr. Shubber's latest piece on his favorite fallen unicorn, valuation gone from £1 1/2 billion to £2 million (maybe):
Ve Interactive: The rise and fall of a tech unicorn
And here's the CEO, David E. Brown, Esq. on Twitter:
Ridiculous cheap jibes & misinformation published by Sunday Times this weekend, not to be believed. False allegations and distorted facts.


They will be hearing from my lawyers. The truth will come out....


Amazing: tech industry more attracted to twisted bullshit & self-destruction rather than recognising real champions & UK success builders!




...Peter Uttley, Equisure's chairman and a former Lloyds of London executive, took control of the company this week, assuming the chief executive post....

...Uttley said in the press release that his chairman role had been a "passive" one, but he now plans an active reorganization of the company, whose reputation has been stained by allegations that it is a scam insurance operation....
...In an unusually emotional statement to the press, sent from an Equisure board meeting Friday in London, Uttley told his version of events over the summer, which eventually led to the delisting of Equisure shares on the American Stock Exchange.
"The simple truth was consumed in the belly of deception, but now has been vomited for the world to see," Uttley began.
He then proceeded to tell a story of three men, whom he described as "liars," "cheats," and "scallywags," who worked with law enforcement officials and the press to spread false rumors about the company with the intent of buying Equisure out at 50 cents a share, a tiny fraction of the stock's trading price of $15, before AMEX suspended trading Aug. 1.
Isn't that damn fine bloviating? It's hard to research but I think Uttley et. al. got away with $100 mil....

As they say on the nature shows:
"Sadly now, there can be but one outcome"

Download 200 Free Art Books, Courtesy of the Guggenheim, or 2.2 Million Early Photographs From the Met or 25 Million Records from the Library of Congress

From Smithsonian Magazine:

Titles devoted to Picasso, Rothko, Lichtenstein, Klimt and more are now available for your reading pleasure
Perusing through a beautiful, hefty art book is one of life’s simple pleasures, but beautiful, hefty art books can be pretty expensive. Fortunately, the Guggenheim is on a mission to digitize its vast collection of titles. As Beckett Mufson reports for Vice, the museum has made 205 art books available for free download.

The project began in 2012, when 65 titles were released online, and the Guggenheim has slowly been growing its digital archive ever since. Among the latest additions are works devoted to Pablo Picasso, Mark Rothko, Roy Lichtenstein, Egon Schiele and Gustav Klimt. Fans of Wassily Kandinsky can browse through a 1946 copy of On the Spiritual in Art, an influential treatise by the pioneering abstract artist.

As KC Ifeanyi notes in Fast Company, most of the available books are rare or out-of-print titles, making the archive a great resource for art lovers—even those who aren’t strapped for cash.....MORE
From My Modern Met:
New Digital Archive Features Over 2 Million Photos from the First 100 Years of Photography
In the age of the Internet, the digitization of historical materials has proven to play a crucial role in the preservation and proliferation of cultural heritage. In addition to major museums and large-scale libraries, archives around the world have adopted this practice. This phenomenon has been made particularly apparent by Europeana Collections, an online platform that has digitized over 53 million “artworks, artifacts, books, videos and sounds from across Europe.” For its most recent project, Europeana Photography, the website has reproduced photographs from the first 100 years of photography and shared them with the public—all for free.

Europeana Photography features over 2.2 million historical photographs with origins that span 50 European institutions sprawled across 34 different countries. As they were taken over the course of 100 years, the photographs that compose the collection present a wide range in style, quality, and subject matter (though, much like contemporary photography, landscapes, portraits, and still-life depictions seem to dominate). In addition to presenting photography's evolving sensibilities, Europeana Photography also showcases the work of prolific photographers, including “important pioneers like Julia Margaret Cameron, Eadweard Muybridge and Louis Daguerre” through curated galleries and museum-inspired online exhibitions....
...You can find the digital archive here.
....MORE, including four other collections

HT: Mental Floss who write:
"The database is searchable, downloadable, and shareable, and many of the images are in the public domain. So get clicking, because those 19th-century memes aren’t going to make themselves."
Finally, from the Library of Congress, something a little different.
From Open Culture:

The Library of Congress Makes 25 Million Records From Its Catalog Free to Download
A quick fyi: According to Fortune, The Library of Congress announced that it “will make 25 million records from its catalog available for the public to download.” They add:
Prior to this, the records—which include books and serials, music and manuscripts, and maps and visual materials spanning from 1968 to 2014—have only been accessible through a paid subscription. These files will be available for free download on [the Library of Congress site] and are also available on data.gov.
This move helps free up the library’s digital assets, allowing social scientists, data analysts, developers, statisticians and everyone else to work with the data “to enhance learning and the formation of new knowledge.” The huge data sets will be available here.

Saturday, May 27, 2017

How Cool Is This: State House Prices and Unemployment Rates

The creator is Deputy Chief Economist at Freddie Mac.
He's also pretty good at coding for data visualization.



"The Domino Effect: How machine logic infects our tastes"

From Real Life:
Americans order a lot of pizza: A 2014 survey by the U.S. Department of Agriculture suggested that one in eight Americans eats pizza on any given day. Nowadays it feels as if there are as many options for having a pizza delivered as there are available toppings. If picking up the phone fills you with anxiety, Pizza Hut offers a pair of sneakers with a built-in button for ordering pizza. “Host Hungrybot in your Twitch channel to let your fans order pizza delivery right from your stream,” a startup targeting eSports fans trumpeted. Twitch is one of the few digital realms left untouched by Domino’s, which now offers a series of apps, chatbots, and even the option of tweeting an order using the pizza emoji. Some of these ordering options may exist primarily as marketing gimmicks, but their aggregate effect remains notable: Any interface to which you have access can likely be used to order pizza.

This in part stems from pizza’s popularity, but taste is only a small part of the story: The delivery pizza is highly adaptable to the logic and formatted language of communication interfaces. The typical consumer’s mental model of a pizza — dough with sauce, cheese, and toppings baked in an oven — is quite similar to a machine’s conception of pizza, which is quite similar to how a pizza is actually made. The algorithm for pizza is not complex. Ordering a pizza through a chatbot or within a Twitch stream is possible because all parties in the transaction are imagining the same simple process and speaking from the same restricted phrasebook.
Because it is streamlined to be easy to assemble, Pizza (and not the Verace Pizza Napoletana-certified kind) is well-suited for digital abstraction. The fast food burger and the burrito have undergone similar transformations, along with plenty of foods desirable not only for their taste but because they are rationalized and efficient, capable of individual customization without requiring any special trust in the person preparing it at the other end of the interface. Do these interfaces make it simpler to satisfy our tastes, or do they subtly simplify them?

After a bad day at work, you return home to find a turnip, some lettuce, and a desultory chicken breast. That problem was the basic premise of the British cooking show Ready Steady Cook: Members of the public would throw together bags of groceries for a few pounds, and chefs would then make a serviceable meal out of these ingredients. This premise lasted 16 years and 1,895 episodes. Beyond their knife skills, what the chefs on Ready Steady Cook really offer is improvisational intelligence: the ability to come up with solutions to new problems on the spot.
Improvisational intelligence, or the appearance thereof, is a dream of consumer technology. DARPA hired a jazz musician to help teach an AI system to improvise. IBM engineers fed Watson, of Jeopardy! fame, the entirety of Bon Appétit’s archive, combined with insights into human taste and analysis of what ingredients tend to be used together. “With Watson’s help, I cooked some eggplant fritters that made convenient use of every sad, wrinkling root in my refrigerator’s crisper,” Alexandra Kleeman wrote in the New Yorker. But Watson is not in your kitchen yet, and may never be; instead, its example is used to show what the current range of culinary companions cannot do.

The Allrecipes skill for Amazon’s Alexa claims to “quickly [find] recipes that match your desired dish type, ingredients you have on hand, your available cooking time, and/or your preferred cooking method.” But it’s just an interface over a simple dataset — the recipes written and documented by contributors to allrecipes.com — and the appearance of improvisational intelligence is purely a function of the search terms a user enters. JULIA, a chatbot that aims to be “your new BFF in the kitchen” by demonstrating the improvisational power of a master chef, can only answer questions one ingredient at a time — it can provide a recipe for turnip, lettuce, or chicken breast, but not all at once. You can feel your new BFF querying a database in the background. The app regularly responds to queries with “I don’t think I’m qualified to answer that yet,” before linking to a page of tips about how best to chat with the bot.

Generally, predictive services are not predictive so much as reliant on someone else having been in your position before — if you search for the contents of your fridge, odds are someone else will have previously cooked these items together, but you will have sift through their results yourself. The appealing complications of actually cooking a meal remain messy, inconvenient, and human. Apps encourage us not to improvise and trust ourselves, but to undertake the process of itemizing and analyzing our ingredients as data for machines to process; to think of ourselves as a component of the machine itself. These tools simplify our lives on the condition that we simplify ourselves for them.

Ordering in is meant to outsource problems — and labor — to other parties: You pay for other people to buy ingredients, prepare them, and bring them to your door. That workforce is largely invisible, and interfaces like those employed by Seamless or UberEats are designed to conceal the labors of the unknowable number of people involved in preparing your food, making the process appear as little more than a hand-off at the door. These apps make a contradictory promise: to simplify the multipart process involved in creating a meal to a series of clicks, while offering enough options to satisfy an infinite number of cravings. You agree to meet the interface somewhere between what you want and what it knows how to offer, until you want what it knows how to offer...MUCH MORE.

Complex Systems (more than the sum of their parts)

I have a real love-hate relationship with the academic study of complexity. On the one hand, some topics that are of interest to this blog are complex-chaotic systems: the economy, weather, markets etc. but on the other hand the application of the terminology of complexity to broad swaths of human stuff seems a bit too facile.
Which is the right approach? Who knows.
I do know people are "explaining" animals and sometimes our explanations end up corresponding in some degree with what is going on.

From Aeon:

The mathematics of mind-time
The special trick of consciousness is being able to project action and time into a range of possible futures
I have a confession. As a physicist and psychiatrist, I find it difficult to engage with conversations about consciousness. My biggest gripe is that the philosophers and cognitive scientists who tend to pose the questions often assume that the mind is a thing, whose existence can be identified by the attributes it has or the purposes it fulfils.

But in physics, it’s dangerous to assume that things ‘exist’ in any conventional sense. Instead, the deeper question is: what sorts of processes give rise to the notion (or illusion) that something exists? For example, Isaac Newton explained the physical world in terms of massive bodies that respond to forces. However, with the advent of quantum physics, the real question turned out to be the very nature and meaning of the measurements upon which the notions of mass and force depend – a question that’s still debated today.

As a consequence, I’m compelled to treat consciousness as a process to be understood, not as a thing to be defined. Simply put, my argument is that consciousness is nothing more and nothing less than a natural process such as evolution or the weather. My favourite trick to illustrate the notion of consciousness as a process is to replace the word ‘consciousness’ with ‘evolution’ – and see if the question still makes sense. For example, the question What is consciousness for? becomes What is evolution for? Scientifically speaking, of course, we know that evolution is not for anything. It doesn’t perform a function or have reasons for doing what it does – it’s an unfolding process that can be understood only on its own terms. Since we are all the product of evolution, the same would seem to hold for consciousness and the self.

My view on consciousness resonates with that of the philosopher Daniel Dennett, who has spent his career trying to understand the origin of the mind. Dennett is concerned with how mindless, mere ‘causes’ (A leads to B) can give rise to the species of mindful ‘reasons’ as we know them (A happens so that B can happen). Dennett’s solution is what he calls ‘Darwin’s dangerous idea’: the insight that it’s possible to have design in the absence of a designer, competence in the absence of comprehension, and reasons (or ‘free-floating rationales’) in the absence of reasoners. A population of beetles that has outstripped another has probably done so for some ‘reason’ we can identify – a favourable mutation which produces a more camouflaging colour, for example. ‘Natural selection is thus an automatic reason-finder, which “discovers” and “endorses” and “focuses” reasons over many generations,’ Dennett writes in From Bacteria to Bach and Back: The Evolution of Minds (2017). ‘The scare quotes are to remind us that natural selection doesn’t have a mind, doesn’t itself have reasons, but is nevertheless competent to perform this “task” of design refinement.’

I hope to show you that nature can drum up reasons without actually having them for herself. In what follows, I’m going to argue that things don’t exist for reasons, but certain processes can nonetheless be cast as engaged in reasoning. I use ‘reasoning’ here to mean explanations that arise from inference or abduction – that is, trying to account for observations in terms of latent causes, rules or principles. 
This perspective on process leads us to an elegant, if rather deflationary, story about why the mind exists. Inference is actually quite close to a theory of everything – including evolution, consciousness, and life itself. It is abduction all the way down. We are thrown into the world as a process already in motion; and processes can only reason towards what is ‘out there’ based on sparse (if carefully selected) samples of the world. This view dissolves familiar dialectics between mind and matter, self and world, and representationalism (we depict reality as it is) and emergentism (reality comes into being through our abductive encounters with the world). But just how did inference happen before there were inferrers around to do it? How did inert matter ever begin the processes that led to consciousness?

Let’s first establish a few ground rules about the nature of processes, and see how far we get. We’re interested only in the processes that make up complex systems, those objects of study that are more than the sum of their parts. A good way to understand this notion is to look at its opposite. If you fire a gun at a target, it’s easy enough for a physicist to anticipate which part of the bullseye it will hit, based on the angle and momentum of the bullet as it leaves the barrel. That’s because the firing range is nearly a linear system, whose overall behaviour is determined by the interaction of its constituent bits, in a one-way fashion. But you can’t pinpoint the precise position of an electron when it’s circling an atom, or say for sure if and when a hurricane will hit New York next year. That’s because the weather and atoms – like all natural processes – are not reliably determined by their initial conditions, but by the system’s own behaviour as it feeds back into the interactions of its component parts. In other words, they are complex systems.

According to physicists, complex systems can be characterised by their states, captured by variables with a range of possible values. In quantum systems, for example, the state of a particle can be described by a wave function that entails its position, momentum, energy and spin. For larger systems, such as ourselves, our state encompasses all the positions and motions of our bodily parts, the electrochemical states of the brain, the physiological changes in the organs, and so on. Formally speaking, the state of a system corresponds to its coordinates in the space of possible states, with different axes for different variables.
Everything should actually get more random, dispersed and chaotic as time marches on. So what’s going on?
The way something moves through this space depends on its Lyapunov function. This is a mathematical quantity that describes how a system is likely to behave under specific conditions. It returns the probability of being in any particular state as a function of that state (or, put differently, as a function of the system’s position in the state space, similar to how air pressure is a function of the density of air molecules at the point at which it’s measured). If we know the Lyapunov function for each state of the system, we can write down its flow from one state to the next – and so characterise the existence of the whole system in terms of that flow. It’s like knowing the height of a mountainous landscape at every location, and then being able to describe how a stream of water will run over its surface. The topography of the mountain stands for the Lyapunov function, and the movement of water describes how the system evolves over time....MORE

"Early farmers and hunter-gatherers got it on with each other, study says" (looked vaguely like Fabio)

If you blur Fabio.
A lot.
https://cdn.vox-cdn.com/thumbor/zI1ANA_DTrs_w5XVWj6w1vuug20=/0x0:720x937/920x613/filters:focal(303x412:417x526)/cdn.vox-cdn.com/uploads/chorus_image/image/54933521/141031_web.0.jpg
The facial reconstruction of a hunter-gatherer from Spain (somehow clean-shaven). Illustration by Serrulla y Sanín
http://i.dailymail.co.uk/i/pix/2015/05/12/00/2890C67500000578-0-image-a-14_1431387483272.jpg
From The Verge:
It helps us understand how farming spread in Europe

Ancient farmers and hunter-gatherers living thousands of years ago in today’s Romania had sex, according to a new study. The finding adds to our understanding of how different groups of ancient humans interacted with each other — painting a more nuanced picture of how farming spread across Europe.
Researchers analyzed the ancient DNA of three individuals dated to over 8,000 years ago, as well as one individual dated to 5,000 years ago — all found in Romania. The DNA of the more recent specimen showed that farmers and hunter-gatherers in this area of Europe were intermixing with each other and having children. The study was published today in the journal Current Biology.

The advent of farming is one of the most revolutionary advances in human history. People began domesticating plants and animals, forever changing the world around them. Farming is believed to have started around 10,000 years ago in the Near East, an area roughly comprising today’s Syria, Lebanon, Jordan, Iraq, and Turkey. From there, it spread across Europe — but when and how exactly people gave up hunting and gathering for farming has been at the center of long-standing debates.
Did farmers just spread across Europe, bringing the technology with them, and outcompete local hunter-gatherers? Or did hunter-gatherers get in contact with farmers, learn their technological advances, and switch to farming? Recent research shows that the answer is complicated, and how farming spread differs from place to place. Studies suggest that in Western and Central Europe, farmers from Anatolia (the Asian portion of Turkey) came in and replaced hunter-gatherer populations. But in the Baltic region, local hunter-gatherers seem to have just adopted farming, without being overtaken by farmers....
...MORE 

On a bizarrely related note, yesterday I was asked "How did the Anatolian cows reach Europe?".
I ventured "swam the Bosphorus?"
Their Latin name is Bos Taurus, kinda rhymes.
It was all I had.

"Bitcoin and Tech Stocks: A 21st Century Tulipmania?"

From Barron's Up and Down Wall Street column:
Investors’ enthusiasm is reminiscent of the mania that struck the Dutch in the 1600s.

It was 50 years ago today Sgt. Pepper taught the band to play, if that can be believed by aging baby boomers. It seems only yesterday that we were listening to the Beatles’ iconic album of the Psychedelic ’60s while driving around in our VW Beetles, Mustangs, Minis, or Fiat 500s. Plus ça change and all that.

The release on Friday of the newly remastered version of Sgt. Pepper’s Lonely Hearts Club Band on the occasion of its half-century anniversary inspired more than a bit of déjà vu. But it was more about partying like it’s 1999, as in the immortal anthem of the late, great Prince.

Instead of internet stocks, Bitcoin was the center of attention. The crypto-currency has taken flight and taken hold of the public’s imagination like the dot-com bottle rockets before the turn of century.

The story of bootblacks offering stock tips in the 1920s is the oft-told fable warning of the Great Crash. My experience relates to my commuter train, where topics of conversation typically are the polite ones about kids and work—except when markets heat up. On one memorable ride in the late 1990s, I listened to a quite exuberant passenger chatting rather too loudly on his cellphone, a device far from ubiquitous then: “Do you have Sun Microsystems? It split again. Life is goooood!”

Sun would increase 100-fold to a split-adjusted peak over $309 a share by 1999. Between 1988 and 2000, Sun’s stock split six times, including twice in 2000 alone. Then came the dot-com crash. In 2007, there was a 1-for-4 reverse split, after which it was acquired by Oracle (ticker: ORCL) for $9.50, some 300 bucks below its peak.

What brought that to mind was the overheard conversation of a couple of fellow travelers last week, in which one extolled the potential of Bitcoin, whose price has gone parabolic in recent days. Bitcoin has more than doubled since mid-April, from under $1,200, to a peak around $2,800 Thursday, before settling into a range between $2,052 and $2,583 Friday. Where it stops, nobody knows, although it was trading around $2,300 at this writing.

The favorite way to play at home is the Bitcoin Investment Trust (GBTC), a fund that’s supposed to track 1/10th the price of the crypto-currency. But the trust’s closing price of $405 on Friday represented a 76% premium over Bitcoin’s intrinsic value (if you believe Bitcoin has such a thing).

There probably is great potential for electronic currencies not controlled by governments. But for something to be a viable medium of exchange or store of value, it needs stability, which clearly is not evident. Bitcoin’s fans claim it is a technology and not something that can be valued like a stock, which probably echoes conversations in Amsterdam coffee houses in the 1600s to rationalize paying any price for tulip bulbs.

There also was an echo of such exuberance, rational or not, in the stock market as it hit records again last week. The Nasdaq Composite ended Friday at a record, with a 2% gain for the week, while the Standard & Poor’s 500 index added 1.4% on the week, also a record, and the Dow industrials ended just shy of their peak, but advanced 1.3% on the week.

What’s striking is the role played by the biggest technology leaders, again reminiscent of the dot-com era. According to Bespoke Investment Group, Apple (AAPL), Facebook (FB), Amazon.com (AMZN), Microsoft (MSFT), and Alphabet (GOOGL) accounted for 4.6 of the 7.89 percentage-point gain this year in the S&P 500. Through Thursday, S&P data maven Howard Silverblatt calculated, the top 15 S&P 500 stocks generated half of the big-cap benchmark’s year-to-date increase. (What has changed is that Amazon and Alphabet both flirted with $1,000 share prices, while two decades ago stock splits were all the rage.)...
...MUCH MORE 

Friday, May 26, 2017

"Why Google Is Suddenly Obsessed With Your Photos"

Not "suddenly".
For both Facebook and the GOOG images have been an artificial intelligence/machine learning target for a half-decade, at least.

From The Ringer:

The next great Google product offers a window into a company reshaping itself around images, artificial intelligence, and even more of your personal data
Google tends to throw lots of ideas at the wall, and then harvest the data from what sticks. Right now the company is feasting on photos and videos being uploaded through its surprisingly popular app Google Photos. The cloud-storage service, salvaged from the husk of the struggling social network Google+ in 2015, now has 500 million monthly active users adding 1.2 billion photos per day. It’s on a growth trajectory to ascend to the vaunted billion-user club with essential products such as YouTube, Gmail, and Chrome. No one is quite sure what Google plans to do with all of these pictures in the long run, and it’s possible the company hasn’t even figured that out. But in a landscape fast becoming dominated by artificial intelligence, data — in this case, your photos — has become its own reward.

At the company’s annual I/O developers conference, Google touted Photos as a signature platform getting a bevy of valuable updates. Users will soon be able to automatically share all their uploaded photos with a loved one, or filter which specific photos are auto-shared by date or topic. A new Suggested Sharing feature will use facial recognition to prompt users to send photos of their friends directly to them, similar to Facebook’s Moments app. The service already uses machine-learning algorithms to classify the objects in photos and make them searchable, so that users can easily find all their pictures of dogs or beer or sunsets. With all these perks, plus unlimited storage, Google Photos is set to become the most convenient, powerful option available for managing a large media library. No wonder the app’s user base has grown so fast. (Though I have my doubts about how “active” these users are — Photos comes preinstalled on Android devices and automatically collects your photos; I mostly use it to look up a friend’s dad’s HBO password that I screencapped once in 2014.)
But the question remains: Why is Google offering such a feature-rich product that doesn’t appear to be readily monetizable, outside of the few print photo books the company plans to sell? The simplest answer is that the company wants to keep people within its all-encompassing ecosystem. Today’s tech giants now offer to serve as caretakers to our digital lives across a suite of services in exchange for access to our personal information. “Even if Google doesn’t make any money directly from something that it offers, it’s still gathering data,” says Pedro Domingos, a computer science professor at the University of Washington and author of The Master Algorithm. “Increasingly these days, what people perceive at companies is that data is one of your biggest assets.”

What more data could Google possibly need? The search giant has effectively achieved its longstanding goal of “organizing the world’s information,” if you consider only the written word. But even cofounder Larry Page has acknowledged that the company’s mission statement is outdated. The internet is fast becoming dominated by visual messaging, benefiting platforms such as Facebook, Instagram, and Snapchat. Google Photos, especially now that it’s been fine-tuned for sharing, is a back door into the social networking and chat functionalities that Google has been trying and failing to pitch to customers for the last decade. While we allow the company to passively track us through platforms like Chrome and Maps, Google Photos may be the first Google product that persuades people to actively share their personal information with the company en masse since Gmail.
The data obtained from a photo, though, has the potential to be much more sensitive than what’s contained in an email. Google already has plenty of pictures of objects that it’s indexed across the web with its search engine, but it still doesn’t know that much about what individual people look like. To make the Photo app’s sharing and tagging features work, Google has to analyze a photo subject’s facial structure and create a unique “faceprint” for them. The company is currently fighting a lawsuit in Illinois alleging that this facial-recognition technology violates a state law protecting citizens’ biometric data, and the tech hasn’t been rolled out in many parts of Europe for fear it might run afoul of privacy laws.

The ability to quickly categorize people, places, and things is the entire selling point of Google Photos, of course, and facial recognition helps achieve that aim. But as Google’s AI techniques become more sophisticated, the company is weaving an ever-growing web of relational data about the world. Some of it is user-submitted (you can ID your own face in Photos or tag friends’ faces), but much of it is derived from the unknowable calculations of the company’s powerful algorithms, which are being trained to be able to teach themselves in the same way a human can use current knowledge to interpret new information. When I Google my mother’s name, her picture doesn’t come up in the public search results. But if I search “Mom” in my Google Photos library, there’s a picture of us at a restaurant in October, which I definitely never tagged “Mom.” (I asked Google to explain how this happened. A spokesperson said Google Photos doesn’t analyze facial structure to look for familial similarity and that the result may have occurred because characteristics of the photo matched images labeled “mom” in Google’s public image search database.) Accurately ID’ing my mom is an example of Google’s machine-learning systems getting smarter. It’s also extremely creepy...MORE.
We have so many posts on artificial intelligence and neural networks it is almost overwhelming.
Use the blog search box if interested.

Atlanta Fed: "GDPNow's Second Quarter Forecast: Is It Too High"

From the Federal Reserve Bank of Atlana's Macroblog, May 22:
Real gross domestic product (GDP) growth slowed from a 2 percent pace in 2016 to an annual rate of 0.7 percent in the first quarter of 2017. The Federal Open Market Committee viewed this slowdown in growth "as likely to be transitory," according to its last statement.

Indeed, current quarter GDP forecasting models maintained by the Federal Reserve Banks of New York, St. Louis, and Atlanta have been pointing toward stronger second quarter growth (2.3 percent, 2.6 percent and 4.1 percent, as reported on their respective websites on May 19, 2017).
The Atlanta Fed's model—GDPNow—is at the high end of this range and is also high relative to other professional forecasts. The median forecast for second quarter real GDP growth in the May Survey of Professional Forecasters (SPF) was 3.1 percent, for instance, and recent forecasts from Blue Chip Publication surveys displayed on our GDPNow page show some divergence from our model as well.

We encourage—and frequently receive—feedback on our GDPNow tool, and some users have suggested that our forecast for second quarter growth is too high. In fact, some empirical evidence supports that view. The evidence considered here correlates differences between consensus Blue Chip Economic Indicators Survey and GDPNow forecasts for growth about 80 days before the first GDP release with the GDPNow forecast errors (see the chart below). 
Macroblog_2017-05-22-chart1
A note about the chart: The horizontal axis shows the difference between the Blue Chip consensus forecasts and GDPNow's forecast. The vertical axis measures the 80-day-ahead GDPNow forecast error, defined as the difference between the first published estimate of real GDP growth and the GDPNow forecast at the time of the mid-quarter Blue Chip survey.

As the chart shows, there is a positive relationship between the Blue Chip-GDPNow discrepancy and the GDPNow forecast error. A simple linear regression would predict that the GDPNow forecast of 3.7 percent growth on May 5 was too high by nearly 1.0 percentage point. Moreover, the chart suggests that there has been a bias in GDPNow forecasts since the fourth quarter of 2015 of between 0.9 and 2.0 percentage points at the time of these mid-quarter Blue Chip surveys. If you are inclined to think the GDPNow forecast for second quarter growth is a bit too high, then this evidence will not change your mind....MORE

Natural Gas: EIA Weekly Supply/Demand Report

Prices have been grinding higher since 2016 and, if LNG shipments to Asia pick up as some have forecast, should continue higher. Partially offsetting demand is increased supply of associated gas from oil drillers but, and that's a big but, depending on this year's weather the trend seems set on a yearly basis.

One thing to watch in 2018 and beyond is how fast China and Japan develop their clathrate technology.
Anyhoo, 3.2880 up 1.3 cents.

From the Energy Information Administration:

...Prices/Supply/Demand:
Prices fall. This report week (Wednesday, May 17 to Wednesday, May 24), the Henry Hub spot price fell 5¢ from $3.16/MMBtu last Wednesday to $3.11/MMBtu yesterday. Despite a price fall week over week, prices are substantially higher than last year at this time. Yesterday's Henry Hub price, for example, was 63% higher than a year ago, when it stood at $1.91/MMBtu. Last year's prices were historically low largely because of downward pressure from record high storage stocks following an unusually warm winter.

At the Chicago Citygate, prices decreased 2¢ to $3.03/MMBtu yesterday. Prices at PG&E Citygate in Northern California gained 3¢ to $3.38/MMBtu yesterday. The price at SoCal Citygate rose 8¢ to $3.25/MMBtu yesterday.

Algonquin price falls significantly. At the Algonquin Citygate, which serves Boston-area consumers, prices went down $1.22 from $4.17/MMBtu last Wednesday to $2.95/MMBtu yesterday. Prices were elevated last Wednesday with hot weather pushing up power demand and with a capacity reduction at Algonquin's Burrillville Compressor Station in Rhode Island, which may last for about two weeks.

At the Transcontinental Pipeline Zone 6 trading point for New York, prices decreased 28¢ from $3.18/MMBtu last Wednesday to $2.90/MMBtu yesterday.

Tennessee Zone 4 Marcellus spot prices decreased 15¢ to $2.53/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania fell 11¢ to $2.66/MMBtu yesterday.

June Nymex increases slightly. At the Nymex, the price of the June 2017 contract increased 2¢, from $3.192/MMBtu last Wednesday to $3.209/MMBtu yesterday. The price of the 12-month strip, which averages June 2017 through May 2018 futures contracts, climbed 1¢ to $3.323/MMBtu.

Supply remains flat. According to data from PointLogic, the average total supply of natural gas remained the same as the previous report week, averaging 76.6 Bcf/d. Dry natural gas production remained constant week over week. Net imports from Canada remained the same as last week, averaging 5.7 Bcf/d.

Demand remains flat. Total U.S. consumption of natural gas was unchanged from last week, averaging 56.5 Bcf/d according to data from PointLogic. An increase in power burn was offset by a decrease in residential/commercial sector consumption. Power burn climbed by 5% week over week. Industrial sector consumption stayed constant, averaging 20.0 Bcf/d. In the residential/commercial sector, consumption declined by 11%. Natural gas exports to Mexico increased 1%....
...MORE
https://www.eia.gov/naturalgas/weekly/img/20170518.7day.mean.F.gif

Thursday, May 25, 2017

"Fed Trial Balloon: JPM Warns Fed May Start Shrinking Balance Sheet In September"

I was pulling ZeroHedge's aureate teat with the post immediately below, here's the story I was actually going for.
From ZeroHedge:
It appears the Fed's balance sheet "trial balloons" using primary dealers as intermediaries have begun.
After yesterday's unexpectedly explicit guidance on the future of the Fed's balance sheet, which prompted Goldman, Citi, and various other banks to suggest they may bring forward their estimates for when the Fed will announce the start of "renormalization", moments ago JPM's Michael Feroli, traditionally the analysts "closest" to the Fed, did just that when he issued a report stating that that there is now "chance of a September start" to renormalization, with the values for monthly roll-off caps and phase-in period to be "revealed at the June FOMC meeting."

According to Feroli, JPM continues to look for normalization to commence at the December FOMC meeting but "there is some chance of a September start, though this would not have a material difference for our projections on a multi-year horizon. At the meeting at which normalization starts we expect the Committee to announce a set of monthly roll-off caps for the following year, which increase regularly every three months.
"Our best guess is that the initial caps are $4 billion a month for MBS and $8 billion a month for US Treasuries. In the preannounced schedule, these caps would be augmented each quarter by $4 billion and $8 billion, respectively, until at the end of the year they are $16 billion and $32 billion. Consistent with yesterday’s minutes, even after the normalization process is fully phased in the monthly caps will still be in place, though in most months after the full phase-in they would cease to bind."
And here are the finer details which the Fed may or may not have leaked to select banks, in an attempt to prepare for what is coming, and talking down the equity bubble....MUCH MORE
Earlier:
Shrinking The Federal Reserve's Balance Sheet

Questions America Wants Answered: "Should I Invest My Fortune in Gold?"

From ZeroHedge:

Should I Invest My Fortune in Gold? Latest Research
 PRESENTATION HIGHLIGHTS
- Should I invest my fortune in gold?
- Lessons from gold and silver: Reviewing the research
- What precious metals can tell us about finance?
- What are precious metals and why should we care?
- What size of market and how evolved over time?
- Long and detailed history of gold and silver as money
- What does a tonne of gold look like?


...MORE, including:

"- Game of Thrones & Scrooge McDuck's gold and the Hyperinflation of Smaug"
"- Do not spend too long staring at and obsessing about gold or might turn into Gollum"

http://www.goldcore.com/ie/wp-content/uploads/sites/19/2017/05/gold-goldnomics.jpg

Ctrl-Walt-Delete: Mossberg's Final Column at the Verge: "The Disappearing Computer"

The first half of the headline is from The Verge's:

Ctrl-Walt-Delete: our last in-studio show
Our 75th episode 
https://cdn.vox-cdn.com/thumbor/3UnBcI9iM5OUwGLKnr2ghwTYBm8=/0x0:1876x1252/920x613/filters:focal(788x476:1088x776)/cdn.vox-cdn.com/uploads/chorus_image/image/54945807/CtlWaltDelete-900x600-Md.0.0.png
Walt Mossberg’s final weekly column at The Verge before retirement was published today. Our beloved podcast Ctrl-Walt-Delete traditionally echoes his column, and this week’s episode (our 75th!) is no different. In our last episode recorded in studio, Walt and Nilay talk through Walt’s column and the future of tech. The show also focuses on each of the big tech companies and what is possibly in store for their future. 

This is an episode you are not going to want to miss....MORE

...And I know what you’re thinking... the last show? Well, kind of. We are happy to announce that we are doing a live taping of Ctrl-Walt-Delete for our final show!...
While the final column begins:
Mossberg: The Disappearing Computer
May 25, 2017, 10:00am EDT 
Tech was once always in your way. Soon, it will be almost invisible
This is my last weekly column for The Verge and Recode — the last weekly column I plan to write anywhere. I’ve been doing these almost every week since 1991, starting at The Wall Street Journal, and during that time, I’ve been fortunate enough to get to know the makers of the tech revolution, and to ruminate — and sometimes to fulminate — about their creations.

Now, as I prepare to retire at the end of that very long and world-changing stretch, it seems appropriate to ponder the sweep of consumer technology in that period, and what we can expect next.
Let me start by revising the oft-quoted first line of my first Personal Technology column in the Journal on October 17th, 1991: “Personal computers are just too hard to use, and it’s not your fault.” It was true then, and for many, many years thereafter. Not only were the interfaces confusing, but most tech products demanded frequent tweaking and fixing of a type that required more technical skill than most people had, or cared to acquire. The whole field was new, and engineers weren’t designing products for normal people who had other talents and interests....MORE
Both the NASDAQ Composite Index and the Nasdaq 100 saw record-high intraday and closing values today.

See also the commentary of: Garcia, Weir, Lesh, and Hunter, 1970:

Engineer Who Jumped From Ford to Uber Leaves Kalanick & Co, Back to Ford to Head Up Self-Driving Ops (F)

He's not the only one who wants to get the hell out, there may be a dozen or more upper level engineers and roboticists thinking the same thing.
From TechCrunch:

Sherif Marakby rejoins Ford to lead self-driving after leaving Uber
After leaving his role at Uber as VP of Global Vehicle Programs in April, Sherif Marakby is back at Ford to lead its autonomous vehicles and electrifications program. Marakby’s new VP role was announced as part of a general executive re-organization revealed on Thursday under new Ford CEO Jim Hackett.

Marakby joined Uber in April 2016, coming from Ford where he worked for 25 years, most recently as Director of Global Electrical/Electronic Systems Engineering. When Marakby’s departure from Uber became public in April, he didn’t specific future plans or a reason for his departure.

In his new role at Ford, Marakby will be a VP reporting to EVP and President of Global Markets Jim Farley....MORE

$500 Million Poppy Field Being Grown By Moron Found In North Carolina

From the Charlotte Observer:

Acre of opium poppy plants found in Catawba County field. Value: $500 million
The Catawba County Sheriff’s Office seized an entire field of poppy plants Tuesday, the 2,000 plants have an estimated value of $500 million.

Authorities admit that’s a rough estimate on the value, because the plants still need to be weighed.

The plants are used in the manufacturing of opium, and growing them is far from legal. The field was about an acre located near Claremont, a Catawba County town about 40 miles north of Charlotte. It has a population of about 1,300 people.

“This is the second one in the nation,” Sheriff Coy Reid told the Hickory Daily Record. “One of our narcotics investigators came to the house looking for something else. When he knocked on the door, the guys said, ‘I guess you’re here about the opium.’ 

The plants were in rows, like corn, in a field behind a home on Poultry Road.

One person in a nearby home was charged in connection with the field, the Daily Record reported.
Catawba County Sheriff's Office deputies got a tip last week and were able to obtain a search warrant, reported WBTV, the Observer’s news partner. The station identified Cody Xiong as the suspect arrested and charged with manufacture and trafficking by possession.

Xiong is also suspected of being involved in a cockfighting operation, due to a number of chickens found at the home with unusual wounds, officials said...MORE
http://cbsnews3.cbsistatic.com/hub/i/r/2017/05/24/c111fb38-a116-4de5-a823-720313be380c/resize/620x/cf496a46d860a431a885e8b55b75017c/poppy.jpg

Read more here: http://www.charlotteobserver.com/news/local/article152129627.html#storylink=cpy
An acre-wide opium poppy field plant discovered in Catawba County, N.C.(WBTV)
What....the....hell?
"Oh, what's happening? I'm so sleepy, I can't run anymore. Oh please, I have to rest for just a minute, Toto, where's Toto? Yawn..."
Dorothy Gale (1939)

Read more here: http://www.charlotteobserver.com/news/local/article152129627.html#storylink=cpy

Read more here: http://www.charlotteobserver.com/news/local/article152129627.html#storylink=cpy

Nine of the World's Biggest Packaged Food Companies Have Launched Venture Capital Units

Not our favorite industry.
As noted in the intro to last March's "M&A In European Food":
I'm not sure that consumer packaged goods is the area to be in, at least not in the U.S. and not based on names like Kellogg or General Mills.

For a quarter-century those manufacturers ratcheted prices as though they were tobacco companies but people find it easier to give up their Cheerios than their cigarettes.

The managements milked that approach for pretty much all it was worth so, as operating entities, they aren't all that attractive but someone will decide the only thing left to do is to asset strip or dividend recap the life out of the former cash cows....
Who knows though, maybe they've bottomed, see charts after the jump.

An extensive piece from Reuters, May 24:
Food and drink megabrands are seeing their sales chewed away by smaller, nimbler, cooler rivals. They can't beat them - so now they're joining them.

Nine of the world's biggest industry players, including Danone (DANO.PA), General Mills (GIS.N), Campbell Soup (CPB.N) and Kellogg (K.N), have launched venture capital units over the past 18 months, a Reuters analysis of the sector shows. 

The aim of the strategy, according to interviews with executives, is to buy into - and learn from - the kind of start-up innovation that has become their nemesis, from micro-distilled spirits and cold-pressed juices to kale chips and vegan burgers.

Food and drink multinationals spend far less on R&D than their counterparts in many sectors like tech and healthcare. They have been wrongfooted over the past five years by the shifting habits of consumers who are increasingly shunning established brands in favor of small, independent names they regard as healthier, more authentic and original.

This is forcing the companies to take a leaf out of Silicon Valley's venture capital playbook - and their success or failure in harnessing promising new trends at a very early stage could help determine how well they adjust to the changing landscape, and whether they ultimately emerge as winners or losers.
"It's difficult for companies to have the persistence and to replicate the energy and the passion that these early-stage entrepreneurs have," said John Haugen, head of General Mills' venture capital arm 301 Inc, adding innovation was extremely tough because of how quickly market trends were changing.

"We're just a year or a little more than that into these investments," he said of 301, where his team of about 15 sits down twice a month to pass around dozens of samples from start-ups. "For me it's part of a total long-term growth strategy for our company."

In the United States - the world's biggest packaged food market - small "challenger" brands could account for 15 percent of a $464 billion sector in a decade's time compared with 5 percent now, according to Bernstein Research.

The researchers point to successful upstart brands like Chobani Greek Yogurt, which they say has stolen more than half of General Mills' market share in yogurt, and Kind Snack Bars which have taken a big bite out of Kellogg's snack bars.

'IT'S AMAZING, THIS SWITCH'
The nine companies to recently launch venture capital arms also include Hain Celestial (HAIN.O), Tyson Foods (TSN.N) and Pernod Ricard (PERP.PA). Typically, their funds range in size from about $100 million to $150 million.

While it is still early days for them, the experiences of the handful of food and drink firms that have had funds for several years - Nestle (NESN.S), Unilever (ULVR.L), Coca-Cola (KO.N), PepsiCo (PEP.N) and Diageo (DGE.L) - could offer some guide to the future....MUCH MORE 
HT: Quartz, whose piece, "Giant Food Brands are Coming for Your Kale Chips and Craft Whiskeys" contains a sentence I guarantee I've never seen before:
These venture capital units are allowing moves like Kellogg’s first investment, on Kuli Kuli, which makes snack bars out of the nutrient-rich moringa plant
And on to the charts of the two companies mentioned in that March 7 post:

GIS General Mills, Inc. daily Stock Chart


K Kellogg Company daily Stock Chart

Risk: Ahead of Next Week's Official Start of Hurricane Season Forecasts Getting Bumped Up

We'll have more next week but for today here's Artemis:

2017 hurricane season forecast upped to above average by Weather Co.
The Weather Company has revised its forecast for the 2017 Atlantic tropical storm and hurricane season, saying that the latest indications and data now suggest a year with activity levels a little above average.

The Weather Company now forecasts that the 2017 season will see a slightly above average 14 named tropical storms, 7 hurricanes and 3 hurricanes that reach major status of Category 3 or higher, which should be noted by reinsurance interests.

It’s previous forecast from April had been for 12, 6 and 2, which was an average for  a year.
The forecaster says that the latest observations show warmer sea-surface temperatures in the North Atlantic, which tend to correlate with more active tropical seasons. There are indications that further warming is also possible, which could add to increased activity.

“The historically strong North Atlantic blocking event in early May also suggests the possibility of continued increases in North Atlantic sea-surface temperature anomalies, so it would be no surprise if we increased our forecast numbers again,” explained Dr. Todd Crawford, chief meteorologist with The Weather Company.

The Weather Company also says that it forecasts “a reduced potential for the development and strength of El Niño later this summer.”

El Niño can have a strong influence on hurricane and tropical weather activity levels, and the forecaster notes that there is “plenty of uncertainty regarding El Niño’s possible development, and therefore, how much of an effect it could have on the hurricane season.”

El Niño had previously been cited by forecasters as the main reason for below-average forecasts for the 2017 tropical season, but with the chances of an El Niño now seen as a little lower this is factoring into the latest updates.

As ever the reinsurance and insurance-linked securities (ILS) community are most concerned about landfalls in the United States, the source of major catastrophe loss events....MUCH MORE
Here's our last (April 20) visit to Artemis:

Insurance: "2017 hurricane forecasts suggest below average season due to El Niño" 
A number of forecasts have been released for the 2017 Atlantic Tropical Storm & Hurricane Season and so far all are calling for activity levels just below the long-term average, with the expectation that we will see a weak El Niño by the typical peak of the season suggesting a slower year....
2017 Atlantic hurricane season forecasts

And on The Weather Company:
IBM's Watson Gets A Real Job: Big Blue Closes Purchase of The Weather Company

IBM Says Their Newly Purchased The Weather Company Is An IoT Platform 
And here I was thinking* the purchase was just a fancy way to mobilize Watson as a crop-insurance salesman along the lines of Google funded The Climate Corporation
The Weather Company (Weather Channel) to Pay $600 Mln Dividend to Sponsors, Including Bain and Blackstone

And if interested:
Ha! Monsanto Buys Crop Insurer/Data Co. for $930 Mil. (MON)

Shrinking The Federal Reserve's Balance Sheet

As noted in last week's "Gavyn Davies: 'The consequences of shrinking the Fed’s balance sheet'":
This has the potential to be the most important econ/finance/market story of the second half of this year....
And going back to the FT well, from FT Alphaville:

Snap AV: Here’s the Fed’s balance sheet shrinkage plan
From the Fed’s May meeting minutes, with our emphasis:
Under the proposed approach, the Committee would announce a set of gradually increasing caps, or limits, on the dollar amounts of Treasury and agency securities that would be allowed to run off each month, and only the amounts of securities repayments that exceeded the caps would be reinvested each month. As the caps increased, reinvestments would decline, and the monthly reductions in the Federal Reserve’s securities holdings would become larger. The caps would initially be set at low levels and then be raised every three months, over a set period of time, to their fully phased-in levels. The final values of the caps would then be maintained until the size of the balance sheet was normalized.
Let’s not forget that the New York Fed’s definition of “normalized” is still pretty big. Their baseline projection is that it’ll fall just below $3tn, with $1.5tn of that in Treasuries and slightly less in mortgage-backed securities...
...MORE

So, reducing the Fed’s balance sheet at the same time they are raising interest rates.
And since this is uncharted territory we aren't quite sure how, exactly, the shrinkage will affect...stuff.
Should be interesting.

Currencies: "Euro Strength more than Dollar Weakness"

From Marc to Market:
The Dollar Index is heavy, just above the lows set earlier this week set near 96.80. However, this exaggerates the dollar's weakness because the weight of the euro and currencies that shadow it, like the Swiss franc and Swedish krona.

As the North American session is about to start, the dollar is higher against the dollar-bloc currencies and the Japanese yen. The Scandi's are flat and sterling is turning lower. That leaves the dollar weakness limited to the euro and Swiss franc.

The euro reached a high earlier this week just shy of $1.1270. It has run out of steam today near $1.1250. Between $1.1175 and $1.1200, there are nearly 1.4 bln euros in options expiring. Sterling was sold in response to the downward revision in Q1 GDP to 0.2% from 0.3%. The UK economy had expanded by 0.7% in Q4 16. Services and production were revised lower and net exports took 1.4 percentage points off GDP, a record drag. There are nearly GBP270 mln options struck at $1.2940 that roll-off today. Sterling has not closed below its 20-day moving average (~$1.2940) since April 10. We note that the technical condition for sterling may be deteriorating. The MACDs and RSI show bearish divergence.

Separately, when US President Trump began this extended trip, many thought that Israel would object to the Administration's handling of intelligence, but it turns out the British seem more concerned. The BBC reports that Prime Minister May will raise the issue at the highest levels following the British police have stopped sharing information with US officials.

Minutes from the FOMC meeting seems to confuse some. To be sure, the market continues to believe that a hike next month is as done of a deal as these things can get. Our calculations suggest fair value for the June Fed funds futures contract, assuming a hike and some softness at the end of the quarter, is about 1.04%, while the contract currently implies 1.015%.

Some are trying to explain the pullback in US bond yields as a response to the FOMC statement that more evidence that weakness in Q1 was transitory before removing more accommodation. We read this as a justification for not hiking rates this month, rather than change in forward guidance. The December Fed funds futures contract implied yield was 1.215% at the end of last week. It closed yesterday at 1.23%.

The Fed's balance sheet strategy is evolving. The minutes confirmed expectations that the Fed is thinking to begin the process of not replacing maturing issues slowly and then increasing them. It is a rolling start that was one of the common scenarios discussed by investors. However, the FOMC did not how much it may begin with, though subjectively we thought $5-$10 bln divided, even if not evenly, between Treasuries and MBS. The other important question is what size balance sheet does the Fed eventually want. Bernanke recently suggested $2.3-$2.8 trillion....
... MORE
 
Here's the last year of the euro from FinViz:
 
https://finviz.com/fut_chart.ashx?t=6E&cot=099741&p=d1&rev=636312945571197201

Wednesday, May 24, 2017

The Brain Predicts Whether You Want It To or Not

From The Verge:

Our brains predict events in fast-forward
Your brain on autocomplete
What happens when you look up and see a ball headed toward you? Without even thinking about it, you flinch. That might be because our brains are constantly living our lives in fast-forward, playing out the action in our head before it happens. 

Humans have to navigate, and respond to, an environment that is always changing. Our brain compensates for this by constantly making predictions about what’s going to happen, says Mattias Ekman, a researcher at Radboud University Nijmegen in the Netherlands. We’ve known this for a while, but these predictions are usually associative. An example: if you see a hamburger, your brain might predict that there will be fries nearby. In a study published today in the journal Nature Communications, Ekman and other scientists focused instead on how the brain predicts motion. So they used brain scans to track what happened as participants observed a moving dot. 

First, 29 volunteers looked at a white dot the size of a ping-pong ball. The dot went from left to right and then reversed directions. The volunteers watched the dot for about five minutes while scientists scanned their brains with ultra-fast fMRI. This way, the researchers know what pattern of brain activity was activated in the visual cortex while they watched the dot. 

After these five minutes, the researchers showed only the beginning of the sequence to the volunteers. Here, the scans showed that the brain “autocompletes” the full sequence — and it does it at twice the rate of the actual event. So if a dot took two seconds to go across the screen, the brain predicted the entire sequence in one second. “You’re actually already trying to predict what’s going to happen,” says Ekman. “These predictions are hypothetical, so in a way you’re trying to generate new memories that match the future.”

In fact, “twice as fast as real-time” might not be the actual number because it’s limited by the brain scans, notes Ekman. An electrode placed directly in the brain might find that the rate of compression is even faster. (It’s worth noting here that the brain scan they did use, called fMRI, can sometimes be unreliable. It measures brain activity by recording how blood oxygen levels change, not by directly measuring what’s happening. And sometimes there are false positives, like when one study showed brain activity in a dead salmon.)...MORE
I might be willing to bet on the dead salmon's brain activity over that of the Russian demolition audience:
Although, on the other hand, he has an insouciance that even the salmon (deceased) would be hard-pressed to match.

Shillong the Indian Town Obsessed With Bob Dylan

And a slightly less doomy-and-gloomy piece than the post immediately below.
From the Independent:
In the little visited state of Meghalaya lies India’s self-styled rock music capital. Charukesi Ramadurai visits Shillong, where Bob Dylan is worshipped above all others

Bob Dylan is on my mind this balmy winter afternoon in Shillong – just as I’m sure he is on a million other minds all over the world. It’s just over a month since the big news about Dylan’s controversial win of the Nobel Prize for Literature, but that’s not the reason I am thinking of the man behind “Mr Tambourine Man”.

Shillong, the capital city of the scenic northeast Indian state of Meghalaya, thrives on music. The town has earned itself the moniker of India’s rock music capital – even if cynics say the title is self-anointed – thanks to its various music festivals and local bands like Soulmate, which have now made a name for themselves across the country.

But it’s not all about rock – more than anything, Shillong loves Bob Dylan. Dylan has never visited – in fact, he’s never performed in India and is thought to have visited only once, for a wedding – but the people of Shillong don’t care. For several decades now, the city has hosted an informal celebratory concert every year on his birthday: 24 May.

What began as a small meeting of friends to celebrate an idol’s birthday has now turned into a major event in the regional music calendar. And although there are no celebs on offer, musicians and fans from all over India now trudge into Shillong for this. The annual tradition was started in 1972 by local celebrity Lou Majaw – known as the grand old musician of Shillong, and homegrown Dylan fan – some say fanatic. But there is no doubt that he is good at what he does.

This 70-going-on-17-year-old musician regularly performs Dylan’s songs at some of the most popular pubs and cafés in town. Majaw does have other music to his credit, including his own songs, but it is the Dylan impressions that have won him acclaim – and these days he mostly sticks to them. He’s so famous in Shillong that he’s even had a documentary made about him almost a decade ago....MUCH MORE
Here's the vid: 
Forever Young (Documentary - 59 mins)

"India vs. Pakistan: Which Army Would Win?"

In the last week we've seen the Financial Express on May 17 say "War threats from China, Pakistan! India to deploy Rafale fighter jets in Haryana, West Bengal: Report", and from Strategy Page:
May 23, 2017: In northwest India (northeast Pakistan) Kashmir border violence continues to spiral out of control. A local hotline was established, apparently more for publicity than peace, but on the Pakistani side of the hotline the message was the same; we are not at fault. This is mainly about the Pakistani military needing a justification for their wealth (much of it gained via corrupt practices) and power (to overthrow a government they see as a threat to themselves)....MORE
And from dozens of other sources, ditto.

The headline story, from The National Interest (U.S.) dropped out of one of the feedreaders a few days ago and reminded me we haven't seen this recent level of saber-rattling for quite a while.
The quick and dirty answer is India wins but only if China stays out.

From The National Interest:
The Indian subcontinent is home to two of the largest armies on Earth. Not only are the armies of India and Pakistan both larger in personnel than the U.S. Army, but they have stood at alert facing one another since the dissolution of the British Indian Army in 1947. The two armies have clashed four times in the past seventy years, and may yet do so again in the future.

The Indian army is the primary land force of the Indian armed forces. The army numbers 1.2 million active duty personnel and 990,000 reservists, for a total force strength of 2.1 million. The army’s primary tasks are guarding the borders with Pakistan and China and domestic security—particularly in Kashmir and the Northeast. The army is also a frequent contributor to United Nations peacekeeping missions abroad....MORE
...If the two countries went to war, a major clash between the two armies would be inevitable. Outnumbered and under-equipped, the Pakistani army believes it is in a position to launch small local offensives from the outset, before the Indian army can reach its jumping-off points, to occupy favorable terrain. Still, the disparity in forces means the Pakistanis cannot hope to launch a major, war-winning offensive and terminate a ground war on their own terms. As a result, the Pakistani army is increasingly relying on tactical nuclear weapons to aid their conventional forces.

For its part, the Indian army plans to immediately take the offensive under a doctrine called “Cold Start.” Cold Start envisions rapid mobilization followed by a major offensive into Pakistan before the country can respond with tactical nuclear weapons. Such an offensive—and Pakistan’s likely conventional defeat—could make the use of tactical nuclear weapons all the more likely....
A half-decade ago it seemed we had an India-Pakistan war threat every six months or so.
Here's October 2014: "The India-Pakistan Border Appears to Be Heating Up"
January 2013: "In Other News: 'India Warns Kashmiris to Prepare for Nuclear War'"
May 2012: "A Possible (nuclear) Water War Between Pakistan and India"
And even back to 2008: "Pakistan: We're ready for war with India . And: Pakistan, India troops exchange fire at Chakoti sector".

In most of the posts we would embed the Wagah Crossing flag lowering ceremony:

Palin at the India-Pakistan border ceremony - BBC 
And hope his bit never got tested:
Problem Solved: "Small Nuclear War Could Reverse Global Warming for Years"

Just this morning Quartz India disagreed on a war outcome but illustrated their story "For all the chest-thumping, India cannot win a war against Pakistan" with a big ol' picture of Wagah:

https://qzprod.files.wordpress.com/2017/05/india-pak.jpg?quality=80&strip=all&w=3200