Thursday, June 21, 2018

Reuters Exclusive - "Tesla to close a dozen solar facilities in nine states: documents" (TSLA)

Jim Chanos weeps at what might have been.*
From Reuters:
Electric car maker Tesla Inc's (TSLA.O) move last week to cut 9 percent of its workforce will sharply downsize the residential solar business it bought two years ago in a controversial $2.6 billion deal, according to three internal company documents and seven current and former Tesla solar employees.
The latest cuts to the division that was once SolarCity - a sales and installation company founded by two cousins of Tesla CEO Elon Musk - include closing about a dozen installation facilities, according to internal company documents, and ending a retail partnership with Home Depot Inc (HD.N) that the current and former employees said generated about half of its sales.

About 60 installation facilities remain open, according to an internal company list reviewed by Reuters. An internal company email named 14 facilities slated for closure, but the other list included only 13 of those locations.
Tesla declined to comment on which sites it planned to shut down, how many employees would lose their jobs or what percentage of the solar workforce they represent.
The company said that cuts to its overall energy team - including batteries to store power - were in line with the broader 9 percent staff cut.
"We continue to expect that Tesla's solar and battery business will be the same size as automotive over the long term," the company said in a statement to Reuters.
The operational closures, which have not been previously reported, raise new questions about the viability of cash-strapped Tesla's solar business and Musk's rationale for a merger he once called a "no brainer" - but some investors have panned as a bailout of an affiliated firm at the expense of Tesla shareholders. Before the merger, Musk had served as chairman of SolarCity's board of directors.
The installation offices that the internal email said were targeted for closure were located in California, Maryland, New Jersey, Texas, New York, New Hampshire, Connecticut, Arizona and Delaware.
The company also fired dozens of solar customer service staffers at call centres in Nevada and Utah, according to the former Tesla employees, some of whom were terminated in last week's cuts. Those employees spoke on condition of anonymity because making public comments could violate the terms of their severance packages....

*See also:

Dec. 2017
So, How Was Tesla's Purchase Of SolarCity Not a Fraud? (TSLA; SCTY) 
We've been posting on this nasty bit of alchemy for years, some links below.
Today FT Alphaville's editor commends to our attention a Reuters article from Friday:
Tesla largely responsible for slide in U.S. home solar sales...
That was Izabella Kaminska with the heads-up. Her confrère, David Keohane (now FT-Paris) was also on SCTY with quite a few Further Reading posts linking to it—as well as SunEdison, another bit o'financial engineering gone wrong. Fond memories of SUNE; who can forget the time its death throes led to one of my favorite headlines:

and another, to which Mr. Keohane kindly linked:
It appears we have entered the realm of one of Zeno's Paradoxes, namely the Paradox of the Tortoise and Achilles, that no matter how many days SUNE drops 50% it never reaches zero. 21 cents, down 22 cents last....

The stock had traded above $32 in July 2015. The bankruptcy wiped out $16 billion in debt with the equity having declined by an additional $10 billion.
Good times.

Anyhoo, back to some of our prior Solar City posts:

The Short Argument Against Tesla
Mr. Chanos was taken to the cleaners by Mr. Musk on SolarCity: had Tesla not bought it, SCTY was on its way to bankruptcy court. We have quite a few posts on the bad blood between the two, use the 'Search Blog' box search term SCTY if interested.... 

"Tesla cites performance reviews as it fires SolarCity employees, though workers say reviews never took place" (TSLA)
The question that comes to mind is: Was the acquisition of SCTY a fraudulent altruistic stupid brilliant bailout of the Rive boys and maybe even Elon himself? 

Whitney Tilson on Shorting Tesla (and other stuff) TSLA
April 1, 2013 
Why We Don't Short Tesla: The stock is up 16% On The Day (TSLA)
August 2016
...For the longest time we had a Don't Short Tesla policy because it showed signs of being a cult stock and cult stocks can kill shorts. Plus it can be very hard to locate stock and very expensive to borrow when you do,
However, after the SolarCity deal and Elon's purchase of SCTY debt (on top of his SpaceX buying SCTY debt) I'm more open to betting against the company, at least tactically if not to zero.
Remember, your mileage may vary, close cover before striking etc.

June 2017
"Einhorn Compares GM to Apple and Explains Why He’s Short Tesla" (TSLA; GM)

..It is just so dangerous to put valuation (as compared to fraud) shorts on in a bull market.
We have had a general rule, "Don't short Tesla" virtually since the IPO, that we've violated on three occasions, fortunately profitable but it is tough to tell if it was worth the risk. 

Why SolarCity Has Become a Shell of Its Former Self Since Tesla Buyout (TSLA)
This is a $3,000,000,000 scandal and no one seems to care.... 

SolarCity/Tesla: Analysts React (SCTY; TSLA)
Not only is Tesla taking on almost $3 billion in SolarCity debt, it is also buying into the problem of even more negative cash flows, both Operating and FreeCashFlow.

Which of course, along with the corp. governance nastiness, explains why Tesla has lost almost 11% of its market cap, amounting to $3.14 billion on the 133 million shares out and more than the entire market cap for SCTY (98,296,422 shares at $22.30, up 5.2%).

The market is saying SCTY is worth less than zero to Tesla.

We'll have a lot more to say about this in the coming days....
Tesla-Solar City: Cousins Shouldn't Get Married (to each other) TSLA; SCTY--UPDATED

So, Who Will Write A Fairness Opinion On The Tesla/SolarCity Deal? (TSLA; SCTY)

More On SolarCity/Tesla and Fairness Opinions (SCTY; TSLA)
"Elon Musk Faces Cash Squeeze at Tesla, SolarCity" (TSLA; SCTY)

"Short-Seller Chanos Calls Tesla-SolarCity Merger 'Crazy': CNBC Conference" (TSLA; SCTY)   

Today In Depreciation: Does Tesla Really Understand What It’s Buying in SolarCity? (TSLA; SCTY)

Tesla, SolarCity Tumble Ahead Of New Merger Financials (TSLA; SCTY)
Attentive reader may have noticed we didn't cover Mr. Musk's press conference on the roof tile solar panels last Friday. We've been at the market long enough to recognize a master magician's "hey, look at this" misdirection. The tiles aren't going to matter to anyone for at least a year, probably two, and by then I would expect the market to have changed to the  point that they will be recognized as a niche at best.

The oohing and ahing from the assembled journos was kinda funny though; in a naïve, never had to bet real money sort of way.... 
"Wait, Tesla Motors Might Need to Raise $12 Billion?!?!" (TSLA; SCTY)
We've been thinking $6 billion to cover the build-out of the factories in Fremont, CA and Nevada and the New York SolarCity plant along with funding the higher cash burn after the SCTY merger.

And we were at the high end....
How Do We Know James Chanos Got Under Elon Musk's Skin? (TSLA SCTY)
Chanos has been living rent-free in Elon's head for over a year.
The departure this week of the second of Mr. Musk's two cousins, the Rive boys who had been running SolarCity reminded me I had promised another example of the toll the stress of keeping all the plates spinning may be taking on Elon.
In Monday's "Being Told Tesla Exists Because of Tax Breaks and Subsidies Drives Elon Musk Crazy (TSLA)" I said:
Regarding Mr. Musk, it is starting to appear he's a bit thin-skinned, we'll have another example later today or tomorrow....
went into a meeting and forgot until today.

Here's the set-up for this example. Back in the fall of 2015 Chanos was pretty vocal about SolarCity being the quintessential short-it-to-zero-stock. The company was burning enormous amounts of cash, had no path to profitability, and couldn't get anyone but SpaceX to buy their debt.
On October 21 SCTY shared their financials and we posted "Pray For Elon Musk: SolarCity Drops 21% (SCTY)".

The public relations people earned their keep with "SolarCity pivots to slower growth mode" and I recounted how earlier, in August, Lyndon Rive, SolarCity's CEO was told Chanos was shorting his stock and  "SolarCity's CEO When Told Jim Chanos Is Shorting His Stock: "First I've ever heard of the guy" (SCTY)".
Oh dear.
Oh dear, oh dear, oh dear.
SolarCity's CEO is an ahistorical idot.
I mean we're all idots from time to time but most of us at least try to conceal our idot-hood from the freakin' media!
Well, Mr. Chanos apparently took note of Rive's comment and the next day, while being interviewed on CNBC started out with "One of our big short positions in the renewable space is SolarCity".
The interviewer says "Elon Musk's company" and Chanos replied "Who?"
Here's the video if you care to see it, it's pretty funny: "SolarCity: Jim Chanos On Elon Who? (SCTY)".
Fast-forward to the week before last and, via Sujeet Indap, the FT's Lex US editor:
The Journal does a story on Tesla's need for cash,
One of the fanbois tells Elon not to sweat it,
Mr. Musk uses a variant of the 2015 trash talk: ...["never heard of them"]...

...The upshot? Elon got to use the line, the Rive boys got to say "thanks cuz" for turning their going-to-be-worthless SCTY stock into TSLA, I get to do this post and Chanos got screwed by the self-dealing bail-out but hey, 3 out of 4 ain't bad.
Plus, the TSLA the cousins received may or may not be worth the current price after the model 3 roll-out.
We shall see. 
And many more.

"The World’s First Robot-Made Burger Is About to Hit the Bay Area"

Watch out China.
You may be able to pick, pack and ship 200,000 orders/day with a four person team but the U.S. has $6.00 roboburgers.

From Bloomberg, June 21:
On June 27, the world’s first robot-crafted burger will roll off a conveyor belt in San Francisco and into the hands of the public.

You could call it the freshest burger on Earth.

The product, from Bay Area-based Creator, a culinary robotics company, is assembled and cooked in a machine that contains 20 computers, 350 sensors, and 50 actuator mechanisms. It does everything from slicing and toasting the brioche bun to adding toppings (to order) and seasoning and cooking the patties, all in five minutes. The meat is ground to order—why it’s touted as so fresh—and sourced from premium ingredients. It emerges from the machine piled with tomatoes and lettuce, sprinkled with seasonings, and drizzled with sauces, at which point it’s transferred by human hands to the customer. The price: $6.

Formerly known as Momentum Machines, Creator was founded by entrepreneur Alex Vardakostas in 2012. The 33-year-old has assembled an Avengers-like superteam of engineers, designers, and roboticists from Apple, Tesla, NASA, and Walt Disney Imagineering R&D. The team also includes alumni from elite restaurants such as Chez Panisse, Momofuku, and SingleThread.

Vardakostas’s pitch is simple: Machines can cook burgers over a hot griddle and slice tomatoes more efficiently than a human can and don’t have the health hazard of showing up to work the grill with a cold. And then there’s the social media gold mine that a Willy Wonka-esque food machine presents. The 14-foot-long contraption, which the team refers to as a “culinary instrument” rather than robot, features glass chutes that transport buns, silos that dispense sauces, and paddles that gently push the evolving burger along.

“June 27 is a big day,” says Vardakostas. “When I started this process eight years ago, there wasn’t the inevitability that this would happen with food. Now not only is it inevitable, but it also produces a much higher quality product.”

I went to the Creator storefront, in San Francisco’s South of Market neighborhood, to sample the four burgers that will be on offer when the place opens and decide whether Creator burgers deserve to be as ubiquitous as driverless cars.
Enter the Machine
The 2,200-square-foot Creator space is spare and clean, with white-tiled walls, a poured concrete floor, and light ash wood accents. (Per Salvaag, a lead designer for BMW, consulted on the space.) It looks more like a salad bowl spot than a burger place, with only a discreet scent of griddled meat to set it apart. Even the prep stations that ready accompaniments such as skin-cut fries and seasonal grain salad are hidden behind large glass-walled refrigerators showing off the principal ingredients. Instead of a counter, the glass-walled machine is front and center. Within are a series of oversize vertical tubes with stacks of tomatoes, onions, pickles, and so on.
Lanes of brioche buns are positioned overhead. “I consider this to be the most transparent restaurant,” says Vardakostas. The one part of the burger-making process that customers won’t see is the grinding and cooking of the burger. “There was a hesitation about seeing meat being ground,” he adds.

The machine in action is a made for fast-motion video. First the brioche travels across the chute, pushed by a wooden block (and air pressure). It then shimmies down a chute as it’s sliced, toasted, and deposited in a leaf-shaped, custom-made container. Traveling along the copper-colored conveyor belt, it lands under the sauce spigots—there are around eight on offer, including barbecue, onion jam, shiitake mushroom, and ballpark mustard. Next are the sweet pickles, tomatoes, and onions—sliced to order, they land in slow motion on the bun. Shredded lettuce follows, then cheese—mild or smoked Cheddar and grated to enhance the melting potential. At the end of the line are large tubes of seasoning, including alderwood smoked salt, sprinkled on the griddled 4-ounce burger before the patty lands on the cheesed half of the bun.
The only workers you’ll see around the machine, apart from the odd employee replacing ingredients, are “concierges” at the front of the contraption to take orders and payment and a few at the end to serve the burgers....MUCH MORE, it's actually a pretty big deal.

Why Do Cities Want Their Own Cryptocurrencies?

Just flagging the trend here. There's so much boosterism involved in both municipalities and crypto that combining them....we'll leave it to others to do the analysis.

From CityLab:

The allure of digital currencies has hit Dubai, Seoul, Berkeley, and more. What looks like another offshoot of the Bitcoin craze could be an evolution of the municipal bond.
Coming soon to Slovenia: a brand new city that runs completely on cryptocurrency.
If all goes according to plan, BTC City will rise from the ashes of a former commercial shopping district in the country’s capital of Lubljana, offering wallet-less shoppers and wide-eyed tech enthusiasts a chance to engage in a more modern brand of conspicuous consumption. Every store in the 1.5 million-square-foot plot will stop accepting cash and start accepting crypto.

It’s a big deal for the small, former Yugoslav country. But it’s small potatoes compared to some other municipal efforts to wade into the world of digital financial systems. BTC City’s aim is to get people to use the dozens of digital currencies that already exist. Elsewhere, cities are vying to create new ones from scratch.

The list of cities experimenting with cryptocurrencies is diverse, and so are their goals. Dubai launched emCash in 2017 to flex its high-tech prowess as a “smart city.” Berkeley, California, is exploring a city-branded cryptocurrency effort to fund municipal bonds, making up for inadequate outside investment. Cities in Venezuela are bartering with Petros in a desperate—and questionable—attempt to raise funds amid the country’s economic crisis. And Seoul’s mayor has floated the idea of creating S-coins to fund social welfare programs for the sake of efficiency and advancing technology.

What’s less clear, though, is how exactly a city-specific cryptocurrency would work—and what cryptocurrencies can do for a city that cash can’t.

Why go crypto?
The first thing to understand is that there’s a major distinction between government-backed cryptocurrency and the more well-known financial instruments like Bitcoin or Ripple. Those virtual currencies are essentially “built by air, and backed by air,” said Sheila Warren, project head of blockchain and distributed ledger technologies at the World Economic Forum. In other words, their value is determined by the complicated coding it takes to mine them, in the case of Bitcoin, and how much people are willing to pay for them....

Machine Learning: Google Is Now Offering "GPU's as a Service" (GOOG; NVDA)

From Google's Cloud Platform blog:

GPUs as a service with Kubernetes Engine are now generally available 
[Editor's note: This is one of many posts on enterprise features enabled by Kubernetes Engine 1.10. For the full coverage, follow along here.]
Today, we’re excited to announce the general availability of GPUs in Google Kubernetes Engine, which have become one of the platform’s fastest growing features since they entered beta earlier this year, with core-hours soaring by 10X since the end of 2017. Together with the GA of Kubernetes Engine 1.10, GPUs make Kubernetes Engine a great fit for enterprise machine learning (ML) workloads. By using GPUs in Kubernetes Engine for your CUDA workloads, you benefit from the massive processing power of GPUs whenever you need, without having to manage hardware or even VMs.

We recently introduced the latest and the fastest NVIDIA Tesla V100 to the portfolio, and the P100 is generally available. Last but not least, we also offer the entry-level K80, which is largely responsible for the popularity of GPUs. All our GPU models are available as Preemptible GPUs, as a way to reduce costs while benefiting from GPUs in Google Cloud. Check out the latest prices for GPUs here. As the growth in GPU core-hours indicates, our users are excited about GPUs in Kubernetes Engine. Ocado, the world’s largest online-only grocery retailer, is always looking to apply state-of-the-art machine learning models for customers and Ocado Smart Platform retail partners, and runs the models on preemptible, GPU-accelerated instances on Kubernetes Engine.
“GPU-attached nodes combined with Kubernetes provide a powerful, cost-effective and flexible environment for enterprise-grade machine learning. Ocado chose Kubernetes for its scalability, portability, strong ecosystem and huge community support. It’s lighter, more flexible and easier to maintain compared to a cluster of traditional VMs. It also has great ease-of-use and the ability to attach hardware accelerators such as GPUs and TPUs, providing a huge boost over traditional CPUs.” — Martin Nikolov, Research Software Engineer, Ocado

See also the "Getting Started with Google Kubernetes Engine" at Coursera if you want to start your DIY ML co.

As Wikipedia says about Kubernetes:
The original codename for Kubernetes within Google was Project Seven, a reference to Star Trek character Seven of Nine that is a 'friendlier' Borg.[9] The seven spokes on the wheel of the Kubernetes logo is a nod to that codename.

"Does Elon Musk really understand Iain M Banks's 'utopian anarchist' Culture?"

From the Guardian:
"The tech entrepreneur has endorsed a vision of monolithic totalitarianism overseen by machiavellian machines – and one that is neither entirely utopian or anarchist"
Easy for you to say.

As noted back in December 2016:

21st Century Headlines

I delude myself that I am reasonably up-to-speed on the zeitgeist and on technology but twenty or so times a day things are brought to my attention about which I was heretofore clueless.

Here's a headline from VentureBeat:
Bot-making service now supports Node.js
And all I can think of is a scene from Friends eighteen years ago:
Phoebe: They don't know we know they know we know. And Joey, you can't say anything.

Joey:      Couldn't if I wanted to.
And this one, also VentureBeat:
Super Evil Megacorp starts team-franchise program to energize Vainglory...
I would expect nothing less from SEMC.

According to CrunchBase Super Evil Megacorp has raised $42 million in three venture rounds.
I'd buy it just for the name. But wasn't invited.

Finally Quartz almost made the Questions America Wants Answered series with:
What Nike’s $720 self-lacing sneaker, releasing today, signals about Nike’s future
until I realized I didn't care what Nike's $720 self-lacing sneakers signaled about Nike's future.

And this happens every day.
I just nod my head and try to change the subject to something simpler.

Capital Markets: "Dollar Driven Higher"

First up, the US Dollar Index:
95.14, up .42 (+0.44%)

And from Marc to Market:
The half-hearted and shallow attempts by the currencies to recover appear to be emboldening the dollar bulls today, The greenback is higher against all major and emerging market currencies today. Demand for dollars is strong enough to offset the broader risk-off environment that is pulling stocks and core yields lower that is usually supportive of the yen. The greenback stretched to a week high near JPY110.75 today.

Asian shares were lower, and the MSCI Asia Pacific Index gave back yesterday's 0.6% gain that snapped a five-day decline. The negative sentiment is illustrated by the fact that the Moody's upgraded Samsung's credit (1st in 13 years) and Korea's shares still tumbled over 1%.

Chinese officials indicated another cut in reserve requirements was likely, but the PBOC failed to deliver today. Despite injecting more liquidity and tweaking its forward guidance, the PBOC could not prevent a further slide in Chinese shares. On the other hand, Australia continued to buck the regional trend and shrug-off worries about rising trade tensions. The S&P ASX 200 rose nearly 1% today to bring the five-day rise to a smart 3.6%.

European bourses are lower, though sterling's weakness is underpinning the FTSE 100. Healthcare and consumer staple sectors are performing well, while financials and utilities are the largest drags. Italy's bonds and stocks are underperforming. The equity market is off nearly one percent at midday, and the 10-year bond yield is up about 15 bp, while rest of the peripheral yields are up four-six basis points.

Two major central banks met. The Swiss National Bank left policy unchanged and repeated its refrain about the franc being over-valued and that it is prepared to intervene. Although it tweaked its inflation forecast higher, it warned of downside risks due to oil. It also recognized risks posed by Italy's new government. The franc is trading at its best level here in June against the euro. Norway's Norges Bank left rates steady as well, but it signaled a rate hike in September. The krone made a new marginal high for the year against the euro. However, the euro quickly recovered back above NOK9.40.

Against the dollar, the euro cannot find much traction. It has completely unwound the gains scored in the first part of the month, culminating in the initial response to the recent ECB meeting. Yesterday Draghi hinted at a material decision about the reinvesting of maturing bonds. Currently, the rules allow for flexibility and the proceeds have to be reinvested within three months. Imagine instead, it is the period is extended to say 12 months. This would appear to make the recycling that is a simple matter of course in the US into a potentially new powerful tool that could be used to support the market for longer....

Wednesday, June 20, 2018

SEC documents detail scores of fraud allegations against Andreessen-backed Coinbase

People are complaining to the SEC?
That is not what you want ahead on your IPO.

From Mashable:
Life savings lost. Desperate cries for help. Allegations of fraud.

In the six years since its founding, the San Francisco-based exchange Coinbase has established itself as one of the most trusted places to trade ether, bitcoin, litecoin, and bitcoin cash. It's also run up its share of critics: namely, its customers.

In 134 pages of complaints filed to the SEC and the California Department of Business Oversight obtained by Mashable following a five-month FOIA process, a picture emerges not of a responsible actor in the cryptocurrency space opening the market to new investors, but rather a company overwhelmed by and underprepared for its own success.

And the consequences — as expressed by Coinbase's own customers — are enough to give even the most diehard crypto-enthusiast pause.

Money gone and no one home
A recurring theme in the SEC complaint files Mashable obtained is the seeming disappearance of a would-be trader's money, and what is portrayed as an aggressive nonchalance on the part of Coinbase in response to the loss.

Notably, the SEC redacted the complaints to remove personally identifiable information. This, while an understandable privacy measure, makes it practically impossible to reach out to the complainants for follow up. As such, we'll mostly let their words speak for themselves.
And there are a lot of words.

One complaint, filed in January of this year, is typical of the frustration expressed by many.
"I have sent 17,023.00 from my Coinbase account to another Coinbase account on 12.21.2017," it reads. "The other Coinbase account never received the funds as of 1/16/2018. I have contacted Coinbase over 7 times and all they say is that they have so many issues, they will get back to me and it is been a month."...

 If interested see also:
Jan. 31
"Coinbase Strategy Teardown: How Coinbase Grew Into The King Midas Of Crypto Doing $1B In Revenue"

March 6
"Announcing Coinbase Index Fund"
Coinbase, and the things Coinbase is doing seem to be a more realistic way for Andreessen Horowitz to make money out of Bitcoin than their 21.Co. (see below)...

April 9 
Andreessen Horowitz Investee Coinbase May Buy Andreessen Horowitz Investee (né
That's one way to exit. was not mentioned in April 4's "Crypto M&A: "Three Startups Coinbase May Have Its Eye On"" because it's such a Tesla/SolarCity-cousins-shouldn't-marry type of deal.

Yet here we are....

And many more but that's such a nice progression we''ll stop here. Use the 'search blog' box if interested in more.

"Beijing Wants to Rewrite the Rules of the Internet"

From The Atlantic, June 18:

Xi Jinping wants to wrest control of global cyber governance from the market economies of the west.
It’s never been a worse time to be a Chinese telecom company in America. This evening, the Senate is set to vote on whether to restore a ban on U.S. company sales to prominent Chinese telecom player ZTE, a penalty for its illegal shipments to Iran and North Korea. The bill also includes a measure that would ban U.S. government agencies from buying equipment and services made by ZTE and Huawei, one of its competitors, to tackle cyber threats to U.S. supply chains. Meanwhile, a revelation that Huawei was among the companies with whom Facebook had data-sharing agreements, which allowed device makers to access user data and that of their friends, sparked fears that the Chinese government now possesses a treasure trove of sensitive data on U.S. citizens.

ZTE and Huawei have become flashpoints in the Trump administration’s confrontation with Beijing over cybersecurity, investment, trade, and technological leadership. All this comes as the administration slapped tariffs on $50 billion in Chinese goods last Friday. But amid the hysteria surrounding these two companies, we may be missing a less obvious but potentially more impactful challenge: China’s ambitions to radically overhaul the internet.

In late April, just days after the Commerce Department announced the denial order against ZTE, Xi Jinping, the president of China, gave a major speech laying out his vision to turn his country into a “cyber superpower.” His speech, along with other statements and policies he has made since assuming power, outlines his government’s ambition not just for independence from foreign technology, but its mission to write the rules for global cyber governance—rules that look very different from those of market economies of the West. This alternative would include technical standards requiring foreign companies to build versions of their products compliant with Chinese standards, and pressure to comply with government surveillance policies. It would require data to be stored on servers in-country and restrict transfer of data outside China without government permission. It would also permit government agencies and critical infrastructure systems to source only from local suppliers.
China, in other words, appears to be floating the first competitive alternative to the open internet—a model that it is steadily proliferating around the world. As that model spreads, whether through Beijing’s own efforts or through the model’s inherent appeal for certain developing countries with more similarities to China than the West, we cannot take for granted that the internet will remain a place of free expression where open markets can flourish.

China has been open about its intentions to change how the world addresses development. As part of that vision, for over a decade, it has advocated for something its leaders call “cyberspace sovereignty” as a rebuke to established actors in internet governance like the United States, Europe, and Japan. To advance this model, Xi created a powerful government body to centralize cyber policy. In addition to passing a major cybersecurity law, China has pushed through dozens of regulations and technical standards that, in conjunction, bolster the government’s control of and visibility into the entire internet ecosystem, from the infrastructure that undergirds the internet, to the flow of data, to the dissemination of information online, to the make-up of the software and hardware that form the basis of everything from e-commerce to industrial control systems. In a 2016 speech, Xi called for core internet technologies deemed critical to national and economic security to be “secure and controllable”—meaning that the government would have broad discretion, even without specific written regulations, to decide how it protects information networks, devices, and data.

China’s cyber governance plan appears to have three objectives....

"Tesla sues ex-employee for hacking, theft, and leaking to the press" (TSLA)

The stock is trading at $357.56 up $5.01 (+1.42%), a couple bucks below the 'magic line' we've looked at the last two days.
From the Verge:

Elon Musk claimed ‘sabotage’ earlier this week
Tesla filed a lawsuit on Wednesday alleging that a former employee hacked the company’s system and transferred “gigabytes” of data to unnamed third parties. The lawsuit may align with Tesla CEO Elon Musk’s recent claim of “sabotage” by an ex-worker. 

Tesla’s lawsuit names Martin Tripp, a former process technician at the company’s Gigafactory in Nevada, as the defendant. Tesla claims that Tripp “unlawfully hacked the company’s confidential and trade secret information and transferred that information to third parties.” To do so, Tripp placed “hacking software” in the computers of three individual employees to routinely export confidential data, the company says. 

Tesla says that Tripp has already admitted to hacking its manufacturing operating system, and the company accuses him of making false statements to the media about the stolen information. The suit, which was filed in federal court in Nevada, was first reported by CNBC

Tesla claims that Tripp was the source of a news report about punctured battery cells at Tesla’s factory.
For example, Tripp claimed that punctured battery cells had been used in certain Model 3 vehicles even though no punctured cells were ever used in vehicles, batteries or otherwise. Tripp also vastly exaggerated the true amount and value of “scrap” material that Tesla generated during the manufacturing process, and falsely claimed that Tesla was delayed in bringing new manufacturing equipment online.
The lawsuit doesn’t specify which media outlet Tripp leaked to, but earlier this month, Business Insider ran a story about scrap metal waste and punctured battery cells at Tesla’s factory, citing documents and former employees as sources...MORE

San Francisco Fed: "Economic Forecasts with the Yield Curve"

A repost from March 11.

From the Federal Reserve Bank of San Francisco:

FRBSF Economic Letter
2018-07 | March 5, 2018
The term spread—the difference between long-term and short-term interest rates—is a strikingly accurate predictor of future economic activity. Every U.S. recession in the past 60 years was preceded by a negative term spread, that is, an inverted yield curve. Furthermore, a negative term spread was always followed by an economic slowdown and, except for one time, by a recession. While the current environment is somewhat special—with low interest rates and risk premiums—the power of the term spread to predict economic slowdowns appears intact.

One of the most pervasive relationships in macroeconomics is that between the term spread—the difference between long-term and short-term interest rates—and future economic activity. A negative term spread, that is, an inverted yield curve, reliably predicts low future output growth and indicates a high probability of recession (Rudebusch and Williams 2009). This relationship holds not only in the United States but also for a number of other advanced economies (Estrella and Mishkin 1997). The term spread is one of the most reliable predictors of future economic activity among a wide range of economic and financial indicators and, as such, is closely watched by professional forecasters and policymakers alike.

Over most of the current recovery, particularly in 2017, the yield curve has flattened. As of the end of February, the difference between the ten-year and one-year Treasury yields stands at only 0.8%. The Federal Reserve, which affects short-term interest rates, is continuing its path of monetary policy normalization. In its Summary of Economic Projections from December 2017, the median projection of the federal funds rate rises from its current 1.4% to 3.1% in 2020, even slightly overshooting its long-run projected value of 2.8%. Many observers and forecasters therefore expect the term spread to shrink even further, including the possibility that it could turn negative.

The question then naturally arises whether this development may signal a rising probability that a recession could begin. Some commentators have argued that the relationship between the slope of the yield curve and the business cycle may have changed due to the unique current circumstances, including the unusually low risk premiums holding down interest rates. This Economic Letter revisits and updates some of the empirical evidence for the predictive power of the term spread and addresses the question of whether this time may indeed be different.

The yield curve and the business cycle
The predictive power of the term spread is immediately evident from Figure 1, which shows the term spread calculated as the difference between ten-year and one-year Treasury yields from January 1955 to February 2018, together with shaded areas for officially designated recessions. Every recession over this period was preceded by an inversion of the yield curve, that is, an episode with a negative term spread. A simple rule of thumb that predicts a recession within two years when the term spread is negative has correctly signaled all nine recessions since 1955 and had only one false positive, in the mid-1960s, when an inversion was followed by an economic slowdown but not an official recession. The delay between the term spread turning negative and the beginning of a recession has ranged between 6 and 24 months.
Figure 1

The term spread and recessions
Note: Gray bars indicate NBER recession dates.
While historical circumstances differed for these episodes, the patterns of past yield-curve inversions were remarkably similar: The decline in the term spread was generally driven by a pronounced increase in short-term interest rates. Long-term rates, on the other hand, typically moved much more gradually and either increased slightly over those periods or even declined....MUCH MORE
HT: FT Alphaville's Further Reading post, March 7

Izabella Kaminska at FT Alphaville June 20, 2018

Izzy came back for a special Markets Live production:
Join us for Kaminska Live at 3pm, a Parliament TV watching party
And apparently wowed the critics:

"Kaminska, a master of any medium she chooses... Alphaville's livestream will be a case study of the craft."

"FT Alphaville has a lot under the hood, tight and fast".

"Kaminska Live-It's a smash, number one with a bullet!"

"FT Alphaville's Live Blog of Kaminska et al. is intelligent; To use a tired cliché, a must read."

"Mere months into her tenure, the team Kaminska has fielded is redefining what a business blog should be."
Seriously, we are fans - and kudos to the FT/Alphaville staff. Here's

"The Onion is on a crusade against Mark Zuckerberg because it says Facebook is choking its traffic" (FB)

From Business Insider, June 15:
The Onion is in the business of making jokes about pretty much anything in the news. But this week, the satirical news site appears to have trained its fire on one particular target: Facebook and its CEO Mark Zuckerberg.

Over the last two days, The Onion has published around a dozen articles ridiculing the social network and its founder, and it says there's more on the way.

Why? The Onion's editor-in-chief Chad Nackers told Business Insider that the comedy onslaught is because Zuckerberg has "repeatedly betrayed the trust of billions of people," and because Facebook is choking off traffic to The Onion's website.

"We have 6,572,949 followers on Facebook who receive an ever-decreasing amount of the content we publish on the network," Nackers said in a statement, calling Facebook an "unwanted interloper" between the publisher and its audience.

In other words, The Onion is on a mission. 

A multi-day lampooning

One of the first in the barrage on Thursday poked fun of the 34-year-old CEO: Mark Zuckerberg Insists Anyone With Same Skewed Values And Unrelenting Thirst For Power Could Have Made Same Mistakes.

The Onion's parody news article quoted a would-be Zuckergerg:
"'I know I screwed up, and I understand why you're all upset, but if you were a morally corrupt megalomaniac hell-bent on manipulating society to your twisted whims, you would have done the exact same thing,' said Zuckerberg, suggesting that people should put themselves in the shoes of a self-absorbed asshole with a warped perception of humanity who justified the exploitation of personal connections as a means of amassing unfettered influence and profits to truly comprehend why he made every completely fucked-up decision."
Another Onion article skewered Facebook's arguably cringey "Here Together" campaign: Facebook Users Ashamed Of Criticizing Company After Seeing Heartwarming 'Here Together' Ad Campaign.

After that came a flurry of more jabs at the Facebook CEO....MUCH MORE

Chips: Intel Will Have Graphics Processing Units by 2020 (INTC; NVDA; AMD)

From The Register, June 13:

Intel confirms it’ll release GPUs in 2020 
They sell like hot cakes so why wouldn’t Chipzilla want in?
Intel has confirmed it will start to sell discrete GPUs in the year 2020.

News of Chipzilla’s plans appeared in a post by analyst Ryan Shrout, who said that Intel CEO Brian Krasnich last week told an analyst event about the company’s plans.

Intel confirmed Shrout’s piece, telling us "We’re pleased to confirm our first discrete GPU is coming in 2020. As we’ve previously stated, our intent is to expand our leading position in integrated graphics for the PC market with high-end discrete graphics solutions for a broad range of computing segments."

Details remain scanty, but a move into GPUs would be entirely sensible for a few reasons.
Firstly, they’re selling like hot cakes and demand is so high they can sometimes be hard to find. Intel would be mad not to offer buyers another source given AMD and NVIDIA can hardly shove their kit out of a fab fast enough to keep up with demand.

Second, Intel recently discontinued its Xeon Phi co-processor line. GPUs would be a more-than-handy replacement for the Phi.

Third, GPUs are Just Becoming The Way Stuff Gets Done, especially in markets like AI, HPC and visualization in which Intel already plays. Not doing GPUs would therefore be stupid....MORE

"Reinsurance pricing outlook “very bleak” – Deutsche Bank"

From Artemis:
Absent further major losses hitting global reinsurance and insurance-linked securities (ILS) markets this year, the expectation now is that rates are likely to lose any ground gained at renewals so far this year and return to a slow softening trend in 2019, according to analysts at Deutsche Bank.

It’s no surprise really, given rate increases have decelerated again at the recent June 1st reinsurance renewal, with only loss affected accounts seeing any meaningful rises.

The gains made in January, as rates rose somewhat, were below the expectations of the traditional market at least, but these gains could be lost within a year if there isn’t a loss event that drains some of the capital from the marketplace.

Deutsche Bank’s equity analysts say that “the reinsurance pricing outlook looks very bleak” as a result, with an expectation that the market may not see any further rate increases to improve on those achieved so far in 2018.

They suggest that reinsurers which have touted the potential to improve their underwriting profitability in 2018 and beyond, on the back of the major losses from 2017, may now find that they and their shareholders are set to be further disappointed, absent any major industry losses.
The big four reinsurers have all expressed a desire to increase profitability over the coming years, not just due to better pricing after the losses but also thanks to greater efficiency.

In fact some of their targets imply improving underwriting returns at a level that some analysts are suggesting would require significant cuts to achieve.

Those efficiency efforts may become more urgent, as premiums earned in 2018 may be about the best they can hope for having mostly bulked up their property portfolios at January renewals this year.
Once those rate increases are earned through, there could be little in the way of increases left as pricing returns to a slow and steady decline.

If re/insurers efficiency efforts, such as headcount reduction and technology initiatives, aren’t seen to improve the bottom line swiftly enough, we could see them accelerated in order to make more immediate impact for their shareholders and to lower their overall cost bases....MORE

GE’s 111-year run in the Dow comes to an end (GE; WAG)

From MarketWatch:

General Electric, a member of the blue-chip index when it started and since 1907 continuously, booted in favor of Walgreens
General Electric Co. is losing an important title it has held for more than a century: Dow Jones Industrial Average component.

GE GE, -1.85%   , which was part of the Dow Jones index DJIA, -1.15%  when it was started in 1896 and had been a part of the blue-chip portfolio continuously since 1907, is being replaced by Walgreens Boots Alliance Inc. WBA, +3.70%  , S&P Dow Jones Indices announced Tuesday afternoon.

“The U.S. economy has changed: Consumer, finance, health care and technology companies are more prominent today and the relative importance of industrial companies is less,” David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, explained in Tuesday’s announcement. “Today’s change to the DJIA will make the index a better measure of the economy and the stock market.”

GE has been removed from the index twice previously, but has been a constant presence since replacing Tennessee Coal & Iron in November 1907, the same month Oklahoma became the 46th state in the union. The other companies that were part of the index when GE entered in 1907, none of which are still members: Amalgamated Copper, American Car & Foundry, American Smelting & Refining, American Sugar, Colorado Fuel & Iron, National Lead, Peoples Gas, U.S. Rubber, U.S. Rubber 1st preferred, U.S. Steel and U.S. Steel preferred.

GE has fallen on hard times in recent years though, with a plunging stock price that broke an unwritten rule for the Dow: A component’s stock should not be worth less than 10% of the highest-priced stock in the index. GE closed at $12.95 a share Tuesday, which was less than 1/20 the price of a share of Boeing Co. BA, +1.28%  .

S&P Dow Jones Indices noted that GE’s plunging stock price factored into the decision as well...MORE
Also at MarketWatch:
What Walgreens stock replacing GE in the Dow Jones Industrial Average may mean

Tuesday, June 19, 2018

The 39 San Francisco high-rises at risk of collapse during a major quake, according to the U.S. Geological Survey

From Curbed San Francisco:

“Most of the structures, which were built between 1964 to 1994, are clustered around downtown, the Financial District, and SoMa” 
The U.S. Geological Survey released a gasp-inducing report regarding the structural security of dozens of San Francisco high-rises that could be in peril when the next major earthquake strikes.
New York Times reporter Thomas Fuller sifted through the USGS report to reveal the nearly 40 buildings in SF that could buckle following powerful earthquakes, like the one that hit San Francisco in 1906.

Most of the structures, which were built between 1964 to 1994, are clustered around downtown, the Financial District, and SoMa. The reason for concern: Many of the skyscrapers employed the use of a flawed technique that wasn’t remedied until after a major Southern California earthquake in the 1990s.

The faulty technique, known as welded steel moment-frame buildings, fuses together columns and beams rather than using the pricey and time-consuming bolts and rivets method, which was used in steel frame building in previous generations.

While the building code with said technique was rewritten following the Northridge quake, many of the buildings constructed using the welded steel moment-frame system have yet to be retrofitted.

According to the New York Times:
Engineers have known about a major defect in certain steel-frame buildings since 1994, when shaking from the Northridge earthquake in Los Angeles fractured critical joints in more than 60 buildings, bringing at least one very close to collapse. The building code was rewritten to eliminate the flawed technique....

"Pointy-Haired Bosses* are splashing AI about their organisations without a clue about why they're doing it,..."

From The Register, June 12:

Low AI rollout caused by dumb, fashion-victim management – Gartner
We're paraphrasing
Pointy-Haired Bosses* are splashing AI about their organisations without a clue about why they're doing it, says a senior Gartner analyst.

"As head of customer experience, the logic is: we have to deploy AI because everyone else is doing it. In fact, there's not a huge number of companies that are actually deploying AI," Jessica Ekholm told us.

Gartner estimates that only 4 per cent of CIOs polled in its most recent survey had invested and deployed AI, if you count chatbots as AI as Gartner does. Another 21 per cent of CIOs were experimenting with it.

The top use cases are around customer engagement, call centre support and digital marketing. That's 81 per cent of organisations giving the technology a steer.

Depressingly, the main motivator is saving money.

"To some extent saving costs has been the major proposition," confirmed Ekholm. "But to make it work there needs to be a business value proposition. The key point is the customer journey."
Two years ago Facebook and Microsoft kicked off a chatbot arms race, with Microsoft CEO Satya Nadella positioning "conversations as a platform" as the next era in human-computer interface.
"Bots are the new apps," the SatNad told developers at the 2016 Build conference. "People-to-people conversations, people-to-digital assistants, people-to-bots and even digital assistants-to-bots. That's the world you're going to get to see in the years to come."

Facebook thought so too, and pointed to its enormous consumer reach (of two billion users of Facebook, Instagram, WhatsApp and Messenger) to persuade businesses that it was the best channel through which to engage people. But Facebook's M messenger ran into trouble, with a reported 70 per cent failure rate. M was later repositioned as an experiment before being taken out the back and shot in January.

We did find one area where chatbots work well, and it's an interesting one....MORE

Tesla Down 23 Bucks (TSLA)

Sometimes you get lucky.

June 18

"Tesla short-sellers have been getting creamed, but they're still betting against Elon Musk anyway" (TSLA)

In pre-market trade the stock is down $2.87 (0.80%) at $355.30. Note the prices the stock stalled at on prior up-moves:

$347.24 down $23.59 (6.35%)
More to come.

Next on Humblebrag:

Stocks--I'm a genius! Housing--I'm a genius! Commercial real estate--yes, well, I suppose the evidence is overwhelming...

Sandia National Lab to Install First Petascale Supercomputer Powered by ARM Processors (Masayoshi Son smiles)

Softbank's chairman paid quite a bit to get his hands on the crown jewel of British high tech.
From Top500:
Sandia National Laboratories will soon be taking delivery of the world’s most powerful supercomputer using ARM processors. The system, known as Astra, is being built by Hewlett Packard Enterprise (HPE) and will deliver 2.3 petaflops of peak performance when it’s installed later this year. 
Astra rendering. Source: HPE

“Sandia National Laboratories has been an active partner in leveraging our Arm-based platform since its early design, and featuring it in the deployment of the world’s largest Arm-based supercomputer, is a historical moment not just for us, but for the industry as we race toward achieving exascale computing,” said Mike Vildibill, vice president, Advanced Technology Group, HPE

Astra will be based on HPE’s Apollo 70 system and will be comprised of 2,592 dual-socket nodes, containing 145,000 cores – by far the largest such system the company has delivered. If it was up and running today, it would easily make it into the upper fifth of the TOP500 list.

Each node will be equipped with two 28-core Cavium ThunderX2 processors running at 2.0 GHz. These aren’t the biggest or the fastest of Cavium’s newest ARM processor, but represents something of a sweet spot in price-performance. In aggregate, the compute nodes will draw 1.2 MW of power, which translates into a respectable energy efficiency for a 2.3-petaflop machine.

Local storage will be supplied by Apollo A4520 enclosures, providing 350 TB in the form of an all-flash Lustre appliance. Because of the relatively small capacity and high performance, it will primarily be used for operations needing extreme I/O bandwidth – things like burst buffering and file checkpointing.

Prior to the Astra announcement, most of the other action with regard to ARM-powered HPC was taking place in the United Kingdom. HPE had previously announced that three UK universities (Edinburgh, Leicester, and Bristol) had ordered Apollo 70 clusters, but each of these systems will be outfitted with just 64 nodes and will top out at a mere 74 teraflops. As far as computational capacity goes, the closest thing to Astra is Isambard, a 10,000-core Cray XC50 supercomputer using these same ThunderX2 processors. It’s set to be deployed at the Great Western 4 (GW4) Alliance, a research consortium of four UK universities (Bristol, Bath, Cardiff and Exeter).

Astra’s delivery is the first production deployment of the of the Department of Energy’s (DOE) National Nuclear Security Administration’s (NNSA) Vanguard Project. The project’s mission is to ensure a viable HPC ecosystem is established for ARM technology within the NNSA and the larger DOE community. Besides Sandia, a number of other national labs are involved in the project, including Lawrence Livermore, Oak Ridge, Argonne, and Los Alamos....

Keeping in mind the new Summit supercomputer at Oak Ridge turns over at 200 AI-tuned petaflops this latest 'puter is more about offering a different supercomputer architecture, what with the tech Cavium licenses from ARM.

"IBM builds world’s most powerful supercomputer to crack AI" (IBM; NVDA)

“What the f--- is happening to our business?’: As ad execs hit Cannes, New Yorker scribe Ken Auletta’s new book chronicles the industry’s various existential crises

From Business Insider, June 16:
As hundreds of high-powered advertising and media executives descend on Cannes this week for a flurry of meetings, marketing stunts, and boozy yacht parties, there's an undercurrent of deep uncertainly about the industry's future.

As well chronicled in New Yorker writer Ken Auletta's new book, "Frenemies: The Epic Disruption of the Ad Business (and Everything Else)," advertising faces a crisis at every turn. People are asking scary questions such: "Do ad agencies have a reason to exist?" "Is TV advertising — and interruptive advertising — nearly over?" "Do consumers hate us?"

Business Insider spoke with Auletta about his experience writing the book and his take on the state of affairs in adland.

Mike Shields: In your career, you're written a lot about media and tech. How much did you really know about the ins and outs of how the ad business really operates?
Ken Auletta: Not enough. One of the attractions of doing this book. Covering the media for a long time, if you adopt the Watergate mentality of follow the money, you say, my god, you've gotta look at advertising. There's the piggy bank for much of the media. And I don't just mean legacy media. I mean Facebook, Google, the internet.

The other reason I do what I do is visiting another planet, and finding the natives and how they operate. And for me I was visiting a new planet. The advertising-marketing planet. And so for me that intellectually was a challenge.

Shields: Was there anything that really surprised you in your reporting?
Auletta: Among the things that surprised me was how fast the disruption was happening. I was stunned by the idea that 20% of Americans use ad-blockers. And a third of Western Europeans have ad blockers on their cellphones. Those are huge numbers.

And [another surprise was] how the cellphone becomes a real impediment to advertising. It's such a personal instrument. It's like your wallet or your purse. You don't lend it to anyone. And suddenly people are pinging you. Before you read what you searched for, we want to divert you for 20 second or 25 seconds. It really is annoying. So people are really turned off by ads as an interruption. And that was a punch in the nose.

Obviously you watch television, and you kept getting bombarded. You're interrupted 19 minutes or so every hour.

Shields: Right. But TV was sort of built that way.
Auletta: The thing that makes it more annoying, even though it was built that way, is you can turn to Netflix, let's say, and you can watch what you want without commercial interruption, and you can watch as much of it as you want. It just accentuates your feeling of being interrupted....

Insurance: Property Casualty Looks to Be Extremely Profitable This Year (TRV; CB; ALL; AIG)

If the lowered hurricane forecasts come to pass* and the U.S. tornado numbers continues their decade low trend the P&C folks stand to make some serious coin on the weather related stuff.
Here are the tornado numbers season to date:

And the current sea surface temp anomalies via Environment Canada:

Current monthly precipitation anomaly forecast

Granted there a a couple big if's in the opening sentence. It's possible there could be an EF-5 tornado in downtown Oklahoma City next week but that's not really the way to bet.

And regarding hurricanes, despite the cooler than average sea surface temperature anomalies in the "main development zone" for the long-haul hurricanes that start their run off the coast of Africa and the slightly cool area east of the Yucatan peninsula, this is no guarantee for the height of the season come August-September.

And then there are the earthquakes....

Re/Insurance: "2018 hurricane forecasts reduced on lower Atlantic temperatures"

"Rotor sail helps Finnish ferry Viking Grace reduce fuel consumption"

Depending on how high the low-sulpher rules push the price of bunker fuel there might be a lot more of these coming.


Rotor sail helps Finnish ferry Viking Grace reduce fuel consumption

Passengers traveling on the Baltic sea on the Viking Grace vessel can now observe a 24 meter high spinning tube on deck. The structure is a rotary sail, a first of it's kind installed on a passenger ship.
The rotor sail is installed on the Grace is built by a Helsinki based company Norsepower. The cylinder shaped sail uses the wind as propulsion, and reduces the need for the main engine. Viking Grace deployed the sail on the 12th of April 2018.

Magnus effect
Use of the rotary sail takes advantage of the Magnus effect to fuel and emission savings. The pilot project hopes to save 300 tons of LNG fuel each year. Carbon dioxide emissions are reduced by 900 tons.

In addition to reduced strain on the environment, the rotary sail is a strong financial incentive. On the Grace the Norsepower sails are projected to yield the shipping company Viking Line with savings of 180,000 euros annually. Profits out of thin air.

Norsepower is also working together with Maersk shipping company. One of the company's oil tankers will get two 30 meter rotor sails later this year.

The sails are expected to result in fuel savings of up to 20 percent for the Maersk pilot vessel project, but the average savings are said to be around 10 percent on global shipping routes....
...MORE, including video

Monday, June 18, 2018

Tourists in San Francisco: "I'm Not Coming Back"

From the San Francisco Chronicle:

'Am I in the bad part of town?' Tourists shocked by what they see on San Francisco streets

It's something many San Franciscans see on a daily basis, outside their homes or offices and during their commutes. For better or for worse, locals are used to walking by crime scenes, have seen open injection drug use, and have witnessed mental health episodes firsthand.

But when a tourist lands at SFO, guidebook in hand, that reality can be shocking.

"Is this normal or am I in a 'bad part of town?' Just walked past numerous homeless off their faces, screaming and running all over the sidewalk near Twitter HQ and then a murder scene. Wife is scared to leave hotel now," wrote an Australian Reddit user Wednesday.

That person isn't alone. On Sunday, another tourist from Canada asked the San Francisco Reddit community, "Why is this city so terrifying?"

"I'd been there for probably less than a day, just wandering around the center, and already seen more than enough poverty and suffering to cause me wanting to leave desperately," wrote another visitor from London in 2017. "I saw many people talking to themselves, or to things that weren't there. Even in a Macy's, and there weren't any police officers to help them or do anything about it."

Anyone who has hosted friends or family from out of town may have had to field similar questions.
Just those three Reddit posts garnered more than 650 comments, many of which were helpful suggestions (other neighborhoods to explore, safety tips, and more).

But the city's own visitors' bureau is struggling to come up with a good explanation for horrified tourists....MORE
May 22
So, What's New In Silicon Valley?
From the San Francisco Chroicle
"Palo Alto pastor resigns after nasty tweets about city: 'An elitist sh-- den of hate"
Huh, same 'ol, same 'ol.

Feb 22
San Francisco: "UN expert decries homeless conditions in Bay Area as ‘cruel,’ ‘unacceptable’"
You may have seen the story.
The UN's special rapporteur on Adequate Housing has been jet-setting around, Mexico City, Mumbai, S.F., documenting what she sees:

“In Mexico City, I visited a low-income settlement that had been moved by the city onto empty land near a railway line,” [Farha] said. “They had no running water. They stole electricity.” The camp was noisy and dangerous. She noted that the camp in Mexico is virtually identical to those she visited in Oakland, including the Wood Street and 23rd Avenue encampments....
The above snip is from the East Bay Express reprinted in Curbed San Francisco.

Curbed has had one of the most impressive series on the situation of any major media.
There's the January 22 piece  we used for the headline which wraps up with:
After her trip to the Bay, Farha headed out to assess conditions in LA, an errand she told the East Bay Express she dreaded after observing encampments here.
Additionally they had coverage a week later with "How SF tourism industry deals with the homeless crisis":
“I actually think it’s the worst it’s ever been”

February 12's "San Francisco backs new law to intervene with severe homeless population":
“This is a public health issue and needs to be treated as such”

February 19's "Some SF streets filthier than world’s poorest slums, says UC Berkeley professor"
So kudos to Curbed.

Someone else who's been pointing out various aspects of the culture that is San Francisco is Elaine Ou who we linked to last summer in: San Francisco's Dirty Little Secret
And again in November's "Elaine Would Prefer That Amazon Not Move to San Francisco (AMZN)".

As I noted the first time we linked to the Curbed headliner:
It's a deliberate policy decision by the municipal and county government. More on that point next month....
Still not ready to do that but I thought we should update with the nod to Curbed. And earlier:

Bonhams Auctioneers Has Allegedly Installed Sprinklers To Douse Homeless Outside the Building
It seems they got the idea from the Archdiocese of San Francisco.
Now, the auctioneers may think they are offering the homeless a cool, refreshing shower but boy the optics are bad.

From Curbed San Francisco:   
SF Luxury Auction House Allegedly Turns Sprinklers on Homeless [Update] 
...Using a sprinkler system to remove homeless people from structures is not a new idea. In 2015, the San Francisco Roman Catholic Archdiocese got into hot water after it was discovered that they were using sprinklers to regularly douse people camping overnight in the doorways of St. Mary’s Cathedral.... 
When youv'e lost the Catholics...