Thursday, October 18, 2018

Softbank pushes link-ups as insurance strategy takes shape

Just as the old-timey Kremlinologists got paid pretty big money for explaining Soviet policy based on positioning on the May Day reviewing stand, so the next big opportunity in financial analysis will be discerning Softbank's plans by interpreting the shadows cast by various deals.
And then there was the time it looked like Chernenko was ascendant but what really happened was Ustinov was just late because he had to pick up the uniform at the dry cleaners.

From Reuters:
Softbank’s Vision Fund plans to pump more money into insurance, a sector it sees as both ripe for disruption and a potential booster for its bigger bets in cars, health and financial services, a Vision Fund executive told Reuters.

In the past year, the world’s biggest private technology investor has backed China’s largest online insurer ZhongAn (6060.HK) as well as PolicyBazaar, India’s biggest online insurance distributor, and app-based U.S. home insurer Lemonade.

And these and other insurance bets totaling nearly $3 billion are just the start, Vision Fund dealmaker David Thevenon said. The Vision Fund has raised nearly $100 billion, almost half of it from Saudi Arabia’s sovereign wealth fund.

“We believe that technology and how data is used, processed and collected is going to transform insurance,” Thevenon said.

Softbank believes a new breed of “insurtech” companies can work with other firms within its portfolio such as local transport juggernaut Uber and office sharing firm WeWork to roll out new products and services to their massive base of clients.

Three of the 10 biggest investments in new digital insurance firms over the past year — PolicyBazaar, Lemonade and Nauto — were led by Softbank, according to data from Willis Towers Watson and CB Insights.

Including its stakes in ZhongAn and two units of China’s biggest insurer, Ping An (601318.SS), it made half the dozen biggest insurance investments in the year to June.

“We are going to have to place several bets,” said Thevenon, a former Google executive. “The nice thing about insurance is that this is so big, it’s not exactly a market where you make one investment and you suddenly have 90 percent market share.”

Insurtech will represent just under 10 percent of the global insurance market by 2023, or more than $400 billion in premiums, against just 4 percent in 2018, according to a recent Jupiter report....MORE

Natural Gas: Polish Oil and Gas Company (PGNiG) confirms US LNG supply deal

Ramping up the use of the new (and already being expanded) President Lech Kaczyński LNG Terminal. Qatar is currently Poland's largest LNG supplier with the next step in the diversification away from reliance on Russia to be increasing Norwegian gas via the Norway-Denmark-Poland Baltic Pipe by October 2022.

From LNG World News, Oct. 17:
 Polish Oil and Gas Company (PGNiG) said it has executed two liquefied natural gas supply deals for the delivery of chilled fuel from Venture Global’s Calcasieu Pass and Plaquemines projects.

The long-term binding deals were signed late September following the corporate approvals, PGNiG said in a statement. The preliminary deals have been signed in June.

Each contract provides for the purchase by PGNiG of approximately 1 million tonnes of LNG annually for 20 years.

The deliveries may be further traded by the company on international markets and will be made on a free-on-board basis, PGNiG’s statement reads.

The contracts are in line with PGNiG’s strategy to expand its LNG trading business on global markets....MORE

"Regional EU GDP Per Capita 2004 vs 2014"

Following up on Tuesday's "GDP per Capita in Europe in 1890 (in 2017 $)".

From Brilliant Maps:

The map above shows the relative GDP per capita of the EU-28’s NUTS 2 Regions in Purchasing Power Standard (PPS) in 2004 and 2014.

And if you’re wondering just what exactly PPS is, Eurostat explains that it:
is an artificial currency unit. Theoretically, one PPS can buy the same amount of goods and services in each country. However, price differences across borders mean that different amounts of national currency units are needed for the same goods and services depending on the country. PPS are derived by dividing any economic aggregate of a country in national currency by its respective purchasing power parities.
Therefore, the map above shows the relative wealth of each region in comparison to the EU-28 average for each year. Those in green have a GDP per capita at least 5% greater than the EU average in that year, whereas those in red have a GDP per capita that is no more than 75% of the EU average.
Inner London (UK) was the EU’s richest region in 2014 with a GDP per capita of 539% of the average.

Severozapaden (Bulgaria) was the poorest with a GDP per capita of just 30% of the EU-28 average....

Wednesday, October 17, 2018

"Secret Amazon brands are quietly taking over" (AMZN)

From Quartz:
Arabella. Lark & Roe. Mae. NuPro. Small Parts.

You might not know it from their names, but these brands all belong to Amazon.

Amazon’s private label business is booming, on pace to generate $7.5 billion this year and $25 billion by 2022, according to estimates from investment firm SunTrust Robinson Humphrey. To accelerate that growth, the company is inviting manufacturers to create products exclusively for its collection of private brands.

The “Amazon Accelerator Program” is hiring a senior product manager for private brands, CNBC reported. The job listing invites applicants to “invent and Think Big to take an idea from concept to reality for Amazon customers.” Duties include managing and planning inventory, identifying business opportunities, and working across a wide swath of Amazon divisions, including consumables, Prime Pantry, Prime Fresh, Prime Now, and Amazon Go.

Another job listing spotted by CNBC, for a private brands program leader, notes that the “Private Brands team is rapidly expanding and is looking for an exceptional product leader to grow the business.”

Brands created through the accelerator will be exclusive to Amazon, but not owned by it, the company said. Manufacturers will create, produce, trademark, and own the products they offer.

“Amazon Accelerator creates new opportunities for manufacturers and offers a way for them to launch brands and products directly to Amazon customers,” an Amazon spokesperson said in an emailed statement. “For customers, this program adds products to our assortment and allows us to offer an even wider selection of high quality products at a great value.”

Amazon’s push into private labels could threaten the third-party sellers who do business on its website, and are important to the company’s own bottom line....MORE

Follow-up: Just How Much Coal Fired Power Is China Currently Planning/Building?"

Following on October 5's "Satellite images show 'runaway' expansion of coal power in China".
That story at The Guardian starts out "Extra 259GW capacity from coal in pipeline despite Beijing’s restrictions on plants".

259 billion watts in additional coal fired capacity is comparable to the entire U.S. coal-fired fleet currently operationg.

Here's CoalSwarm, the group that supplied the report the Guardian story was based on:
Like an approaching tsunami triggered by a distant earthquake, a massive cohort of hundreds of new coal-fired power plants is on course to be added to the already overbuilt Chinese coal plant fleet. This wave of new capacity—comparable in size to the entire U.S. coal fleet—is the consequence of a little reported surge in permit approvals at the provincial level from late 2014 to early 2016.

While China’s central authorities have sought to mitigate the surge through a series of special regulatory measures, new satellite imagery and plant-by-plant research show the measures to have been only partially effective. Rather than cancelling unneeded coal plants, China’s officials in many cases have merely rescheduled them.

There is still time to stop the wave, but China’s authorities must move quickly to cancel the unneeded projects. Otherwise the tsunami of coal power capacity will overwhelm China’s own coal cap and seriously undermine global climate goals. This report, based on a plant-by-plant survey by CoalSwarm’s Global Coal Plant Tracker (GCPT) completed in July 2018, includes the following findings:

■ ■ 259 Gigawatts (GW) of new capacity are under development in China, comparable to the entire U.S. coal fleet (266 GW). If built, the new plants will increase China’s current coal fleet of 993 GW by 25%.
■ ■ The new capacity is the result of a permitting surge from late 2014 to early 2016, after a regulatory devolution from central to provincial authorities.
 ■ ■ In 2016 and 2017, central authorities sought to rein in the surge through a series of suspension orders.
 ■ ■ Contrary to previous reporting and analysis, many of the restrictions only delayed new projects rather than stopping them.
■ ■ Adding 259 GW of new coal power in China is wildly out of line with the Paris climate agreement. According to the IEA, a 50% chance of limiting future tem- perature increases to 1.75°C requires that China phase out its traditional coal plants by 2045.
■ ■ The surge in new projects will overwhelm China’s own 1100 GW coal cap in the country’s current Five-Year Plan.
■ ■ Cancelling the 259 GW of new coal plants would free up US$210 billion in capital expenditures, enough to build nearly 300 GW of solar PV or 175 GW of wind power.
...MUCH MORE (19 page PDF)

If interested see also Aug. 15's "China is building coal power again".  It's a worldwide phenomena.

And, as noted in the intro to the satellite post:
China will be able to reduce emissions over the next 12 - 18 months the same way the west did in 2008 - 2010: simply through a a slowdown in the rate of growth of their overall economy.
When—not if but when—China's economy again begins showing increases in the rate of growth, the increases will be powered by coal, despite all the headlines about wind and solar installations.
The saving grace, if you can call it that, is the efficiency improvements in the overall system as the small older coal plants are eventually retired.
So the way this plays out is China's economy continues to slow, the central government orders the regional and municipal authorities to scale back their now overly ambitious plans, President Xi goes to the next climate confab and is hailed as having listened to the world clamoring for change and he heads back home to work on ramping up the Chinese growth rate once again.

I should dust off some of the old posts on China gaming Kyoto with the.'ol HFC-23 scam (HFC-23 is 11,700 times more powerful than CO2 as a greenhouse gas) or maybe the Russians running the Gazprom leaky pipes scam.

Yeah we've been doing this for a while. Rio, 1992.
"I don't know if climate change is caused by burning coal or sun flares or what," said the Moscow-based carbon cowboy. "And I don't really give a shit. Russia is the most energy inefficient country around, and carbon is the most volatile market ever. There's a lot of opportunity to make money."

"Beyond Amazon Go: The Technologies And Players Shaping Cashier-Less Retail"

From CB Insights, Oct. 9:

Over 150 companies are working on automated, human-free, brick-and-mortar retail, using machine vision, IoT, RFID, and more.
Traditional retail is getting an upgrade.
Despite the rise of e-commerce and mobile, the physical channel still plays an important role in consumer experience — and retailers are increasingly leveraging technologies to stay afloat.
Cashier-less technology is one of the latest trends to dominate conversation.
Amazon recently opened its fourth Amazon Go store, which uses a mix of cameras, machine vision, and IoT to track shoppers throughout the store. It then charges them automatically for the items they pick up, eliminating the need for cashiers.
While Amazon Go has grabbed headlines, dozens of other companies are also working on ways to take cashiers out of retail.
These companies use a range of technologies, but share two common purposes: to make brick-and-mortar retail more convenient and to gather shopper data.
In this analysis, we dive into some of the key ideas and technologies used in cashier-free retail, highlight companies leveraging this level of automation, and talk about what’s next.
Why Are retailers are pivoting towards cashier-less retail?
Human-free retail is not a new concept.
Some historians date its existence to over 2,000 years ago: texts from ancient Greece describe a coin-operated machine for dispensing holy water in temples.
Since then, the first modern vending machine was invented, and many retailers — from restaurants to grocers to suppliers of general goods — have experimented with various human-free and self-service concepts — including self-checkout.
In 2013, for example, Walmart began experimenting with self-checkout technology. Using a mobile app, shoppers could scan barcodes on items they wanted to buy. Then, a QR a code would be generated, which shoppers would then scan at a self-checkout till to pay.
Later in 2016, fashion retailer Rebecca Minkoff partnered with startup QueueHop to debut an RFID-powered self-checkout system. Shoppers would use a mobile app to scan products themselves and pay, at which point anti-theft tags on the products would unlock automatically.
Neither of these experiments, however, have seen long-term success or widespread adoption. Walmart has since revisited with iterations, and QueueHop — failing to catch on — is now defunct.
But the concept of streamlining checkout and removing layers in the process is still largely top of mind for retailers, and can provide many benefits.
Unmanned retail can:
  • Set up points of sale in new places: As shopping malls struggle and brick-and-mortar foot traffic declines, brands don’t want to wait for shoppers to come to stores. They need to go to shoppers, and cashless retail kiosks can help them do so. Small in size and with no need for staffers, these kiosks can sit in office lobbies, university campuses, transit hubs, and other public spaces. It’s the next generation of vending machines, which were the original unmanned retail setup.
  • Reduce overhead costs: Of course, automated checkout reduces the need for human cashiers. Retailers could simply cut staff, or reassign their staff to more hands-on roles helping shoppers. However, the upfront costs may be high for retailers that choose to retrofit existing stores with checkout automation technology.
  • Gather shopper data: By pushing offline shoppers to check out via mobile (i.e. using their online account to check out in store), cashless retailers hope to merge shoppers’ online and offline identities. Retailers can then form fuller pictures of shopper interests and habits. Since many human-free retail systems track shoppers continuously in stores, retailers can also better understand how shoppers react to various shelf displays, store layouts, and more.
  • Improve the efficiency of inventory management – Once retailers can view the full picture of shoppers’ online and offline activities, they can better localize their inventory. They can see what shoppers in one area tend to buy online, and use that to inform local store merchandising; they can also re-target shoppers online based on in-store purchases. Many retailers focus on these strategies already, and unmanned retail systems further support them.

The technologies Supporting a cashier-less environment

Retailers and startups are using a range of technologies to support cashier-free and human-free retail, including:
  • Machine vision: Machine vision, a subset of AI, allows computers to understand images. Cashier-free retailers use machine vision to track shoppers through stores, though the technology can’t identify the shoppers without facial recognition (below). Shoppers still have to scan a code on their phones as they enter the store in order to link their physical presence with their identity. Machine vision also tracks the movement of products through the store.
  • Facial recognition: Facial recognition algorithms tie visual data on shoppers to specific shopper identities. With fully functioning facial recognition tools, cameras can match in-store shopper visuals to digital shopper profiles, determining the name and identity of each visitor. Most US players don’t (yet) use facial recognition, but the technology is more developed in China. (For more about China’s facial recognition tech, check out our deep dive here.)
  • Shelf sensors: Some unmanned (and traditional) retailers use weight sensors or light sensors on shelves to detect when products are added or removed. These shelves can confirm activity recorded by cameras, adding another point of proof that a shopper picked up or put back a product. These sensors can also automatically alert store staff when products are sold out.
  • Barcodes: Mobile apps, that let shoppers scan product barcodes themselves and pay, can support unmanned checkout.
  • Quick Response (QR) codes: Many unmanned retail mobile apps make use of QR codes. In some models, particularly in China, a mobile app generates a personalized QR code for the shopper, which the shopper can then scan to enter the store, pay, and exit. In other models, products have QR codes that shoppers can scan to get more information on the product.
  • RFID tags: RFID (radio frequency ID) tags can be attached to products to track them through the store. Sensors at store exits can read RFID information to confirm which products a shopper is carrying out. Attaching RFID tags to each product often doesn’t make much sense for low-cost items, which is why Amazon Go and others say that AI observation systems can track products without tags. However, RFID tags could provide extra security for unmanned retailers of higher-priced goods.

Key players to watch

A number of companies are working on cashier-free projects and initiatives. Below, we dive into a few across the public and private space.

Public companies...


Where Are We At With The ENSO: El Niño? La Niña? La Nada?

Along with Australia's Bureau of Meteorology, the IRI are the big dogs of the ENSO business.
BOM's latest was:
Issued -  9 October 2018
El Niño ALERT activated
From IRI/Columbia Uni:
IRI ENSO Forecast
2018 October Quick Look
Published: October 11, 2018

A monthly summary of the status of El Niño, La Niña, and the Southern Oscillation, or ENSO, based on the NINO3.4 index (120-170W, 5S-5N)

Use the navigation menu on the right to navigate to the different forecast sections
While ENSO-neutral conditions prevailed in September, signs of El Niño increased in early October 2018, as east-central tropical Pacific SSTs warmed to slightly above-average levels. A key atmospheric variable, the low level wind anomaly, also showed westerly anomalies in the last two weeks. The subsurface water temperature was above-average, and increased further recently. The official CPC/IRI outlook calls for a 70-75% chance of El Niño development during October/November, continuing through winter 2018-19.

An El Niño watch is in effect. The latest forecasts of statistical and dynamical models collectively favor El Niño development during fall, most likely maintaining weak strength through winter; forecasters agree with this scenario....MUCH MORE

Mahmoud Ahmadinejad ‏Weighs in on U of Michigan Head Football Coach Jim Harbaugh

From Mr. Ahmadinejad's Twitter feed:
The former President also quotes Tupac on the Black Panters' Huey P. Newton:

BlackRock: "Earnings are not enough: Stocks need easy credit"

The writer is a Portfolio Manager for BlackRock’s Global Allocation Team

From BlackRock's blog:
Credit markets are still relatively supportive of stocks, but at the margins, less so. Russ discusses the implications.
As the recent equity meltdown demonstrated, sometime even stellar earnings are not enough. While U.S. stocks are still having a pretty decent year, it would be an even better one if not for the fact that price-to-earnings (P/E) multiples have contracted (see Chart 1). Whether they rise again (unlikely), stay at current levels or fall will largely be determined by credit markets and broader financial market conditions.
financial market conditionFinal
Last May, I suggested that despite rising rates and a stronger dollar, financial conditions remained easy, or at least enough to support stocks. Since then, the U.S. equity market has advanced, albeit a lot less then week ago. Today the situation looks similar, albeit not as supportive. While financial conditions remain accommodative, they’re becoming less so. Consider the following:
  1. A higher dollar. The Dollar Index (DXY) is 4% above the May low and nearly 9% above the February bottom.
  2. A big backup in yield. Year-to-date, both long-term and short-term rates have risen significantly, with 2 year and 10 year Treasury yields up 100 basis points (bps, or one percentage point) and 85 bps respectively. The recent backup in rates is the largest since the second half of 2016.
A stronger dollar and higher rates are causing a tightening of financial market conditions. One proxy, the Goldman Sachs Financial Conditions Index (GSFC), has tightened by about a quarter point since mid-September and by a full point since late January. Tighter financial conditions help explain the rise in volatility. Historically, a one point change in the GSFC Index has been associated with a 3.5 point rise in the VIX.

Credit markets hold the key
However, up until this week, volatility had risen but it remained well below the long-term average. What kept things from getting worse? Credit market conditions remain remarkably, almost surreally benign. High yield spreads are below where they started the year and nearly 200 bps below the long-term average. In other words, the premium investors’ demand for holding riskier bonds is close to an historic low....MORE

Trouble In the Container Ship Biz.: Japan’s ONE Carrier Network Flags $600 Million Loss in First Year

They are big but not big enough to swallow too many nine-figure losses.

From gCaptain:
 Japanese carrier Ocean Network Express (ONE) is set to see losses spiral to $600m in its first year, as it struggles to “restore the trust of customers” after the chaotic April launch.

ONE has alerted shareholders of K Line, MOL and NYK to a $310m loss for the half-year period to 30 September.

Moreover, the merged carrier network has drastically revised its forecast of a full-year profit of $110m to a loss of $600m, which would see it sink towards the bottom of the carrier profitability league table.

Prior to the merger of the three carriers, chief executive Jeremy Nixon and his team were bullish about the prospects for ONE, predicting more than $1bn a year in synergy cost savings. They said this would bring a profit in the first year of $110m, followed by $313m and $648m in consecutive years.

What followed, however – in the words of its own shareholder, K Line – was a “clumsy” launch, which left customers, loyal to the trio for decades, unable to book containers or obtain information about the status of their cargo.

In a joint profit warning today, ahead of first-half results on 31 October, the Japanese trio – K Line and MOL each hold a 31% stake, while NYK has the remaining 38% – endeavoured to provide investors with explanations for the disastrous start.

They said lifting and utilisation levels had fallen due to “teething problems” after a chaotic launch, which it attributed to not enough staff, and those they had not being familiar with the NYK IT system.

In fact, ONE’s management was obliged to significantly revamp the rationalisation plans, which represented more than a third of the planned synergy savings, by putting in more staff and hiring new workers....MORE

Doubts Swirl Around Bloomberg‘s China Chip Hack Report.

From Fortune, Oct. 14:
In last weekend’s column we discussed Bloomberg Businessweek’s recent, explosive report alleging that Chinese spies had planted surveillance chips on the motherboards of computer servers that ended up inside more than two dozen companies, including Amazon and Apple. Just about all of the parties named in the piece issued strong denials. I urged readers to approach the story with skepticism. “It’s likely there is truth in the piece, but in which parts remains an open question,” I wrote.

A week later, I remain deeply troubled by this story—not because of its substance, but because of its lack of substantiation. It seems a little odd that no one has reported identifying a single one of these spy chips in the wild since Bloomberg’s report appeared, no? Wouldn’t it have been easy for any companies using servers containing components from Supermicro, the company whose products were allegedly backdoored, to send an engineer into a data center, pry open a server, pluck out an offending implant, and reveal China’s alleged subterfuge to the world? Instead, we hear cricket chirps.

While this absence of evidence is not enough to debunk the report, it does raise doubts. Besides, wouldn’t it be easier for spies simply to meddle with Supermicro’s notoriously buggy firmware? This approach would achieve the same results and be far less complicated to pull off logistically. Plus, it would leave no trace.

Further developments related to the report’s publication give me pause. Joe Fitzpatrick, a hardware hacking expert and one of the only named sources in the piece, said he finds the story implausible....MORE

Soylent Takes Meal Replacement Drink to UK

From AgFunder:
Meal replacement drink maker Soylent is hopping across the pond to bring three of its beverage flavors to the UK in a move that requires the drink maker to re-think its sourcing. The vegan and nut-free drink uses plant-based protein to create a drink with all the nutrients necessary in a meal.
In 2016, the brand came out as pro-GMO, citing the rising global demand for food as the leading reason for its decision to embrace the divisive technology. Unlike the US, however, the UK has a strict ban on the cultivation of genetically modified crops within its borders, which will reportedly remain in place following Brexit.

“Before launching in the UK, we worked with the UK Food Standards Agency to ensure UK compliance. We’ve replaced seven GM ingredients from our US formula with the same unique, identity-preserved non-GM ingredients allowed under UK regulations,” says Andrew Thomas VP of marketing who is due to talk about the UK launch at the Future Food-Tech conference in London later this month. 

“There is one ingredient in our UK formulation that is genetically modified — Soy Protein Isolate. It’s on a list of approved strains/”events” for the EU.”

Soylent selected soy protein isolate for the protein component of its recipe due to the ingredient’s bioavailability, which refers to how easy it is for the body to digest something. It also provides a consistent texture and achieves the company’s desired flavor profile, according to Thomas. 

Soy protein isolate is nothing new to product formulations. It is a dry powder ingredient that has been isolated from other components of the soybean, leaving 90% to 95% protein in the resulting powder. A simple investigation of product labels at the supermarket will reveal the ingredients in everything from dairy products to fruit drinks to baked goods and cereals.

Why UK?
The company’s decision to launch in the UK may have something to do with the country’s reportedly overworked and hungry workforce.

The product will be sold in cases of 12 at £39.99, with each drink designed as a complete meal, packed with 20g of protein and 26 vitamins and minerals.

In preparation for the UK launch, the company engaged in extensive consumer research that showed UK consumers on average skip as many as four meals each week. It also revealed that over half of tech sector employees don’t eat breakfast. These results combined with the company’s impression that UK consumers are becoming more and more health conscious made the region the next logical step in its expansion.

“A 2016 study from Harris Interactive shows that nearly 60% of people living in the UK are skipping meals or snacking throughout the day. Soylent is a great solution for people who are always on-the-go, stuck at their desk during lunch, or just looking for an easy way to get the nutrition they need when they don’t have time for a complete, nutritious meal,” said Thomas. Thomas will be speaking on a panel entitled Nutrition & Health: Innovating to Enhance Performance, Flavour, and Texture at Future Food Tech on October 18, 2018 at Future Food-Tech.

As part of its overall marketing strategy, the company has reassured consumers that it doesn’t intend to totally replace a diet containing fresh, traditional food. 

“The truth is, we love food! It is connected to the fabric of what defines cultures and makes us human. We just think that nutrition shouldn’t be difficult. We also acknowledge that locally grown, fresh food is not available to everyone at all times, and we want to provide complete, sustainable nutrition to people and places where freshly grown food is not available or affordable,” adds Thomas.

It’s also relied on its early cult following in the tech world and a direct-to-consumer approach to convince consumers that a drinkable meal replacement is worth trying. Maintaining a presence on social communities like Reddit, Facebook, and Twitter have been a priority for Soylent, which allows it to have open communication with its existing and potential consumers....MORE
We've been watching the Soylent drama for a while. Some previous episodes:

She Tried Soylent. It Didn't Go Well
Soylent's New Food Bar Is Giving People Diarrhea
Soylent Ingredient Provisioner Pooh-Poohs Diarrhea Accusation, Cuts Off Gruel Maker's Algae Flour Supply
Disruption: Soylent Says It Knows Why It Is Making Its Customers Poop and Puke

Soylent Has Competition and the Marketing is Gonna Get Weird
Soylent Banned In Canada
Not to put too fine a point on soi-disant Soylent "Food reformatted", but hasn't the Silicon Valley bro-appeal passed its sell-by date on this stuff?

Knowledge@Wharton: Andreessen Horowitz Partner Frank Chen Talks Artificial Intelligence
Mr. Chen sounds smarter than the A16Z partner who said about nutrient infused sludge:
It's not just Soylent, It's the Soylent community
We let that one slide.

And the other A16Z partner who said:
...Bitcoins are like “tulips you can send anywhere in the world in arbitrary quantities”.
Here we had to point out the partner may not have been aware that, since ca. 1637 or so, tulips have not had the best connotation in the world of finance....

Tuesday, October 16, 2018

"GDP per Capita in Europe in 1890 (in 2017 $)"

From Brilliant Maps:

GDP per Capita in Europe in 1890 (in 2017 $)
Map created by Reddit user Kamil1707
The map above shows the very approximate GDP per capita for various European states in 1890. Below we look at how these have changed over the past 127 years.

The table below lists most entities for which data are shown on the map. However, not all these entities were sovereign states in 1890 and the list includes some that were dependencies of other states at the time.

The table compares GDP (PPP) per capita in thousands of 2017 US dollars in 1890 and 2017. However, it should be noted that the boundaries of some states have shifted between the two dates, so that comparisons in such cases are approximate at best....
All the countries listed have experienced significant growth in GDP (PPP) per capita since 1890, most by a factor of 10 or more. However, there is a wide variation in the amount of growth, ranging from around $10,000 to $68,000.

The largest such gains were experienced by Norway ($67.7K), Switzerland ($55.9K), Netherlands ($48.8K), Sweden ($48.7K), Germany ($45.7K) and Denmark ($45.4K).

Those gaining the least were Bosnia & Herzegovina ($9.9K), Serbia ($13.7K), Montenegro ($15.9K), Bulgaria ($19.7K), Romania ($21.9K) and Croatia ($22.0K)....

On the Passing of Paul Allen: The 1986 Microsoft Prospectus (MSFT)

There are a lot of tributes to Mr. Allen on the report of his death, including by his Microsoft co-founder Bill Gates. Here's one you may not see elsewhere.
We have the Final Prospectus on the PDF server but our copy originally came from technology junkie Patrick Lannigan.
I think we also have a red herring on dead trees around here somewhere but the final is better.

Thanks to Patrick Lannigan for keeping it alive on the internet.

The following summary is qualified in its entirety by the more detailed information and Consolidated Financial Statements appearing elsewhere in this Prospectus. All information relating to the Company's Common Stock contained in this Prospectus, except as presented in the Consolidated Financial Statements, reflects the conversion of all outstanding shares of Preferred Stock into Common Stock on the date of this Prospectus.

The Company

Microsoft designs, develops, markets, and supports a product line of systems and applications microcomputer software for business and professional use. The Microsoft Software Product Line chart inside the front cover of this Prospectus illustrates the evolution and diversity of the Company's product line. Microsoft’s systems software products include Microsoft® MS-DOS®, a 16-bit microcomputer operating system used on the IBM PC and IBM compatible computers, and computer language products in six computer languages. The Company offers business applications software products in the following categories: word processing, spreadsheet, file management, graphics, communications, and project management. The Company's products are available for 8-bit, 16-bit, and 32-bit microcomputers, including IBM, Tandy, Apple, COMPAQ, Olivetti, AT&T, Zenith, Wang, Hewlett-Packard, DEC, Siemens, Philips, Mitsubishi, and NEC. Microsoft develops most of its software products internally using proprietary development tools and methodology. The Company markets and distributes its products domestically and internationally through the original equipment manufacturer (“OEM”) channel and through the retail channel primarily by means of independent distributors and dealers and by direct marketing to corporate, governmental, and educational
Here's the whole thing (52 page PDF)

I Hate Paying Dividends On Shorts and Hate Valuation Shorts In Bull Markets But...

...But...there is something wrong with this stock:

From Slope of Hope:
Breathtaking (literally and figuratively) how this stock is forming a gargantuan top, even after having lost so much of its value. Not that I have much sympathy for the cancer-stick maker………anyway, here’s the pattern for Phillip Morris:
Slope of Hope homepage.

$83.18 last, down 0.31 (-0.37%).
With a 5.5% yield the stock is expensive to short (on that basis) but easy to find (thus cheap on that basis) with less than 1% of the float shorted.

I wonder what the stock knows that I should.

"Intel, Arm to Collaborate on IoT"

They are sworn enemies. Incompatible architectures, your mama dresses you funny jibe-throwers.
Nah, not really, friendly rivals, maybe.

From Electrical Engineering Times:
SAN FRANCISCO — Intel and Arm announced a strategic partnership that aims to eliminate a major barrier to IoT deployment, reducing the complexity associated with the onboarding process for IoT devices and enabling customers to choose their onboarding systems without being locked into a single device architecture or single cloud provider’s provisioning method.

The companies said that the partnership aims to extend the capability of Intel’s Secure Device Onboard onboarding service to include Arm devices. The collaboration will also enable Arm’s Pelion IoT Platform to onboard and manage x86 platforms in addition to Arm-based IoT devices and gateways, they said.

Collaboration between the two most prevalent semiconductor architectures could be an important step toward reducing bottlenecks to the wide-scale deployment of IoT — lack of interoperability, standards, and common technologies.

“Arm and Intel have a lot to gain by working together on IoT, and it’s good to see as the two of them hold many of the keys to widespread adoption,” said Patrick Moorhead, president and principal analyst at Moor Insights and Strategy, in an email exchange with EE Times.

“Intel and Arm are simplifying one of IoT’s most complex and challenging barriers with regard to streamlining the manufacturing and security deployment workflows for IoT,” said Michela Menting, a director at ABI Research, in a public statement.

Jim McGregor, principal analyst at Tirias Research, said in an email exchange with EE Times that the collaboration appears to be more of an effort from Arm than Intel, arising from companies that Arm has acquired, which McGregor said he assumes were working with Intel or on Intel platforms previously....MORE

"Uber proposals value company at $120 billion in a possible IPO - WSJ"

Is that a lot of money?
That seems like a lot of money.
I suppose if your discounted cash flow estimate is , it's not a lot of money,

From Reuters:
Uber Technologies Inc [UBER.UL] could be valued at $120 billion when it finally goes public next year according to recent proposals made by U.S. banks, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

The ride hailing company’s most recent valuation was pegged at $76 billion, following a $500 million investment from Toyota Motor Corp (7203.T) in August.

Reuters reported in late September that Goldman Sachs and Morgan Stanley were in pole position to secure top roles in Uber IPO.

Goldman Sachs and Morgan Stanley last month delivered the valuation proposals to Uber, the WSJ report here said.....MORE

"Why we can’t quit the QWERTY keyboard"

It's a pretty big deal when you think about it.

From MIT's Technology Review, Oct. 13:

We’ve been using it to type for 144 years. Here’s why it works, and what it would take for us to give it up.
Tap is a one-handed gadget that fits over your fingers like rubbery brass knuckles and connects wirelessly to your smartphone. It’s supposed to free you from clunky physical keyboards and act as a go-anywhere typing interface. A promotional video shows smiling people wearing Tap and typing with one hand on a leg, on an arm, and even (perhaps jokingly) on some guy’s forehead.
Seems like a great idea, right? But when I tried it, the reality of using Tap was neither fun nor funny. Unlike a conventional QWERTY keyboard, Tap required me to think a lot, because I had to tap my fingers in not-very-intuitive combinations to create letters: an A is your thumb, a B is your index finger and pinky, a C is all your fingers except the index.
I memorized these combinations by playing simple letter-choosing games in an app, but it was quickly exhausting. It was almost impossible to type on my thigh, or on any surface that wasn’t flat and solid. My most verbose tweets were a handful of words long and took several minutes to compose. Even typing out “Duh!” was cumbersome and uncomfortable. After less than a week, I conceded defeat and retreated to my big, old-fashioned QWERTY and its soothing tactile feedback.
But while Tap didn’t work well for me, it brings up an important question about the evolution of technology. We have so many ways to input data—by voice, touch screen, stylus, you name it—and yet we still rely heavily on something that looks a heck of a lot like the first commercially successful typewriters, released nearly 150 years ago. We can make powerful computers that fit in our pockets. So why haven’t we quit the keyboard?

QWERTY’s quirky history
Part of the answer is inertia. The large, clunky keyboard is what you learned to type with, as did your parents and your grandparents (and maybe even your great-grandparents). It’s comfortable; Kevin Weaver, an assistant clinical professor of physical therapy at New York University, says that at this point most of the potentially bothersome ergonomic issues have been designed out of it.
“We’re stuck in a cycle,” says Frank Jones, an assistant professor of computer science at Brigham Young University and a creator of a finger-tracking touch-screen keyboard called DotKey. “We teach kids how to use QWERTY because it’s everywhere. Why is QWERTY everywhere? Because we teach kids to use it.”

This wasn’t always the case. Early typewriters included all kinds of creative key layouts and arrangements. But the one that stuck was the Sholes & Glidden Type-Writer, developed largely by Wisconsin journalist and inventor Christopher Latham Sholes, and sold by firearms maker E. Remington & Sons starting in 1874.

The Sholes & Glidden became the first popular typewriter, and it had a key format nearly identical to the QWERTY one we use today. It typed only in capitals, though, so reading Sholes’s early letters gives the impression that he’s shouting at the recipient.

It’s not clear how Sholes came up with the key arrangement, featured in an 1878 patent, though theories abound. But he was trained in the printing industry and was a newspaper publisher, so he would have been familiar with how typesetters organized their trays of letters by frequency of use.
In 2011, Kyoto University researchers proposed that QWERTY stemmed from key rearrangements made to satisfy the habits of the typewriter’s earliest customers: telegraph operators, who used it to transcribe Morse code messages. (For instance, some letters that are often confused for one another in Morse are close together on the keyboard.) Those researchers were challenging the oft-invoked bit of folklore that QWERTY was chosen to prevent typewriters from jamming when people hit commonly used letters in quick succession. Either way, in 1893, several of the largest typewriter makers combined to form the Union Typewriter Company. By the turn of the century, QWERTY was the typing standard.

After that, it wasn’t long before children started learning QWERTY. These days, US kids are required to be able to type with a keyboard by third grade, and some schools are teaching kids as young as kindergarten basic keyboard skills.

QWERTY dominates not just in countries that use alphabets (with some regional variations), but in countries like China that developed their own systems, such as Pinyin, to type a vast array of characters with the same simple keyboard.

But the QWERTY keyboard’s success has not been due to lack of competition.

The contenders
Way before Tap, there were numerous efforts to change the arrangement and form of the keyboard—such as the Dvorak Simplified Keyboard layout, patented in 1936 by University of Washington professor August Dvorak. More recently, there was the one-handed Twiddler keyboard. Neither managed to dent QWERTY’s dominance....MUCH MORE

"Lyft launches subscription plan, offering 30 rides for $300/month"

I haven't swapped cars in a while and am unsure on pricing but that sounds like a lease payment + insurance on, maybe, a Toyota Camry?

From GeekWire:
 Lyft is rolling out a new monthly subscription plan for riders in all markets starting Tuesday.

For $299 per month, riders who subscribe to Lyft’s new All-Access Plan will get 30 rides as long as each ride doesn’t go over $15. If it does, the rider pays the difference. Subscribers will also receive 5 percent off additional rides.

“This is the first step toward delivering on our goal of making car ownership optional, and we’re constantly looking for more ways to provide passengers with the easiest, most convenient options possible,” Lyft said in a blog post announcing the new program.

The 30 rides are dolled out on a monthly basis. Unused rides can’t be rolled over to the following month. Riders can use their allotted rides for ride-sharing services, like Lyft Line but they can’t be split between accounts.

Lyft is in the midst of a month-long promotion called “Ditch Your Car”...MORE

Secretly Hankering to Be a Totalitarian? "How to Invest in the China Social Credit Score"

From Nanalyze:
About a year ago or so, we noticed how emerging technologies and investment opportunities in China are becoming increasingly important for technology investors to stay on top of. There are about 1.3 billion reasons for that, but we’ll list a few here outside of the 10 ways the communist-cum-capitalist country is already beating the United States in technology: China has the world’s second-largest economy, with a middle class so big that it would count as the world’s third most populous country. Party leaders plan to make China No. 1 in the artificial intelligence race, with the public and private sectors investing billions of dollars into startups. It’s already the leader in the electric vehicle market. The biggest fintech company in the world, Ant Financial, is a homegrown product spun off from tech giant Alibaba (NYSE:BABA) that is worth about $150 billion following a $14 billion Series C in June. In comparison, U.S. rival PayPal (NASDAQ:PYPL) has a market cap of about $100 billion.
Of course, there is a dark, dystopian side to all this that even goes beyond using AI and facial recognition technologies by Chinese unicorn SenseTime and others to keep China’s 1.3 billion citizens under constant surveillance safe. By 2020, the so-called China Social Credit Score will go nationwide, a new type of credit rating where George Orwell meets Mastercard. Most of us in the United States are probably familiar with FICO credit scores, which lenders use to gauge a person’s creditworthiness based on things like payment history, number of accounts, and length of credit history. The China Social Credit Score will account for credit history but will also include stuff like online transactional habits, personal information, ability to honor an agreement and social network affiliations, according to the Brookings Institute. It’s the “new credit score” we’ve talked about before, but worse.

China Social Credit Score
In other words, the China Social Credit Score weighs your value to society. Those with good scores (with ranges similar to FICO scores) get perks better than double points for airline miles. Rule followers can get discounts on energy bills, rent stuff without deposits, and enjoy better banking interest rates, according to Business Insider. Citizens who don’t follow the rules—outstanding loans, jaywalking, smoking in public places—can expect a ding to their Social Credit Score. A low enough score can get you banned from buying train tickets, getting into certain hotels and attending Chinese operas (which actually counts as a perk).
Social Credit Score: credit scoring
Credit: Brookings Insitute
If that’s not enough to get you to become a law-abiding citizen, there’s also a bit of peer pressure involved, as those with poor scores can affect the social credit ratings of others in their social media circles. Can you imagine this system in the United States? How many soap parties would it take before your buddy Rich stops throwing his cigarette butts in the street? You’re going to stop smoking now, aren’t you, Rich? Whack, whack, whack. On the plus side, New York City would be cleaner than Singapore. Or, more likely, society would devolve into a bartering system using subway rats and day-old slices of cheese pizza.

Marriage Between Life Score and Credit Score
But we digress. In an extract from Rachel Botsman’s book, Who Can You Trust? How Technology Brought Us Together and Why It Might Drive Us Apart, she notes that this marriage of “credit scoring into life scoring” isn’t limited to China. In 2015, the nosey folks at the U.S. Transportation Security Administration proposed expanding the PreCheck background checks to include social media records, location data and purchase history. We know companies are already mining big data with AI for finding actionable trends in the news and creating credit scores for hipsters with little credit.
However, China is a bit more unique. Its most recent Great Leap Forward in the 21st century found many skipping the transition from cash to plastic and jumping straight into the mobile digital economy. That has created a tech-savvy population of more than 750 million people, more than 95 percent of whom access the web via a mobile device, according to the Brookings Institute. And the majority of those people use payment and social media platforms created by two tech companies, Alibaba and Tencent (the Facebook of China).....MUCH MORE

"Rolls-Royce, Intel Launch Autonomous Ship Collaboration"

From World Maritime News:
Rolls-Royce and Intel have signed an agreement with an aim to collaborate on designs for sophisticated intelligent shipping systems that are expected to make commercial shipping safer.

“We’re delighted to sign this agreement with Intel, and look forward to working together on developing exciting new technologies and products, which will play a big part in enabling the safe operation of autonomous ships,” Kevin Daffey, Rolls-Royce, Director, Engineering & Technology and Ship Intelligence, commented.

As explained, the new collaboration will advance smart, connected and data-centric systems for ship owners, operators, cargo owners and ports, bringing together the expertise in advanced ship technology from Rolls-Royce with components and systems engineering from Intel.

“This collaboration can help us to support ship owners in the automation of their navigation and operations, reducing the opportunity for human error and allowing crews to focus on more valuable tasks,” Daffey added....

Previously on Rolls-Royce maritime:

Shipping: Rolls-Royce Has Some Ideas For Battery Power
Rolls-Royce To Deliver Technology For Innovative Ocean Fish Farm And Live Fish Carrier
Autonomy: "Rolls-Royce’s cargo ship of the future requires no onboard crew"
"Forget Autonomous Cars—Autonomous Ships Are Almost Here" 
This is a bit of an infomercial for Rolls-Royce but still the best generalist overview currently available.
From the brainiacs at IEEE Spectrum:... 
"Rolls-Royce to sell commercial marine business for £500m to Norway's Kongsberg"
Rolls-Royce and AXA Partner on Risk Management Products for Autonomous Shipping
Following just a half-step behind the technologists are the insurance salesmen.  

Monday, October 15, 2018

"Twitter is being investigated over its collection of data in its link-shortening system" (TWTR)

Jack you clever, clever boy.

From The Blogroom:
Over the past year, a trend has emerged of increased government inquiries into the inner operations of social networks and other premier tech firms. The trend continued again on Thursday as data privacy regulators in Ireland are now opening up an investigation into Twitter’s data collection practices. Specifically, the regulators are looking into how much data Twitter receives from its URL-shortening system,

The Ireland Data Protection Commission is investigating the social network since they refused to provide their web link tracking data to UK professor, Michael Veale. Their refusal to comply with the request is potentially a violation of the EU’s allowance for requests under GDPR. The privacy expert said that Twitter refused to cite an exception to GDPR for requests that required ‘disproportionate effort’.

By contrast, Veale believed that twitter was distorting the law in order to limit the information they handed over to the authorities. A new GDPR regulation, which was first enforced in May, requires that tech companies aim towards a more transparent relationship with user data and provide their customers with data privacy rights.

He also suspected that Twitter was recording private device information and timestamps every time people clicked on the shortened clink, and claimed that it was technically within the company’s aim to determine someone’s approximate location. Veale claimed that the investigation was a matter of exercising our “right to understand” how Twitter is using our personal information.

He then wrote to the relevant privacy regulator to see if Twitter was holding up some data. He complained to the Irish DPC rather than the British equivalent since Twitter’s European headquarters are in Dublin.

Now, it appears as though the investigation is in motion. First reported by Fortune, the official inquiry is in a letter sent to Veale from the office of the Irish Data Privacy Commissioner.
The letter reads:
“The DPC has initiated a formal statutory inquiry in respect of your complaint. The inquiry will examine whether or not Twitter has discharged its obligations in connection with the subject matter of your complaint and determine whether or not any provisions of the GDPR or the Data Protection Act have been contravened by Twitter in this respect.”...MORE

“Concerned” Bank of England Raises Alarm about Growth of High-Risk Loans"

Alternative title: "Old Lady of Threadneedle Street Gets Her Freak Flag Flying."

Or not, your call.

From Wolf Street, October 10: 

The power of Collateralized  Loan Obligations.

“The global leveraged loan market is larger than – and growing as quickly as – the US subprime mortgage market was in 2006,” said the Bank of England’s Financial Policy Committee in the statement from its latest meeting. And the committee is “concerned by the rapid growth of leveraged lending.”

In terms of magnitude, the US and EU “leveraged loan” market combined now exceeds $1.3 trillion, up from $50 billion at the turn of the century.

A “leveraged loan” is a loan that is extended to junk-rated (BB+ or lower), over-indebted companies. These loans are considered too risky for banks to keep on their books. Instead, banks sell them to loan funds, or they package them into highly rated Collateralized Loan Obligations (CLOs) and sell them to CLO funds and other institutional investors. In the UK, over £38 billion ($50 billion) of these loans were issued in 2017 — more double the amount in 2016 — and a further £30 billion ($39 billion) has already been issued in 2018.

Leveraged loans are popular among investors because of the slightly higher interest rates they offer, and because they’re often based on floating rates, a positive in an environment where interest rates are rising. Investors earn a set amount of interest — the so-called margin — on top of the prevailing Libor benchmark rate. As the Libor rises, so too does the interest. The loans’ floating interest rates offer investors some degree of protection from rising rates, until, of course, the borrower defaults.

While banks benefit from issuing leveraged loans via hefty fees for arrangement, structuring and portfolio management, since these loans are typically sliced, diced and sold in global financial markets in classic sub-prime fashion. Among the biggest buyers are CLO funds.

One of the myriad problems with this practice, warns the Bank of England, is the acute lack of certainty about investors’ “ability to sustain losses without materially impacting financing conditions.” But if things do go south, the resulting pain may nevertheless end up boomerang back to the banks....MORE

"The future’s so bright, I gotta wear blinders"

Or not, your call.
From Rough Type:
“This is only the beginning,” writes Kevin Kelly in an essay in Wired‘s 25th anniversary issue. “The main event has barely started.” He’s talking about the internet. If his words sound familiar, it’s because “only the beginning” has become Kelly’s stock phrase, the rhetorical device he flourishes, like a magician’s cape, to draw readers’ eyes away from what’s really going on. Back in 2005, in a Wired story called “We Are the Web,” Kelly wrote, “It is only the beginning.” And then, his enthusiasm waxing, he capitalized it: “the Beginning.” He doubled down in his 2016 book The Inevitable: “The internet is still at the beginning of its beginning.” And then: “The Beginning, of course, is just beginning.”
I predict this sentence will appear in the next thing Kelly writes: “The beginning of the Beginning will be beginning shortly.”
This is not the beginning, much less the beginning of the beginning. We’ve been cozying up to computers for a long time, and the contours of the digital era are clear. Computers have been around for the better part of a century, computer networks have been around since the 1950s, personal computers have been in popular use since the late 1970s, online communities have been around at least since 1985 (when the Well launched), and the web has been around for a quarter century. Text messaging on mobile phones started in 1984, the first BlackBerry smartphone was released in 2002, and the iPhone arrived in 2007. The social network MySpace was popular 15 years ago, and Facebook went live in 2004. Last month, Google turned 20. In looking back over the consequences of computer-mediated connectivity since at least the turn of the century, we see differences in degree, not in kind. 
A few years ago, the technology critic Michael Sacasas introduced the term “Borg Complex” to describe the attitude and rhetoric of modern-day utopians who believe that computer technology is an unstoppable force for good and that anyone who resists or even looks critically at the expanding hegemony of the digital is a benighted fool. (The Borg is an alien race in Star Trek that sucks up the minds of other races, telling its victims that “resistance is futile.”) Those afflicted with the complex, Sacasas observed, rely on a a set of largely specious assertions to dismiss concerns about the ill effects of technological progress. The Borgers are quick, for example, to make grandiose claims about the coming benefits of new technologies (remember MOOCs?) while dismissing past cultural achievements with contempt (“I don’t really give a shit if literary novels go away”).
To Sacasas’s list of such obfuscating rhetorical devices, I would add the assertion that we are at “the beginning.” By perpetually refreshing the illusion that progress is just getting under way, gadget worshippers like Kelly are able to wave away the problems that progress is causing. Any ill effect can be explained, and dismissed, as just a temporary bug in the system, which will soon be fixed by our benevolent engineers. (If you look at Mark Zuckerberg’s responses to Facebook’s problems over the years, you’ll find that they are all variations on this theme.) Any attempt to put constraints on technologists and technology companies becomes, in this view, a short-sighted and possibly disastrous obstruction of technology’s march toward a brighter future for everyone — what Kelly is still calling the “long boom.” You ain’t seen nothing yet, so stay out of our way and let us work our magic....

Capital Markets: "Monday Blues"

From Marc to Market:
Overview: Despite the pre-weekend gains that lifted the S&P 500 above its 200-day moving average, global equities are moving lower today. The main news over the weekend included the US renewing its threat to impose more tariffs on China and Saudi Arabia threatening retaliation for any sanctions relating to the disappearance of the journalist Khashoggi, and the lack of a breakthrough in UK-EU negotiations. Many large Asia equity markets (Japan, China, Hong Kong) were off around 1.5%. The Nikkei and Topix extended last week's lows, but the Shanghai Composite and Hong Kong's Hang Seng did not. European bourses are on the downside, with the Dow Jones Stoxx 600 off about 0.5% near midday on the Continent. It is extending the losing streak to a fourth session, and seven of the past eight, and is at its lowest level since late 2016. The equity weakness is giving the bonds a bit, and benchmark 10-year yields are off one-to-three basis points. Italians bonds are outperforming a little, and Portugal, which Moody's upgraded ahead of the weekend, in a catchup move, is also doing better than most today. The dollar is mostly softer. The Swedish krona and sterling are exceptions. Political uncertainty in Sweden and Brexit concerns are the main weights, it appears.

Brexit: Talks broke up over the weekend. The Irish border remains the pivotal issue, and the UK cannot agree to an open-ended transition period. A key meeting among EU government's today to ostensibly prepare for the summit on Wednesday has been canceled. The summit that might have been called to finalize Brexit may now become a summit to prepare for a UK exit without an agreement. The UK cabinet meets tomorrow. May's Chequers Plan has vocal critics in the cabinet and within the Tory Party, and, as the weekend developments illustrate, there is no agreement with the EU. We have suggested that May is in a trilemma and is unable to simultaneously appease, the EU, her cabinet, and Parliament. In her attempt to triangulate, May has succeeded in satisfying no one. Sterling came under downside pressure after posting an outside down day ahead of the weekend. It saw a high before the weekend of near $1.3260 and reached almost $1.3080 in early Asia. It has climbed back to test the $1.3050 area. There is a nearly GBP330 mln option struck at $1.3040 that expires today. The euro has bounced from a four-month low last week near GBP0.8720 to resurface above GBP0.8800 today, where there is an option for 1.6 bln euros that also will be cut today.

Bavaria: The pre-election polls proved fairly accurate as the CSU lost its majority and drew less than 40% of the vote for the first time since 1954. The Social Democrats into oblivion, losing half their voters to poll less than 10%, below both the Greens, who is emerging as a centrist force, and the Afd, who saw no surge even though it managed to secure parliamentary representation for the first time. It is now in 15 of the 15 states parliaments. There could be national ramifications if the leadership challenge within the CSU leads to a break with Merkel's CDU. Hesse holds state elections on October 28. The CDU and Greens are in a coalition there, and that is likely to continue and provides a precedent for a CSU-Green coalition in Bavaria. Separately, the Greens also did well in local elections in Belgium.

Euro: The euro opened lower in Asia (~$1.1535) and had steadily recovered to $1.1590 in late morning turnover in Europe. Last week's high was set near $1.1610, and above there resistance is seen near $1.1630, which corresponds to the 100-day moving average and the 50% retracement of the leg down from late-September' s high above $1.1800. There is a $1.16 option for roughly 940 mln euros that expires today....

Massive $40 Billion Canadian LNG Project to Move Forward

From the Canadian Broadcasting Company:

LNG Canada chief executive says it will move 'immediately' into construction

Construction is going ahead on a massive, $40-billion liquefied natural gas project in northern B.C., hours after five primary investors from five different countries granted their approval for the joint venture.
The LNG Canada project will see a pipeline carrying natural gas from Dawson Creek in northeastern B.C. to a new processing plant on the coast in Kitimat. There, the gas would be liquefied for overseas export.
The partners came to their decision at 9:18 p.m. PT on Monday. They are:
  • Royal Dutch Shell.
  • Mitsubishi Corp.
  • The Malaysian-owned Petronas.
  • PetroChina Co.
  • Korean Gas Corp.
On Tuesday, LNG Canada CEO Andy Calitz said the company is "immediately, today, moving into construction" on the pipeline and plant.
He said project has already obtained all the necessary approvals to break ground, including from the National Energy Board, Department of Fisheries and Oceans, BC Hydro as well as 25 First Nations

Prime Minister Justin Trudeau said the announcement represents the single largest private sector investment in Canadian history.

"Today is a good day," he said Tuesday. 
Political, First Nations leaders reactTrudeau, B.C. Premier John Horgan and other leaders held a news conference to make the official project announcement in Vancouver on Tuesday morning.

"It's certainly a great day for northern British Columbia," Horgan said.
"I can't tell you how proud I am. I can't stop smiling."...


LNG Canada is moving faster on beginning construction than I did on linking to the story, it's dated October 2.

"China Hits A Speed Bump On the Way to Battery Dominance" (SQM)

Lifted in toto from Reuters Breakingviews:

China’s pursuit of rechargeable battery ingredients has hit an amber light in Chile. To clinch a $4.1 billion stake in Chilean giant SQM, Shenzhen-listed Tianqi Lithium has agreed with local antitrust officials to limit access to commercially sensitive information. A hostile shareholder may yet thwart the deal anyway. As Beijing’s clout in the industry grows, such deals will only get tougher.

Over the past decade, China’s effort to secure its industrial supply chain has been unparalleled. When Western majors pulled back on spending after the 2011 commodities boom, Chinese miners kept buying, striving to catch up.

Yet despite hefty purchases in a variety of metals, they have not achieved dominance. Success has been more forthcoming in battery ingredients, which have been largely ignored by the major diggers until the recent electric vehicle boom. Beijing has made investments at home, in mines abroad and in equity stakes, as well as in processing the minerals.

The accomplishment helps to explain the rare antitrust pothole in Santiago, as Tianqi tries to secure roughly a quarter of SQM. Certainly, lithium matters greatly to Chile, which holds the world’s largest reserves and wants to diversify a copper-reliant economy. Meanwhile, SQM is one of the top producers of the super-light metal, competing with rivals like Albemarle – already Tianqi’s partner in operating the biggest hard-rock lithium mine, Greenbushes in Australia.

In the end, competition authorities were reassured by an agreement to curtail Tianqi’s access to key details, to bar its own executives from the board and oblige it to warn regulators of any future deals. These are significant curbs for a costly investment, even one the buyer describes as purely financial. And the purchase could still be derailed by a legal appeal from SQM’s influential top shareholder, who held deal talks with Tianqi himself back in 2016.

Whatever the outcome, this is a rare instance of China encountering some pushback in its march to acquire minerals used in everyday devices. Beijing’s grip on lithium and its processing means it is likely to attract more and more attention. For now, shaky prices of the white stuff mean a slower approach may be no bad thing.
Also at Breakingviews:
Cox: Global finance has a Saudi Arabia problem
Riyadh is clouding Masayoshi Son's $100 bln vision

Sunday, October 14, 2018

How to Pick a Career (That Actually Fits You)

From Wait But Why:
Hey readers! Quick note before we jump in:
This is a post about something I’ve been wanting to write about forever: careers. Society tells us a lot of things about what we should want in a career and what the possibilities are—which is weird because I’m pretty sure society knows very little about any of this. When it comes to careers, society is like your great uncle who traps you at holidays and goes on a 15-minute mostly incoherent unsolicited advice monologue, and you tune out almost the whole time because it’s super clear he has very little idea what he’s talking about and that everything he says is like 45 years outdated. Society is like that great uncle, and conventional wisdom is like his rant. Except in this case, instead of tuning it out, we pay rapt attention to every word, and then we make major career decisions based on what he says. Kind of a weird thing for us to do.
This post isn’t me giving you career advice really—it’s a framework that I think can help you make career decisions that actually reflect who you are, what you want, and what our rapidly changing career landscape looks like today. You’re not a pro at this, but you’re certainly more qualified to figure out what’s best for you than our collective un-self-aware great uncle. For those of you yet to start your career who aren’t sure what you want to do with their lives, or those of you currently in the middle of your career who aren’t sure you’re on the right path, I hope this post can help you press the reset button on your thought process and get some clarity.
Finally, it feels very good to put this post up. It’s been way, way too long. The last year has been pretty frustrating for me and anyone who likes Wait But Why—a lot of build-up of ideas with none of the satisfying release of those ideas on the blog (most of my last year has been spent working on another, way longer post). I’m hoping this WBW Dark Ages era is nearing its end, because I miss hanging out here. Thanks, as always, to the small group of ridiculously generous, ridiculously patient patrons who have stuck with us through such a slow period.
– Tim
PDF: If you want to print this post or read it offline, the PDF is probably the way to go. You can buy it here.
Your Life Path So Far
For most of us, childhood is kind of like a river, and we’re kind of like tadpoles.

We didn’t choose the river. We just woke up out of nowhere and found ourselves on some path set for us by our parents, by society, and by circumstances. We’re told the rules of the river and the way we should swim and what our goals should be. Our job isn’t to think about our path—it’s to succeed on the path we’ve been placed on, based on the way success has been defined for us.

For many of us—and I suspect for a large portion of Wait But Why readers—our childhood river then feeds into a pond, called college.1 We may have some say in which particular pond we landed in, but in the end, most college ponds aren’t really that different from one another.
In the pond, we have a bit more breathing room and some leeway to branch out into more specific interests. We start to ponder, looking out at the pond’s shores—out there where the real world starts and where we’ll be spending the rest of our lives. This usually brings some mixed feelings.
And then, 22 years after waking up in a rushing river, we’re kicked out of the pond and told by the world to go make something of our lives.
There are a few problems here. One is that at that moment, you’re kind of skill-less and knowledge-less and a lot of other things-less:
But before you can even address your general uselessness, there’s an even bigger issue—your pre-set path ended. Kids in school are kind of like employees of a company where someone else is the CEO. But no one is the CEO of your life in the real world, or of your career path—except you. And you’ve spent your whole life becoming a pro student, leaving you with zero experience as the CEO of anything. Up to now, you’ve only been in charge of the micro decisions—”How do I succeed at my job as a student?”—and now you’re suddenly holding the keys to the macro cockpit as well, tasked with answering stressful macro questions like “Who am I?” and “What are the important things in life?” and “What are my options for paths and which one should I choose and how do I even make a path?” When we leave school for the last time, the macro guidance we’ve become so accustomed to is suddenly whisked away from us, leaving us standing there holding our respective dicks, with no idea how to do this.

Then time happens. And we end up on a path. And that path becomes our life’s story.
At the end of our life, when we look back at how things went, we can see our life’s path in its entirety, from an aerial view.

When scientists study people on their deathbed and how they feel about their lives, they usually find that many of them feel some serious regrets. I think a lot of those regrets stem from the fact that most of us aren’t really taught about path-making in our childhoods, and most of us also don’t get much better at path-making as adults, which leaves many people looking back on a life path that didn’t really make sense, given who they are and the world they lived in.

So this is a post about path-making. Let’s take a 30-minute pre-deathbed pause to look down at the path we’re on, and ahead at where that path seems to be going, and make sure it makes sense.

The Cook and the Chef—Revisited
In the past, I’ve written about the critical distinction between “reasoning from first principles” and “reasoning by analogy”—or what I called being a “chef” vs. being a “cook.” Since writing the post, I notice this distinction everywhere, and I’ve thought about it roughly 2 million times in my own life.
The idea is that reasoning from first principles is reasoning like a scientist. You take core facts and observations and use them to puzzle together a conclusion, kind of like a chef playing around with raw ingredients to try to make them into something good. By doing this puzzling, a chef eventually writes a new recipe. The other kind of reasoning—reasoning by analogy—happens when you look at the way things are already done and you essentially copy it, with maybe a little personal tweak here and there—kind of like a cook following an already written recipe.
A pure verbatim recipe-copying cook and a pure independently inventive chef are the two extreme ends of what is, of course, a spectrum. But for any particular part of your life that involves reasoning and decision making, wherever you happen to be on the spectrum, your reasoning process can usually be boiled down to fundamentally chef-like or fundamentally cook-like. Creating vs. copying. Originality vs. conformity.
Being a chef takes a tremendous amount of time and energy—which makes sense, because you’re not trying to reinvent the wheel, you’re trying to invent it for the first time. Puzzling your way to a conclusion feels like navigating a mysterious forest while blindfolded and always involves a whole lot of failure, in the form of trial and error. Being a cook is far easier and more straightforward and less icky. In most situations, being a chef is a terrible waste of time, and comes with a high opportunity cost, since time on Earth is immensely scarce. Right now, I’m wearing J. Crew jeans and a plain t-shirt and a hoodie and Allbirds shoes, because I’m trying to conform. Throughout my life, I’ve looked around at people who seem kind of like me and I’ve bought a bunch of clothes that look like what they wear. And this makes sense—because clothes aren’t important to me, and they’re not how I choose to express my individuality. So in my case, fashion is a perfect part of life to use a reasoning shortcut and be a cook.2
But then there are those parts of life that are really really deeply important—like where you choose to live, or the kinds of friends you choose to make, or whether you want to get married and to whom, or whether you want to have kids and how you want to raise them, or how you set your lifestyle priorities.

Career-path-carving is definitely one of those really really deeply important things. Let’s spell out the obvious reasons why:

Time. For most of us, a career (including ancillary career time, like time spent commuting and thinking about your work) will eat up somewhere between 50,000 and 150,000 hours. At the moment, a long human life runs at about 750,000 hours. When you subtract childhood (~175,000 hours) and the portion of your adult life you’ll spend sleeping, eating, exercising, and otherwise taking care of the human pet you live in, along with errands and general life upkeep (~325,000 hours), you’re left with 250,000 “meaningful adult hours.”3 So a typical career will take up somewhere between 20% and 60% of your meaningful adult time—not something to be a cook about.
Quality of Life. Your career has a major effect on all the non-career hours as well. For those of us not already wealthy through past earnings, marriage, or inheritance, a career doubles as our means of support. The particulars of your career also often play a big role in determining where you live, how flexible your life is, the kinds of things you’re able to do in your free time, and sometimes even in who you end up marrying....