Wednesday, December 7, 2016

Saxo Bank's Predictions 2017: Britain Remains In EU; Mexican Peso Soars, Italian Banks Best Performing Equity Group...

From Saxo via PR Newswire:

Saxo Bank's 10 Outrageous Predictions for 2017 

Will this be the year when China exceeds growth expectations, Brexit turns into Bremain, the Mexican peso soars and Italian banks turn out to the best performing equity asset class?  
Saxo Bank, the online multi-asset trading and investment specialist, has today released its annual set of 'Outrageous Predictions' for the year ahead.

Continuing in the tradition of making a selection of calls aimed at provoking conversation on what might surprise or shock the investment returns in the year ahead this year's predictions cover a range of scenarios, including a Chinese growth rebound, an Italian bank rally, Brexit giving way to Bremain and the EU's willingness to change in the face of populist backlash, among others. The Outrageous Predictions should not be considered Saxo's official market outlook, it is instead the events and market moves deemed outliers with huge potentials for upsetting consensus views.

Steen Jakobsen, Chief Economist at Saxo Bank, commented: "After a year in which reality has managed to surpass even seemingly unlikely calls - with the Brexit surprise and the US election outcome - the common theme for our Outrageous Predictions for 2017 is that desperate times call for desperate actions.

"With change always happening in times of crisis, 2017 may be a wakeup call which sees a real departure from the 'business as usual', both in central bank expansionism and government austerity policies which have characterized the post-2009 crisis.

"As some of our past outrageous predictions have turned out to be far less outrageous that at first thought, it is important that investors are aware of the range of possibilities outside of the market consensus so that they can make informed decisions, even in seemingly unlikely market scenarios."
It is in this spirit that we release Saxo Bank's Outrageous Predictions for 2017:
  1. China GDP swells to 8% and the SHCOMP hits 5,000
    China understands that it has reached the end of the road of its manufacturing and infrastructure growth phase and, through a massive stimulus from fiscal and monetary policies, opens up capital markets to successfully steer a transition to consumption-led growth. This results in 8% growth in 2017, with the resurgence owing to the growth in the services sector. Euphoria over private consumption-driven growth sees the Shanghai Composite Index double from its 2016 level, surpassing 5,000.
  2. Desperate Fed follows BoJ lead to fix 10-year Treasuries at 1.5%
    As US dollar and US interest rates rise in increasingly painful fashion in 2017, the testosterone driven fiscal policy of the new US President leads US 10-year yields to reach 3%, causing market panic. On the verge of disaster, the Federal Reserve copies the Bank of Japan's Yield Curve Control, by fixing the 10-year Government yield at 1.5%, but from a different angle, effectively introducing QE4 or QE Endless. This in turn promptly stops the selloff in global equity and bond markets, leading to the biggest gain for bond markets in seven years. Critical voices are lost in the roar of yet another central bank-infused rally.
  3. High-yield default rate exceeds 25%
    With  the long-term average default rate for high yield bonds being 3.77%, jumping during the US recessions of 1990, 2000 and 2009 to 16%, 10% and 12% respectively, 2017 sees default rates as high as 25%. As we reach the limits of central bank intervention, governments around the world move towards fiscal stimulus, leading to a rise in interest rates (ex Japan), thus steepening the yield curve dramatically. As trillions of corporate bonds face the world of hurt, the problem is exacerbated by a rotation away from bond funds, widening spreads and making refinancing of low grade debt impossible. With default rates reaching 25%, inefficient corporate actors are no longer viable allowing for a more efficient allocation of capital.
  4. Brexit never happens as the UK Bremains
    The global populist uprising, seen across both sides of the Atlantic, disciplines the EU leadership into a more cooperative stance towards the UK. As negotiations progress, the EU makes key concessions on immigration and on passporting rights for UK-based financial services firms, and by the time Article 50 is triggered and put before Parliament, it is turned down in favour of the new deal. The UK is kept within the EU's orbit, the Bank of England hikes the rate to 0.5% and EURGBP plummets to 0.7300 - invoking the symbolism of 1973, the year of UK's entry into the EEC....
...MORE

"To properly understand globalization, you need to start 200,000 years ago...."

From Quartz:

Brace yourself: the most disruptive phase of globalization is just beginning
To properly understand globalization, you need to start 200,000 years ago.
Richard Baldwin skillfully takes on this daunting task in a new book, starting all the way back with the hunter-gatherers. For too long, he says, traditional analysis of trade has been too narrow, he argues.

The economist, who is a professor at the Graduate Institute in Geneva and president of the Centre for Economic Policy Research (CEPR) in London, has been researching globalization and trade for 30 years. As anti-globalization forces now sweep across the world, The Global Convergence: Information Technology and the New Globalization (Harvard University Press) is well timed.

Baldwin argues that globalization takes shape in three distinct stages: the ability to move goods, then ideas, and finally people. Since the early 19th century, the cost of the first two has fallen dramatically, spurring the surge in international trade that is now a feature of the modern global economy.
The standard line from politicians in recent times is that everyone wins from globalization. But the backlash from low-skilled workers who lost their jobs to cheaper labor abroad has forced a change in tone.

Mark Carney, the governor of the Bank of England, gave a candid speech on globalization in northwest England this week, where unemployment is among the highest in the country. He said:
Amongst economists, a belief in free trade is totemic. But, while trade makes countries better off, it does not raise all boats… the benefits from trade are unequally spread across individuals and time....
...MUCH MORE

Tuesday, December 6, 2016

"Behind China and Russia's 'Special Relationship'"

From The Diplomat:

China and Russia’s carefully curated relationship is increasingly having a global impact.
The rise of a more politically and militarily assertive Russia and an economically and institutionally ascendant China may be characterized as the two principal forces challenging the United States in global policymaking.

China’s and Russia’s strategies for international expansion, in each of their respective areas of policy specialization, are not necessarily mutually exclusive. Arguably, both countries’ intensified involvement on the world stage is not only complementary but to a growing extent directly and indirectly supportive of each other’s increasingly commonly-defined interests.

The growing international significance of China and Russia’s key political and economic partnership must be considered a major factor in global policymaking going forward.

China-Russia Relations Before 2014 
China and Russia have largely formulated their economic and political relations based on an evolving series of strategic partnerships. While there is no “model” strategic partnership, in the sense that the terms are negotiated individually with a partner state, both countries have incorporated certain core principles into each partnership.

Following two partnership agreements in 1994 and 1996 and a Treaty of Friendship and Cooperation in 2001, the 2012 comprehensive strategic partnership of cooperation (the 2012 Strategic Partnership), underlined the principles of mutual benefit, mutual trust, and equality in addition to setting specific economic targets in China-Russia bilateral relations.

Notably, although the 2012 Strategic Partnership, signed by President Hu Jintao, China’s president at the time, and Russian President Vladimir Putin, was intended to provide the basis for implementation of relations over a ten-year period, it was prematurely superseded by the 2014 agreement calling for a new stage in the comprehensive strategic partnership of cooperation, the 2014 Strategic Partnership.
In this case, China’s President Xi Jinping, was the co-signatory.  The involvement of Xi, who came to power in 2013, a year after Putin’s re-election as Russian president, has become a key driver in the intensification of bilateral relations.

After the Ukraine Crisis
The 2014 Strategic Partnership, ratified shortly after Russia’s annexation of Crimea, amid the launch of U.S. and EU sanctions against Russia, is widely regarded as the most enhanced in terms of depth and breadth of economic, political, and security relations of any one of China’s or Russia’s network of strategic partnerships.

Some of the much-publicized and high-profile deals emerging from the 2014 Strategic Partnership included a 40-year gas supply agreement between Gazprom and China National Petroleum Corporation (CNPC). The landmark gas supply deal, including plans to build the “Power of Siberia” gas pipeline, was indirectly referred to in the 2014 Strategic Partnership as a measure aiming to “strengthen the Sino-Russian energy partnership.”

A further deal with Russia’s largest oil company, state-owned Rosneft, involving financing deals with CNPC to supply oil worth up to $500 billion from Russia’s largest oil field, was also established shortly after, prospectively enabling Russia to surpass Saudi Arabia as China’s main supplier of oil.
Also in 2014, the People’s Bank of China (PBOC) and the Central Bank of Russia signed an arrangement for a currency swap worth 150 billion yuan and 815 billion rubles ($24 billion at the time). The first such Chinese currency swap to be announced for any country outside of Asia, the deal was meant to facilitate settlement in national currencies and boost bilateral trade.

Since 2014, and particularly in 2015, Russia has become one of the five largest recipients of Chinese outbound direct investment in relation to the Chinese government’s Belt and Road Initiative (BRI) connecting Asia with Europe. Meanwhile, China was Russia’s largest bilateral trade partner, in 2015; in spite of declining overall bilateral trade in U.S. dollar terms (mainly due to sharp declines in the ruble as well as the yuan), relative to 2014, trade flows continued to expand in terms of volume.
In this context, it was significant that Russia’s exports of mechanical and technical products to China rose by about 45 percent over the course of 2015 possibly signifying an important trend in the diversification and competitiveness of Russia’s non-energy sector in terms of bilateral trade prospects with China.

Importantly, the economic relationship between China and Russia has been driven by a variety of bilateral intergovernmental commissions, including 26 subcommissions. According to Putin, in spite of often slow progress in reaching agreements, both sides invariably maintain a common goal of cooperation to eventually find a solution on a wide range of complex issues.

Integrating of High-Level Political Interests
Since the 2014 Strategic Partnership, amid a strengthening of personal ties in the Putin-Xi relationship, there has been an extensive broadening of bilateral relations beyond merely focusing on economic interests. This has centered on mutual support concerning each country’s “core interests,” including “strengthening close coordination in foreign policy.” They have also jointly advocated for reform of the international financial and economic architecture to accord with the rapidly-changing global real economy.

The relationship between China and Russia has, therefore, evolved into intensified cooperation in political areas in the last couple of years. Chief among those developments was the announcement on May 8, 2015 in Moscow, on the occasion of the annual parade commemorating the end of World War II, of the planned integration of the Chinese-led BRI with Russia’s Eurasian Economic Union (EEU)....MORE

Pee Power: The Dream Is Dead

Many times in the energy investing racket you have to face reality and in the words of Edward M. Kennedy upon losing the Democrat Party nomination in 1980, say:
"...For all those whose cares have been our concern,
the work goes on, the cause endures,
the hope still lives, and the dream shall never die."*

-Ted Kennedy
Other times, you just say "Doesn't work" and move on.

From Daily Tech, Oct. 19, 2015:

Debunked: Beneath the Lies, Nigerian "Pee Generator" Is Still Pissing Into the Wind
Hydrogen doesn't grow on trees... well not free hydrogen gas, at least 
One of my friends on Facebook, Inc. (FB) shared second hand a piece of amazing news. According to his friend's post a group of Nigerian girls has invented a "pee generator" which takes a couple cups worth of urine, filters out the contaminates and turns the water into pure hydrogen gas which is then dried/stored in borax, before being piped to a small portable combustion generator.

Hmm, if true this is the best thing since urine harvested stems cells were used to regrow neurons and more! What can't urine do? Sort of gives a whole new meaning to "thy cup runneth over", right?

The only problem, as I pointed out to my friend, is that it's unfortunately malarkey (for the most part). Yes, it's certainly an entertaining science faire (or faire?) experiment, given that it potentially should work. And yes, there's perhaps a small amount of useful purpose amidst the misrepresentations. But when it comes to the solution to the world's small scale power needs, pee is not some some magical panacea.

I. Pee Power: The Golden Years 
It's somewhat amazing that this story is still making the rounds.
The probable inspiration behind this pee pandemonia likely lies in a 2010 presentation delivered at Proceedings of the 12th International Conference on the Synthesis and Simulation of Living Systems (aka Artificial LIFE XII or A-LIFE XII (2010)). Given by Professor Ioannis Ieropoulos of the University of the West of England's (UWE) Bristol Bioenergy Center (a sub-lab of the Bristol Robotics Laboratory (BRL)) the talk discussed using a microbial fuel cell (MFC) to produce hydrogen to power a robot [pg. 749 PDF].

A little over a year later in Oct. 2011 Prof. Ieropoulos published a followup paper [PDF] on the MFC which carried an unexpected twist. In terms of unexpected, yet novel turns in science few can claim rival that which the UWE professor's work took -- suddenly his research hatched a brand new field: "urine-tricity". The premise was (and is) both sensational and simple -- push pee into a colony of bacteria in a fancy jar (of sorts) and let them digest it, building up a low level current in the process which is stored in a battery. 
Urine -- fuel for the future?
Urine -- fuel for the future? Urine --fuel for the future, or pissing into the wind? [Image Source: RSC] 
In the perfect world this would be an epic win. While the amount of power produced by a urine fed stack is minute -- roughly 2 to 2.5 milliwatts in more recent iterations -- that's enough to trickle charge (no pun intended) a microelectronic device in a remote setting. Typically that would require a noisy, wasteful, smelly, and worst of all expensive fossil fuel generator. 
MFC
MFC The pee microbial fuel cell (MFC) (well, urine MFC, formally speaking) is a good idea, but it's not all there commercially speaking. [Image Source: Phys. Chem. Chem. Phys.] 
But, the devil, of course, is in the details. While the cell itself was cheap to construct (being comprised in part of a clay vessel), the hard part would be getting and keeping alive the bacteria colony. A recent publication describes the process as follows
"Both types of MFC were inoculated from anaerobic sludge, provided by the Wessex Water Scientific Laboratory (Cam Valley, Saltford, UK), which was supplemented with acetate (as the source of carbon energy) and yeast-extract (as the source of minerals/nutrients). The acetate–yeast extract was added into 1 L of anaerobic sludge and consisted of 25 mM sodium acetate (Fisher Scientific, UK) and 0.1% w/v yeast extract (Oxoid, UK) with no added buffers and a pH of 6.7.

Initially and for approximately 1 week, the ceramic MFCs were maintained under batch mode conditions, after which they were switched to continuous flow, using a Watson Marlow 205U peristaltic pump (Watson Marlow, UK). The flow rate used was 250 mL min1 (hydraulic retention time – HRT = 3 hours, 48 minutes) and the same flow rate was subsequently employed for urine. The EcoBot MFCs were also maintained in fed-batch mode with 3 mL of either acetate–yeast extract or urine fed twice a day, resulting in an HRT E 24 hours." doi: 10.1039/C3CP52889H; Physical Chemistry Chemical Physics (PCCP); Jul. 2013
At the risk of playing contrarian I would point out that there's one thing glaringly absent from most of these publications: the lifespan of the bacteria. Most bacteria are short-lived and seek to live in a specific sort of environment. In this case it's clear that the bacteria colony can last at least a week and only requires yeast (not super expensive), water, and acetate (which can be made frugally from baking soda (sodium bicarbonate) and vinegar). 
robots to pee
From robots to pee research funded by Bill Gates, Professor Ioannis Ieropoulos has seen his career at UWE take an unexpected and somewhat sensational diversion. [Image Source: UWE/Bristol]
The issue is not so much in the media (which certainly is doable in a remote setting and not overly rigorous, but in the tolerance to changes in the cell, particularly in terms of temperatures and pH. Remember, these remote regions don't have air conditioning in the summer or central heat in the winter. So keeping your pet bacteria alive is challenging.

And then there's the real kicker -- the pump. The bacteria, after all, don't like to live in stagnant water. They like a nice gentle flow and continuous twice daily injection of nutrients. Those luxuries are provided via Watson Marlow 205U peristaltic pump [brochure; PDF]. Such pumps typically have motors that start at a minimum of 5 watts.

So your bacteria colony, which outputs 2 to 2.5 milliwatts of power needs something on the order of two thousand times that much power to continuously circulate its media.

"Uh oh."...
...MORE, SO MUCH MORE

Additionally the four-year, EU financed multidisciplinary ValueFromUrine Project wrapped up August 31.

*That address to the Democratic National Convention was ranked as number 74 of the top 100 American speeches of the 20th century.

"The Pessimist’s Guide to 2017"

From Bloomberg, Dec. 5:
By John Fraher, Flavia Krause-Jackson and Mira Rojanasakul
Donald Trump and Brexit shocked most of the world in 2016. 
But not readers of last year’s Bloomberg Pessimist’s Guide, which warned that the unthinkable could happen in both cases. Now the authors are turning their attention to 2017. 
From social breakdown in the U.S. to a nuclear crisis in North Korea to the defeat of Angela Merkel in Germany, the potential for chaos is just as great. 
These aren’t predictions. But they show what your social-media news feed could look like if things go wrong....MUCH MORE

SCENARIOS


HT: ZeroHedge's Frontrunning links

"Alphabet’s Sidewalk Labs is eyeing a contest to build its own internet city" (GOOG)

From The Verge, Nov. 30:

‘A living laboratory for urban technology’
For months, it was rumored that Sidewalk Labs, the Google spinoff focused on smart city solutions, wanted to build its own city-within-a-city to trial self-driving cars, public Wi-Fi, new health care solutions, and other city planning advances that modern technology makes possible. Today, the company confirmed that it was indeed interested in creating its own urban district “from the internet up,” and hinted that it may even make a contest out of it.

Dan Doctoroff, CEO of Sidewalk Labs, made it official in a Medium post today celebrating the company’s first year in existence. In it, he claims that by experimenting with new technologies in “real-world conditions,” there is the potential to reduce greenhouse gas emissions by up to two-thirds, shorten commutes by an hour, and slash the cost of living for local residents by as much as 14 percent.

“A large-scale district holds great potential to serve as a living laboratory for urban technology  —  a place to explore coordinated solutions, showcase innovations, and establish models for others to follow,” Doctoroff writes.

He credits “internet rumors” with fueling heightened interest in Sidewalk Labs’ urban experiment. Indeed, the rumor mill has been churning about a mythical “Google Island” since even before the company spun-off Sidewalk Labs as its smart city incubator. This led to speculation that Sidewalk Labs was looking to purchase land on which to build a planned community that could house thousands of people. But in his essay, Doctoroff dismissed the idea of a walled-off district separated from the wider city. 

“Whatever we do, we know the world doesn’t need another plan that falls into the same trap as previous ones: treating the city as a high-tech island rather than a place that reflects the personality of its local population,” he said....MORE 
Recently:

No, they have bigger plans.
There is big money and big politics behind this stuff and this June 2016 article is a good primer on what's coming.
As former Deputy Mayor to Michael Bloomberg, Doctoroff pretty much epitomizes the intersection of big money/big politics. That Medium post is not quite a blueprint but interesting nonetheless.

Foreign Exchange: "You Can Almost Hear a Pin Drop"

The US dollar index is up 0.24 at 100.35.
Here's the one-year chart from FinViz:


From Marc to Market:
The foreign exchange market is quiet.  Ranges are narrow, with the US dollar mostly consolidating against the major currencies.  Given the push lower yesterday, the shallowness of its recovery warns of the greenback's downside correction after strong gains last month may not be complete.

The news stream lends itself to consolidation.  The immediate angst over Italy has calmed.  Many new reports insist on calling the defeat of the referendum as a victory for anti-establishment forces.  We demur,  and note that the opposition, nearly 60%, was only partly explained by the populist-nationalist forces, but the opposition to it was obviously widespread including in area in which the 5-Star Movement is not particularly strong.  

Moreover, as it turns out, Renzi will stay on until at least the passage of the 2017 budget, which could happen toward the end of the week.  It is possible that after the Italian President looks around for the best person to head up the government, Renzi is it.  One indication that this will not happen is if Renzi also resigns as head of the PD. 

At the same time, it looks like investors are coming around to a less apocalyptic understanding of Italian developments.  To wit:  bank shares have recouped yesterday's loss and are up about 2.6% near midday in Milan after falling 2.2% yesterday. Italian sovereign bond has also recovered.  Yesterday the 10-day yield rose eight bp.  Today it is off six bp.  What this means is that over the past week, the benchmark 10-year yield is down almost three bp, while Spain's is off two bp and Germany is up 12 bp.  A similar story is evident in the equity market.  Italian equities underperformed yesterday but are leading the way higher today with a 1.4% gain.  Over the past week, the FTSE-MIB is up 4.4%, the most among not just major European markets but the G7 as well by a couple of magnitudes.  

Monte Paschi successfully swapped about 20% of its subordinated notes for equity.  The next step is to secure new capital by anchor investors, like Qatar.  After that is the challenge of raising capital by issuing more stock.  There is some risk that even if it can do this, which is not sure thing (which is also why there is still talk of precautionary state aid), it may satiate the market for this type of risk asset even though other large Italian banks are also looking to raise capital.   There is also some talk that the bank may move away from its non-performing loan disposal, which might not sit well with potential investors.  

German news offered a pleasant surprise....
...MORE

Travel Around the World With Nick Kristof and Three Other New York Timers, 26 Days, $135K

Well this Looks interesting.
From the New York Times:

Around the World by Private Jet: Cultures in Transformation
Fly around the world in a customized Boeing 757 jet for the ultimate in luxury travel. Spend 26 days visiting such places as Iran, Cuba, Colombia, Australia, Myanmar and Iceland. Four award-winning New York Times journalists will accompany you, each for several days as you visit areas where they have expertise.

Combining the best of several Times Journeys itineraries and offered jointly with Abercrombie & Kent, this global tour offers a worldview like no other. It begins in New York, then stops in Cuba, Colombia and Easter Island; continues to Australia and Myanmar; then to Iran and Morocco; and to Iceland. In addition to the Times expert who accompanies you, meet other Times journalists and local experts for additional insights. In the air, your private jet comes with lie-flat beds and a dedicated cabin crew and chef. Circle the globe with The New York Times and Abercrombie & Kent on this unique journey for unparalleled access and perspective....MUCH MORE
 
Cost $135,000; Deposit of $7,500 per person; For full payment schedule, see terms and conditions.
Select dates and pricing
 
Itinerary 26 days, 25 nights
View daily itinerary

Monday, December 5, 2016

Space Oddity: U.S. Astronaut Buzz Aldrin Evacuated From South Pole, Being Treated in New Zealand

From Reuters:
In what can only be described as a space oddity, former astronaut Buzz Aldrin is being cared for in a New Zealand hospital by Dr David Bowie after being evacuated from the South Pole.
In a truly remarkable coincidence, Aldrin's doctor shares the name of the late British singer whose greatest hits included songs such as "Starman" and others about space travel that could easily have been penned for the great American astronaut.

The coincidence certainly tickled Aldrin's manager, Christina Korp, who posted a photo on Twitter of Aldrin and Dr Bowie together in a Christchurch hospital.

"Thank heaven @TheRealBuzz's doctor is David Bowie," Korp said on Twitter. "You can't make this stuff up."

Bowie, the singer and actor, released his smash hit "Space Oddity" about a fictional astronaut who loses communication with ground control in 1969, just days before Neil Armstrong and Aldrin became the first humans to set foot on the moon.

Their moonwalk, part of the Apollo 11 lunar landing, was watched by a then-record television audience of 600 million people worldwide....MORE
Here's a tweet from @TheRealBuzz:
Here's the Official vid:



The cover by Commander Chris Hadfield on board the International Space Station:



And Commander Hadfield's thoughts on Bowie's passing:

What Happens Next In Italy: Here Is Goldman's Take


Sorry, that may not be the correct flow chart.
I'll try again. From ZeroHedge:
While the market overcame its initial scare following yesterday's counter-establishment Italian referendum vote, and European stocks proceeded to not only make up all losses, but soar in the overnight session by the most since Trump's presidential victory, what happens next in Italy is largely unknown. What follows are Goldman's snap thoughts on the Italian next steps. 
First, a quick recap of what has happened in yesterday's referendum in which many more Italians than expected turned up to reject the proposed reforms, leading PM Renzi to announce his resignation later today. The odds of a general election have risen from one-in-five to one-in four, according to Goldman. Despite yesterday's outcome, Renzi remains the most popular politician on the centre-left. More importantly, the outcome of the vote lowers the chances of a market-driven solution for the ailing Italian banks, and in turn increases the likelihood of a State-led restructuring Goldman notes 
Here are the details:
In a national confirmative referendum held yesterday, Italian voters rejected a Constitutional reform bill sponsored by the coalition government of Mr Renzi and passed by Parliament in April. The referendum was called because the bill had failed to receive the quorum of 2/3 of MPs in its final reading.
The outcome of the referendum was in line with opinion polls in the run-up to the vote. These had been suggesting that the ‘Vote No’ side would win by some distance. Two elements are new, however (all numbers based on quasi-final vote count):
At 59.1%, the percentage of voters rejecting the reform bill was 5 percentage points higher than projected by opinion polls going into the referendum (55%). This outcome represents a much starker victory for the ‘Vote No’ camp than generally envisaged. Goldman assumed that the odds favoured a ‘Vote No’ win only marginally (55%), and that the gap between the two sides would be small, within 10 percentage points rather than the realised 20. 
The voter turnout was 10 percentage points higher than projected by pollsters (65.5% vs. 55%), with close to 33 million people casting their vote (19.4 million voted ‘No’ and 13.4 million ‘Yes’). By comparison, the turnout in the UK Brexit vote was 72.2% (corresponding to 33.6 million people) while in the Italian 2006 referendum on Constitutional reforms, which also saw the amendments being rejected, the turnout was 52.3%.
A first analysis of the vote breakdown suggests that the electorate largely acted on political priors. Specifically:
  • In polling districts where opposition right-wing parties and the 5 Star Movement gathered higher consensus back in 2013 (Southern Italy, alongside some areas in the North), the ‘Vote No’ camp has achieved its best results, reaching as much as 70% of the vote share.
  • In the South, the ‘No’ vote outnumbered the ‘Yes’ by a remarkably ample margin (more than 40%) in Sicily and Sardinia, where the 5 Star Movement managed to outperform the Democratic Party in the 2013 general election.
  • The constitutional reform has been largely rejected also in the North-East of the country, a stronghold of the Euro-sceptical Northern League. The 'Vote No' camp, for instance, obtained 62% of the vote in Veneto, where Lega won roughly one-third of opposition votes in the 2013 general election.
  • Conversely, the regions where the Democratic Party performed better at the 2013 elections – such as Emilia Romagna and Tuscany, where it won more than 40% of votes – were those experiencing a victory of the 'Vote Yes’ camp.
  • The relationship between the share of youth unemployment by polling region and No share of the vote is strikingly positive (see Exhibit 2). This is a result that will carry a large weight in the next general elections, as well as those in other European countries. The general impression here is that the youth and the disadvantaged are rebelling against the establishment, even when its policies bring economic benefits, albeit unequally distributed (incidentally, the protests against the ECB policies of low rates and QE go in the same direction).
Exhibit 1: The percentage of voters rejecting the reform bill was 5% higher than projected by opinion polls 
...MORE

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/11/29/gs%20italy%20scenarios.jpg

Here's Google's Sidewalk Labs' Pitch To Insert Itself Into America’s Urban Transportation Infrastructure (GOOG)

From Buzzfeed, Oct. 7:

Here’s Alphabet’s Pitch To “Smart”-ify Your City
Google’s sister company Sidewalk Labs wants to insert itself into America’s urban transportation infrastructure. Here are the documents that show how it could happen. 
In April, a team of representatives from Sidewalk Labs — a subsidiary of Alphabet, which is also Google’s parent company — visited Columbus, Ohio, to pitch city officials on a sprawling, ambitious plan to overhaul the city’s transportation infrastructure.

Sidewalk proposed managing and expanding the city’s transportation data on transit routes, passengers, parking spaces, cars, and more. In the process, Sidewalk promised to give the city “new superpowers” and make it more accessible.

By mid-year, Sidewalk Labs had pitched at least six other tech-hungry cities — San Francisco, Austin, Pittsburgh, Denver, Kansas City, and Portland — on the same bold proposal.

In Columbus, the company’s representatives said, two systems called Flow and Link could “pinpoint the causes of congestion,” reduce the “emissions and distracted driving that results from circling for parking,” “encourage ride-sharing,” and provide “ultra-fast gigabit WiFi.” That could be a significant improvement in a city where an estimated 82% of commuters drive to work. And though Sidewalk’s presentation does not name the final cost of the systems — it’d depend on a range of factors — it claims that the new approach could ultimately return a profit to Columbus.

But outsourcing these traditionally municipal concerns to a private company — and a high-profile technological innovator, at that — would be a stark change that could have implications well beyond central Ohio.

Those promises and more are detailed in a set of documents BuzzFeed News obtained through a freedom-of-information request to Columbus. Among the contents:
  • Sidewalk Labs’ slide decks presented to Columbus in the April meeting.
  • A proposed “memorandum of understanding” that Sidewalk sent to city officials.
  • A spreadsheet that Sidewalk shared to help the city estimate potential revenues and costs associated with the company’s proposal.
Some excerpts from these documents have been published by other outlets, including The Guardian and Recode. But until now the documents have not been reproduced in full. You can find them at the bottom of this post.

Sidewalk Labs targeted its pitch to cities competing for the Department of Transportation’s Smart City Challenge. In June the DOT named Columbus the competition’s winner, beating the six other finalists for the $40 million prize.

Columbus and Sidewalk Labs haven’t reached any formal agreements, according to Jeff Ortega, assistant director for the city’s Department of Public Service.

“At this point, discussions are centered around whether or not the company’s ‘Flow’ platform can help link health providers and residents in disadvantaged neighborhoods to facilitate transportation options,” Ortega told BuzzFeed News this week. “At this point, if Sidewalk Labs were to be engaged, the engagement would only be specific to this purpose.”

Sidewalk Labs declined to comment specifically on its pitch to Columbus. But in an op-ed published this summer, Daniel Doctoroff, the company’s CEO, wrote that its “conversations with city officials and urban planners” around the country “taught us many important lessons.” He continued: “Our role during these talks was to learn what the public sector is already trying, and discuss ways to help those trials become successful.”

The pitch
Transportation is rapidly becoming consumerized,” the pitch deck begins. To keep pace, “cities must innovate with the private sector.”

At the heart of the proposed collaboration is Sidewalk’s data platform, which would integrate data from city records, digital sensors, and “third-party data providers” such as Google Maps, Waze (the navigation app acquired by Google in 2013), Uber, and Lyft....
....MUCH MORE

Private Equity Embraces the Return of the Quick Flip

For some reason I still see Warren Buffet's 2008 Shareholders Letter when someone mentions the term "Private Equity":
...Some years back our competitors were known as “leveraged-buyout operators.” But LBO became a bad name. So in Orwellian fashion, the buyout firms decided to change their moniker. What they did not change, though, were the essential ingredients of their previous operations, including their cherished fee structures and love of leverage.

Their new label became “private equity,” a name that turns the facts upside-down: A purchase of a business by these firms almost invariably results in dramatic reductions in the equity portion of the acquiree’s capital structure compared to that previously existing. A number of these acquirees, purchased only two to three years ago, are now in mortal danger because of the debt piled on them by their private-equity buyers. Much of the bank debt is selling below 70¢ on the dollar, and the public debt has taken a far greater beating. The private- equity firms, it should be noted, are not rushing in to inject the equity their wards now desperately need. Instead, they’re keeping their remaining funds very private...
From Forbes:
When private equity giant Blackstone sold luxury hotel group Strategic Hotels & Resorts to Chinese insurance group Anbang for around $6.5 billion earlier this year, many observers took the deal as further evidence of China’s mad scramble for foreign assets, especially US real estate.

But the deal was also the start of another scramble that investment bankers across all sectors stateside have begun to notice: the return of the quick flip.

In Strategic Hotels’ case, Blackstone took the company private in December 2015 for about $6 billion, and then sold the group again in March – meaning the firm cleared about $500 million in something close to 12 weeks.

Private equity has long battled the caricature that they are mere speculators. As the industry has matured there has been ever more talk of more farsighted investment strategies. In February, for instance, The Carlyle Group announced it had raised more than $3.6 billion for a special long-dated fund aimed at holding companies for at least double the length of the rest of its conventional funds.
But Mergermarket data show the current market environment is making it hard to resist the option of a speedy – and relatively juicy -- exit.

So far this year, 24 private equity firms have exited platforms after holding them for less than two years. In 2015, there were 46 such exits, a nearly 50% increase from 2014, when there were 33. Frequently, the portfolio companies in question were traded to other sponsors....MORE

'Fake News' Site Threatens Washington Post With Real Lawsuit

From Naked Capitalism:

We Demand That The Washington Post Retract Its Propaganda Story Defaming Naked Capitalism and Other Sites and Issue an Apology
As the lawyers like to say, res ipsa loquitur. Please tweet and circulate this letter widely. You will notice that our attorney Jim Moody is a seasoned litigator who has won cases before the Supreme Court. He has considerable experience in First Amendment and defamation actions. Past high profile representations include Westomoreland v. CBS and defending Linda Tripp.

I also hope, particularly for those of you who don’t regularly visit Naked Capitalism, that you’ll check out our related pieces that give more color to how the fact the Washington Post was taken for a ride by inept propagandists, particularly our introduction to our spoof PropOrNot.org site, which uses the PropOrNot project as an example of sorely deficient propaganda and shows where it went wrong, or the humor site itself. Be sure not to miss its FAQ.

We have another post today that describes how the few things that are verifiable on the PropOrNot site don’t pan out, as in the organization is not simply a group of inept propagandists but also appears to deal solely in fabrications. If the site is flagrantly false with respect to things that can be checked, why pray tell did the Washington Post and its fellow useful idiots in the mainstream media validate and amplify its message? Strong claims demand strong proofs, yet the Post appeared content to give a megaphone to people who make stuff up with abandon. No wonder the members of PropOrNot hide as much as they can about what they are up to; more transparency would expose their work to be a tissue of lies...MORE 
Also at Naked Capitalism:

We Launch PropOrNot.Org To Identify Inept Propagandists and School Amplifiers Like The Washington Post on How to Spot Them

PropOrNot’s Grandiose Fabrications

Thanks SO MUCH For a Speedy and Very Successful Emergency Fundraiser to Fight Independent News Site Blacklists

And apologies to Naked Capitalism for the "Fake News Site" in the headline, I think I was channeling the New York Post's style.
Or something. 

Media: Politico Co-founder’s New Media Startup is Eyeing $10,000 Subscriptions — Eventually

Some people will be able to afford the news and some won't.
It's a model that's been talked about for a while.
From re/code:
We still don’t know a lot about Axios, the yet-to-launch media startup founded by Politico co-founder and former CEO Jim VandeHei. But we do know it’ll be expensive.

VandeHei is envisioning subscribers paying $10,000 or more for some of the startup’s news and analysis, he told Kara Swisher onstage at Recode’s Evening with Code Media on Wednesday night in New York City.

The one-time Washington Post journalist said he can’t imagine being “super intrigued with a subscription less than $10,000.” He declined to offer more specifics. 

The company’s coverage will center on business, technology, politics and media. It will also focus, as many media companies do, on putting content in front of readers on the social networks where they are already spending a lot of time. Specifically, VandeHei spoke highly of Snapchat’s media platform, called Discover.

VandeHei also stressed that Axios will value brevity in its coverage over length for length’s sake.
“Journalists are writing for journalists. That’s the biggest problem in media right now,” he said.
“People don’t want the pieces we’re writing,” he added. “They’re too damn long.”

At launch, Axios will be free to readers and supported by advertising. Two to three years down the line, VandeHei is targeting around 50 percent of revenue from advertising, and the other half from subscriptions and events. That’s a ratio he accomplished in his 10-year run at Politico, where some Politico news is free while some falls under expensive Politico Pro subscriptions....MORE

BlackRock: "What we talk about when we talk about TIPS"

BlackRock owns the iShares brand of ETF's including the largest TIPS ETF.

From the BlackRock blog:
Matt explains why investors should look at Treasury Inflation Protected Securities (TIPS) and TIPS ETFs now, and what the differences are between the two. 

Inflation expectations have been on the rise since before the U.S. election, but markets are now more convinced of higher inflation to come due to President-elect Trump’s talk of fiscal stimulus and tax cuts. Measured by breakevens in the Treasury Inflation Protected Securities (TIPS) market, inflation expectations for the next 10 years rose to 1.93%, the highest level since the summer of 2015 (source: Bloomberg data, as of 11/18/2016). The long decline in inflation seems to be turning, as the Consumer Price Index (CPI) climbed 1.6% year-over-year, the most in two years (source: Bureau of Labor Statistics, as of 11/18/2016). This changing environment has piqued investor interest in TIPS, and in turn, TIPS ETFs.

As the name implies, Treasury Inflation Protected Securities can help protect investors against inflation, while also providing the potential for income. The payments on TIPS are adjusted according to changes in the CPI. That means the coupon and principal payments of TIPS increase with inflation and fall with deflation.

TIPS are also valued by investors for their historically low correlation with other asset classes, which can make them a good addition to a diversified portfolio.

Among the ways to buy exposure to TIPS is directly through the government (the government sells them on TreasuryDirect.gov) or through an ETF. But here are two key points to understand before deciding whether TIPS or TIPS ETFs are right for you:

Tax implications
For a taxable U.S. investor, both the bond coupon and the inflation adjustment of TIPS are taxed as income. But the majority of the inflation adjustment is paid when TIPS mature. This creates what has been coined “phantom income”, income that is taxed in the current period but not received until a later period.

iShares offers two ETFs that invest in the U.S. TIPS market: iShares TIPS Bond ETF (TIP) and iShares 0-5 Year TIPS Bond ETF (STIP). These funds address the phantom income issue by paying out a monthly distribution that includes both the coupon income coming from the underlying TIPS held in the funds, as well as the principal adjustment for inflation. The income that an investor is taxed on in the current period is received in the current period. But paying out both coupon income and realized inflation has an interesting impact on the amount of income a TIPS ETF distributes, which leads me to my second point.

Distributions will vary
Coupon income on TIPS is generally positive, but the inflation adjustment can be positive or negative depending upon changes in the CPI. Investors should be aware that during periods of high inflation, the distribution on a TIPS ETF will likely rise, but during periods of deflation, the distribution will likely fall. It can even fall to zero if deflation is strong enough—this happened in November 2016 with the iShares TIPS Bond ETF. It is important to keep in mind that the distributions will fluctuate over time.

Below is a chart that shows the historical CPI levels and distribution yields for the iShares TIPS Bond ETF (TIP). A change in CPI doesn’t impact the inflation accrual for a TIPS bond until two months later....MORE

Sunday, December 4, 2016

No, Google's Sidewalk Labs Doesn't Want To Take Over Urban Transit. Yet. (GOOG)

No, they have bigger plans.
There is big money and big politics behind this stuff and this June 2016 article is a good primer on what's coming.

From CityLab:
No, Alphabet Isn't Conspiring to Take Over Public Transit in Columbus
Contrary to a recent article, “smart” transportation technologies like those from Sidewalk Labs aren’t really a big secret. Plus, cities want them.

Google drives about a third of all internet traffic and has the best digital map of the world. Every day, its databases process billions of thoughts and queries, secret and banal, typed into search engines and email subject lines. Among other things, Alphabet Inc., Google’s holding company, builds robots of formidable intelligence. Its technologies will soon be chauffeuring us from points A to B.
Reading about Alphabet’s hush-hush projects, interconnected products, and disruptions both welcome and unwelcome, wary minds may well wonder if its ambitions might include world domination. An article published Monday in the Guardian, about an Alphabet subsidiary’s work with the finalists of the U.S. DOT’s $50 million Smart Cities Challenge, seemed to lean toward that suspicion, starting with a fairly alarmist headline and opening sentence:
Sidewalk Labs, a secretive subsidiary of Alphabet, wants to radically overhaul public parking and transportation in American cities, emails and documents obtained by the Guardian reveal.
It goes on to describe some of the services which would usher in this “radical overhaul,” as gleaned from the obtained documents: a platform that allows low-income bus riders to apply public subsidies to ride-sharing services; an app that unifies payment and service information for all modes of transit; public wi-fi kiosks with remote sensing capabilities; and “virtualized parking,” which would use camera-equipped vehicles to scan for empty spaces cities could sell on a virtual parking market.
As the article explains, all of the functions described here are proposed elements of Flow, the transportation-data collection and analysis platform. Flow is one of Sidewalk Labs’ two current, public products (the other is the aforementioned line of kiosks, some of which are in use now in New York City). Flow is currently being offered first to Columbus, Ohio, which won the U.S. DOT’s Smart Cities Challenge last week. The Guardian article goes on to examine a sample contract that describes the terms and conditions required of Columbus by Sidewalk Labs:
Cities like Columbus would be obliged to bring parking signs up to date, re-train enforcement officers and share parking and ridership information with Sidewalk in real time. The company also wants cities to share public transport data with ride-sharing companies, allowing Uber to direct cars to overcrowded bus stops.
All these conditions could mean expensive upgrades to existing technology. “Not every city would be ready to do that,” says [Alexei Pozdnoukhov, director of the Smart Cities Research Center at the University of California at Berkeley]. “Plus, you’ve got a variety of transit operators. Small ones might have to change their entire payment systems.”
Overall, the article gives the impression that Flow is some kind of top-down planning regime, conceived in secret by Sidewalk Labs and foisted on cities like Columbus. It makes it sound conspiratorial. But that isn’t really the case.

First, the Guardian article does not mention that Flow was announced in March, in partnership with the U.S. Department of Transportation, as technology offered for free by Sidewalk Labs to the Smart Cities Challenge victor. The exclusive documents obtained by the Guardian were, according to Sidewalk Labs, pitch materials shared with finalist cities that modeled some of the possible functions of Flow. Since the platform has still yet to be deployed in any city, the specific elements of Flow remain a work in progress.

This is not to say that the Guardian’s facts and images came out of nowhere. Flow will, in fact, aim to “increase the efficiency of roads, parking, and transit use,” says Anand Babu, COO of Sidewalk Labs. It will provide real-time transportation information to cities, and it “could be used to improve and plan public transportation, guide drivers directly to parking, or point commuters to shared mobility options they can use when public transportation is not an option.”

But the final product will ultimately be a result of a back-and-forth process with whatever city adopts it first—not a grand transit “fix,” ordained in the shadows. Sidewalk Labs’ CEO Dan Doctoroff writes in Co.Design that the company worked with the Smart Cities finalists to refine the functions of Flow. According to a number of officials from those cities, that is true. Sidewalk Labs reps flew to meet with each of the seven finalist cities to discuss how their services might work there. According to attendees, those meetings resembled meetings with any other vendor angling to sell young technology to a government: There was give and take....MORE

"Social Media Is Killing Discourse Because It’s Too Much Like TV"

From MIT's Technology Review, Nov. 29:
If I say that social media aided Donald Trump’s election, you might think of fake news on Facebook. But even if Facebook fixes the algorithms that elevate phony stories, there’s something else going on: social media represents the ultimate ascendance of television over other media.

I've been warning about this since November 2014, when I was freed from six years of incarceration in Tehran, a punishment I received for my online activism in Iran. Before I went to prison, I blogged frequently on what I now call the open Web: it was decentralized, text-centered, and abundant with hyperlinks to source material and rich background. It nurtured varying opinions. It was related to the world of books.

Then for six years I got disconnected; when I left prison and came back online, I was confronted by a brave new world. Facebook and Twitter had replaced blogging and had made the Internet like TV: centralized and image-centered, with content embedded in pictures, without links.
Like TV it now increasingly entertains us, and even more so than television it amplifies our existing beliefs and habits. It makes us feel more than think, and it comforts more than challenges. The result is a deeply fragmented society, driven by emotions, and radicalized by lack of contact and challenge from outside. This is why Oxford Dictionaries designated “post-truth” as the word of 2016: an adjective "relating to circumstances in which objective facts are less influential in shaping public opinion than emotional appeals."

Neil Postman provided some clues about this in his illuminating 1985 book, Amusing Ourselves to Death: Public Discourse in the Age of Show Business. The media scholar at New York University saw then how television transformed public discourse into an exchange of volatile emotions that are usually mistaken by pollsters as opinion. One of the scariest outcomes of this transition, Postman wrote, is that television essentially turns all news into disinformation. "Disinformation does not mean false information. It means misleading information—misplaced, irrelevant, fragmented or superficial information—information that creates the illusion of knowing something but which in fact leads one away from knowing ... The problem is not that television presents us with entertaining subject matter but that all subject matter is presented as entertaining.” (Emphasis added.) And, Postman argued, when news is constructed as a form of entertainment, it inevitably loses its function for a healthy democracy. "I am saying something far more serious than that we are being deprived of authentic information. I am saying we are losing our sense of what it means to be well informed. Ignorance is always correctable. But what shall we do if we take ignorance to be knowledge?"

The problem with today’s Internet, driven less by text and hypertext (hyperlink-enriched text), is that it not only shares many of TV’s ills but also creates new ones. The difference between traditional television and the form of TV that has reincarnated as social media is that the latter is a personalized medium. Traditional television still entails some degree of surprise. What you see on television news is still picked by human curators, and even though it must be entertaining to qualify as worthy of expensive production, it is still likely to challenge some of our opinions (emotions, that is).

Social media, in contrast, uses algorithms to encourage comfort and complaisance, since its entire business model is built upon maximizing the time users spend inside of it....MORE

"Inside the weirdly calming world of farming and truck simulators"

From NewScientist:
Harvesting takes me an hour. That’s an hour in which I drive at little more than walking pace from one end of a field to the other and back again 20 or 30 times. It’s not the most fun I’ve had in a video game, but then I do need the money.

Farming Simulator 17, released on 25 October, is the latest game in a series made by Giants Software in Schlieren, Switzerland. Players start out with little land and few machines and must plant, tend and harvest crops – or raise livestock – to earn money to buy more land and more machines.
Running a successful farm can get your goat. You need to carefully manage your spending on fields, fuel and fertiliser to make a profit. You have to decide when trading in your beaten up tractor for a new one makes more sense than paying for repairs. There are loans to consider and investments to monitor. But at its heart, Farming Simulator is a game about driving heavy machinery up and down in straight lines. And there’s a zen-like buzz to the monotony.

.
For many, that’s a bigger draw than the frantic action of a shooter. Most games are all about winning or losing, says Mason, who plays to unwind. “When I play Farming Simulator there is no losing – it’s just me driving a tractor.”

Farming Simulator games often top sales charts in the US and Europe. And they are not the only popular video games about farming. Games like Harvest Moon and Stardew Valley give players idyllic cartoon farmsteads to run. And at its peak, Zynga’s 2009 Facebook hit FarmVille hooked several million people into a daily routine of tending their crops of carrots, albino pineapples and watermelon babies. But FarmVille never let you spend hours behind the wheel of a Holmer Terra Felis 2 eco sugar-beet loader.

Racing games often let you cruise around in pixel-perfect replicas of real-life vehicles, boasting licensing deals with car makers. Last year’s Forza Motorsport featured hundreds of virtual rides, including supercars like the Aston Martin V12 Zagato and the Lamborghini Veneno.
 Down on the farm
Farming Simulator is no different. The Holmer Terra Felis 2 is just one of around 250 licensed farm machines you can take for a spin – from the Massey Ferguson 7726 with Joskin Betimax RDS 7500 trailer (capacity: nine pigs) to the Ponsse Buffalo forwarder, a forestry vehicle used for thinning trees.


It’s not always about speed, though. Truck-driving sims such as Euro Truck Simulator and American Truck Simulator have even more fans that Farming Simulator. There are driving sims for everyone, whether buses, trains, tanks or diggers float your boat. All drop you into the cab of a large vehicle and simply let you drive....MORE
HT: Marginal Revolution

Previously (yes, there was a previously):
Apparently A Farming Simulator Has Sold One Million Copies
Who knew?
And its gone through 15 iterations.... 


The Farming Simulation Competition Is About to Heat Up
Can you feel the excitement?... 

HBR: Golf is evil (from an investor's perspective)

That's the Professor's headline, not the Harvard Business Review.

From Professor Bainbridge:

The HBR reports:
A year before Bear Stearns failed during the financial crisis, there were signs that the Wall Street firm was in trouble. During July 2007, two of Bear Stearns’ large hedge funds were failing. What was CEO James Cayne doing at the time? That month, he spent ten “working” days either playing golf or the card game bridge. ...

Separate tests focusing on operating performance and stock market valuations both suggest that high levels of CEO leisure are associated with underperforming firms. The average return on assets (ROA) is over 100 basis points lower for the CEOs in our sample who were in the top 25% of most-frequent golfers. A similar relation exists between CEO leisure consumption and firm market capitalization, which suggests that shareholder wealth is also negatively affected by the time CEOs spent on the fairways and greens.
Go read the whole thing, it's quite interesting.

There Appears To Be a Lovefest Going On at Ft Alphaville

Keep in mind these are Financial Times readers, not Teen Beat or J-17 or Sugar or somesuch.

Just look at these comments:
senatus populusque 3 days ago
Kudos to this newspaper for allowing your work to flourish. We need antidotes to group-think 

Izabella Kaminska FT 3 days ago
 @senatus populusque
thanks!

CThwaites 3 days ago
@Izabella Kaminska @senatus populusque
Yes, keep at it. 

HDA 3days ago
Hear Hear. IK at her best and her best is very good indeed. Thank you 

No. 5011348 3 days ago
Great piece. Great work by NC also.

ResilienceEconomist 3 days ago
Your unashamedly intelligent and independent-minded writing keeps my faith in journalism alive.

Lemmy 3 days ago
Thought-provoking as ever. 

willosaurus 3 days ago
superb! 

Ubique 3 days ago
Outstanding journalism. Detailed, fact based reporting informed by political reality and human empathy. Thank you Ms Kaminska 

Anon 3 days ago
This is a great piece. Brilliant work. 

Olibee 3 days ago
Fantastic article - thank you so much (also for the link to Naked Capitalism). Keep it up!

LoggedOut 3 days ago
As a middle-ager, I've always hated being disrupted and fail to understand how now it's seen as a positive term. Great article!

lxduende 3 days ago
Kudos to linking to Naked Capitalism.

HisDudeness 3 days ago
Great stuff IK. Thanks. 

Grant 1 day ago
Finally, somebody is doing their job in calling out the unicorns for what they are: all style and no substance. Thank you

I've never seen anything like it. There were maybe four negative leavings among the 70 or so listed.

And this is a post about a taxicab unicorn.
The taxi unicorn’s new clothes

It got to be so overwhelming going through the comments, one after another that, I'm a bit embarrassed to say, I thought of this from one of our posts a year ago:

http://3.bp.blogspot.com/_HIGcqeTeDg4/SwYuh3dP-8I/AAAAAAAAAa0/YEQQhJLTnN8/s1600/5d22bd9cc5759499ec73a74b30526a269f2868f1_m.jpg
The internet has some odd offerings when you ask it for "Unicorn orgy". 

Saturday, December 3, 2016

Turkey's Erdoğan Backs Down In Battle Of Wills With Putin

Following up on Kremlin Unsure How to Take Erdogan's Vow to Topple Assad.*

From Hurriyat Daily News (since they're still publishing we can assume they speak for the government), Dec. 1: 

Operation in Syria only targets terror, Erdoğan clarifies 
Turkey’s military operation in Syria is not against any country or person but terror groups in general, President Recep Tayyip Erdoğan has said, in contrast to earlier remarks that Turkey’s objective was to topple Syrian President Bashar al-Assad following.

“The aim of the Euphrates Shield Operation is no country or person but only terror organizations. No one should doubt this issue that we have uttered over and over, and no one should comment on it in another fashion or try to [misrepresent its meaning],” Erdoğan said at a 30th gathering with village chiefs at the Presidential Palace in Ankara on Dec. 1.

On Nov. 29, Erdoğan sought to explain the reason for Ankara’s military offensive into Syria, saying: “We entered there to end the rule of the tyrant al-Assad who terrorizes with state terror. [We didn’t enter] for any other reason.”

Erdoğan referred to the ongoing Euphrates Shield Operation that was launched on Aug. 24, after Ankara and Moscow began new dialogue over the course of developments in Syria. Turkey said its aim was to secure the border from the Islamic State of Iraq and the Levant (ISIL) and to stop People’s Protection Unit (YPG) efforts to link its cantons in northern Syria.

Erdoğan’s remarks on Nov. 29 created unease in Moscow, as senior officials publicly criticized the Turkish government and expressed their demand for an explanation. The issue was also raised by Vladimir Putin, who talked to Erdoğan on the phone on Nov. 30 while the latter was chairing a National Security Council (MGK) meeting....MORE 
*The precedent is already established, the one used in "Reply of the Zaporozhian Cossacks", see below....
... And back to the Cossacks. A couple weeks ago we posted "Little Has Changed Between Turkey, Russia Despite Reconciliation" with this introduction:
Whenever I think about Turkish-Russian relations I think of this painting:
https://upload.wikimedia.org/wikipedia/commons/7/79/Ilja_Jefimowitsch_Repin_-_Reply_of_the_Zaporozhian_Cossacks_-_Yorck.jpg
... That's "Reply of the Zaporozhian Cossacks" by Repin, hanging in the State Russian Museum, St. Petersburg.

As the story goes, in 1676 the Turkish Sultan, despite being beaten by the Cossacks when he tried to invade what is now southern Ukraine, demanded these guys surrender and submit to Turkish rule.

As can be seen, the Cossacks thought this was the funniest thing they had ever heard and wrote a letter in response.
A very profane, very defiant, very vulgar, very contemptuous letter.

These old boys just cracked themselves up with their letter.
And that's what I think of when I think of Russians and Turks.

Police State Investing: The Companies that Could Join China’s Orwellian Behavior Grading Scheme

From Fortune via VentureBeat:
A year after China’s central government proposed a far-sweeping social credit system to turn citizens’ mundane online activities into a record of creditworthiness, local governments are beginning to compile records in the system critics dismiss as Orwellian.

Cities like Hangzhou, home to Alibaba, are beginning to track citizens’ utility bills, criminal record, online shopping habits, and public transportation use, among other factors, to generate a social credit score, the Wall Street Journal reports. The paper said three dozen cities are beginning to compile records.

The news reflects the unease existing in China today.

China’s ruling Communist Party is nervous about the prospects of social unrest as economic growth slows and millions of eligible workers are laid off amid reforms to the country’s heavy industry sector. The social credit score program, which the government hopes will combine disparate big data on its citizens for the first time, will likely make it easier to monitor and reward citizens who act suitably while punishing those who don’t. It’s a program China’s government can’t do alone, so it is enlisting some of the country’s best-known companies to help create it.

Alibaba’s Alipay payment system is one of eight companies involved in the first experiments around China’s social credit scoring system, the WSJ said. Alipay compiles scores based upon a user’s smartphone brand and what they buy online, before offering users perks for high scores.
“We want people to be aware of” their online behavior having an influence on their online credit score “so they know to behave themselves better,” the WSJ quoted Joe Tsai, Alibaba’s executive vice chairman, as saying.

Tencent is another obvious candidate to join the government’s efforts. Tencent’s WeChat social network, which has a scrolling “moments” feed and messenger service similar to Facebook’s offerings, has 800 million monthly users....MORE

"Equity Analysts Join the Gig Economy"

From Bloomberg Gadfly:
The gig economy has arrived in banking.
French lender Societe Generale SA announced Thursday that it had struck a deal to provide Asian equity research to its clients from online financial research syndication platform Smartkarma. According to the release:
"Societe Generale is the first global investment bank to have an agreement with an emerging fintech company to provide equity research that is compliant with evolving research unbundling requirements, such as MiFID II."
If the letter soup in that sentence went above your head, here's a summary: Europe's proposed new investment regulation, the Markets in Financial Instruments Directive, will require equity research to be paid for independently, instead of bundled together with trading commissions. As they start looking into how to separate the areas, banks are finding that research can't always pay for itself, partly because of the competitive nature of the business.

Enter third-party providers, such as Smartkarma . The platform has found a niche aggregating and distributing research produced by small brokerages and, more often, by independent analysts who may use it as a venue to retain visibility and land consulting work after leaving positions at big banks or funds.

Until now, such services had been gaining subscribers but had not replaced in-house research desks. Societe Generale's announcement may indicate a bigger shakeup is coming. It makes sense under the new European rules so expect more such notices. With many jurisdictions considering emulating MiFID, it could even become the norm.
The bad news for employees is that if banks are using syndicated research, they will need fewer in-house analysts....MORE
Well, at least it's not the robots.
As noted in last Sunday's "The automation of creativity: scary but inevitable"
First they came for the journalists and I did not speak out-
Because I was not a journalist.

Then they came for the ad agency creatives and I did not speak out-
Because I was not an ad agency creative. (see below)

Then they came for the financial analysts and I
said 'hang on one effin minute'....