Thursday, March 30, 2017

"Juncker threatens to promote Ohio independence after Trump’s Brexit backing"

Go home Jean-Claude, you're drunk.

I'm talking full-blown, end-stage, Wernicke-Korsakoff, wet-brain, catch-a-buzz-on-a-pint, reverse-tolerance, dipsomaniacal, drunk.
(whew, that's a lot of hyphens)

From Politico:
“If he goes on like that I am going to promote the independence of Ohio and Austin, Texas,
” Jean-Claude Juncker said of Trump | Sean Gallup/Getty Images

Commission president also says EU defense efforts ‘like a chicken coop.’
VALLETTA, Malta — European Commission President Jean-Claude Juncker said Thursday he would promote the independence of U.S. states if Donald Trump continues to encourage EU countries to follow the U.K.’s example and leave the bloc.

At a meeting of leaders of the center-right European People’s Party in Malta, Juncker said Brexit would not be the end of the European Union — even if some people, such as Trump, would like that outcome.

In response to White House claims that Trump was “a leader on Brexit,” Juncker declared: “If that continues, I’ll call for Ohio to be independent and Texas to leave the United States.”...MORE
Earlier he said something about bees:
I’m the bees’ man: Juncker on Article 50 day 
Reminding yours truly of another honey-loving imbiber:

"PM markets: grains extend losses, ahead of 'big Friday'"

Following last year's March report our headline and intro were:

USDA Corn Reports: This Ain't Rock and Roll, This Is Genocide
I'm not sure why we have David Bowie doing the commodities report but it fits for the long corn crowd.*...
The report set up a rough day on that March 31st before the move higher, which was then crushed three months later when the June WASDE confirmed the earlier intentions report:

We're not looking for those kinds of fireworks although there may be some small upside surprises in the Soybeans/Corn acreage ratio.

From Agrimoney:
Friday will be a big day in the grain markets by anyone's definition, bringing the end of the week, the month, and the quarter, along with one of the most important data releases in the year.

"Month-end, quarter-end, and pre-report positioning dominate headlines and trading expectations," said Kim Rugel, at Benson Quinn Commodities. 

"Market lacks news and enthusiasm this morning trading lower overnight ahead of an expected bearish USDA report," Ms Rugel said. 

"Ag markets continue lower ahead of 'Big Friday'," said CRM AgriCommodities. 

Eyes on the stocks number
The US Department of Agriculture's stocks and acreage estimates will set expectations for the US summer season. 

Markets have probably factored in heavy soybean sowings, and a shift away from wheat, but perhaps more important is just how much corn, wheat, and soybeans are left 

"There probably be too much excitement around the acreage numbers, but what it could end up being [about] is quarterly stock numbers," said Steve Georgy at Allendale.
"How much do we have left over right now is the number we will be watching."

Risk-off sentiment
Mr Georgy also noted the end of month and quarter sentiments. "We're finding this risk-off mentality for grains," he said. 

This selling found no support from good wheat and soybean export sales numbers.
Weekly US soybean export sales were reported at 996,600 tonnes, beating expectations of 450,000 to 850,900 tonnes.

"Soybean sales and shipments are at record pace with USDA forecasting record large export demand for the marketing year," said Kim Rugel, at Benson Quinn Commodities.
"But with sales and demand shifting seasonally to South American, the big question with 23 weeks left in the marketing season, can shipments keep up with average weekly pace needed to meet forecast," Ms Rugel said. 

May soybean futures settled down 0.7%, at $9.62 a bushel. 

Soy/corn ratio falls
But corn export sales missed expectations, at 841,900 tonnes, where analysts estimated sales at 1.0 to 1.5m tonnes. 

May corn futures settled down 0.2%, at $3.57 ¾ a bushel. 

The closely watched ratio between new crop soybeans and corn, which farmers use as a guide to which crop will be more profitable, now stands at 2.53....MORE

Last Chg
Corn 357-4s-1-0
Soybeans 963-0s-6-0
Wheat 421-0s-4-4

Another Huge Miss From Citron and Andrew Left: Who Is This Guy? (TSLA; NVDA; MBLY; CC)

What the Hell?

At $186 the guy says Tesla is going to $100, it's at $281.
At $119 he says NVIDIA is going to $90 gets the initial drop and chickens out. Today the stock is at $108.
He says he's switching the short from NVIDIA to Mobileye with a $35 target.
17 days later MBLY agrees to be acquired by Intel at $63.54.

And here's the best of the bunch.
From Bloomberg, June 2, 2016: 

Chemours Rebounds From Selloff Sparked by Citron Short Call
  • Citron’s Left sees company as ‘bankruptcy waiting to happen’
  • Chemours on hook for liabilities in Teflon chemicals lawsuits
Chemours Co., the titanium-dioxide pigment maker spun off from DuPont Co., staged a late rally to rebound from the biggest drop in almost five months sparked by a Citron Research report calling the company “a bankruptcy waiting to happen.”

The shares closed higher by 0.7 percent at $8.86, rallying from a loss of as much as 15 percent as investors assessed the short seller’s report. A Citigroup Inc. research note suggested it contained nothing factually new.

In the spinoff, Chemours assumed DuPont’s liabilities including 3,500 lawsuits from people living near a Teflon plant in Parkersburg, West Virginia, who claim they were harmed by PFOA, also known as C-8, a chemical used to make non-stick coatings and stain-resistant fabrics. DuPont was found liable for a woman’s kidney cancer in the first trial, and another began this week.
Chemours may face more than $5 billion in PFOA liabilities, 10 times as much as some analysts estimate, given the costs of medical monitoring, cleanup, compensatory and punitive damages and legal fees, Citron said in its report. The company is likely to go bankrupt within 18 months, according to the report.

“It’s serious. It’s going to zero,” Andrew Left, owner of Citron, said in a telephone interview. “I don’t care when it goes to zero but the entity goes to zero....MORE
The stock was trading at $8.50 before he announced. Ten months later it's at $37.31:

CC The Chemours Company daily Stock Chart

Seriously, what the hell?

HT that this was an Andrew Left trade: Barron's Stocks to Watch:
Chemours: What Do You Do After a Stock Quadruples? Upgrade It, Of Course!

Further Case-Deaton Plight O'White Folk (morbidity, mortality etc) and the Critics Thereof

Speaking of Irish treasures (see immediately below), the FT's David Keohane directs us to this piece.

From Noahpinion:

The blogs vs. Case-Deaton 
Anne Case and Angus Deaton have a new paper on white mortality rates. This one is getting attacked a lot more than the 2015 one, though the findings and methods are basically the same -- increased death rates for U.S. whites, especially for the uneducated. Andrew Gelman is still on the case (we'll get to his critique later), but a number of other pundits have now joined in. Thanks in part to these critiques, it's rapidly becoming conventional-wisdom in some circles that the Case-Deaton result is bunk - one person even called the paper a "bogus report" and criticized me for "falling for" it.

But most of the critics have overstated their case pretty severely here. The Case-Deaton result is not bunk - it's a real and striking finding. 
First, let's talk about the most popular critique - Malcolm Harris' post in the Pacific Standard. Josh Zumbrun of the Wall St. Journal had a good counter-takedown of this one on Twitter.

Harris notes that the Case-Deaton paper hasn't gone through peer review, but fails to note that the 2015 paper, which said basically the same thing, did go through peer review. 
Harris also takes issue with the labeling of non-college-graduates as "working class", but this is a journalistic convention - Case and Deaton themselves use the term "working class" twice in their paper, but only when talking about possible economic explanations for the mortality increase. At no point do they equate "working class" with an educational category; that is entirely something that writers and journalists (including myself) do. 
And personally speaking, who really constitutes the "working class" seems like one of those internecine Marxist debates best left in the 1970s. When I use the term to mean "people without a college degree", I specify that that's what I'm talking about. 
But Harris' central critique is that, according to him, Case and Deaton have ignored selection effects. Obviously, if more people graduate college, there's a composition effect on the ones who still don't graduate. If mortality goes down by education level, this composition effect (which Harris calls "lagged selection bias") will raise non-college mortality even if mortality rates aren't changing at all. There's a 2015 paper by John Bound et al. (which Case & Deaton cite) showing that once these selection effects are taken into account, there's "little evidence that survival probabilities declined dramatically" for the lowest education quartile. Harris heavily cites Arline Geronimus, one of Bound's co-authors, who makes a number of disparaging comments about Case & Deaton's papers.
Selection effects are very real (and John Bound is one of the best empirical economists out there). Attrition from the non-college group is important. But as Zumbrun points out, once you lump all white Americans together - which totally eliminates the education selection effect - the mortality increase remains. Just look at this graph from the 2015 paper:

HT: today's FT Alphaville Further Reading post which leads off with a link on trading donkeys in China should you be jonesing for some action and can't get off on the usual fixes.

As I noted about a critic of the first Case-Deaton paper:
Since they are dealing with a paper co-written by Angus Deaton, this year's winner of the Nobel Prize in Economics, I'm assuming SMCISS has thought long and hard about this. 
Or they're just shooting for a bit of publicity by taking on the biggest name they could think of, people do that in the social sciences....

You Can Either Buy A Round of Guinness For Four Million Of Your Pals Or You Can Buy A Guinness 'Castle' and 5000 Acres

So there I was, looking at properties accessible to Dublin, what with the Brexit and all I thought there might be a bet in there somewhere, when this pops up.
It's not a real castle despite the crenelated battlements. More of a mini-castle, but cute.

From the Irish Times:

Denis O’Brien shows interest in buying Luggala
Guinness family’s 5,000-acre estate in Co Wicklow is on the market for €28m 
Businessman Denis O’Brien is understood to be interested in buying the Luggala estate in Co Wicklow which is on the market for €28 million.

Mr O’Brien recently inspected the Guinness family-owned 5,000-acre spread near Roundwood.
Cradled in a valley between Luggala and Djouce mountains, the estate’s fairy-tale castellated white stucco house, Luggala Lodge, has a quite unique front garden water feature: Lough Tay.

The house was built originally for the French Huguenot La Touche family of Greystones, and the estate was bought by Ernest Guinness in 1937 as a wedding present for his daughter, Oonagh. 

Today, it is the occasional home to her son, arts and Irish music patron Garech Browne, and his wife, Princess Harshad Purna Devi of Morvi....MORE
The Irish Times has more on the background of the place in Jan. 25's "Guinness ancestral home in Wicklow goes on sale for €28m"

Here's the listing at Sotheby's which stresses the property is larger than it looks:
...Inside a composite sequence of elements work together to produce a coherent whole. Within a modest footprint Luggala Lodge manages to contain 3 substantial reception rooms as well as a wealth of smaller chambers on both the ground and first floors, with the latter's size not being externally apparent. There are 7 bedrooms within the main house, 4 within the guest lodge and a further 16 comprised within 7 estate lodges and cottages throughout the estate. In all the accommodation within the estate extends to some 1,802 square metres or 19,099 square feet...

Wednesday, March 29, 2017

"Judge Alsup Wants Uber & Waymo To Teach Him How To LiDAR Prior To Self-Driving Car Case"

From Techdirt:
from the will-judge-alsup-design-his-own-lidar? dept
Judge William Alsup certainly continues to make himself known for how he handles technology-intensive cases. In techie circles, he's mostly known for presiding over the Oracle/Google Java API copyright case, and the fact that he claimed to have learned to program in Java to better understand the issues in the case (in which he originally ruled, correctly, that APIs were not subject to copyright protection, only to be overturned by an appeals court that simply couldn't understand the difference between an API and functional code). He's also been on key cases around the no fly list and is handling some Malibu Media copyright trolling cases as well.

And, last month, he was handed another big high-profile case regarding copying and Google: the big self-driving car dispute between Google's (or "Alphabet's") Waymo self-driving car company and Uber. In case you weren't following it, Waymo accused a former top employee of downloading a bunch of technical information on the LiDAR system it designed, only to then start his own self-driving car company, Otto, which was then bought up by Uber in a matter of months. Most of the lawsuit is focused on trade secrets, with a few patent claims thrown in as well.

Either way, Judge Alsup appears to want to be educated on LiDAR before the case begins. In two orders last week, Judge Alsup first asked lawyers for each side to present a basic tutorial on the basics of self-driving car technology:
For a tutorial for the judge, counsel shall please make presentations to set forth the basic technology in the public domain and prior art bearing on the trade secrets and patents at issue on the motion for provisional relief. Please do not refer to the actual systems or subsystems used by either party. (Those will be presumably covered in the motion papers.) For the tutorial, please refer only to what is in the public domain or prior art, regardless of whether or not one side or the other actually practices it. That is, in the tutorial, please do not say what the parties actually practice but if the item is in the public domain, you may reference the public domain part, even if one side or the other practices it. Make sure that all points in the tutorial reside in books, treatises, articles, public interviews, public videos, blogs, websites, seminars, presentations, Form 10-Ks, or other publicly verifiable sources. Please exchange approximate scripts beforehand so that each side may vet the other. Each side will have forty minutes on APRIL 12 AT 10:00 A.M. The public may attend the entire presentation. The judge is interested in learning the basic technology and learning publicly known art.
I'm kinda disappointed that I've got something else that I can't get out of that day so that I can't attend. Oh, and Judge Alsup also got some press attention for then asking that each side might want to send "young lawyers" for the tutorial:
This would be a good opportunity for a young lawyer to present in court.
Of course, Judge Alsup actually has a bit of a history of doing similar things. If I remember correctly, he made a similar suggestion in the Oracle/Google case as well, and people have noted he's done it before as well. The idea is that he wants to encourage firms to enable younger, less experienced lawyers to get more courtroom experience and find areas where you don't necessarily need the veteran partner, even in a high-profile clash among mutli-billion dollar behemoths.

Still, it was another request that came a few days later that has gotten more attention (first spotted by Julia Carrie Wong), in which Judge Alsup also asked each side to recommend a book for him to read about LiDAR. But not just any book. You see, Judge Alsup wants you to know that he's not a total noob when it comes to light and optics, so don't feel the need to send him "LiDAR for Dummies" or whatever:...

The story thus far, in roughly chronological (not reverse chron) order:

Google is spinning off its self-driving car program into a new company called Waymo (GOOG)
"New Patents Hint That Amazon and Google Each Have Plans to Compete with Uber" (AMZN; GOOG) 
Uber Is A Cesspit: Google's Waymo Sues Kalanick's Creation--UPDATED
Waymo Comments On Why They'r Suing Uber
"The Uber Bombshell About to Drop"
"Alphabet’s Waymo asks judge to block Uber from using self-driving car secrets" (GOOG)
Remember that time Uber's Kalanick said having autonomous was crucial to the company's very survival? (a deep dive)
And related:

Night of the Long Knives: "Google Vs. Uber in the Rush To Drive You Around, Driverless" (GOOG)
Uber Bids for Nokia Maps Service to Lessen Google Reliance
"Why Uber Has To Start Using Self-Driving Cars"
Uber Throws Tesla Under the Autonomous Bus
Uber to Buy Self-Driving-Truck Company Otto
"Google’s Car People Diaspora" (GOOG)   

Best Court Filing This Week: Libel Case Against BuzzFeed Edition

From the


BUZZFEED, INC. and BEN SMITH Defendants.

Case No. 0:17-cv-60426-UU

In a somewhat remarkable Motion to Dismiss, Plaintiffs Buzzfeed, Inc. (“Buzzfeed”) and Ben Smith (“Mr. Smith”) intimate that their ties to Florida are so sparse that, collectively, they can barely find Florida on a map and that, as a result, the present case should be dismissed for lack of jurisdiction or transferred to the Southern District of New York....

That’s the title of a response (to a motion to dismiss on jurisdictional grounds) filed by plaintiffs’ lawyers — Evan Fray-Witzer, Valentin Gurvits, Matthew Shayefar and Brady Cobb — in Gubarev v. Buzzfeed, a libel case against Buzzfeed, brought based on the Trump dossier. Nice (and, yes, I confirmed it in the court docket; the document is real). Here’s the kitten, Exhibit 41 (is that its real name?):
From the court record.
From the court record.
Thanks to Jonathan Falk for the pointer.

Source Says BuzzFeed Is Going Public In 2018

"Expect More Deals Like Intel-Mobileye"

From Barron's Investors Soapbox:

Large strategic players are trying to get into telematics but there seems to be a steep learning curve.
Wells Fargo Securities
We recently traveled with Mark Licht. Licht is president of Licht & Associates, a strategic advisory services firm specializing in telematics, Internet of Things and location-based services.

Today there are about 100 million vehicles equipped with telematics -- 40 million of which are in the U.S. Assuming there are about 250 million vehicles in the U.S., this implies a telematics penetration of only about 16%. Of the approximately 15 million vehicles manufactured every year, only 40% are telematics-enabled. This is all on the consumer side. On the fleet side, there also exists a very long runway. Licht estimates telematics on fleets with over five vehicles, penetration is only 25%-30% depending on the segment. While average revenue per user (ARPU) in the telematics business is lower than traditional wireless service, telematics requires much less spectrum and capacity than the typical individual wireless connection. As Licht noted “3G and certainly LTE is good enough” for today’s telematics product set. That said, he did acknowledge more spectrum and capacity will be required with the increased use of WiFi hotspots, video analytics and in the future of autonomous driving.

Through its three telematics acquisitions (Hughes Telematics, Telogis and Fleetmatics), Verizon Communications (ticker: VZ) has “triple downed” on the telematics space. While it has some telematics vehicles in its portfolio, these acquisitions have put Verizon more on the services side of the telematics’ house. Licht estimates Verizon makes $30 a month per fleet connection -- over 10 times the typical Internet of Things (IoT)/machine-to-machine (M2M) ARPU. Verizon’s IoT revenue is $1 billion a year, of which telematics represents about 55%. Factoring in acquisitions, Verizon’s IoT revenue increased 60%-plus in the fourth quarter....MORE

Source Says BuzzFeed Is Going Public In 2018

From Axios:

Scoop: BuzzFeed going public in 2018
With a blinding spotlight on Snap's IPO, viral powerhouse BuzzFeed is quietly making preparations to go public in 2018, industry sources tell me. OMG!

The widely (and poorly) copied BuzzFeed, which began as a "great cat site" and now has foreign correspondents and a massive BuzzFeed Motion Pictures studio in L.A., mastered the art of sharable content and became a defining brand of the Internet age.
  • The pitch: BuzzFeed, with news and entertainment divisions, styles itself as a media-tech company with "the innovation obsessed culture and structure of a venture-backed tech company": "We are best known for exploding watermelons, The Dress, Tasty, award-winning news investigations, quizzes, and lists."
  • The strategy: BuzzFeed CEO Jonah Peretti has turned down past offers from media companies, and has long planned to go public.
  • Peers: The Big Four of modern digital content companies are BuzzFeed, Vox, Vice and Group Nine Media (millennial-focused online publishers Thrillist, NowThis, The Dodo and Seeker).

UPDATE: "Best Actual Court Filing This Week: Libel Case Against BuzzFeed Edition"

They grow up so fast. It seems like it was just yesterday (actually it was January 11, 2017, 12:52 pm PST) that we were posting:

Breaking--Buzzfeed Considers Itself Media--Breaking
The tweeter is a writer on media at HuffPo and adjunct professor at NYU.

I can't imagine what Andreessen Horowitz and NBC Universal are thinking about their BuzzFeed investments right now.

Maybe this will cheer them up:
Possibly also of interest:

Buzzfeed Story Generator
New Media: "BuzzFeed missed 2015 revenue targets and slashes 2016 projections"
Update--"BuzzFeed Didn't Cut Its 2016 Forecast In Half, In Fact Everything's Fine"
Take That, Buzzfeed: 17 Numbered Lists From History 
From the Public Domain Review:
1. 7 types of drunkard
From pages 52 to 60 of The Anatomy of Drunkenness (1834) by Robert Macnish
Okay, Who Sent Me the BuzzFeed SEC Form D?
Journalism: BuzzFeed Releases Internal Style Guide--Updated 
Arrrgh--Updated--Journalism: BuzzFeed Releases Internal Style Guide--Updated
BuzzFeed Appears To Be Buying The Guardian, One Employee at a Time
Study Showing "Fake News' Beating 'Real News'" Is Fake
"NBCUniversal Buys Big Chunks of Vox Media and BuzzFeed"
15 Cliches In Buzzfeed President's Departure Memo*
"Can Silicon Valley disrupt journalism if journalists hate being disrupted?"
The Onion Launches Clickhole to Take On BuzzFeed, Upworthy
Facebook To Decide Which News Sites Live, Which News Sites Die

"The NYTimes could be worth $19bn instead of $2bn"
Errrmmm, yes.
Should the risk-free rate go to negative 5%.

Agricultural Futures: Rabobank Has Some Thoughts On Brexit and the New Zealand Model

Over the years we've noted Rabobank seems to have a better feel for the ag stuff than most of the banks.
They're not always right but worth paying attention to.

From Agrimoney:
Article 50 could be a boon for non-EU agricultural exporters
Brexit could be good news for agricultural exporters outside the EU, if the UK government decides to prioritise low food prices, by adopting a so-called New Zealand model, the Dutch agricultural lender Rabobank said. 

But whatever the outcome of the negotiations, an increase in prices for some goods, such as fresh vegetables and olive oil, is more or less inevitable the bank said.

Still, the official launch of negotiations to leave the EU did little to disrupt UK markets on Wednesday, with the pound barely wobbling, and UK wheat prices trading both sides of unchanged.
Article 50 triggered
In a letter to EU president Donald Tusk, the British prime minister Theresa May official triggered Article 50, launching a two-year negotiation on the terms of the UK's exit.

Attention will now focus on the exact details of future economic and trade relations between the UK and the EU, whether these are an interim agreement, or a permenant trade deal. 

"Much of the current focus on how Britain will trade post-Brexit revolves around the UK continuing trade with the EU or providing additional protection to its farmers by imposing protectionist import tariffs," said Harry Smit, senior analyst at Rabobank.

"Yet in our view, a third possible scenario not being as widely discussed is the New Zealand model – essentially a 'present to the rest of world' in which it eliminates all food import tariffs, possibly as a quid pro quo for receiving more favourable terms for its key export sectors, like financial services."
Such a move could be "bad news for the EU," Mr Smit said.  Which has previously had preferential access to British buyers via the single market.

Price increases for some goods are inevitable
 But Rabobank warns that whatever deal is struck with the EU, prices for many agricultural products will increase....MORE

Marc Chandler Talks "Brexit, Europe and EU Challenges"

From Marc to Market:
Earlier today, I had the opportunity to discuss the outlook for sterling and the US dollar on Bloomberg TV with Rishaad Salamat and Haidi Lun. It is a momentous day with Article 50 of the Lisbon Treaty being formally triggered by UK Prime Minister May, nine months after what was, at least initially, a non-binding referendum.

European Council President Tusk is expected formally to respond for the EU before the weekend. It is not immediately clear when the negotiations will start. However, it is clear that the formal triggering of Article 50 will transfer the initiative and balance of power toward the EU from the UK. Over the 24 months, there will be plenty of posturing, negotiations, brinkmanship tactics, and blinking.

Many investors may be best served by keeping the core issue in perspective. The UK government is willing to lose access the single market in order to get more control of its borders for immigration and trade. Europe, on the other hand, just celebrated the 60th anniversary of the Treaty of Rome which established the European Project. Losing a member, and an important, though not a founding member, is a significant blow to Europe, which is having its own identity crisis of sorts.

Some evolution that the UK blocked, such as European army, may go forward, but the UK's amputation will change the balance in Europe on a range of issues and alter Europe going forward. Non-EMU, EU members, have lost a voice, and these countries are mostly in eastern and central Europe and are presently strained relationships with the older Western part....MORE, including Bloomberg video.

Tuesday, March 28, 2017

"Robots are killing jobs after all, apparently: One droid equals 5.6 workers"

One of the lessons they really try to drive home in junior analyst school is: don't say "This time is different".
But this time might actually be different and the accumulated history of technology vis-à-vis employment may not be of much use as a guide. And the stakes are pretty high.

From The Register:

So much for the utopian techno future, according to this study
Industrial robots are depressing wages and increasing unemployment, according to a paper published by the National Bureau of Economic Research, a private, non-profit, non-partisan research organization in America.

Written by MIT economists Daron Acemoglu and Pascual Restrepo, "Robots and Jobs: Evidence from US Labor Markets" appears only days after Treasury Secretary Steve Mnuchin dismissed the possibility of automated systems taking jobs from people, saying, "It's not even on our radar screen."
Similar to the cosmological conundrum about whether the universe will continue expanding indefinitely or collapse upon itself, the impact of automation and AI on human employment is the subject of ongoing debate about whether automated systems will create more jobs than they destroy.
Among technology advocates, there's predictable optimism. Robert D Atkinson, president and founder of the Information Technology and Innovation Foundation, has gone so far as to place a bet through the Long Now Foundation that by June of 2025 the labor force participation rate and unemployment rate, reported by the US Bureau of Labor Statistics, will respectively be above 60 per cent and below 7.5 per cent.

"The 'robots are killing our jobs' proponents miss the fact that automation lowers prices (or raises wages), which in turn spurs increased demand for goods and services, and hence labor," he states in his argument.

If Acemoglu and Restrepo are correct, however, that may not be a wise bet. The researchers analyzed how the increase in industrial robot usage between 1990 and 2007 affected US local labor markets.
These robots are fully autonomous machines that operate without human intervention, doing tasks that at some point in the past were done manually, such as welding, painting, product assembly, moving materials, and packaging.

There are presently somewhere between 1.5 and 1.75 million industrial robots operating around the globe, according to the International Federation of Robotics. The auto industry uses about 39 per cent of such robots, followed by the electronics industry (19 per cent), metal product manufacturing (9 per cent), and the plastics and chemicals industry (9 percent), according to the researchers.

Acemoglu and Restrepo found that in areas exposed to industrial robots, between 1990 and 2007, "both employment and wages decline in a robust and significant manner (compared to other less exposed areas)."...

If you don't have access to the NBER version linked above here are Professor Acemoglu's MIT web pages.

China's Tencent Buys a 5% Stake in Tesla (TSLA)

TSLA is up $9.42 at $279.64.

From Reuters:
China's Tencent Holdings Ltd (0700.HK) has bought a 5 percent stake in U.S. electric car maker Tesla Inc (TSLA.O) for $1.78 billion, the latest investment by a Chinese internet company in the potentially lucrative market for self-driving vehicles and related services.

Tencent's investment, revealed in a U.S. regulatory filing, provides Tesla with an additional cash cushion as it prepares to launch its mass-market Model 3. Tesla's shares were up 2.9 percent at $277.03 in midday trading on Tuesday, enabling it to rival Ford Motor Co (F.N) as the second-most-valuable U.S. auto company behind General Motors Co (GM.N).

The deal expands Tencent's presence in an emerging investment sector that includes self-driving electric cars, which could enable such new modes of transportation as automated ride-sharing and delivery services, as well as ancillary services ranging from infotainment to e-commerce.

Those new technologies, and their potential to create new business models and revenue streams in the global transportation sector, have attracted billions in investment from China's three tech giants - Tencent, Alibaba Group Holding Ltd (BABA.N) and Baidu Inc (BIDU.O).

In an investor note, Morgan Stanley auto analyst Adam Jonas said on Tuesday that he "would not be surprised" to see Tencent and Tesla collaborate in the development and deployment of some of those technologies.

Founded in 1998 by entrepreneur Ma Huateng, Tencent is one of Asia's largest tech companies, best known for its WeChat mobile messaging app. With a market capitalization of about $275 billion, it is roughly six times the size of 14-year-old Tesla, whose $46 billion market cap on Tuesday matched that of 114-year-old Ford.

Tencent was an early investor in NextEV, a Shanghai-based electric vehicle startup that since has rebranded itself as Nio, with U.S. headquarters in San Jose, not far from Tesla's Palo Alto base. Tencent also has funded at least two other Chinese EV startups, including Future Mobility in Shenzhen.

In addition, Tencent has invested in Didi Chuxing, the world's second-largest ride services company behind Uber, and in Lyft, Uber's chief U.S. rival.

Baidu has invested in Nio, as well as in Uber and Velodyne, a California maker of lidar sensors for self-driving cars. Alibaba's mobility investments include Didi and Lyft....MORE

Ridezilla: Chinese Rideshare Co, Didi Chuxing Is Looking to Raise Another $6 Billion

Following up on yesterday's "Does Uber Go Bankrupt If Didi Chuxing Decides To Compete In the United States?".
From Bloomberg Gadfly, March 28:
Didi Chuxing looks set to put its shareholders in an impossible position by entertaining another round of fundraising, this time for $6 billion.

SoftBank Group Corp. would lead the investment being considered by China's largest ride-hailing company, Bloomberg's Lulu Chen reported Tuesday.

That means current shareholders may be forced to decide whether to double down on their existing investment, or watch their bets get diluted by the new money. Such a dilemma faces investors every time a startup brings out the begging bowl.

New funding is usually welcome because it means more cash to get the business through the next phase in its development, compete with rivals and move closer to profitability. It typically has the added bonus of raising the startup's valuation, which makes everyone happy.

For Didi, though, it's a little different. As the product of two competitors merging, the company has vanquished its last credible threat. From there, the path to profitability should have been smooth, limiting the amount of cash it would have to burn to get to the IPO finish line.

Except such a conclusion assumes that the underlying business model is actually viable.

The distinguishing feature this time is that a massive pool of money is knocking on the door and wanting in. With its valuation already a heady $33.8 billion, any further escalation would limit the upside for investors in a future public offering, while a flat or down round would be a terrible move....MORE
 And the Bloomberg story that came out last night (EDT): 

Didi Said to Be Weighing $6 Billion SoftBank-Backed Funding

Smart Beta: "They Can’t All Be That Smart"

Continuing our tour of some of the more interesting characteristics of the factor zoo.

From Investing Research, March 14:
Smart Beta is a label applied broadly to all factor-based investment strategies. In a recent WSJ article on Smart Beta, Yves Choueifaty, the CEO of Tobam, said “There’s a huge range of possibilities in the smart-beta world, and they can’t all be that smart.” This paper separates the factor investing landscape, gives a framework to analyze the edge of various approaches and lets you decide which factor-based strategy is worth your money.

Analysis of a factor-investing strategy should focus on two of the manager’s skills: the ability to identify specific factors that accurately generate out-performance and the manager’s technique in constructing a portfolio of stocks with those factors. Factors are not commodities, and one should know how managers are selecting stocks, but we are focusing on portfolio construction and the soundness of different approaches.

Active share can be a useful tool in this investigation. Active share by itself is not a metric that inherently identifies manager skill. Nor is it the best metric to determine the risk of the portfolio versus an active benchmark. Tracking error is a more comprehensive metric for the trailing differences in the portfolio returns and Information Ratios to understand the balance of how much active risk you are taking for active return. But active share is a very useful tool in investigating the choices managers make in building factor portfolios.

Through the lenses of active share, tracking error, and information ratios, we consider the relative merits of factor-based portfolio construction approaches: Fundamental Weighting, Smart Beta and Factor Alpha. Understanding the differences between these approaches will help you better incorporate factors into your overall portfolio.

Fundamental Weighting
Most benchmarks weigh constituents by market capitalization. Some factor investing approaches pivot away from weighting on market cap, and weighting on another fundamental factor like sales or earnings. The argument for these strategies is that weighting by market cap is not the smartest investment solution out there: the top quintile of the S&P 500 by market cap underperforms the average stock by -0.65% annualized1, and market cap weighting allocates 65% of the benchmark to those largest names.

For a comparison of fundamental weighting schemes, the table below shows the characteristics and annualized returns for weighting on Market Cap, Sales, Earnings, Book Value of Equity and Dividends. There are some benefits to the approach, for example eliminating companies with negative earnings. On average, about 8.3% of Large Stocks companies are generating negative earnings2, and avoiding those is smart. The largest benefit is an implied value-tilt to the strategy: over-weighting companies with strong earnings and average market caps creates an implicit Price/Earnings tilt. This is apparent in the characteristics table: Sales-weighting gives the cheapest on Price/Sales, Dividend-Weighted gives the highest yield, etc.

But pivoting from market cap to a fundamental factor weighting scheme does not create large risk-return benefits. Raw fundamental factors correlate highly with market cap; companies with huge revenues tend to have large market caps. As of December 31st, 2016, weighting on Earnings has a 0.85 correlation with weighting on market capitalization3. In market cap weighting, the top 25 names are 34% of the portfolio. In an earnings-weighted scheme those same 25 companies are still 34% of the portfolio, just shifting weights a bit from one name to another.

Active share shows how little fundamental weighting moves the portfolios, with active shares in the 20-30% range. Excess returns range from slightly underperforming market cap to outperforming by +72bps. The modest excess return comes with much higher active risk, and tracking errors ranging from 4.5% to 5.8%. This generates poor information ratios, the ratio of active return to active risk.

Portfolio Weight for Market Cap Weighted vs. Earnings Weighted – December 31st, 2016
Characteristics and Annualized Returns by Weighting Scheme (U.S. Large Stocks, 1963-2016)
The reason that the risk-return benefits are small is because Fundamental Weighting is an indirect allocation to a Value strategy. Value investing on ratios is identifying investment opportunities with the comparison of a fundamental factor in the context of the price you pay. Fundamental weighting is only taking half of the strategy into account, looking for large earnings but ignoring the price you’re paying for them. Some Fundamental Weighted products will be more sophisticated than simply weighting on sales, earnings, book value or dividends. But weighting on fundamental factors instead of market cap doesn’t create a significant edge.

Risk-Focused versus Return-Focused
A post by Cliff Asness at AQR suggested that Smart Beta portfolios should be minimizing active share. Smart Beta portfolios are “only about getting exposure to the desired factor or factors while taking as little other exposures as possible.” This statement cemented the idea that there is a group of Smart Beta products that are risk-focused in nature: Start with the market portfolio, identify your skill and then take only the exposure on those factors....MUCH MORE
Are Factor Investors Getting Paid to Take on Industry Risk?
Asness et al: "Contrarian Factor Timing is Deceptively Difficult"
"Investing: Cliff Asness Blasts Rob Arnott"   

And some older posts:
What a Long Strange Trip: From CAPM To Fama-French to Four (or more) Factor
Improving on the Four-factor (beta, size, value, momentum) Asset Pricing Model
2017 Credit Suisse Global Investment Returns Yearbook (and testing smart beta factors)
Factors: The Problem With Small Cap Stocks (the effect probably isn't real)
It's Anomalous: "Fact, Fiction and Momentum Investing"
Rob Arnott's Research Affiliates: "Finding Smart Beta in the Factor Zoo"

"The Biggest Risk From the Dollar's Drop May Not Be What You Would Guess"

From Bloomberg, March 27:

A high-risk corner of the $5 trillion currency market has become the collateral damage of the dollar selloff.
Whipsawed by the greenback and confronted by U.S. policy confusion, carry trades were supposed to be a rare bright spot for investors who want to stay away from the world’s biggest reserve currency. Under the strategy, you borrow in low-rate alternatives such as the yen, and buy high-yielding peers like the Mexican peso, benefiting from low volatility and the emerging-market rally.
Practitioners of the carry trade are learning there’s no hiding from the dollar’s influence. Growing doubts about the outlook for U.S. policy following the failed attempt at health-care reform not only led to a weaker dollar, it also caused investors to pile into havens such as the yen and the euro -- the funding currencies carry traders sell as part of the strategy. The Japanese currency gained 2 percent against the dollar this month, while the euro rose 2.8 percent.

"The carry trade is far more important than the dollar move in the changing the currency market," said Bob Savage, chief executive officer of hedge fund CCTrack Solutions LLC in New York. "The rise in the yen may actually put the trade at risk. The dollar itself doesn’t affect the biggest FX trade out there, but the yen does."

There’s no hard evidence available in analyzing the scale of carry trades. But according to Bank of America Corp.’s flow data, buying emerging-market currencies made up the biggest long position as of last week. The data blend positioning and sentiment surveys conducted with its hedge fund and real-money clients, and publicly available futures data.

Funding Currency
Nonetheless, carry traders could still make a profit because of yield differentials or appreciation in emerging-market currencies. At a time when most investors have capitulated on the strong-dollar bet and currency funds struggle to yield any return for yet another year, the carry strategy may be the last oasis....MORE

Monday, March 27, 2017

Too Funny: Reporting On Elon Musk's New Brain Implant Company, The Nerds at Boy Genius Report...

...went with this picture and headline:

"Elon Musk launches Neuralink, a venture to merge the human brain with AI"

"Elon Musk launches Neuralink, a venture to merge the human brain with AI" UPDATED

Update: "Too Funny: Reporting On Elon Musk's New Brain Implant Company, The Nerds at Boy Genius Report..."
Original post:

About time, he's teased it enough, links after the jump.

From The Verge:

Rockets, cars, and now brain chips
SpaceX and Tesla CEO Elon Musk is backing a brain-computer interface venture called Neuralink, according to The Wall Street Journal. The company, which is still in the earliest stages of existence and has no public presence whatsoever, is centered on creating devices that can be implanted in the human brain, with the eventual purpose of helping human beings merge with software and keep pace with advancements in artificial intelligence. These enhancements could improve memory or allow for more direct interfacing with computing devices. 

Musk has hinted at the existence of Neuralink a few times over the last six months or so. More recently, Musk told a crowd in Dubai, “Over time I think we will probably see a closer merger of biological intelligence and digital intelligence.” He added that “it's mostly about the bandwidth, the speed of the connection between your brain and the digital version of yourself, particularly output." On Twitter, Musk has responded to inquiring fans about his progress on a so-called “neural lace,” which is sci-fi shorthand for a brain-computer interface humans could use to improve themselves. 

These types of brain-computer interfaces exist today only in science fiction. In the medical realm, electrode arrays and other implants have been used to help ameliorate the effects of Parkinson’s, epilepsy, and other neurodegenerative diseases. However, very few people on the planet have complex implants placed inside their skulls, while the number of patients with very basic stimulating devices number only in the tens of thousands. This is partly because it is incredibly dangerous and invasive to operate on the human brain, and only those who have exhausted every other medical option choose to undergo such surgery as a last resort.
This has not stopped a surge in Silicon Valley interest from tech industry futurists who are interested in accelerating the advancement of these types of far-off ideas. Kernel, a startup created by Braintree co-founder Bryan Johnson, is funding medical research out of the University of Southern California to try and enhance human cognition. With more than $100 million of Johnson’s own money — the entrepreneur sold Braintree to PayPal for around $800 million in 2013 — Kernel and its growing team of neuroscientists and software engineers are working toward reversing the effects of neurodegenerative diseases and, eventually, making our brains faster and smarter and more wired.

These types of brain-computer interfaces exist today only in science fiction. In the medical realm, electrode arrays and other implants have been used to help ameliorate the effects of Parkinson’s, epilepsy, and other neurodegenerative diseases. However, very few people on the planet have complex implants placed inside their skulls, while the number of patients with very basic stimulating devices number only in the tens of thousands. This is partly because it is incredibly dangerous and invasive to operate on the human brain, and only those who have exhausted every other medical option choose to undergo such surgery as a last resort. 

This has not stopped a surge in Silicon Valley interest from tech industry futurists who are interested in accelerating the advancement of these types of far-off ideas. Kernel, a startup created by Braintree co-founder Bryan Johnson, is funding medical research out of the University of Southern California to try and enhance human cognition. With more than $100 million of Johnson’s own money — the entrepreneur sold Braintree to PayPal for around $800 million in 2013 — Kernel and its growing team of neuroscientists and software engineers are working toward reversing the effects of neurodegenerative diseases and, eventually, making our brains faster and smarter and more wired....MORE 
June 2016
Sept. 2016
In other news...
Sept. 2016
Feb. 2017
Mr. Musk is probably just pitching his "neural lace" idea, on which we are supposed to have an announcement this month.*

But what about rockets? For the asteroid mining cancer cures? 

China Exports of High Fructose Corn Syrup Taking On Cane Sugar Industry in The Philippines

This doesn't sound healthy, on a few different levels.
From Agrimoney:

China's turn to HFCS exports 'could be start of something big'
China's exports of high fructose corn syrup to the Philippines, where sugar producers are protesting at the trade, could be the "start of something major" in the sweeteners market, if use spreads in Asia.
China has been, up to now, the only substantial user of high fructose corn syrup (HFCS) in Asia, with use equivalent to some 4m-5m tonnes a year, said Robin Shaw, analyst at London broker Marex Spectron.
However, imports by the Philippines of 235,000 tonnes of HFCS last year, according to customs data, equivalent to some 352,000 tonnes of sugar, and trade which prompted the country two weeks ago to impose curbs on corn syrup.
"HFCS is significantly cheaper than locally-produced sugar," according to a US report which said that the imports had "driven down sugar prices" in the country by some 17% since September.
Indeed, Mr Shaw said that the imports could be a sign of a structural shift in sweeteners users towards corn syrup - a move which would be "anti-bullish" for sugar prices.
'Start of something major'
"It looks like HFCS is invading the world sugar market more," Mr Shaw told
"The increase in China's HFC exports at the moment could be start of something major," if it catches on in in the region, which includes some large sugar importing countries, including Indonesia and Malaysia - besides China itself.
Indeed, it could prove "another nail in the coffin" of the bullish sugar story, as "the world adapts to high sugar prices", with New York raw sugar futures standing above 21 cents a pound as recently as last month.
May futures on Monday stood at 17.59 cents a pound, down 0.7% on the day.
HFCS vs sugar
The apparent paradox of China, the world's biggest sugar importer, becoming an exporter of HFCS comes despite a large incentive from prices for the country to consume the grain-based sweetener domestically....MORE

Natural Gas: EIA Weekly Supply/Demand Report

$3.1450 down 0.008.

If (big if) natty can get through the little gap at $3.20 there's not much technically to stop it up to the bottom of the big gap at $3.80, with $3.60 a minimum target.
From the Energy Information Administration:

Natural Gas Weekly Update


Prices mixed. This report week (Wednesday, March 15 to Wednesday, March 22), the Henry Hub spot price fell 2¢ from $3.00/MMBtu last Wednesday to $2.98/MMBtu yesterday. Last report week, the eastern half of the country was affected by unseasonably cold temperatures and a late-winter snowstorm, pushing up prices in the Northeast and Midwest. As temperatures moderated during the current report week, prices generally fell. At the Chicago Citygate, prices decreased 4¢ from $2.93/MMBtu last Wednesday to $2.89/MMBtu yesterday. 
The price at PG&E Citygate in Northern California gained 4¢ to $3.19/MMBtu yesterday. The price at SoCal Citygate rose 14¢ from $2.93/MMBtu last Wednesday to $3.07/MMBtu yesterday. Temperatures in California fell over the weekend, pushing the price up 25¢ between Friday and Monday. 
Additionally, the Aliso Canyon natural gas storage field is not available for full storage service. EIA publishes information about Southern California natural gas and energy prices in the Southern California Daily Energy Report.Northeast prices fall sharply. Coming off of a late-winter snowstorm and unseasonably cold weather last week, prices in the Northeast fell sharply. At the Algonquin Citygate, which serves Boston-area consumers, prices went down $3.44 from $7.45/MMBtu last Wednesday to $4.01/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York, prices decreased $3.71 from $6.82/MMBtu last Wednesday to $3.11/MMBtu yesterday. 
Marcellus prices were largely unaffected by the moderating weather. Tennessee Zone 4 Marcellus spot prices were constant week over week at $2.77/MMBtu. Prices at Dominion South in northwest Pennsylvania fell 3¢ to $2.82/MMBtu yesterday. 
April Nymex contract up slightly. At the Nymex, the price of the April 2017 contract increased 3¢, from $2.981/MMBtu last Wednesday to $3.011/MMBtu yesterday. The price of the 12-month strip, which averages the April 2017 through March 2018 futures contracts, climbed 5¢ to $3.258/MMBtu.Supply falls slightly. According to data from PointLogic, the average total supply of natural gas fell by 1% compared with the previous week. While dry natural gas production remained constant week over week, average net imports from Canada decreased by 4% from last week. 
Demand falls significantly. Total U.S. consumption of natural gas fell by 15% compared with the previous report week, according to data from PointLogic. Last week's weather featured unusually cold weather and a snowstorm in the Northeast, which pushed demand up. This week, weather moderated across most of the country, pushing demand down. Week over week, power burn declined by 9%; industrial sector consumption decreased by 5%; and residential/commercial sector consumption declined by 26%. Natural gas exports to Mexico decreased 2%. 
U.S. liquefied natural gas (LNG) exports. Natural gas pipeline deliveries to the Sabine Pass liquefaction terminal averaged 2.2 Bcf/d for the report week, 8% higher than the previous week. Four vessels (combined LNG-carrying capacity of 13.9 Bcf) departed Sabine Pass last week, and one vessel (LNG-carrying capacity of 3.8 Bcf) is currently loading at the terminal. 
Last week, Cheniere Energy, the operator of the Sabine Pass terminal, received authorization from the Federal Energy Regulatory Commission (FERC) to commence liquefaction and export activities from Train 3. On March 16, Cheniere filed a request with FERC to begin commissioning of Train 4. Once the fourth train at Sabine Pass becomes operational, the total baseload nameplate capacity of the facility (including all four trains) will reach 2.6 Bcf/d, with a maximum operating capacity of 2.9 Bcf/d. The fifth train at the facility, currently under construction, is expected to begin service in mid-2019....

"1 in 4 Believe Robots Would Make Better Politicians"

In some elections that's almost a plurality.

From Computer Business Review:

The impending robot revolution has certainly got people talking – from the workplace to the car and home, robots and AI has really grabbed the attention of the public.

However, setting aside Terminator-esque visions of the future, what do consumers really think of the impending AI revolution? Enterprise information management firm, OpenText, went and surveyed 2,000 UK consumers to find answers to that very question.

Initial findings from the survey mirrored many other reports and surveys, with consumers expecting AI to impact the human workforce and their daily lives in general.

The study found that 42 percent of UK consumers believe their job is likely to be replaced by a robot in the next 30 years, while 25 percent think that this could happen within the next 10 years.

However, the surprising, or not-so-surprising (depending on your opinion of politicians) findings from the report reveal that consumers would entrust the running of the country to robots. 66 percent of UK citizens expect that robots will be working within the government by 2037, with 16 percent believing this could happen in the next one to two years.

A further finding which may cause concern for Number 10 is that one in four think robots will make better decisions that elected government representatives, mainly in regards to the economy. However, a further 35 percent of UK citizens say robots would not be able to assess the cultural aspects when it comes to decision making....MORE

"Beware of Cows"

And we're not just talking futures.

From the London Review of Books, March 23:
The statistics make grim reading. In a 2013 report, Overview of Fatal Incidents Involving Cattle, the Health and Safety Executive notes in its usual lapidary prose that ‘this paper gives an overview of fatal incidents involving cattle to (a) Enable Agriculture Industry Advisory Committee members to consider the current trends in agriculture accidents involving cattle.’ There is no room for complacency. The HSE logs 74 ‘fatalities involving cattle’ in the UK in 2000-15, compared to 53 deaths caused by Islamist terrorism in the same period. Many of the victims were farm workers, while eighteen were ‘MOPs’ or members of the public. These victims were disproportionately older people (only one was under 50, thirteen were over 60 and as many as five were over 70).

More chilling still, as the HSE report makes clear, is the specific threat posed by out-of-control mothering cows. Of incident reports where the gender of the assailant was identified, ten involved cows with calves, and only one a bull. Hence it emerges that predominantly older people are being targeted by nursing cattle. Vegans seem largely to have been spared. But nobody is wholly safe from this civilisational threat, not just to our persons but to our old, carnivorous values.

The HSE notes that both beef and dairy animals have been involved in carrying out the atrocities....MORE
If that isn't terrifying enough the Swiss Bovine Special Forces are practicing air-mobile vertical insertion techniques:

Note identifying bell (and more disconcertingly, lack of diaper)

Does Uber Go Bankrupt If Didi Chuxing Decides To Compete In the United States?

Uber has spent a lot of money to open up local markets, one at a time, to "ridesharing".
Opening the door for Didi Chuxing.

And Didi is an awesome competitor.
As noted in the intro to last week's story about Singapore-based Grab's fundraising:
"Uber’s largest Southeast Asian rival looks to raise another US$1.5 billion"
I still can't get the picture of Didi Chuxing's President, Liu Qing (anglicized to Jean Liu), commenting on Travis Kalanick and Uber's efforts in China as cute. Then when Uber proclaimed the $3.5 billion investment from the Saudis she laughed and said she had more than that on the way.
Didi then announced the completion of a $7.3 billion fundraising.

Uber better be on top of their game in Southeast Asia because they weren't in China and got run out of the country....
If I were a late stage Uber investor the following story would terrify me. Long time readers can gloss over some of the details, and the failure to put the Financial Times' Izabella Kaminska* at the top of the list of journos covering the Ube raises some doubts, but the point raised, "What happens if Didi goes international?" is important or as Kalanick might say, existential.

From Next Big Future:

Will Uber mirror Yahoo, If its China Rival Didi becomes globally dominant  
Uber has taken $12 billion over 15 rounds of investment, and has a reported valuation of nearly $70 billion. There have been several different leaks of Uber's financial data over the years, covering income from 2012 through Q4 2016.

Uber incoe statement numbers were from Bloomberg, The Information, Valleywag, Gawker, AllThingsD, TechCrunch, The New York Times, and Naked Capitalism.

Published financial data shows that Uber is losing more money than any startup in history and that its ability to capture customers and drivers from incumbent operators is entirely due to $2 billion in annual investor subsidies.

Net revenues reached $1.7 billion in Q4 2016.
Gross bookings were $5.4 billion last year.
Uber's costs and expenses are much more than its revenues

The Atlantic thinks that if Uber fails that it will not set off a bubble-popping chain reaction.

Didi Chuxing is the world's largest ride-sharing company. It provided transportation services for close to 400 million users across over 400 cities in China. Its headquarters is located in Beijing. It provides services including, taxi hailing, private car hailing, Hitch (social ride-sharing), DiDi Chauffeur, DiDi Bus, DiDi Test Drive, DiDi Car Rental and DiDi Enterprise Solutions to users in China via a smartphone application. Formed from the merger of rival firms Didi Dache and Kuaidi Dache (backed by the two largest Chinese Internet companies, Tencent and Alibaba respectively), it was valued (as of June 2016) at approximately US$28 billion. DiDi announced that it acquired Uber's China unit on August 1, 2016. Following this acquisition, Didi Chuxing is estimated to be worth US$35 billion and it is the only company to have all of China's three Internet giants—Alibaba, Tencent, and Baidu—as its investors.

Didi Chuxing completed 1.4 billion rides milestone in just 2015 alone, as well as clocking over 200 million rides in December 2016 alone (one month), making it the most dominant ride-sharing company in the world. This far surpassed Uber which completed only 1 billion rides in 6 years' time since its founding in 2009.

In mid-2016, China’s largest ride-hailing company, Didi Chuxing Technology, said it was profitable in more than half of the 400 cities in which it operates.

In 2017, Didi made an investment in 99 (formerly 99Taxis), an Uber competitor in Brazil and self-proclaimed market leader in Sao Paulo and Rio de Janeiro. Didi will provide guidance and support for 99, including in "technology, product development, operations and business planning." Didi said specifically that it will share "data-driven algorithmic capabilities" too.

Uber’s sale of its Chinese business included taking a 5.89 percent stake in Didi. Didi plans to expand its service beyond China for the first time in 2017, but Zhang wouldn’t reveal where they’re headed next specifically in terms of target markets. “It’s a secret,” he said, though any launch in another country could potentially bring it back into direct competition with Uber.

A partnership with Avis announced in November will give them some kind of international presence, but definitely doesn’t represent the full scope of their ambitions outside China.

Will Didi become globally dominant ? Didi appears to be financially stronger than Uber. Will there be other smaller ride sharing services with models similar to RideAustin ?....

*Going back through the list of Izabella's posts-linked above-January 2014's "No, regulatory evasion isn’t ‘disruptive innovation’" pretty much sets the tone.

Regarding financial strength, Uber has already tapped what is usually the "topping up, raise the valuation before going public" market (although in Uber's case getting the Saudis to come in after the high net worth clients of MS and BAML was a coup).

For some background on how this racket works see Jan. 2016's "'Uber Is Raising More Money From Rich People' (Al Gore and Snapchat do cameos)":
...Way back in 2008 we noted the VC's of Silicon Valley were using a very shady private placement bundler called Advanced Equities to top off deals at very high valuations:
Venture Capital: "Garbage In...
...A late-stage venture funding outfit is foisting junky startups on investors--much to the benefit of the Sand Hill Road crowd....
Advanced Equities is no more and if Uber has to raise money to compete they have a real problem.