Risk: "Half of hurricane Harvey loss could fall to reinsurance: J.P. Morgan"

This is a few days old but provides a base for what's to come.
From Artemis, Aug 25:

As hurricane Harvey continues to bear down on the Texas coastline, currently packing 110 mph winds as a strong Category 2, almost Category 3 storm, analysts at J.P. Morgan have taken a look at the exposure in the region and estimated that as much as 50% of an insurance industry loss could end up covered by reinsurance.

Our sister site ReinsuranceNe.ws reported earlier that should hurricane Harvey turn into a particularly large loss the percentage could even be higher, according to the analysts.
Loss estimates are notoriously difficult to make and for reinsurance arrangements, including exposed collateralized reinsurance layers, ILS transactions, or even catastrophe bonds, to take such a large share of the industry exposure Harvey would have to impact areas of particularly high insurance density and be a major storm by landfall, we’d imagine.

J.P. Morgan said that it would typically expect around 50% of the insurance industry loss from a hurricane like Harvey to be paid for by reinsurance capital providers.

Swiss Re and Munich Re have the highest exposure of the major four reinsurance firms, at 10%, of which 90% will be retained by each, while Hannover Re is 6% exposed with a 75% retention, and SCOR estimated to be 4% exposed, with a 75% retention.
ReinsuranceNe.ws explains J.P. Morgan’s thinking:

J.P. Morgan analysts combined the potential net loss for Europe’s big four players, and then compared this to its full-year 2017 expected net income and book value estimates.

The analysis shows that a $5 billion insured loss total may result in an average impact to net income of 7% for the four reinsurers, increasing to 13% of net income with a $10 billion loss. Should Harvey drive insured losses of $20 billion, the impact to net income would be an average of 27% for the group, rising further still to 40% of net income in the event of a $40 billion insured loss.

However, these major four reinsurance firms have large catastrophe budgets remaining, after a relatively benign start to the year.

J.P. Morgan says that even a $10 billion industry loss event due to hurricane Harvey, “would be unlikely to exhaust the remaining natural catastrophe budgets across the sector, with a larger loss of $20bn-30bn required to cause an overrun.”...

...MORE

Also at Artemis, Aug. 25:

Hurricane Harvey – catastrophe bond exposure

Here’s a quick look at just how much of the near $30 billion of outstanding catastrophe bonds could be exposed to a major Texas hurricane, be that hurricane Harvey that is rapidly approaching Category 3 on approach to the state, or any other major storm.

It’s important to note that we don’t have the actual data for expected losses of every cat bond in our Deal Directory, so establishing precisely how much of the outstanding catastrophe bond market is exposed to hurricane Harvey isn’t possible.

But we can take a look at cat bonds that are Texas named storm and hurricane exposed and those U.S. wind cat bonds that tend to cover every hurricane exposed state on the east and Gulf coasts, as well as a few multiperil bonds.

For Texas only exposure, there are only the two outstanding Texas Windstorm Insurance Association (TWIA) cat bonds, which total $1.1 billion of exposure, $400m from Alamo Re Ltd. (Series 2017-1) and the $700m Alamo Re Ltd. (Series 2015-1).

Both are exposed to Texas hurricane risks, with attachment points set relatively high as they sit above reinsurance in the TWIA tower.

As well as this $1.1 billion of pure Texan hurricane exposure, U.S. hurricane exposed cat bonds (either pure wind or mult-peril) which have some Texas exposure in the majority of cases (a handful may not) in our Deal Directory total a huge $10.6 billion from 39 outstanding cat bond deals.

Clearly it would take a hurricane much larger than Harvey to create losses to all of these cat bonds and in fact the majority have attachment points that are far too high to be troubled by Harvey over the coming days, but it’s useful to see just how much of the cat bond market carries U.S. wind risk and could be exposed to the storm....

...MUCH MORE, including a couple updates.  

Goldman Sachs On Hurricane Harvey and the Oil & Gas Business

Amid the awful images and stories coming out of Houston there is also the commercial angle.
WTI $47.49 down  38 cents; Gasoline (RBOB) 1.7502, up 8.36 cents:

FinViz

From ZeroHedge:

"Oil Markets Roiled": Goldman Calculates The Impact From Harvey's "Devastation"

Oil markets were roiled, sending gasoline prices surging on Monday after Tropical Storm Harvey wreaked havoc along the Gulf Coast over the weekend, crippling Houston and its port, and knocking out numerous refineries as well as some crude production. As noted on Sunday, gasoline prices hit two-year highs as massive floods caused by the storm forced refineries in the area to close. 

Meanwhile crude futures fell as the refinery shutdowns could reduce demand for US crude production. As a reminder, Texas is home to 5.6 million barrels per day (bpd) of refining capacity, and Louisiana has 3.3 million bpd. Over 2 million bpd of refining capacity was estimated to be offline as a result of the storm.

While the U.S. National Hurricane Center said Harvey was moving away from the coast, it was expected to linger close to the shore through Tuesday, and that floods would spread from Texas eastward to Louisiana.

As Reuters reports, US traders were seeking oil product cargoes from North Asia with transatlantic exports of motor fuel out of Europe expected to surge. “Global refining margins are going to stay very strong,” said Olivier Jakob, managing director of Petromatrix. “If (U.S.) refineries shut down for more than a week, Asia will need to run at a higher level, because there’s no spare capacity in Europe.”

At the same time, about 22%, or 379,000 bpd, of Gulf production was idled due to the storm as of Sunday afternoon, the U.S. Bureau of Safety and Environmental Enforcement said. There may also be around 300,000 bpd of onshore U.S. production shut in, trading sources said.

In a note released this morning, Goldman's Damien Courvalin calculated the estimate near-term impact from the "devastating" fallout from Harvey. As Courvalin writes, data available so far point to sizably larger refining than production disruptions: as of Sunday, August 27, nearly 3 mb/d of refinery capacity was offline (16.5% of the 18.2 mb/d US capacity) vs. c.1 mb/d of crude production (11% of 9.3 mb/d current production) and 2 Bcf/d of gas production (3% of 72 Bcf/d current production).

Should these levels of outages remain in place, and using past hurricanes as proxies for the impact on oil demand, Goldman estimates that the impact of Harvey on the US oil market would be to increase domestic crude availability by 1.4 mb/d while removing 615-785 kb/d of gasoline and 700 kb/d of distillate supplies. Larger refinery outages would increase these long crude and short product impacts.

Should the storm continue to head East towards Houston, as forecasts project, it risks creating further refinery outages with 850 kb/d of capacity in Houston not yet reported offline.

The hurricane is therefore likely to lead to further strengthening in product cracks given the loss in domestic refined product supply. The loss of USGC refining capacity will further support refinery margins for non-affected refiners to incentivize them to operate at higher utilization. The hurricane will however lead to a weakness in domestic crude prices given the lack of refining outlet. From a global oil supply-demand perspective, the storm is likely to lead to higher crude and product inventories over the next couple of months given the likely larger hit on US demand than supply.

The impact on production is far smaller, with 1 mb/d of crude production offline (11% of 9.3 mb/d current production) and 2 Bcf/d of gas production (3% of 72 Bcf/d current production). The flooding currently taking place is however leading to a greater loss of onshore supply (from the Eagle Ford) than historically has been the case. Gulf of Mexico production was instead spared by the path of the hurricane. Historically, onshore production has rebounded faster than offshore production and this would be consistent with producer commentary that loss of production is due to preventive shut-ins for now....MUCH MORE

"Maersk moves show the shipping industry is far from sunk "

Well duh.
From the Telegraph:

It’s almost exactly a year since the crisis in the shipping industry made global news with the collapse of Hanjin Shipping.

The company’s vessels and sailors were stranded at sea as ports refused to let them dock, fearing they wouldn’t get paid, while customers were left battling to get their goods off the ships. The situation brought home to many the fact that the vast bulk of the world’s goods are transported by sea.
Hanjin’s failure was caused by a unique set of circumstances that saw new vessels flooding the market while cargo demand stalled, driving down the prices shipping lines could charge to transport goods.

Describing the dire state of the market at the time and the desperate lengths shipping lines were going to to win trade, one shipbroker said: “They keep slitting each other’s throats with lower prices.”
However, those cut-throat practices seem to have ended and there are signs the storm is abating, with shipping rates edging up recently as troubles work their way through the system. Last week came the strongest signal yet that shipping isn’t the basket case many had thought.

AP Moller-Maersk, owner of the world’s biggest shipping lines with 600 vessels, said it was doubling down on the sector by ending its status as a global conglomerate. The Danish group announced the sale of its oil unit to France’s Total for $7.5bn (£5.9bn), leaving it to focus solely on the maritime operations it is best known for.

The deal means Maersk chief executive Soren Skou is betting on shipping as the future of the business, despite some still pretty choppy seas.

It’s a change of tack for Maersk. Early last year, his predecessor Nils Anderson had delivered a much gloomier view describing the market as worse than the downturn unleashed by the financial crisis.
“The oil price is as low as its lowest point in 2008-09 and doesn’t look like going up soon. Freight rates are lower,” said Anderson.

So what has suddenly given Maersk such confidence? For a start, the fundamentals of the industry are strong, according to Andi Case, chief executive of FTSE 250 shipbroker Clarkson.
“Demand grows as population grows,” said Case, adding that between 85pc and 95pc of goods travel by sea.

“In 1990, 0.8 tons of goods per person were transported by sea. That figure is now 1.5 tons and the global population is only rising.”

In other words, as populations grow and become richer, people want more products, and in an increasingly globalised world these goods are transported by sea, mainly in the ubiquitous 20ft standard shipping containers – known as TEUs.

Jonathan Roach, a container shipping analyst at shipbroker Braemar, agrees: “The rule used to be demand for containers rose at about 2.5 times global GDP growth – but that went out the window a few years ago.”

The problem was simple supply and demand – too many ships were chasing too little cargo. In the run up to the financial crisis, booming trade meant huge orders for shipyards. The high oil price also encouraged construction of new ships because owners wanted vessels which burnt less fuel, while incoming pollution regulations also fed the demand.

At the peak of demand in 2007, 2,905 ships over 20,000 tons were ordered, about three times the average of the previous decade. Clarkson’s Clarksea Index – a measure that gives a broad snapshot of earnings for ships – was averaging in the low 30s at the same point, having hovered in the mid-teens until a few years prior....MORE

What has me sounding like Moon Unit Zappa with the introductory line is a series of posts beginning with October 2016's:
"Shares of A.P. Moller-Maersk Look Ready to Sail"
December 2016
Shipping: "Maersk's Rose-Tinted 2017"
February 2017
"2017: The Year For Shipping Companies?"
March 2017
Shipping: "CMA CGM Returns to Profit in Q4"
March 2017
Shipping: "Scorpio Bulkers Has Doubled in Just Six Months. This Analyst Just Upgraded It" (SALT)

And a week ago:
China's Yangzijiang Q2 profit jumps, shares hit 6-yr high

"Superbrains getting closer? Musk ‘lines up $100m’ to fund Neuralink brain-computer interface "

From RT:

Elon Musk could be preparing to invest $100 million of his own money to fund Neuralink, the start-up the billionaire tycoon hopes will one day produce technology capable of connecting the human brain to a computer, and save us from AI overtake. 

A filing with the US Securities and Exchange Commision (SEC) confirms that Neuralink already has $27 million in funding, and Musk took to Twitter Friday to shoot down suggestions that the company was looking for outside investors.

Neuralink is not raising money

— Elon Musk (@elonmusk) August 25, 2017

So the SEC form is incorrect?

— Alex Heath (@alexeheath) August 25, 2017

While Musk himself has been equivocal about the filing, Bloomberg stated that he “has taken steps to sell as much as $100 million in stock to fund the development.”

Neuralink remains a mystery to observers of the tech industry. The company’s website simply states that it is “developing ultra high bandwidth brain-machine interfaces to connect humans and computers.”

In April, the blog ‘Wait But Why’ published a colossal blog post about the venture using stick-figure illustrations to explain Musk’s plan to merge the human brain with AI using brain implants.

Writer and cartoonist Tim Urban spent six weeks researching the idea, a process that involved meeting and interviewing Musk....MORE

Also at RT:
Elon Musk’s Neuralink could represent next stage of human evolution

Previous Neuralink links, starting with the above ref'd Tim Urban piece:

A Deep Dive Into What Elon Musk Is Up To With His Neuralink Company

....MUCH, MUCH MORE
You won't believe how much more

"5 Neuroscience Experts Weigh in on Elon Musk's Mysterious "Neural Lace" Company"
Questions America Wants Answered: Would Elon Musk's Neuralink Solve All of Accounting’s Problems?
"Elon Musk launches Neuralink, a venture to merge the human brain with AI" UPDATED
"Too Funny: Reporting On Elon Musk's New Brain Implant Company, The Nerds at Boy Genius Report..."

Elon Musk Is Making Progress On His Neural Lace Brain Hack To Defeat AI And Prevent the Takeover Of the Human Mind

In other news...

Related:  

How Scientists Plan To Grow Cities Out Of Living Organisms 

Company At the Intersection of Synthetic Biology, Software, Robotics, and Advanced Manufacturing Raises $100 Million

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

Bill Gates Invests In Another Lab-Grown Meat Company

This marks Gates' third such investment although, to be fair, Hampton Creek only recently began the pivot from Just Mayo to industrial-scale-ingredient-supply-Co. and purveyor of fine Frankenmeats,

From VentureBeat:

Lab-grown food startup Memphis Meats raises $17 million from DFJ, Cargill, Bill Gates, others

Meat grown in a laboratory is the future, if certain sustainable food advocates have their way, and one startup just raised a bucketload of cash from major investors to make this goal a reality.

Memphis Meats produces a variety of meat products using animal cells, with no animals bred, fed, or slaughtered in the process. The San Francisco-based startup had previously raised around $5 million in funding through a couple of seed rounds and an equity crowdfunding initiative last year, but the company has now brought out the big guns as it looks to commercialize its goods over the next few years.

Leading the $17 million series A round was venture capital (VC) firm DFJ, backer of Skype, Tesla, SpaceX, Tumblr, Foursquare, Baidu, and Box. But digging down into the details reveals some other big names, including food giant Cargill, Bill Gates, Richard Branson, and European VC giant Atomico.

“We are committed to growing our traditional protein business and investing in innovative new proteins to ultimately provide a complete basket of goods to our customers,” noted Sonya McCullum Roberts, president of growth ventures at Cargill Protein. “Our investment in Memphis Meats is an exciting way for Cargill to explore the potential in this growing segment of the protein market.”...MORE

Recently:

August 2
"Bill Gates headlines an all-star list of investors pumping $75 million into meatless burgers"

Mr. Gates also partnered with Li Ka-Shing and Khosla on Hampton Creek which is attempting to pivot from Just Mayo into laboratory-grown 'meat'.*

From Quartz:

Impossible Foods, the maker of the meatless “burger that bleeds,” just got a fresh infusion of cash from some of the wealthiest people on the planet.

Bill Gates, a co-founder of Microsoft, and Li Ka-shing, Asia’s third-richest man, are among the investors backing the firm in its quest to get a plant-based burger to market. They were joined by Temasek, the Singapore state-owned investment company; Khosla Ventures; and Open Philanthropy Project, a investment fund led by Facebook co-founder Dustin Moskovitz.

Impossible Foods is locked in a race against another startup, Beyond Meat, to get a high-quality, plant-based burger into the mainstream. These aren’t your average veggie burgers—the companies have raised hundreds of millions of dollars to develop a product aimed to look, taste, and cook exactly like ground beef. And you won’t find them tucked away in supermarket freezer sections. Beyond Meat (which also counts Gates among its backers) is selling its product alongside the real thing in the meat section, while Impossible Foods has been getting its product—made with soy leghemoglobin—into high-profile restaurants.

Beyond Meat tripled its potential customer reach last week, and added to the pressure on Impossible Foods, when it added Kroger—the largest US grocery chain—to the list of retailers carrying its product. It had previously inked deals with Whole Foods and Safeway....MORE

*"Mayo-scandal firm Hampton Creek from San Francisco going whole hog for Frankenmeat: report"
Just Mayo Guy, Hampton Creek's Josh Tetrick, Pivots to Industrial Scale Ingredient Supply Biz
Hampton Creek: Remember All Our Vegetarian Talk? Never Mind 

Climateer Line of the Day: Writing Tips I Probably Won't Be Using Edition

"Note to historical novelists: the Stalinist era is severely underrepresented in fiction, even though it was a demented hellscape whose horrors practically beg to be dramatized. Saul Austerlitz makes the case...."

That's from the Paris Review.

If yukking it up with Beria and the boys isn't your cuppa chai they also offer-up a deranged Norwegian:

Look, normally I don’t go in for this type of thing, but come on: this is John Milton made of Stilton. Show a little respect, people. “I fell in love with John Stilton,” his maker, Christian Kjelstrup, says. “In Norway, Milton and Stilton are treated the same: both are enjoyed only by connoisseurs. The difference between John Milton and John Stilton is the latter is fat, greasy and sticky. I had a hard time making him. The fridge in my office now serves as his temporary mausoleum; I suspect his odor will survive him, perhaps even the fridge.” 

Must be something about living north of the 55th parallel. And speaking of the Scots...

Just kidding, the next post stars Bill Gates and I think his people came from south of the border.

Adventures In Pattern Recognition

From SMBC Comics:

HT: I'm sure it was FT Alphaville's David Keohane but can't for the life of me remember when.

Paging M. Macron: "CIA’s Venture Capital Arm Is Funding Skin Care Products That Collect DNA"

From The Intercept, April 2016:

SKINCENTIAL SCIENCES, a company with an innovative line of cosmetic products marketed as a way to erase blemishes and soften skin, has caught the attention of beauty bloggers on YouTube, Oprah’s lifestyle magazine, and celebrity skin care professionals. Documents obtained by The Intercept reveal that the firm has also attracted interest and funding from In-Q-Tel, the venture capital arm of the Central Intelligence Agency.

The previously undisclosed relationship with the CIA might come as some surprise to a visitor to the website of Clearista, the main product line of Skincential Sciences, which boasts of a “formula so you can feel confident and beautiful in your skin’s most natural state.”

Though the public-facing side of the company touts a range of skin care products, Skincential Sciences developed a patented technology that removes a thin outer layer of the skin, revealing unique biomarkers that can be used for a variety of diagnostic tests, including DNA collection.

Skincential Science’s noninvasive procedure, described on the Clearista website as “painless,” is said to require only water, a special detergent, and a few brushes against the skin, making it a convenient option for restoring the glow of a youthful complexion — and a novel technique for gathering information about a person’s biochemistry.

In-Q-Tel, founded in 1999 by then-CIA Director George Tenet, identifies cutting-edge technology to support the mission of the CIA and other intelligence agencies, and provides venture funding to help grow tech firms to develop those solutions.

“Our company is an outlier for In-Q-Tel,” Russ Lebovitz, the chief executive of Skincential Sciences, said during an interview with The Intercept. He conceded that the relationship might make for “an unusual and interesting story,” but said, “If there’s something beneath the surface, that’s not part of our relationship and I’m not directly aware. They’re interested here in something that can get easy access to biomarkers.”

Still, Lebovitz claimed he has limited knowledge of why In-Q-Tel selected his firm.
“I can’t tell you how everyone works with In-Q-Tel, but they are very interested in doing things that are pure science,” Lebovitz said. The CIA fund approached his company, telling him the fund shares an interest in looking at DNA extraction using the method pioneered by Skincential Sciences, according to Lebovitz.

Beyond that, Lebovitz said he was unsure of the intent of the CIA’s use of the technology, but the fund was “specifically interested in the diagnostics, detecting DNA from normal skin.” He added, “There’s no better identifier than DNA, and we know we can pull out DNA.”

Perhaps law enforcement could use the biomarker extraction technique for crime scene identification or could conduct drug tests, Lebovitz suggested.

Carrie A. Sessine, the vice president for external affairs at In-Q-Tel, declined a media interview because “IQT does not participate in media interviews or opportunities.”...MUCH MORE

Previously on the In-Q-Tel channel:
The CIA’s Venture-Capital Firm, Like Its Sponsor, Operates in the Shadows

This is a pretty good look at the spook shop vehicle.
As a side note, back in the early years of this century, especially immediately after the mass murders of 9/11, it was thought that investing alongside In-Q-Tel was the cool thing to do.
It took a while for the realization to sink in that they weren't necessarily in it for the money return to the VC's....

Quantum Computing: CIA and Bezos Invest in D-Wave Systems In.
"Hedge funds, VCs and the CIA are Throwing Money at ex-Bridgewater Data Scientists’ Startup"  
Peter Thiel’s Pursuit Of Technological Progress; It’s Not About Democracy and It’s Definitely Not About Capitalism – Part 1
Inside Palantir, Silicon Valley’s Most Secretive Company
"Pokémon Go Is a Government Surveillance Psyop Conspiracy"
Amazon and the CIA Want to Teach Artificial Intelligence to Watch Us From Space (AMZN; NVDA) 
Venture Capital: "Tech Companies And Their Love Affair With NSA and CIA" (GOOG)

And perhaps most alarming of all:
Robot Writing Moves from Journalism to Wall Street

The level of alarm is of course directly related to one's perspective.

Hurricane Watch: As Harvey Inches Back Toward The Gulf, Two More Atlantic-side Disturbances

First up, a snippet from Jeff Masters at Category 6:
Heavy Damage in Texas from Harvey; Disastrous Flooding Lies Ahead

.....The forecast: catastrophic, life-threatening flooding expected into next week as Harvey stalls out
An extremely serious situation with few if any close parallels in modern U.S. hurricane history is taking shape over the southeast third of Texas. Computer models remain in strong agreement that the steering currents around Harvey will remain weak through at least Wednesday. As a result, Harvey will spin down while stalled for several days within 100 miles of the central Texas coast (see Figure 5). Even as its top winds decrease, Harvey will continue to pump enormous amounts of moisture into south central and southeast Texas, producing relentless bands of showers and thunderstorms (convection) across a wide swath that will likely include the Houston area. The 12Z Saturday run of our most reliable hurricane tracking model, the European, predicts that Harvey will edge offshore on Monday and Tuesday, which would keep the storm from weakening, and potentially allow some modest re-intensification....MUCH MORE

And from the National Hurricane Center:

Atlantic 2-Day Graphical Tropical Weather Outlook

ZCZC MIATWOAT ALL
TTAA00 KNHC DDHHMM

Tropical Weather Outlook
NWS National Hurricane Center Miami FL
200 PM EDT Sat Aug 26 2017

For the North Atlantic...Caribbean Sea and the Gulf of Mexico:

The National Hurricane Center is issuing advisories on recently
downgraded Tropical Storm Harvey, located inland over eastern Texas.

1. An elongated area of low pressure stretching across north-central
Florida continues to produce a large area of disorganized
cloudiness and thunderstorms extending from the southwest coast of
Florida northeastward into the western Atlantic.  Although
upper-level winds are not particularly conducive, this system has
the potential to become a tropical or subtropical depression
early next week after it moves off the northeast coast of Florida
on Sunday. The low is forecast to move close to the southeastern
coast of the United States and merge with a cold front by mid-week.
Regardless of tropical cyclone development, the low is expected to
cause increasing winds and rough surf along the coasts of Georgia
and the Carolinas through early next week.  Heavy rain is also
expected to continue over portions of southern and central Florida
during the next day or two. Please refer to products from your local
National Weather Service forecast office for more information on
this system.
* Formation chance through 48 hours...medium...40 percent.
* Formation chance through 5 days...medium...50 percent.

2. A tropical wave over western Africa is forecast to emerge over the
far eastern Atlantic Ocean on Sunday.  Environmental conditions are
forecast to be conducive for slow development by the middle of next
week while the wave moves westward about 20 mph.
* Formation chance through 48 hours...low...0 percent.
* Formation chance through 5 days...low...20 percent.

Forecaster Blake

"China Is Weaponizing Water"

If demography isn't destiny, geography might be.

From The National Interest:

Hidden in plain sight is an intimidating Chinese weapon that allows it to hold a quarter of the world’s population hostage without firing a single shot. While much attention has been given to the nation’s fearsome new military hardware, a formidable component in its arsenal has largely escaped notice: dams.

With more than 87,000 dams and control of the Tibetan plateau, the source of ten major rivers which 2 billion people depend on, China possesses a weapon of mass destruction. With the flip of a switch, the Middle Kingdom can release hundreds of millions of gallons of water from its mega dams, causing catastrophic floods that would reshape entire ecosystems in countries downstream.

China knows first-hand the destructive power of water. In an attempt to halt advancing Japanese troops during World War II, Chang Kai-Shek, commander of the Chinese Nationalist Army, destroyed a dike along the Yellow River flooding thousands of miles of farmland, killing an estimated 800,000 Chinese, and displacing nearly 4 million.

It is highly unlikely that China would ever deliberately unleash such a destructive act upon its neighbors, but the fact remains that it wields enormous leverage as an upstream nation by its ability to control life’s most essential resource.

High in the Himalayan Mountains are what has been dubbed the “Water Towers of Asia.” Seven of the continent’s greatest rivers start life here including the Mekong, Ganges, Yangtze, Indus and Irrawaddy. What begins as dribble from snow melt in the Tibetan plateau builds into mighty rivers that flow across China’s borders before eventually reaching South Asia.

To satisfy its insatiable demand for electricity and as part of its shift away from coal, China has gone on a dam building spree. In 1949, China had less than forty small hydroelectric dams, but now it has more dams than the United States, Brazil and Canada combined.

On the upper Mekong alone, China has erected seven mega dams with plans to build an additional twenty-one. Just one of its latest dams is capable of producing more hydropower than all of Vietnam and Thailand’s dams on the Mekong.

This dramatic increase in dam building activity has had an outsized environmental impact and stoked fears in downstream nations.

“Beside having environmental issues those dams in Tibet can be disastrous for [India]. They can unleash their fury during earthquake, accidents or by intentional destruction can easily be used against India during war,” said Milap Chandra Sharma, a glaciologist at Jawaharlal Nehru University in New Delhi.

China’s southern neighbors are not worried without reason. In the past, India has blamed sudden discharges from Chinese dams for several flash floods including one that caused an estimated $30 million in damage and left 50,000 homeless in northeast India.

Each year, during China’s rainy season, downstream nations are on high alert as Chinese dams release water to ease pressure with little warning.

“A discharge by a dam will have a domino effect on the whole system, which can cause huge damages,” explained Le Anh Tuan, deputy director of the Research Institute for Climate Change in Vietnam.

In addition to floods, Chinese dams are also believed to be responsible for worsening droughts. Last year, Vietnam pleaded with China to release water from the Yunnan dam on the Mekong River to ease severe water shortages downstream. China agreed and waters flowed into Cambodia, Laos, Myanmar, Thailand and Vietnam.

These two extremes not only highlight the environmental impact of Chinese dams, but also serve as a stark reminder of China’s influence over its southern neighbors. These rivers are foundational to life in South Asia, providing drinking water, irrigation for farming, habitats for fisheries and transportation for commerce....MUCH MORE

On second thought the intro line is just facile rhyming, along the lines of  "ontogeny recapitulates phylogeny" and probably no more accurate.
Hydrology on the other hand....

"The 10 largest homes for sale in the US right now"

From The Real Deal:

Small homes may continue to rise in popularity, but bigger will always be better for the most luxurious end of the real estate market.

When your budget has no bounds, you can afford endless space for you, your family and your helicopter.
Whether you’ve been dreaming of your own villa near Hollywood or a remote castle in upstate New York, these truly grand estates have earned their spot on the list of the ten biggest houses currently for sale in the United States.

1. Deluxe lakeside compound
$19,800,000
63,000 sq ft

It’s two magnificent estates for the price of one in this jaw-dropping compound on the shores of scenic Lake Winnipesaukee in the quaint town of Alton, New Hampshire. Between these two properties, you’ll enjoy 12 bedrooms and a combined total of 63,000-square-feet. Your commute to either home can be whatever you choose, thanks to the on-site helicopter pad and multiple docks. (Those traveling by luxury car will simply enjoy the drive in from the gated entrance and through six acres of manicured lawns.)

Though built for year-round enjoyment, certain features stand out for milder months of the year, like the stone amphitheater, an infinity pool with grotto and the tennis court. For those who plan on hosting many get-togethers, you have a 7,655-square-foot reproduction post-and-beam barn specifically built for entertaining. There’s also one of the most charming features we’ve ever come across: A private lakeside tea house.

2. High drama in the desert
$8,599,000
52,000 sq ft

Set against panoramic views of Camelback Mountain and metro Phoenix, this 14-bedroom, 23-bathroom estate gives you 52,000-square-feet to customize to your own taste. That’s because this luxury property is being sold as-is — which means you can consider this a massive blank slate for limitless creativity.

Though some features would be in need of updating (for instance, the great room appears to have popcorn ceiling tiles), some are worth keeping, like the amethyst stone fireplace in the guest house, the imported marble throughout the home and the herringbone floors. Sporty types will also appreciate the racquetball court and his-and-hers locker rooms. Overall, it’s an intriguing project for the right owners.

3. Secluded Spanish villa in Los Angeles
$75,000,000
40,000 sq ft

A cool $75 million doesn’t just get you a 40,000-square-foot mansion with 8 bedrooms, 21 bathrooms, a recording studio, outdoor movie screen, a wine cellar and tasting room. It gets you an unthinkable amount of privacy thanks to some very specific features: An underground auto gallery, an indoor saltwater lap pool, an indoor basketball court that doubles as a grand ballroom, your own full service salon complete with a wellness center and a movie theater complete with a candy wall. Though you could very well never leave the house thanks to these features, you’re not far from civilization. The Los Angeles estate is close to the Hotel Bel-Air, and is in close proximity to Brentwood, Beverly Hills and West Hollywood.

And jumping ahead:

7. French facade in Los Angeles
$85,000,000
35,000 sq ft

Los Angeles is home to an unusual amount of super-sized estates. However, while you might frequently see similar features (after all, a private screening room is a necessity in the movie capital of the world) no two mansions are exactly alike. This 10-bedroom, 14-bathroom, 35,000-square-foot estate takes its architectural cues from a variety of places to unique effect.

The exterior is tres French with many of the interior spaces riffing on the extravagant Chateau theme. Yet, you’ll also find a Turkish hammam and a Moroccan-inspired room on-site. Though the interior piles on the details, the grounds were designed with a little more restraint. Fountains, a sleek pool and a swan pond make for a lovely walk around the grounds as you soak in the city views.

...MORE 

Where Are The Profits Of Big Data Flowing?

From TechRepublic, March 17:

Why machine learning benefits the rich, and everyone else is toast  
Big data started with cheap hardware and open source software, but the winners in machine learning are the world's richest companies. 

Why is machine learning finally real? It's the data, stupid. Lots (and lots) of data.

That's a key message from Cloudera co-founder Mike Olson's Strata + Hadoop World keynote earlier this week in San Jose, California. As he declared: "The algorithms that early researchers and current practitioners use are ravenous for data and we finally have enough data on the planet to feed them. They also need scale-out computation and storage at low cost."

In fact, the mountains of data that we now enjoy are a direct result of high-quality open source software running on commodity hardware: More applications churning out more data for more people.

A game only the rich can play
Despite this low-cost hardware and software, and its impact on machine learning, let's be clear: Big enterprises are the primary beneficiaries. Why? As Olson went on to explain, among enterprises doing over $1 billion a year in revenue—Cloudera's target customer—"the appetite for these [machine learning] capabilities is insatiable" as they "absolutely have the data at scale."

Data, after all, is necessary to train the machines. A small company could have big plans but without big data to feed those plans, it's a losing battle. As such, large enterprises are in a prime position to use big data to enrich themselves and effectively hold off would-be, smaller competitors.

(As a side note, as useful as open source has been, we really need to have open data sets. Stanford has been exemplary in this, annotating data to make it more readily useful for machine learning. This is a new frontier in "open source," and we need to explore it more.)

Sparking ML
One thing that aids these big companies has come from an egalitarian source: Apache Spark. I've written about Spark's impact on multiple occasions, but it's easy to understate just how important it has been. Indeed, though Cloudera recognized the importance of Apache Spark early on, Olson noted in his keynote, one aspect of it has "taken them by surprise."

[Spark] allowed people to build and deploy scale-out machine learning applications much faster than they had previously done. [Why?] Its flexibility and ease of programming meant that you could build machine learning apps, train up models on massive data very, very quickly. That has led to huge interest in the ecosystem....

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Coming at the issue on a related tangent is The Verge, July 13:

Robots and AI are going to make social inequality even worse, says new report

Most economists agree that advances in robotics and AI over the next few decades are likely to lead to significant job losses. But what’s less often considered is how these changes could also impact social mobility. A new report from UK charity Sutton Trust explains the danger, noting that unless governments take action, the next wave of automation will dramatically increase inequality within societies, further entrenching the divide between rich and poor. 

The are a number of reasons for this, say the report’s authors, including the ability of richer individuals to re-train for new jobs; the rising importance of “soft skills” like communication and confidence; and the reduction in the number of jobs used as “stepping stones” into professional industries.

For example, the demand for paralegals and similar professions is likely to be reduced over the coming years as artificial intelligence is trained to handle more administrative tasks. In the UK more than 350,000 paralegals, payroll managers, and bookkeepers could lose their jobs if automated systems can do the same work. 

“Traditionally, jobs like these have been a vehicle for social mobility,” Sutton Trust research manager Carl Cullinane tells The Verge. Cullinane says that for individuals who weren’t able to attend university or get particular qualifications, semi-administrative jobs are often a way in to professional industries. “But because they don’t require more advanced skills they’re likely to be vulnerable to automation,” he says.

Similarly, as automation reduces the need for administrative skills, other attributes will become more sought after in the workplace. These include so-called “soft skills” like confidence, motivation, communication, and resilience. “It’s long established that private schools put a lot of effort into making sure their pupils have those sorts of skills,” says Cullinane. “And these will become even more important in a crowded labor market.”....

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There are a couple other aspects of the AI money flows that are becoming apparent, we'll be back with those next week.

Robert Conquest's Summary of Shakespeare's "Seven Ages of Man" (and other stuff)

I've read Conquest but had never seen this.
From Nautil.us:

The $1 Billion Misunderstanding of Aging

Robert Conquest, a historian of Soviet Russia and a poet, once summarized Shakespeare’s 28-line poem, “The Seven Ages of Man,” in five lines. They go like this:

• Seven Ages: first puking and mewling
• Then very pissed off with your schooling.
• Then fucks and then fights.
• Then judging chaps’ rights—
• Then sitting in slippers—then drooling.

For biotech researchers and entrepreneurs who see aging as an engineering problem to be solved, the goal is to halt the process somewhere, I imagine, between the third and fourth lines. They want to grow up but not grow old, because once you’re old, things start going wrong. “The current system in healthcare is a whack-a-mole of your symptoms until you die,” Joon Yun, the founder of the Race Against Time Foundation, told Nautilus. “It addresses the diseases of aging, but not curing the underlying process behind aging itself. The healthcare system is doing a good job of helping people live longer and stronger lives, but aging is still a terminal condition.”

It’s also still a concept without a clear definition. Nevertheless, scientists have a rough idea. Leonard Hayflick, a co-founder of the National Institute on Aging and a past president of the Gerontological Society of America, says aging is “the result of the accumulation of unrepaired changes or losses in molecules (a catabolic process).” Research on aging, he says, tries to answer the question: “Why do things ultimately go wrong?”

“The study of Alzheimer’s Disease and even its resolution will tell us nothing about the fundamental biology of aging.”

In his Ingenious interview, we recently asked Hayflick how scientists might make some progress on it. Focus on the fundamentals, he said, rather than what’s gone wrong....

....MORE

Facebook Is Creepy: The 'People You May Know' Feature (FB)

From Gizmodo:

Facebook Figured Out My Family Secrets, And It Won't Tell Me How

Rebecca Porter and I were strangers, as far as I knew. Facebook, however, thought we might be connected. Her name popped up this summer on my list of “People You May Know,” the social network’s roster of potential new online friends for me.

The People You May Know feature is notorious for its uncanny ability to recognize who you associate with in real life. It has mystified and disconcerted Facebook users by showing them an old boss, a one-night-stand, or someone they just ran into on the street.

These friend suggestions go far beyond mundane linking of schoolmates or colleagues. Over the years, I’d been told many weird stories about them, such as when a psychiatrist told me that her patients were being recommended to one another, indirectly outing their medical issues.

What makes the results so unsettling is the range of data sources—location information, activity on other apps, facial recognition on photographs—that Facebook has at its disposal to cross-check its users against one another, in the hopes of keeping them more deeply attached to the site. People generally are aware that Facebook is keeping tabs on who they are and how they use the network, but the depth and persistence of that monitoring is hard to grasp. And People You May Know, or “PYMK” in the company’s internal shorthand, is a black box.

To try to get a look into that black box—and the unknown and apparently aggressive data collection that feeds it—I began downloading and saving the list of people Facebook recommended to me, to see who came up, and what patterns might emerge.

On any given day, it tended to recommend about 160 people, some of them over and over again; over the course of the summer, it suggested more than 1,400 different people to me. About 200, or 15 percent of them, were, in fact, people I knew, but the rest appeared to be strangers.

And then there was Rebecca Porter. She showed up on the list after about a month: an older woman, living in Ohio, with whom I had no Facebook friends in common. I did not recognize her, but her last name was familiar. My biological grandfather is a man I’ve never met, with the last name Porter, who abandoned my father when he was a baby. My father was adopted by a man whose last name was Hill, and he didn’t find out about his biological father until adulthood.

The Porter family lived in Ohio. Growing up half a country away, in Florida, I’d known these blood relatives were out there, but there was no reason to think I would ever meet them.

A few years ago, my father eventually did meet his biological father, along with two uncles and an aunt, when they sought him out during a trip back to Ohio for his mother’s funeral. None of them use Facebook. I asked my dad if he recognized Rebecca Porter. He looked at her profile and said he didn’t think so.

I sent the woman a Facebook message explaining the situation and asking if she was related to my biological grandfather.

“Yes,” she wrote back.

Rebecca Porter, we discovered, is my great aunt, by marriage. She is married to my biological grandfather’s brother; she met him 35 years ago, the year after I was born. Facebook knew my family tree better than I did

“I didn’t know about you,” she told me, when we talked by phone. “I don’t understand how Facebook made the connection.”

It was an enjoyable conversation. After we finished the phone call, I sat still for 15 minutes. I was grateful that Facebook had given me the chance to talk to an unknown relation, but awed and disconcerted by its apparent omniscience.

How Facebook had linked us remained hard to fathom. My father had met her husband in person that one time, after my grandmother’s funeral. They exchanged emails, and my father had his number in his phone. But neither of them uses Facebook. Nor do the other people between me and Rebecca Porter on the family tree.

Facebook is known to buy information from data brokers, and a person who previously worked for the company and who is familiar with how the tool works suggested the familial connection may have been discerned that way. But when asked about that scenario, a Facebook spokesperson said, “Facebook does not use information from data brokers for People You May Know.”

What information had Facebook used, then? The company would not tell me what triggered this recommendation, citing privacy reasons. A Facebook spokesperson said that if the company helped me figure out how it made the connection between me and my great aunt, then every other user who got an unexpected friend suggestion would come around asking for an explanation, too....MORE

"Google To Refund "Fake Traffic" Advertising Revenue"

From ZeroHedge:

One month ago, consumer products giant Procter & Gamble - one of the largest and most sophisticated advertisers in the world - launched a mini crisis in the online advertising space, when the company announced that it was scaling back its online advertising spend, stating that "digital ad spending was lower versus a high base period and due to current period choices to temporarily restrict spending in digital forums where our ads were not being placed according to our standards and specifications." The implications to this admission that online advertising was either being gamed by bots, or generally underperforming were significant, as it jeopardized the future revenue streams of two of the biggest companies in the world, Alphabet (aka Google) and Facebook, both almost entirely reliant on online advertising. How long before other anchor names decided to similarly cut back on their online ad spending?

So, one month later, in its first tacit admission that its ad network has few protections against "fake traffic" such as ever more sophisticated ad bots - and that P&G's criticism was spot on - the WSJ reports that Google will issue refunds to advertisers for ads bought through its platform that ran on sites with fake traffic "as the company develops a tool to give buyers more transparency about their purchases."

Hoping to avoid further spending cuts and outright contract losses - especially to arch rival Facebook, which has similarly admitted to having ad exposure problems on numerous occasions - in the past few weeks Google has informed hundreds of marketers and ad agency partners about the issue with invalid traffic, also known “ad fraud.” According to the WSJ, the ads were bought using the company’s DoubleClick Bid Manager.

Typically, advertisers use DoubleClick Bid Manager to target audiences across vast numbers of websites in seconds by connecting to dozens of online ad exchanges, marketplaces that connect buyers and publishers through real-time auctions.

The ad spending flows through to the exchanges. The problems arise when ads run on publisher sites with fraudulent traffic, such as those where clicks are generated by software programs known as “bots” instead of humans. This is an issue of growing to concern to marketers. It is difficult to recoup the money paid to those sites when the issue is discovered too late.

While in the past advertisers have received small credits from Google when they detect discrepancies, in this case, for some buyers, the fraud was larger than usual. However, since Google’s "increased" refund still amounts to only a small fraction of the total ad spending served to invalid traffic, some advertisers remain unsatisfied: "Google has offered to repay its “platform fee,” which ad buyers said typically ranges from about 7% to 10% of the total ad buy."

Scott Spencer, director of product management for Google, acknowledged that refunds have been paid, but he declined to provide a dollar figure for the amount being returned. Some ad buyers said the refund amounts range from “less money than you would spend on a sandwich” to hundreds of thousands of dollars.

“Today, we can’t disclose the information about third parties,” Mr. Spencer said. “So when we aren’t able to catch invalid traffic before it impacts our advertisers and we’re unable to refund their media spend, it hurts us, even if we’re not responsible.”

Google added the affected ad buyers in this instance were impacted by invalid traffic over the course of a few months this year, primarily in the second quarter. Part of that traffic affected video ads, which carry higher ad rates than typical display ads and are therefore an attractive target for fraudsters.

Of the billions of dollars flowing into online advertising each year, a percentage is inadvertently shown to sites with fake traffic, with fraudsters siphoning off advertisers’ money for themselves. And while the individual instances of ad fraud tend to be modest in amount, combined they add up quickly: some $6.5 billion in ad spending will be wasted this year to fraud, according to a report released in May by the Association of National Advertisers....

...MORE

In late July we mentioned P&G in relation to another problem—"Banner blindness":

...No wonder Proctor & Gamble could cut their online ad budget by $100 million last quarter and see no drop-off in sales: the 40% of traffic that isn't bots is basically blind to the ads.
Shhhh, don't tell Facebook or the GOOG, they'd be crushed.

"Hurricane Harvey Strengthens to 110 mph Winds..."

From Wunderground's Category 6:
August 25, 2017, 2:34 PM

Hurricane Harvey is poised to deliver a catastrophic flooding blow to Texas after putting on an impressive round of rapid deepening Friday morning that brought the storm to the verge of Category 3 strength. Harvey passed over a warm ocean eddy with high heat content for over 6 hours Friday morning, and the extra energy the eddy provided allowed Harvey’s central pressure to fall a spectacular 15 mb in just two hours, from 967 mb at 4 am CDT to 952 mb at 6 am CDT. It takes several hours for a hurricane’s winds to respond to a rapid pressure fall, so we can expect that Harvey will be a Category 3 hurricane with 120 mph winds by Friday evening. An Air Force hurricane hunter aircraft in the storm this morning was continuing to see falling pressures, with the 8 am CDT eye penetration recording a 949 mb pressure. The aircraft also observed evidence that an eyewall replacement cycle was beginning. In this situation, the inner eyewall would collapse and be replaced by a new eyewall with a larger diameter, which would likely slow down or end Harvey’s intensification phase.

Harvey is a very dangerous hurricane with extreme winds, storm surge, and rainfall. If you live in Texas, please heed the advice of local emergency management officials, and get out immediately if you live in an evacuation zone. Heavy rain squalls and strong wind gusts are already affecting the Texas coast, and tropical storm-force winds will begin affecting portions of the coast late Friday morning or early Friday afternoon, making evacuation difficult.

Favorable conditions for intensification continue
Conditions in the Gulf of Mexico on Friday morning continued to be very favorable for intensification. Satellite images and radar showed that Harvey had expanded in size, and had a very impressive area of heavy thunderstorms with well-organized spiral bands that were dumping torrential rains. Harvey had an intense ring of very heavy thunderstorms surrounding a 13-mile diameter eye, and cirrus clouds streaming away from the center showed the presence of excellent upper-level outflow to the north and east, which was ventilating the storm and allowing intensification to occur. Wind shear was light to moderate, 5 – 15 knots, and the atmosphere had a high mid-level relative humidity of 70%. Sea surface temperatures (SSTs) were a very warm 30°C (86°F). Warm waters extended deep into the ocean, providing a large reservoir of heat for the storm to draw upon....MUCH MORE

...Harvey’s combination of strength and rainfall duration has few if any parallels

The historical record of U.S. hurricanes gives us few, if any, analogs for a major hurricane landfall that transitions into a multi-day rainfall event as prolonged, extensive, and intense as the scenario painted by multiple forecast models for Harvey. All four of the high-probability 0Z Friday European model ensemble members, and all but one of the 20 GFS members, maintain Harvey at Cat 1 strength (or better) for the next five days.

The official NHC forecast on Friday morning called for Harvey to maintain tropical storm strength through Wednesday. Even after Harvey weakens below hurricane strength, gale-force winds will continue to pump vast amounts of moisture onshore, fueling several days of heavy rain. The latest 5-day precipitation outlook from the NOAA/NWS Weather Prediction Center (see Figure 3) projects that an area larger than the state of Massachusetts, including Houston and Galveston, can expect more than 20” of rain between now and Wednesday. Amounts of more than 10” cover an even larger area, extending into parts of the Austin-San Antonio urban corridor and including Corpus Christi and Beaumont-Port Arthur, TX, and Lake Charles, LA. Very serious flooding over the next several days can be expected well inland from the areas immediately at risk from Harvey’s initial landfall and storm surge. For example, Austin/San Antonio NWS office notes the potential for life-threatening flash flooding, especially from San Antonio south and east....

Questions America Wants Answered: "Could the Palladium Rally Lead to Changes in the Auto Industry?"

From the WSJ's MoneyBeat blog:

Could the Palladium Rally Lead to Changes in the Auto Industry?

Platinum bulls are hearing footsteps—the precious metal’s close relative palladium is hot on its heels.

Palladium has been a standout even amid the recent boom in industrial metals like copper, surging to its highest levels since 2001 amid a yearslong deficit and closing the gap on platinum. For the year, prices are up more than 35%, and some analysts and investors think palladium soon costing more than platinum could lead to changes in the auto industry.

Technically a precious metal, palladium often behaves like a base metal because of its use in the catalytic converters that filter car emissions in engines.

Many manufacturers began substituting palladium for platinum because it was widely available and cheaper in the early 2000s, but a continued palladium rally could lead them to consider switching back to platinum, said Pete Duncan, director of market research at Johnson Matthey.

Johnson Matthey expects palladium to soon cost more than platinum, Mr. Duncan said, as demand from China and other global markets has kept the recent rally going despite concerns about slowing U.S. auto sales.

“The whole situation is coming to a head,” said Shree Kargutkar, portfolio manager at Sprott Asset Management, adding that manufacturers considering switching back to platinum “makes a ton of sense.”

Investors have continued to wager on further gains even with palladium’s rapid run up. Net long positions by hedge funds and other speculative investors on palladium futures totaled 24,194 contracts in the week ended Aug. 15, near this year’s high of 24,755 from mid-June, data from the Commodity Futures Trading Commission show. The June high was the largest since 2013....MORE

A Quick Reminder For Bitcoin Enthusiasts In the Path Of Hurricane Harvey

When the power goes out you won't be able to access your crypto.

Just sayin'

Hurricane Harvey: Worst Case Scenario

From BAMwx's Ed Vallee:

The European is the worst case scenario for #Texas with TWO landfalls over the course of the week, both as Cat 2/3 hurricanes. #Harvey pic.twitter.com/F2fttNyW0M

— Ed Vallee 🌽 (@EdValleeWx) August 25, 2017

And this is a screen grab from Weatherbell:

Here's the Weatherbell Daily Update with the video.

BlackRock: "Don’t let the valuation bears scare you"

The writer, Kate Moore, is a Managing Director and Chief Equity Strategist for BlackRock.
From the BlackRock blog:

Equity valuations may look rich compared with history, but we do not believe this is something to be feared. Kate explains.

Many investors are skeptical about equity valuations after an eight-year rally. Investor trepidation is understandable. The cyclically adjusted price-to-earnings (P/E) ratio for U.S. stocks was at its highest level since March 2002 as of end-July according to Thomson Reuters data, a level last associated with a major market correction.

Equity valuations may look rich compared with history, but we do not believe this is something to be feared, as we write in our new Global equity outlook Goldilocks and the valuation bears. We see starting valuations as an indicator of future returns only in the long run. Drivers such as earnings growth and momentum power markets in the near to medium term, in our view.

We analyzed almost three decades of equity market history in the U.S., Europe and Japan, and roughly two decades in emerging markets. We composed a blend of five key valuation metrics—including forward price-to-earnings ratios and price-to-book value—and examined how strong the relationship was between starting valuations—or valuations at the time of purchase—and the variability of subsequent U.S. dollar returns over time.

We found that starting valuations have historically been a poor indicator of future equity returns in the short run. Sentiment-driven changes in market multiples tend to trump fundamentals for holding periods of five years or less. Cheap stocks can remain cheap for years, and often need a catalyst for re-rating. Similarly, highly priced stocks can ride waves of momentum to become even more expensive, before eventually settling to more reasonable multiples.

Starting valuations are a more reliable compass in the long term, we found. They have shown a strong relationship with U.S. equity performance over 10-year periods, our analysis shows. See the chart below....

...MORE

Discerning reader has probably noticed we haven't made many market/individual equity calls this year.
What's to say? Stocks are going up, things are increasing in price.
And the trying-to-call-market-turns game is a lot like Twitter.
Just another opportunity to make yourself look like a damn fool.*
So we outsource.
To folks who seem to have an idea about what's going on.


*From The Quotations Page:

...It's been attributed to many persons, but seems to have its roots in the Bible:

"It is better to remain silent and be thought a fool, than to open your mouth and remove all doubt ". -- George Eliot 

"Better to remain silent and be thought a fool than to speak out and remove all doubt."-- Abraham Lincoln (also attr. Confucius) 

"It is better to keep your mouth closed and let people think you are a fool than to open it and remove all doubt."-- Mark Twain (1835-1910) 

"Even a fool, when he holdeth his peace, is counted wise: and he that shutteth his lips is esteemed a man of understanding." -- Bible, 'Proverbs' 17:28.

There are no citations for Lincoln or Twain. I have my doubts about Confucius.