Thursday, January 23, 2020

Following up on "European Towns Creating Own Currencies"

It was posted in September 25, 2012 so you are excused if you don't remember where you were when you heard the news:
European Towns Creating Own Currencies
We'll probably have to do one of those impenetrable "What is money?" posts one of these days.
Not today though. 
From CNBC:
QE Goes Local: Towns Coin Their Own Currencies....
....The amount of local currencies across Europe has now reached 104, all of which are listed on Last week Bristol, a city in southwest England, launched the latest of these — the Bristol Pound....MORE
And yesterday at CapX:
The demise of the Bristol Pound shows the folly of local currencies
  • The only obvious beneficiaries of the Bristol Pound are the people who run the project
  • The economic argument for local currencies is feeble - and was debunked in the eighteenth century
  • Local currencies like the Bristol pound confuse wealth with money - and make their areas poorer as a result....
Okay, but other than that...

In 2013 it was: Alternative, Community and Private Currencies

Even earlier we had:
BANK RUN: "Second Life Closes Banks"
From MIT's Technology Review:

Credit: Prokofy Neva (a.k.a. Catherine Fitzpatrick)

Bank run: After Linden Lab’s Tuesday announcement that it was banning virtual banks in Second Life, some residents rushed to withdraw their virtual Linden dollars, while others (above) protested the company’s decision.

And many more. Including: "Bacon as Currency: Testing the Limits of What It Can Buy"

Capital Markets: "ECB's Strategic Review and the Coronavirus Command Investors' Attention"

From Marc to Market:
Overview: The spread of the coronavirus and the lockdown in the epicenter in China has again sapped the risk-taking appetite in the capital markets. Asia is bearing the brunt of the adjustment. Tomorrow starts China's week-long Lunar New Year celebration when markets will be closed, which may have also spurred today's drama that saw the Shanghai Composite tumbled 2.75%, bringing the week's loss to 3.2%, the most in five months.

India was among the few markets in the region that managed to post small gains today. Europe equities are lower for the fourth day, but losses have been minor, and over the four sessions, the Dow Jones Stoxx 600 is off around 0.5%.
US shares are trading with a slight downside bias. The US 10-year benchmark is near 1.74%, the lows for this year, while European bonds yields are off 2-4 bp, with Italy fully participating after yesterday's wobble on changes in the Five Star Movement. The US dollar retains firm tone, rising against most of the world's currencies today. The Australian dollar and Japanese yen are notable exceptions among the majors. The dovish twist by the Bank of Canada yesterday is behind the Canadian dollar's underperformance today. It is the heaviest of the majors, extending yesterday's 0.5% loss with another 0.25% today. Among emerging market currencies, the Chinese yuan fell a little more than 0.35%, and the 1% loss for the week is the most since August. Gold is trading heavier but is rangebound between roughly $1546 and $1568. Growth concerns and a build in US inventories (API says 1.57 mln barrels) continues to pressure oil prices. The March WTI futures contract is extending yesterday's 2.8% loss with another 1.7% leg lower bring light sweet crude prices to their lowest level since early December, which is around 15% below the US-Iran confrontation high (~$65.40) on January 8. A broad measure commodity price (CRB Index) is falling for the fourth consecutive week, during which time it has fallen about 3.75%.

Asia Pacific
Within the disappointing Japanese December trade report, there were a few bright spots.
First negative signals need to be recognized to appreciate the positive signs. Exports and imports were weaker than expected. Exports fell 6.3% year-over-year, nearly half again as big as the median forecast in the Bloomberg survey (-4.3%). Imports were off 4.9% compared with the median estimate for a 3.2% decline. The auto sector remained problematic. Auto exports were off 11.8%, and parts exports fell almost 11%. Given that exports fell nearly 15% to the US, we suspect that it may show up in US auto import and inventory data. It is the fifth consecutive month exports to the US fell.

The constructive news is that exports to China rose for the first time in 10 months (albeit less than 1%). Moreover, the export of semiconductor making equipment surged by a little more than a quarter. The two are not unrelated. Japan's exports of chip fabrication equipment to China jumped 60%. This is important too because semiconductor chips (design and manufacturing) are seen to be a bottleneck for China. As part of its import-substitution strategy, it will likely ramp up its efforts to become more independent. Separately, Japan reported a 0.9% rise in its November all-industries index. It was near twice the gain expected and as another piece of data showing recovery after the October typhoon and sales tax boost....

Wednesday, January 22, 2020

The Voyage of The (not so) Good Ship Columbus

From Amusing Planet, October 2019:

Disposable Ships 
Before the Industrial Revolution, the British shipbuilding industry was completely dependent on the countries around the Baltic Sea for timber and for other materials such as masts, tar and pitch needed to build ships. As a strong maritime nation, this frightful dependence on other countries for raw materials not only undermined Britain’s defense, it also worsened the growing trade deficit Britain had with the entire Baltic region. Only a small percentage of Britain’s demand for timber was fulfilled by the American colonies despite the nearly inexhaustible supply of wood in New England. This was because of the vast distance that separated the two nations, which made importing timber from across the Atlantic uneconomical.

In the early 18th century, the British government launched a number of initiatives in order to encourage the use of colonial timber over that from the Baltic. This included bounties from North American producers and rules forbidding the export of colonial timber to anywhere other than England. These policies had little effect on import. Baltic timber continued to dominate the British market, used by both the navy and the merchant fleets, because American timber was still three times as expensive as timber from the Baltic.
During the Napoleonic Wars, French military successes and blockade of the Baltic cast doubts about the continuance of timber supplies from the Baltic, and Britain once again looked towards its former American colonies. By a series of acts in 1809 and 1810, Britain made Baltic timber more and more expensive by imposing an ever-increasing duty on timber imports, while colonial timber only paid a nominal fee. The duty system resulted in the rapid development of the American timber trade, and by the end of 1809, American timber imports to Britain more than tripled from what it was two years ago. By 1812, American timber represented over 60 percent of Britain's total timber imports.

The lucrative tariff system, however, was only a wartime measure, and after peace returned to Europe there was much debate whether the system should continue. In 1821, the duty on European timber was reduced and for the first time a duty was imposed on American timber. The new system still left American producers with an overwhelming advantage, and timber imports actually increased. Prices of timber rose, wages improved and everybody rushed to the timber business.

In the midst of this frenzied activity, two Glasgow shipbuilders, Charles and John Wood, in search for quick profit, devised a technique to import large quantities of timber. Their plan involved building a huge vessel, many times larger than the largest vessel in operation, which was to be packed to capacity with timer and sailed across the Atlantic. On arrival, the huge cargo was to be unloaded and the vessel itself dismantled and the timbers sold. That way the importers could reap big profit, first from the sale of the large cargo, and second, by evading the duty on timber of the vessel itself.
Columbus ship
In 1824, Charles Wood left for Quebec to supervise the construction of the first disposable ship, Columbus. In size, she was immense—300 feet long, 50 feet wide and 22 feet tall. She weighted an astounding 3,690 tons, more than ten times the tonnage of the average vessel operating in the timber trade. The ship was built as cheaply as possible. The hull was made from thick pieces of undressed, squared timber which was not caulked at the seams so that she could be taken apart easily without damaging the timber. The bottom was wider than the deck, and the vessel looked ungainly and crude. In the words of a Times correspondent, “the Columbus was an immense mass of timber knocked together for the purpose of commerce, without any regard to beauty and little attention to the principle of naval architecture.”

Columbus’s journey across the Atlantic was far from uneventful, as can be expected from a sea-unworthy vessel as such. Because of her uncaulked seams, the ship sprang hundreds of leaks as soon as she touched water....MORE
Speaking of having your military realize they are completely dependent on foreign suppliers for critical materials:
Reuters, December 19, 2019
Exclusive: Pentagon to stockpile rare earth magnets for missiles, fighter jets
Uh, mean they hadn't been doing that all along?
Are you saying that the U.S. military was depending on just-in-time inventory from China?
Say what?

FrankenFish: "AquaBounty unveils 50,000 tonne target"

Be careful with this stuff.
As we pointed out in a September post:
Almost 9,000 Tuna Escaped From Spanish Fish Farm During the Storm
This is exactly why you don't want our finny farmed friends anywhere near their wild cousins.
Yes, it was a big storm but that is no excuse. You have a population with exposure to one set of pathogens, and a developed resistance to same, mixing with a population that has no resistance and you end up killing the free-range critters.
That's not even looking at the GMO varieties we were ranting about a couple weeks ago....
The GMO fish were AquaBounty  And though the company says it is taking all precautions, I imagine along the lines of air-gapping computer servers so there is no connection to the outside world, be careful please. If you have transgenic fish mixing with the natural type you have no idea what the real-world implications of such contamination would be.

From The Fish Site, January 17:
AquaBounty has announced plans to produce 50,000 tonnes of transgenic salmon annually by 2027 as it bids to raise $9.2 million from investors.
Outlining the company’s goals in a bid to attract investment the company revealed a “near-term business plan… to construct and operate four to five new, land-based RAS farms in North America at locations close to consumer consumption” at the cost of $75 million to $100 million per farm.
The company has a long way to go – its current locations in Rollo Bay, Prince Edward Island and Indiana have the capacity to produce 250 tonnes and 1,200 tonnes respectively. The first harvests from these facilities are expected in the fourth quarter of 2020, and the second quarter of 2020 respectively.....


Here Come the Frankenfish: GMO Salmon Coming to a Store Near You
They absolutely must not allow these things to get anywhere near ocean salmon (or Great Lakes salmon for that matter).
And though the writer takes a blithely upbeat look at this development, we are posting it for information purposes only....
And in completely unrelated news, from the journal Nature:
Transgenic Aedes aegypti Mosquitoes Transfer Genes into a Natural Population 

"The Top 100 AI Startups Of 2019: Where Are They Now?"

A handy list of the names.
From CB Insights, December 10, 2019:
In February 2019, CB Insights announced our third annual AI 100 — a list of the 100 most promising AI startups across the globe. We take a look at where these companies are now.

In 2019, companies from 3 continents and 18 industries made it to the CB Insights AI 100. They were selected from a pool of 3K+ companies based on a range of criteria, including patent activity, investor profile, news sentiment analysis, market potential, partnerships, competitive landscape, team strength, tech novelty, and more.
Since announcing our list, 9 of these startups have been snapped up by major corporations, 4 went on to become unicorns, and several have entered into partnerships with corporations like Microsoft, Oracle, HSBC, and General Electric.
Below, we take a closer look at how these companies have grown in the last year.  

Acquisitions: Tesla, Uber, Apple, & Others acquire AI 100 startups
Nine startups named to the AI 100 2019 have been acquired. Acquired companies have focused on AI-driven solutions across hardware, cybersecurity, telecom, transportation, and computer vision. 
Autonomous driving has been a prominent theme here. Apple acquired the talent of, an autonomous driving shuttle provider. In the same week, Uber acquired computer vision startup Mighty AI, which works with autonomous vehicle developers to help train vehicles in object recognition. The startup was integrated into Uber’s Advanced Technologies Group.

Tesla later acquired DeepScale, a Mountain View-based startup developing computer vision software for autonomous vehicle systems.

Unicorns: 4 startups Earned $1B+ valuations Four AI 100 2019 startups have achieved $1B+ valuations since February 2019. Eleven startups were unicorns prior to joining the list. 
Horizon Robotics is a China-based startup developing edge AI chips for autonomous driving, smart city traffic surveillance, and in-store cameras for retail analytics. The company raised a $600M Series B funding led by SK China in February 2019, valuing the company at $3B.

Nuro, a Mountain View, California-based startup developing autonomous vehicles for last-mile delivery, raised a $940M Series B from SoftBank Group (also in February 2019). The deal valued the company at $2.7B.

Shape Security’s $51M Series F in September 2019 valued the company at $1B. The California-based startup uses artificial intelligence to differentiate between ordinary customers and imitation hackers on mobile and web apps. 

DataRobot’s $200M Series E in July 2019 valued the company at $1B. The Boston-based startup’s platform ingests datasets and automatically creates predictive models for enterprises in banking, healthcare, insurance and other industries.....

FT Alphaville's Bryce Elder Is a Genius: Pandemic Coronavirus Edition

Seriously, where else will you find:
When the papers are full of frightening headlines about a mystery global pandemic it’s sensible to seek out opinions from those who can speak on the matter with authority: sellside investment analysts. Here’s a useful and very long extract from Julia Wang....

Still looking for the key to the little cubbyhole safe at the back of the desk, back in a bit
FT Alphaville's Bryce Elder Is a Genius: M&A Edition

FT Alphaville's Bryce Elder Is a Genius: M&A Edition

There, I said it.
His introductory paragraph for today's Markets Not Live:
A common problem in M&A reporting (which the author used to do sometimes, until it got too difficult) is how to handle stale deals.

Speaking generally, it tends to be the case that when investors get wind of something non public that might be beneficial to the share price, such as takeover interest, they’ll want to see it publicised. But if people familiar with things insist the takeover interest is in the past tense, reporting it becomes a bit fraught. A lot of traders will buy on any story with the word "bid" in a headline then get mad at you when they reach "not currently" in paragraph three. Both the bidder and the target company will be mad at you for raking over old coals. Corporate flacks will be mad at you for writing a story, contrary to their off-the-record guidance that you shouldn't write a story....MUCH MORE
Which brought to mind this piece from the Columbia Law School's Blue Sky blog which I had intended to post and mislaid:
The Asymmetric Private Information Mask: Informed Trading in Takeovers
The U.S. Securities and Exchange Commission (SEC) has increased the regulation of asymmetric information-based trading, aiming to mitigate disclosure of material private information to select market participants. These efforts have not been fully successful, raising questions about the impact of asymmetric information on private equity trades, informed trades, and expected gains. The integrity of competing market structures and market makers’ rent has heightened the need to understand and measure the cost components of the market maker bid-ask spread. Whether the existence of private information in takeovers through selective disclosure is harmful to financial markets is still uncertain. Inside information is a particularly valuable in the takeover market, especially around private equity bids. Nevertheless, without information asymmetries, private equity would not exist, forcing firms to raise capital from banks and other sources of debt financing. Stock prices thereby include information leakage, evidencing how superior information can lead to superior returns.

My paper, “The Asymmetric Private Information Mask: A Comparative Analysis of Private Equity Bids and Tender/Merger Offers,“ empirically examines whether private equity targets exhibit differences in adverse selection costs due to informed trading, pre- and post-announcement, relative to tender or merger target firms.

Private information may result in increased insider trading as investors seek to maximize profits. Yet the anticipated profit from insider trading may be negated by the time necessary to convert private information into monetizable assets. Given the increased number and frequency of market transactions, and the technological advances that make sharing information easier, over the last 30 years, the risk of market makers encountering informed traders has also increased.  I predict that the expected monetary gain from inside information will increase the permanent spread component of the bid-ask spread, which compensates dealers for losses to informed traders, otherwise known as adverse selection costs. Adverse selection costs thereby represent price protection to buyers who expect to pay less if they believe there is an informed trader and information asymmetries....MUCH MORE
Elder may be the only business journalist in the world who could have triggered that association and thus the chain of events which led to the recovery of the CLS piece.
Now, if only he could help me find my keys.

"European Central Bank has one item left in its toolkit: dual rates"

From Bond Vigilantes, January 9:

A version of this article originally appeared in the Financial Times last week.
There is a widespread assumption that the European Central Bank — like other major central banks — has reached the limits of monetary policy, and that the best we can hope for with Christine Lagarde’s reign is political astuteness in cajoling reluctant politicians to embrace a fiscal stimulus. 
This is not the case.
As Ms Lagarde prepares to launch a strategic review of the ECB’s policies and objectives, she has a final item left in the toolkit: dual interest rates. 

In practice, this entails the central bank targeting different interest rates for loans and deposits. Such loans can also be restricted to specific sectors, such as renewable energy. The policy would be more effective than quantitative easing, forward guidance or negative interest rates. It would provide a powerful monetary stimulus and could be used to turbo-charge Europe’s Green Deal.

The effects of dual interest rates are easiest to understand in contrast to standard policy. Typically, when a central bank reduces interest rates we expect this to boost spending in the economy through three basic effects:
  1. Interest rates fall for households with mortgages; 
  2. asset prices rise, making people feel wealthier; and 
  3. the cost of borrowing for companies falls, which should boost investment spending.
But serious problems emerge when interest rates are very low or negative. The interest income which savers receive collapses — weighing on spending — and bank profitability is damaged, causing many unintended consequences.

The application of dual interest rates
What would happen if the central bank raised the interest rate on deposits, and cut the interest rate on loans? Both savers and borrowers benefit. History tells us that such an approach will always raise demand.

The strongest recent evidence is from the Chinese banking system in the 1980s and early 1990s (see the differential movements in figure 2, prior to more parallel shifts in recent years)....

"Energy industry contractor McDermott International has filed for Chapter 11 bankruptcy"

Now do some gas drillers.

From LNG World News, January 21:

McDermott files for Chapter 11 bankruptcy to erase $4.6 bln debt
Energy industry contractor McDermott International has filed for Chapter 11 bankruptcy as it looks to eliminate over $4.6 billion of debt. 
The company said on Tuesday it has the support of more than two-thirds of all its funded debt creditors for a restructuring transaction that will equitize nearly all its funded debt.
The restructuring transaction will be implemented through a prepackaged Chapter 11 process that will be financed by a debtor-in-possession (DIP) financing facility of $2.81 billion.

Subject to court approval, McDermott expects the DIP financing, combined with cash generated by McDermott, to enable it to stabilize its cash flows, continue operating in the normal course and fulfill its commitments to key stakeholders, including customers, suppliers, joint-venture partners, business partners and employees.

The company also has secured committed exit financing of over $2.4 billion in letter of credit facility capacity and will emerge from Chapter 11 with approximately $500 million in funded debt.
McDermott said the restructuring transaction will strengthen its balance sheet, normalize its trade debt and position the company for long-term growth.

All of McDermott’s businesses are expected to continue to operate as normal for the duration of the restructuring....MORE

Tuesday, January 21, 2020

ICYMI: "Brazil charges ex-Vale CEO with homicide for dam disaster" (VALE)

From Reuters:
Brazilian state prosecutors on Tuesday charged Fabio Schvartsman, the former chief executive of mining giant Vale SA (VALE3.SA), and 15 other people with homicide for a dam disaster last year that killed more than 250 people, according to the charging document seen by Reuters.

In addition to homicide charges, Vale and TUV SUD, the German company responsible for inspecting the dam, were charged with environmental crimes. Of the 16 individuals charged, 11 had worked for Vale and five for TUV SUD, prosecutors said.

The charges, which were presented nearly a year after the collapse of a Vale tailings dam in the state of Minas Gerais, represent a major step forward in Brazilian authorities’ attempt to hold individuals criminally responsible for the disaster....

Bank of England Old School Blockchain

First seen in these parts on January 12, 2018:

It's called a ledger.
As part of their 2016 Christmas special the BoE's Bank Underground blog presented the wholesale bank, Overend Gurney:
Unto us a lender of last resort is born: Overend Gurney goes bust in 1866
which of course reminded me of something, in this case the fact we had looked at the collapse a few months before the BoE post:
That failure of Overend Gurney was rather a big deal, it was in all the papers.
From our August post "Overend, Gurney & Co.: An Inspiration to Karl Marx and Bear Stearns":
One of the most dramatic events in the financial history of Victorian England was the collapse of Overend, Gurney and Co. Its failure had a more severe impact on the London financial market than the collapse of Bear Stearns had on U.S. markets over 140 years later. During the financial crisis of 1866, over 200 firms went bankrupt, including a number of banks. The failure of Overend, Gurney and Co. also led to one of the first trials for financial fraud in history when all six directors were brought before the courts of London to answer for their alleged crimes....
Enough reminiscing, here's Bank Underground, December 11, 2017:

Looking inside the ledgers: the Bank of England as a Lender of Last Resort
Imagine if you could peek inside the Bank’s historical ledgers and see the array of interest rates the Bank has charged for emergency loans in the past. If you could get the inside scoop on how many of these loans were never repaid, and how that impacted the Bank’s bottom line? Now you can.  We have transcribed the Bank’s daily transactional ledgers and put them into an Excel workbook for you to explore. These ledgers contain a wealth of information on everyone who asked the Bank for a loan during the 1847, 1857 and 1866 crises.

The data records who applied; whether their requests were accepted or rejected; the value and volume of assets they exchanged for cash; as well as the price (interest rate) at which they did so. Besides the ledger data, our Excel workbook includes granular data on the Bank’s balance sheet and income statement.
Figure 1 Turning ledgers (left) into data (right) 
These data lie at the heart of a recently published Staff Working Paper exploring the Bank of England’s role historically as a lender of last resort. The paper analyses the extent to which the Bank adhered to Walter Bagehot’s dictum that a central bank during financial crises should lend cash freely at a penalty rate in exchange for ‘good security’ in the period before Bagehot published his book Lombard Street.

Lending freely
During the crises of the nineteenth century, the Bank would provide financial markets with liquidity by purchasing ‘packets’ of bills of exchange. These packets were like modern day CDOs in that they bundled together various bills. The Bank’s Discount Office would typically discount the bundle at a single rate of interest, sometimes at two. For example, Figure 2 shows that on 23 October 1847, Overend Gurney brought in a packet of 80 bills with a face value of £68,460 and got a loan at 9 percent discount. They walked away with £62,299, just under £6 million in today’s terms.
Figure 2: Excerpt from the Bank’s ledgers. Transaction with Overend Gurney highlighted.


"Oops — Santa Clara's attempt to ban fuel cell technology is struck down" (BE)

Although we have serious interest in fuel cell technologies, natural gas and hydrogen, this is not one of them. There is a slightly scammy odor that's come off Bloom since we first posted on it over a decade ago.*
That said, it could be the poster child for the market's recent  ahh, enthusiasm for such things.

BE Bloom Energy Corporation daily Stock Chart

From the Silicon Valley Business Journal:

Bloom’s stock, which had been hammered repeatedly since its IPO in July 2018 for failure to achieve profitability promised by CEO KR Sridhar, closed at $9.71 on the New York Stock Exchange, up 4.6 percent from the previous day’s close.

“Officials in the City of Santa Clara made the inaccurate claim that their policy was good for the environment and would contribute to reduced emissions — ignoring the views of environmental experts on the policy’s potential environmental harm and the needs of the community for clean, resilient power sources,” Josh Richman, Bloom’s vice president of business development and policy, stated in a press release. “This case should serve as a cautionary tale to policymakers who would seek to use the false pretense of sustainability to garner support for interests that have nothing to do with addressing the causes or consequences of climate change....MORE
*The company came public in July 2018 at $15.00, popped 30% on the first day and went higher from there.
And then collapsed.
However, we're no (anti) Bloomies come lately, no sirree. Our dislike goes back years. 
Here's a post from 2016:
More Silicon Valley Bullshit: Bloom Energy May Be Worth Less Than The VC Cash It Has Raised

And a few more:
Anyone keeping tabs would have been tipped as early as 2008 and definitely by the time we posted:
May, 2010
The Company you Keep: "Bloom, Fisker and Serious Materials Raising Cash from Advanced Equities"
November 2012 
Phi Scamma Jamma: Late Stage VC Investor Advanced Equities Shutting Down (Bloom; Fisker etc.)
Bloom Energy on 60 Minutes: "Can You Believe the Hype" (BLDP; FCEL; PLUG; GE; SI)
Is the Bloom Energy Payback Period 15 Years?
Fortune Exclusive: Bloom Energy's Earnings
Things have changed since Kleiner Perkins Orchestrated the hype machine back in February 2010....
And many more, use the 'search blog' box if interested. 

"Carlota Perez et al. 'Are We on the Verge of a New Golden Age?'"

Something I've been thinking about recently: Was she right?
A repost from a few years ago:
From Strategy+Business, August 28, 2017:

A long-wave theory of technological and economic change suggests the financial malaise that began in 2007 may be about to end.
History doesn’t exactly repeat itself, but it does run in cycles. One of the most robust theories of such cycles was articulated by economic historian Carlota Perez, in her influential book Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages (Edward Elgar, 2002). It suggests that humanity can get through the current period of upheaval and economic malaise and enter a new “golden age” of broad economic growth, if the world’s key decision makers act in concert to help foster one.
This may seem far-fetched, but it’s happened four times before. We are in the midst of the fifth great surge (as Perez calls them) of technological and economic change since the Industrial Revolution. The last one, the age of oil, automobiles, and mass production, lasted most of the 20th century and still shapes many people’s attitudes. Our current surge started around 1970 and has rolled out information and communications technology around the world: It is the age of the computer and the Internet (see Exhibit 1).
Each of these surges follows the same broad pattern. First, there is a wave of major new technologies, leading to dramatic changes in industrial production and daily life. For about 20 to 30 years, in a period that Perez calls installation, these technologies are funded largely by speculative investment chasing rapid returns. This age of widening wealth disparity leads to a bubble, which bursts in spectacular fashion, and is followed by a crisis period that Perez calls the turning point. This phase of economic and social turbulence has varied in length from two years to 17. Many efforts to get back to normal are made, usually involving the regulation of financial excesses or the stimulation of production and employment. When the crisis ends, the third part of the cycle begins; it consists of 30 years or so of stable economic growth, with a high level of genuine return on investment, and an economy funded by production capital, not speculation. Perez calls this period deployment. It is experienced as a golden age: a wave of prosperity, lifting everyone’s fortunes, including those who felt left behind just a few years before. Eventually, the technological opportunities reach exhaustion, markets become saturated, and the cycle starts all over again (see Exhibit 2).
Of course, these are broad observations, and nothing guarantees that the pattern will continue. But its overall logic is compelling. To Perez, the dramatically powerful technologies of Wall Street, Silicon Valley, and Industry 4.0 have provoked, in effect, a worldwide economic revolution, starting in the 1970s, challenging the equally powerful technologies of the fourth surge: oil, automobiles, and mass production. To turn the corner from crisis to golden age would require a major economic and political consensus: an intelligent global policy framework giving a convergent direction to investment and innovation, ensuring the growth of profitability and jobs around the world, including most major national economies. Not an easy task!

The participants in this roundtable were three longtime observers of the Perez hypothesis — including Carlota Perez. We met recently to consider this question: Given today’s political turbulence, after at least 10 years of being in the crisis phase, what would have to happen for a new golden age to begin?
—Art Kleiner
Causes of the Current Crisis

KLEINER: Carlota, according to your theory, we’re now about 45 years into a surge that began in the early 1970s. That’s the longest such cycle we’ve seen — and the longest period of crisis.

PEREZ: It’s probably also the deepest transformation of everyday life, and the one that has gone the furthest globally. Also, given our longer life span, the older generation has taken longer to hand over power — in this case, to younger digital natives. Even after 40 years, the information and communications technology (ICT) revolution is far from complete. It hasn’t fully changed our way of life, as previous technological revolutions had done. And it has brought a dangerous political shift, the separation of the interests of major global corporations from interests of the national societies where they are based.

During the golden age of mass production, in the 1950s and early 1960s, the interests of business and society converged. With the welfare state and suburbanization, working-class people in many Western countries could become homeowners and consumers. Therefore, when companies paid high salaries and high taxes, it all contributed to increasing domestic demand. Government support for education and health services freed up discretionary cash for people to spend on consumer products. High demand for these products created conditions for growth and profit. It was a robust positive-sum game, a super win-win between business and the majority of the population, resulting in good profits and decent livelihoods.

Then, in the 1970s, the mass production revolution hit a maturity ceiling. New products were less viable; productivity fell; markets were saturated. The welfare state became unsustainable, and national solidarity broke down. Since then, many businesses have seen their cost advantage and their customer demand migrate abroad, away from their home countries. Low salaries no longer harm business as in the past, so living standards have been declining for decades. This, together with unemployment from offshoring, goes far in explaining the Brexit referendum and the fervor of the U.S. elections in 2016.

JOHNSON: A factor that may intensify those tensions is the nature of today’s technology. We have an amazing arsenal of innovations on the threshold of realization: synthetic biology, quantum computing, blockchain, drones, autonomous vehicles, and private-citizen space travel. Potential breakthroughs are dangled before us....MUCH MORE

"Dogs poop in alignment with Earth’s magnetic field, study finds"

File under: things I did not know.
From the PBS NewsHour:
Dogs use the Earth’s magnetic field when they’re relieving themselves. Not only that, but canines choose to do so in a north-south axis, a new study published in the journal Frontiers in Zoology says.

The study suggests that dogs are sensitive to small variations in Earth’s magnetic field. After examining 70 dogs — made up of 37 breeds — over two years, 1,893 defecations and 5,582 urinations, researchers found that under “calm magnetic field conditions,” dogs preferred to “excrete with the body being aligned along the north-south axis,” avoiding east-west altogether. Dogs were observed in a free-roaming environment, meaning they were not leashed and not influenced by walls or roads that would influence linear movement.

Why do the dogs prefer the north-south axis and avoid east-west? That was unclear, according to the study:
It is still enigmatic why the dogs do align at all, whether they do it “consciously” (i.e., whether the magnetic field is sensorial perceived (the dogs “see”, “hear” or “smell” the compass direction or perceive it as a haptic stimulus) or whether its reception is controlled on the vegetative level (they “feel better/more comfortable or worse/less comfortable” in a certain direction)....MORE
no word on San Francisco denizens.

"Boffins don bad 1980s fashion to avoid being detected by object-recognizing AI cameras"

From The Register(keeping the word 'boffins' alive):

Adversarial T-shirt disguise hoodwinks machine-learning algorithms
In a pleasing symmetry, boffins have used machine-learning algorithms to develop a T-shirt design that causes its wearer to evade detection by object-recognition cameras.

Brainiacs at Northeastern University, MIT, and IBM Research in the US teamed up to create the 1980s-esque fashion statement, according to a paper quietly emitted via arXiv in mid-October. Essentially, the aim is to create a T-shirt that fools AI software into not detecting and classifying the wearer as a person. This means the wearer could slip past visitor or intruder detection systems, and so on.

The T-shirt design is a classic adversarial example. That means the pattern on the shirt has been carefully designed to manipulate just the right parts of a detection system's neural network to make it misidentify the wearer. Previous adversarial experiments have typically involved flat or rigid 2D or 3D images or objects, like stickers or toy turtles.

Now, this team, at least, has shown it’s possible to trick computer-vision models with more flexible materials like T-shirts, too.

“We highlight that the proposed adversarial T-shirt is not just a T-shirt with printed adversarial patch for clothing fashion, it is a physical adversarial wearable designed for evading person detectors in a real world,” the paper said.

In this case, the adversarial T-shirt helped a person evade detection. The two convolutional neural networks tested, YOLOv2 and Faster R-CNN, have been trained to identify objects. Under normal circumstances, when it’s given a photo containing people it should be able to draw a bounding box around them, labeling them as “person”.

But you can trick the system and avoid being noticed at all by wearing the adversarial T-shirt. “Our method aims to make the person's bounding box vanish rather than misclassify the person as a wrong label,” an IBM spokesperson told The Register....
If interested see also:
Adversarial Images, Or How To Fool Machine Vision
"Magic AI: These are the Optical Illusions that Trick, Fool, and Flummox Computers"
Fooling The Machine: The Byzantine Science of Deceiving Artificial Intelligence
Another Way To Fool The Facial Recognition Algos
News You Can Use—"Invisible Mask: Practical Attacks on Face Recognition with Infrared"
Disrupting Surveillance Capitalism

And finally, the essential "Machine Learning and the Importance of 'Cat Face'". 

Have I gotten a bit obsessed with beating the machines?
Not if you are serious about being able to walkabout without having the the voyeurs scoping your every move:
Cargill Invests In Facial Recognition For Cows
Bovine adversarial image teams around the world are working feverishly to beat the machines with ideas ranging from the (udderly) ridiculous:

To the....actually they're all ridiculous.

Hiding from the cameras may be the only foolproof technique:

We'll leave the ruminators something to think about with their Russian sisters exploring virtual reality:

"Who Are the Current Main Players in the Federal Funds Market?" (and why it matters)

And is it time for the Fed to stop paying IOER to the banks?
Regarding the piece linked here, I don't think there is a better broad-brush explanation of what's up in the Fed Funds Market to be found.
From the Conversable Economist, January 14:
When the Federal Reserve conducts monetary policy, it announces a target for the "federal funds" interest rate. The implication is that if this specific rate rises or falls, it will affect other interest rates throughout the US economy; for example, like federal funds interest rate moves closely together with other key benchmark interest rates, like  the interest rate for overnight borrowing on AA-rated commercial paper. However, the identity of the parties borrowing and lending in the "federal funds" market has changed dramatically since the Great Recession. John P. McGowan and Ed Nosal describe the shifts in "How Did the Fed Funds Market Change When Excess Reserves Were Abundant?" (Economic Policy Review, Federal Reserve Bank of New York, forthcoming).

As part of federal financial regulation, banks and certain other financial entities (to which we will return in a moment!) are required to hold a minimum amount of reserves at the Federal Reserve. Back before 2007, banks usually tried to minimize these reserves, because the Fed didn't pay them any interest for the funds in these reserve accounts. But sometimes it would happen, at the end of a business day, that a bank would realize that its deposits and withdrawals has created a situation where it didn't meet the minimum level of reserves. For a fundamentally healthy bank, this wasn't a problem. The bank with a slight deficiency of reserves would borrow from another bank that had ended the day with a slight excess of reserves.  The "federal funds" interest rate was the rate paid for this lending, which was typically for a very short-term loan, like overnight. As McGowan and Nosal write:
Prior to the 2007 financial crisis, trading in the fed funds market was dominated by banks.1 Banks managed the balances—or reserves—of their Federal Reserve accounts by buying these balances from, or selling them to, each other. These exchanges between holders of reserve balances at the Fed are known as fed funds transactions.
But during the Great Recession and its aftermath, the Fed used large-scale asset purchases, sometimes known as "quantitative easing," to conduct monetary policy. The Fed purchased several trillion dollars in US Treasury bonds and in mortgage-backed securities from banks. The Fed paid for these financial securities by putting money in the the reserve account that banks had with the Fed. In theory, banks could lend out these reserves. But the flood of quantitative easing money came so fast, and arrived in economic times that were so uncertain, that banks didn't in fact lend out most of the money. In addition, the Fed announced in October 2008 that it would start paying interest on banks reserves--which made the banks feel financially healthier.

As a result of this pattern of events, banks no longer tried to hold the minimum legally required level of reserves at the Fed. Instead, banks as a group were holding reserves several trillion dollars in excess of the legal requirement. As a result, banks no longer had any reason to borrow money in the federal funds market, and given that the Fed was now paying them interest on reserves, they didn't have any reason to lend money in that market, either.

Bottom line: When the Fed talked about conducting monetary policy to raise or lower the federal funds interest rate back in 2007 and earlier, it was talking about an interest rate in a market where banks were borrowers and lenders. But for the last decade or so, banks have little interest in borrowing and lending in the federal funds market. So when the Fed talks about raising or lowering the federal funds interest rate, what entities are  actually doing the borrowing and lending in that market?

The main lenders in the federal funds market, as McGowan and Nosal explain, are the Federal Home Loan Banks....MORE

What Was Old Is New Again: "Head of Canada Pension Fund Warns on Rush to Iliquid Assets"

Been there, done that.
The headline was on a Bloomberg story via Yahoo yesterday.

On October 26, 2008 our headline was:
Calpers Sells Stock Amid Rout to Raise Cash for Obligations 
with the one line introduction:
This is hedge fund behavior, selling your most liquid investments to prop up the illiquid....
And what brings this ridiculous, and for a fiduciary probably illegal behavior to mind?
FT Alphaville:
Calpers and the ‘illiquidity premium’
In 2019 we took a quick look at some comments by Calpers, the $401bn Californian pension megafund, regarding its private equity book.

Chief investment officer Ben Meng was bullish on the asset class, telling the fund’s investment committee that Calpers needed more exposure to PE “and we need it now”.
Meng reiterated the idea to the FT in December, stating that he wants private equity to represent over 10 per cent of Calpers’ assets, up from around 7 per cent today.

Private equity’s runaway success with fund allocators over the past decade has drawn some criticism from those who invest in listed securities -- such as mutual and hedge funds.

One particular point, made by investors such as Verdad Advisers’ Dan Rasmussen, is that private equity returns are fundamentally the same as those for leveraged, mid-cap public equities. The only difference being that volatility in a private equity portfolio, due to the owned businesses having no day-to-day prices, is masked.

This has been seen as an issue as it hides from allocators that their capital is as much at risk in private equity as it is in the public markets. The difference is that they just don’t know it (yet).
But what happens if illiquidity -- the fact you can’t get an instant mark on a private equity portfolio -- was a feature, and not a bug?.....

 I say go for it CalPERS, just don't backstop your risk with the taxing power of the state of California, it's various subdivisions, counties and municipalities.
And especially not when you are paying quarter-million dollar per year (and up) pensions.

Monday, January 20, 2020

"Why is a mysterious billionaire buying up the Cayman Islands?"

From The Independent, October 19, 2019:

Travelling to the notorious tax haven, Katy Lederer looks for signs of the mogul who has been secretively snapping up property across the archipelago for decades
One humid Tuesday in July, I summited the highest point on Grand Cayman, an eight-storey dump known affectionately by the locals as Mount Trashmore. From the top of the foul mound – a collection of almost every piece of rubbish discarded on the island since it went all-in on financial services in the 1960s – I imagined I could just make out the enshrouded beach estate of the secretive investor Kenneth Dart.
I had been on Grand Cayman for more than a week, but I was no closer to speaking with him than when I arrived. The heir to a famously private foam-container dynasty and a reclusive businessman in his own right, Mr Dart apparently hasn’t spoken to the press since 1993. Although he has lived on Grand Cayman for 25 years and is widely believed to be the biggest private landholder on the archipelago, only a few people I interviewed were sure they had seen him. Residents compared him to Batman, Howard Hughes, a Bond villain and both Warren and Jimmy Buffett.

Mr Dart lives on Seven Mile Beach, in an old hotel – the entire hotel – once known as the West Indian Club. He acquired the property in 1994 after renouncing his US citizenship, a tax dodge so audacious it inspired federal legislation. Although Cayman was initially a refuge for the financier, Mr Dart, who is thought to be 64, has taken to his adopted home with zeal. With his fortune and his company, Dart Enterprises, he has increasingly come to define the islands’ future.

In 2007, he opened a major development, a sprawling mix of retail and entertainment venues called Camana Bay, and began amassing a portfolio of high-end properties. His list now includes the Ritz-Carlton, the Yacht Club and a new Kimpton resort. In February, his group proposed a $1.5bn (£1.2bn) “iconic skyscraper” that would rival the Eiffel Tower and the Burj Khalifa of Dubai.

As a place to conduct business, Cayman’s appeal is obvious. The country, a British Overseas Territory, levies no income or corporate taxes, and, since the 1960s, it has become one of the world’s most sophisticated banking centres. While Cayman was once a shady place to stash illicit cash – a reputation cemented by the 1991 John Grisham novel The Firm and a subsequent Tom Cruise thriller – it has long since moved aggressively upmarket, courting institutional investors, private equity and trading firms seeking to minimise taxes and bureaucracy. As of 2016, according to one analysis, it domiciled 60 per cent of global hedge fund assets.

But for his base of operations, Mr Dart has chosen an existentially vulnerable piece of land. At 76 square miles, Grand Cayman is roughly the size of Brooklyn and is, on average, only 7 feet above sea level. In 2004, Ivan, a Category 5 hurricane, submerged most of the island. The damage was valued at close to $3bn (£2.3bn). Bodies buried in beach cemeteries floated out to sea. Animals escaped their enclosures, and, to this day, rewilded chickens roam the islands.

“Problem is, even if hurricanes don’t get any more prevalent, they’ll get stronger,” said James Whittaker, a Caymanian who is a former banker and regulator turned clean energy entrepreneur. “If sea-level rise is a foot, well, that means that a Category 1 now is going to do the same damage that a Category 4 used to do.” Even if Cayman built enough infrastructure to survive the rising water, he added, “The problem is insurance. You’ll never be able to insure the country anymore.”

As I stood atop Mount Trashmore, looking out at the crystalline water, I wondered what Mr Dart thought about the country’s vulnerability to rising seas. Or if, like me, he had quickly fallen into a tropical reverie – a feeling that nothing could possibly go wrong on this exclusive stretch of paradise. Would a wildly successful investor like him buy up so much of a country that was really doomed to disappear?

‘A Caymanian dream’
Until the 1960s, when the first banking laws were put in place to attract international capital, the Cayman Islands was a backwater, with an economy dependent on seamen who would send their remittances back home. When a Cambridge-trained lawyer named William Walker arrived in 1963, he described the place as having “cows wandering through Georgetown, only one bank, only one paved road, and no telephones.” The population was just over 8,000, and the mangrove-covered island was swarming with mosquitoes....MUCH MORE
HT: there was no identifying tag but it's possible it came via FT Alphaville's Jemima Kelly angling for an island visit other than the one I've been pitching, Orkney, in the winter, to explore the wonders of hydrogen.
I think she went to Davos instead.

French Shipyard Chantiers de l’Atlantique Nabs a Big Order

From LNG World News:

Chantiers de l’Atlantique bags MSC Cruises LNG pair
MSC Cruises and Chantiers de l’Atlantique have signed firm contracts for the construction of third and fourth LNG-powered MSC World Class ships.  
The vessels are scheduled for delivery in 2025 and 2027,  Chantiers de l’Atlantique said in its statement.

The first of the initial two ships in the class is currently under construction at Chantiers’ shipyard in Saint-Nazaire and is due to enter service in 2022. With 205,000 GT, she will become the biggest vessel operated by a European cruise line as well as the first LNG-powered cruise ship built in France.

These contracts represent a capital investment by MSC Cruises exceeding €2 billion ($2.2 billion).
The two companies have also extended their partnership over the next decade with two additional newbuild projects....MORE
November 2019
Shipping: Two Approaches To NextGen Power: Maersk Goes With Batteries In a Box; 
Chantiers de l'Atlantique and MSC Cruises Trial LNG Fuel Cells 
...And speaking of big, the Saint-Nazaire yard built four of these suckers, second only to the 657,019 DWT Happy Giant as the largest ultra-super-mega tankers. Batillus was the lead ship of the class:
Batillus class tanker, 555,000 DWT.
We've mentioned it a few times.

"Why Pirates Are Giving Up On Oil"

I was always under the impression that by taking up piracy those who ply that vocation self-identified (probably not a term they use) as outlaws, literally outside-the-law and could be shot on sight by any navy in the world. The lady attorneys tell me this is not always the case.
More after the jump.
From OilPrice, January 5:

Piracy in some of the world’s most critical oil chokepoints is on the rise--but now, pirates are resorting back to another method of income generation better suited to times of lower oil prices: taking human captives.
Sometimes, black market oil prices just aren’t lucrative enough. In the days of $100 oil, oil theft was a hot commodity. Today, pirates are supplementing their stolen oil income with ransomed sailors, creating a whole new set of problems for the oil industry to tackle.

Where Piracy is Hot, and Where It’s Not
Piracy is being dealt with fairly successfully in certain regions of the world. In others, efforts to shore up maritime security have failed. But the threat of pirates taking human captives is alive and well in all regions.

East Africa - Once a piracy hotspot, piracy off Somalia’s coast has fallen in recent years as the international community--including Iran--stepped up to tackle this pressing problem that disrupted the flow of goods, including oil, through the critical oil route. Somalia, too, has stepped up its ability to prosecute pirates. The East Africa area includes the Bab-el-Mandeb between Yemen and Djibouti, as well as the Gulf of Aden. Piracy incidents here hit a high of 54 in 2017, before falling back to just 9 in 2018, according to One Earth Future’s annual report The State of Maritime Piracy 2018.  
But while piracy off Somalia has toned down in recent years, the problem of using captive humans as an additional income stream has not gone away. One Iranian seafarer, for example, who was held captive by Somalia pirates was finally released after four years due to poor health. Three of his shipmates, however, are still being held to this day.

West Africa - While things appear to be cooling off in the pirate world off Africa’s east coast, the west side is seeing a disturbing rise in piracy. And not just any piracy--piracy with a human captive component. The area most subject to piracy here is off the coast of Nigeria and the Gulf of Guinea in general. So much so has this alarming shift risen from oil to persons over the course of the last year in West Africa, that India--the most prolific source of maritime sailors in the region--has banned all Indian seafarers from working on vessels in Nigerian waters and in the Gulf of Guinea. On the line here for Nigeria is $10 billion annually in crude oil sales to India, who purchases more than one-third of all Nigerian oil. 

Just last month, pirates in the Gulf of Guinea hijacked two Indian oil tankers in two separate instances. But they didn’t stop with the crude oil. They also took the Indian crewmembers hostage both times. While one set of hostages have since been released, the second batch is still being held in captivity, adding to the growing unrest in the region as shippers and sailors fear for their own safety and for the safety of their crew.

Overall in 2019, there were a total of 89 crew hijacked for ransom in the Gulf of Guinea, and there is now even a special rider offered by one insurer, Beazley, called the “Gulf of Guinea Piracy Plus” that compensates vessels up to a certain maximum should they fall prey to pirates.

This area is where 82% of all kidnappings on the world seas take place, as crime syndicates in the Niger Delta region of Nigeria look to capitalize not only on the country’s sizable crude oil trade but on the ransom for the many kidnapped sailors that traverse nearby waters as well....MORE
The first rule of kidnapping insurance is DON"T TELL ANYONE YOU HAVE KIDNAPPING INSURANCE!
News You Can Use: "The Economics of Kidnap Insurance"
"Kidnapped by Pirates at Sea? Here's How Economics Can Save You"
Insurance—"The business of kidnapping: inside the secret world of hostage negotiation"

Back in the heyday of the Somali pirates the business grew to be quite formalized. Some of our posts from that time:
Piracy 2012: Now With Form Letters, P.R.

And some of the posts linked in that piece:
"Somali sea gangs lure investors at pirate lair" and "A comparison of Piracy and Private Equity"
"Mace and Vomit: The Latest in Anti-Pirate Tech"
Oil: Somali Pirates Seize Supertanker, Smoke the Khat, Head for Home
Somali pirates set up "agencies" on three continents
   "The Arms Race Against the Pirates"
Big Money: Somali Pirates' Rich Returns
Arrgh: 'Pirates Not a Good Long Term Bet

Obama Reaches Out to 'Moderate' Pirate Community (and we plan to make a buck-o, or two)
Somali Jihadi's Put a Price on Obama's, Hillary's Heads
..."Anyone who helps the Mujahideen find the whereabouts of Obama and Hillary Clinton will be rewarded with 10 Camels to the information leading to Obama and 10 hens and 10 cocks for Hillary," said senior Shabaab commander Fuad Mohamed Khalaf in a statement reported on numerous websites....  
And five years later:

Who's Who In Active Somali Pirate Clans and Militias
Despite being deadly serious there is something Le Théâtre de l'Absurde ridiculous about piracy being a viable career option in 2017.
So let's set the mood with 2009's "Arrgh: 'Pirates Not a Good Long Term Bet'":

Update: The WSJ's Deal Journal has a comparison of Piracy and Private Equity:
...Geographical investment thesis 
Private equity: Bullish on China.
Piracy: Opportunities on the coast of Africa.

Start-up costs

Piracy: Gun, boats, a handful of men, rocket-propelled grenades.
Private equity: Office on Park Avenue.


Private equity: “Internal rate of return,” called IRR.
Piracy: Eerily similar: “Aaar.”>>>MUCH MORE
And from yesterday's maritime Executive:
Active Somali Pirate Clans and Militias....
Who said a grenade launcher could not be a perfect financial asset?"
A new form on finance on the coast of Somalia.
I particularly enjoyed this part:
Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel.
“I am waiting for my share after I contributed a rocket-propelled grenade for the operation,” she said, adding that she got the weapon from her ex-husband in alimony.
“I am really happy and lucky. I have made $75,000 in only 38 days since I joined the ‘company’.”
Getting serious once again, some headlines from the last few days:

19 Indians kidnapped by pirates near Nigerian coast released, one died in captivity | India News - Times of India
South Korea to Deploy Anti-Piracy Unit to the Strait of Hormuz
Sailor kidnappings surge 50% off West Africa

If interested here's an approach slightly different from the U.N./EU tactics:
"Dealing with Pirates (and terrorists) Russian Style

U.S. Navy Announces It Will Be Naming An Aircraft Carrier For Ship’s Cook Third Class Doris Miller

Yeah, there's a story here.
From, January 19:
From Acting Secretary of the Navy Public Affairs
WASHINGTON (NNS) -- Acting Secretary of the Navy Thomas B. Modly will name a future Gerald R. Ford-class aircraft carrier in honor of World War II hero Ship’s Cook Third Class Doris Miller during a ceremony in Pearl Harbor, Hawaii, Jan. 20.

The announcement will be made at a Martin Luther King Jr. Day ceremony, highlighting the contributions of African Americans to the greatest generation.

This will be the second ship named in honor of Miller, and the first aircraft carrier ever named for an African American. This will also be the first aircraft carrier to be named in honor of a Sailor for actions while serving in the enlisted ranks.

“In selecting this name, we honor the contributions of all our enlisted ranks, past and present, men and women, of every race, religion and background,” said Modly. “Dr. Martin Luther King, Jr. observed, ‘Everybody can be great - because anybody can serve’. No one understands the importance and true meaning of service than those who have volunteered to put the needs of others above themselves.”

On Dec. 7, 1941, Miller was collecting laundry on the battleship West Virginia (BB-48), when the attack from Japanese forces commenced. When the alarm for general quarters sounded he headed for his battle station, an anti-aircraft battery magazine, only to discover that torpedo damage had wrecked it. Miller was ordered to the ship’s bridge to aid the mortally wounded commanding officer, and subsequently manned a .50 caliber Browning anti-aircraft machine gun until he ran out of ammunition. Miller then helped move many other injured Sailors as the ship was ordered abandoned due to her own fires and flaming oil floating down from the destroyed Arizona (BB-33). West Virginia lost 150 of its 1,500 person crew.

Miller’s actions during the attack earned him a commendation from then Secretary of the Navy Frank Knox and the Navy Cross, which was presented to him personally by Adm. Chester Nimitz, commander of the U.S. Pacific Fleet at the time.....
....MORE, including cites and refs.

HT: Inside Hook

The Navy Cross is second only to the Medal of Honor in the U.S. system of awards for valor.

San Francisco Fed Head: “We don’t have a really good understanding of why it’s been so difficult to get inflation back up”

This is from January 3 but is troubling enough that we're linking. If you really think about it, nobody knows anything.
From Reuters:
Fed may need new approach to boost inflation, Daly says
The Federal Reserve could find itself fighting too-low inflation for years to come, San Francisco Federal Reserve President Mary Daly said on Friday, and may need a new policy framework to lift inflation back up to the Fed’s 2% goal. 

“We don’t have a really good understanding of why it’s been so difficult to get inflation back up,” Daly said at the annual American Economics Association meeting in San Diego.

But with global growth slowing and the populations of most advanced economies aging, Daly said, “this new ‘fighting inflation from below’ is going to be with us, I would argue, for a longer period of time than just a few years.”

As a result, she said, “a new policy framework will likely be required” to boost inflation...

Reinsurance/ Cat Bonds: A First Take On 2020 Loss Expectations

From Artemis, January 16:

AbsoluteClimo’s climate risk models forecast fewer economic losses in 2020
AbsoluteClimo, a climate and weather modeling, forecasting and risk management firm based in Hawaii, says its models suggest that in 2020 global total economic losses from climate-driven natural catastrophes are most likely to meet or exceed $110 billion.
That’s significantly lower than the number seen this year and also lower than the company’s own forecasts for 2017, 2018 and 2019.
A year ago, AbsoluteClimo came out with a forecast from its ClimoCats model, which suggested near normal expected global total climate-driven catastrophe losses of $153 billion, with a probability range of $90 billion (best) to $257 billion (worst).

In the end that appears to have been very close to the money, as reinsurance firm Munich Re preliminarily estimated 2019 economic catastrophe losses at $150 billion.

Losses to the insurance and reinsurance sector specifically were $52 billion, which was aligned with long term averages....

"IMF boss says global economy risks return of Great Depression", In Other News...

Sorry for the flippancy.
The IMF has a very checkered history of doing what is within their remit, much less going beyond same.
On the other hand the Bank for International Settlements have their little Swiss mitts on the data their central bank owners produce and must be on your radar, if for no other reason than the fact they are on everyone else's radar.
Keynesian beauty contests aside, the actual content of their (BIS) actions and pronouncements can be pretty handy when navigating "Through many dangers, toils and snares".
Here's an example that was worth serious money.

On June 26, 2007 (i.e. pre-"Quant-quake", pre-Bear Stearns, pre-aught-eight-near-catastrohe) we posted a short little piece:
"(Off-topic) Bank's banker warns of downturn":
THE risk of a 1930s-style economic slump has been heightened by "euphoric" markets tapping cheap global credit, one of the world's pre-eminent financial institutions has said.
In its annual report, the Bank for International Settlements noted that the conditions that led to the Great Depression of the 1930s and the Asian crises in the 1990s reflected the current environment.
From The Age
So while we have the IMF running in the background of awareness if the BIS was to say something similar we'd be moving with alacrity.

From The Guardian, January 17:

Kristalina Georgieva compares today with “roaring 1920s” and criticises UK wealth gap
The head of the International Monetary Fund has warned that the global economy risks a return of the Great Depression, driven by inequality and financial sector instability.

Speaking at the Peterson Institute of International Economics in Washington, Kristalina Georgieva said new IMF research, which compares the current economy to the “roaring 1920s” that culminated in the great market crash of 1929, revealed that a similar trend was already under way.
While the inequality gap between countries had closed in the last two decades, it had increased within countries, she said, singling out the UK for particular criticism.

In the UK, for example, the top 10% now control nearly as much wealth as the bottom 50%. This situation is mirrored across much of the OECD (Organisation for Economic Co-operation and Development), where income and wealth inequality have reached, or are near, record highs.”
She added: “In some ways, this troubling trend is reminiscent of the early part of the 20th century – when the twin forces of technology and integration led to the first gilded age, the roaring 20s, and, ultimately, financial disaster.”

She warned that fresh issues such as the climate emergency and increased trade protectionism meant the next 10 years were likely to be characterised by social unrest and financial market volatility.
“If I had to identify a theme at the outset of the new decade, it would be increasing uncertainty,” she said....MORE
Got it. Uncertainty. Increasing.

Capital Markets: "Stocks Stall while the Dollar Remains Bid"

From Marc to Market:
Overview: The new week is off to a quiet start as the US celebrates Martin Luther King's birthday, and investors look for a fresh focus. Hong Kong and Indian markets were suffered modest declines while most of the other large Asia Pacific markets edged higher. European stocks are trading a little lower, and the Dow Jones Stoxx 600 is threatening to end a four-session advance. Most benchmark bond yields around half a basis point in one direction or the other. Of note, despite China's Loan Prime Rate unexpectedly unchanged, the 10-year benchmark yield slipped a few basis points to 3.05%, its lowest level in three months. The US dollar is firmer against the major currencies, with sterling taking the brunt of the pressures, and traded down to nearly $1.2960 (last week's low was near $1.2955). The greenback is also trading higher against most of the emerging market currencies, with the liquid accessible EM currencies (e.g., ZAR, TRY, HUF, MXN) are all lower. The Chinese yuan also began stronger but yielded in the face of the dollar's strength. Gold prices are a little higher, while supply shocks (Libya and Iraq) lifted oil prices, with the March WTI to almost $59.80 before moving back within the pre-weekend range.

Asia Pacific
There are two developments from China to note. First, defying expectations for a small decline, the Loan Prime Rate (set on the 20th of each month based on a lending survey from major banks), it was left unchanged at 4.15% (one-year) and 4.80% (five-year). The obvious implication is that officials are not in a hurry to ease policy. Second, a new SARS-like virus appears to have emerged, with at least 200 cases now reported and in at least four countries (China, Japan, Thailand, and South Korea.

A brief calm in Hong Kong ended with a new escalation of the conflict. The demonstrators' demand for universal suffrage was explicitly rejected by Chief Executive Lam. Hong Kong equities underperformed. Separately, but not unrelated, Hong Kong reported that its December unemployment rate rose to 3.3% from 3.2% in November and 2.8% in December 2018....