Thursday, February 28, 2013

Is U.S. Government Debt Different?

From Knowledge@Wharton:

Why Long-term Debt Solutions Require a Break from Sequestered Thinking
U.S. policymakers now seem compelled to make dramatic budget cuts that many have pushed for, but also avoided. Political skirmishes have played out over fiscal cliffs, debt ceilings and the so-called sequester -- an automatic budget-slashing regime. As political theatrics take center stage, it's worth pausing to ask: How can the U.S. solve long-term debt issues given daunting economic, social and Constitutional restraints? 

To dig into this, Knowledge@Wharton spoke with Wharton finance professor Franklin Allen, co-editor -- along with Anna Gelpern, Charles Mooney and David Skeel -- of a new book titled, Is U.S. Government Debt Different?, published by the Wharton Financial Institutions Center

The book, which is available free on the WFI website, is a collection of 15 articles based on a conference at the University of Pennsylvania in 2012. A key theme: If there is any potential silver bullet out there, it may be value added taxes, a strategy followed by many other countries.
An edited transcript of the conversation appears below. 

Knowledge@Wharton: The topic of the book you have co-edited -- Is U.S. Government Debt Different? -- is timely. We see recurring talk of debt ceiling and forced spending cuts through [so-called] sequestering, and also the on-going debt crisis in Europe. Please tell us about the major themes in the book.

Franklin Allen: This book arose as a result of the problems that we had with raising the debt ceiling in July and August of 2011. One of the things that episode underlined was that there was very little knowledge about what would happen if they didn't raise the debt ceiling and how that would play out. Would there be a default as many people were claiming? What would that mean? The Wharton Financial Institutions Center, in conjunction with the [University of Pennsylvania] law school, decided [to] hold a conference and have a range of disciplines included to look in general [at the question]: Is U.S. government debt different? It certainly plays a very important role in the global economy. Because of the nature of our Constitution, a lot of issues are different than in other countries.

We talked about the debt ceiling, but there are real issues about whether it's possible for the U.S. to default or not. The 14th Amendment has a section which states that the validity of the U.S. debt shall not be questioned. There's a real issue as to what exactly that means. Does that mean that we're constitutionally prohibited from defaulting? Or, does it mean that we can push payments into the future? One of the main issues discussed was what would happen if we hit the debt ceiling.

Two interesting articles by legal experts looked at that. [Michael W.] McConnell from Stanford University had an interesting history of how that clause got into the Constitution and how it would be interpreted. [Howell E.] Jackson from Harvard University has an interesting essay and a detailed appendix done by two of his JD students, looking at how the Treasury would likely react if we did hit the debt ceiling for prolonged [periods.] The book has many other themes to it, such as: What's the historical background? How did U.S. debt get its special characteristics? We start with an historical description of Alexander Hamilton (U.S. founding father who served in the George Washington administration).

We also looked at the long-run problem in the U.S. that we are spending -- and are likely to go on spending as we get into the baby boom retirement years -- much more on Social Security, but particularly on Medicare and Medicaid, than we're raising in taxes. We have to do something about that. That is what much of the negotiations this year are going to be about. We start with the sequestering on March 1 and then we have a whole sequence of events, [including] the run-out of spending authority for the large parts of the federal budget in March. We then have the debt ceiling coming up again. The book tries to give a broad view of the U.S. debt situation....MUCH MORE

"Why It’s Smart to Be Reckless on Wall Street"

Found this while looking for a Miguel Nicholelis post at SA. I always forget if that's propinquity or serendipity.

From Scientific American:

Here is a guaranteed way to get paid well if you work on Wall Street. Find a best friend at a competing bank or hedge fund and take opposite sides of the same large bet. In one year’s time one of you will have a huge profit and get paid well. The other person will have lost and perhaps be fired. The sum of both your profits will be zero, but the sum of what you get paid will be positive. Split the pay.

This scheme is one of the more fanciful ways to exploit Wall Street’s compensation structure that pays absurdly well in the good years and just okay in the bad years. Losing money never means having to give anything back.

That asymmetry in pay (money for profits, flat for losses) is the engine behind many of Wall Street’s mistakes. It rewards short-term gains without regard to long-term consequences. The results? The over-reliance on excessive leverage, banks that are loaded with opaque financial products, and trading models that are flawed.

Regulation is largely toothless if banks and their employees have the financial incentive to be reckless.
How does Wall Street pay its employees? At the end of each year traders are paid a base salary and a bonus. The bonus, which fluctuates wildly, is usually a percentage of a trader’s profit. Some companies even pay a contractual amount, often between ten and fifteen percent. The average bonus of all employees is about three hundred thousand dollars but payments of $1 to $15 million are common. If traders lose they still get their base, often around two hundred thousand dollars. If their loss is great enough, they are fired. They never have to return money.

The incentives are clear. If you make a bunch of money you get personally wealthy. If you lose then you just go home and look for a new job....MORE
The play-both-sides-of-the-bet idea sounds similar to some comp scams that craps players use.

"In Scientific First, Researchers Link Two Rats' Brains via Computer" (What's next, the paralyzed walk?)

Ya gotta love this guy. He's a showman but he publishes in open-access journals, in effect letting the whole world have at it. More after the jump.
From Slate:
It's not exactly rat telepathy. Let's call it a computer-mediated rat mind-meld

Researchers used one rat's brain waves to influence a second rat's actions.
Illustration courtesy of Duke University
In a lab in Brazil, a rat faced an opening in the wall of its enclosure, and two levers. If it detected with its whiskers that the opening was narrow, it was supposed to press one lever. If the opening was wide, it was supposed to press the other. Choose the right lever, and it would be rewarded with a sip of water.
With practice, the rat learned to press the correct lever 95 percent of the time. Then came the remarkable part.

Researchers implanted one set of electrodes in the brain of the rat in Brazil, and another set of electrodes in the brain of a second rat at Duke University. Via an Internet connection, they set it up so that a signal from the brain of the rat in Brazil would be sent, in simplified form, directly to the brain of the rat in North Carolina. The rat in North Carolina also faced two levers, but had no information to go on as to which one to press—except for the signal coming from the first rat's brain.

The test: Could the rat in North Carolina press the correct lever, based on the width of the opening in the enclosure of the rat in Brazil? Six or seven times out of 10, it did.

The study, published Thursday morning in the open-access journal Scientific Reports, appears to be the first to allow animals to communicate via a brain-to-brain computer interface. The researchers, led by neuroscientist Miguel Nicolelis at Duke, say the feedback actually went both ways: When the second rat chose the correct lever, the first rat got an additional reward, which apparently encouraged it to send a clearer and stronger brain signal the next time. If that's true, it would amount to not only communication, but a form of cooperation....MORE
In "UPDATED--'A leading neuroscientist says Kurzweil’s Singularity isn’t going to happen....'" I called Doc Nicolelis a show off (If you're into mind controlled robotic avatars here's the M.D. PhD showoff at TEDMED 2012) and he is one. The thing is, the showing off is in the service of one of the highest value projects I can think of.
Here's the backstory:
Neuroscientist Miguel Nicolelis went on The Daily Show in 2011 and told Jon Stewart that he would develop a robotic body suit that would allow paralyzed people to walk again simply by thinking about it — and he’d do it in just 3 or 4 years.
And here's the rest of the story from Wired:
It was an audacious, some might say reckless, claim. But two years later, Nicolelis insists he’s on track. And he hopes to prove it in brazen fashion in front of billions of people during one of the world’s most-watched events: the World Cup.

The tournament, which will be held in his native Brazil, is less than 16 months away. If all goes according to plan, during the opening ceremony, a young paralyzed person will step onto the field in a robotic exoskeleton operated by electrodes implanted in his or her brain, walk about 20 steps, and kick a soccer ball.

This may sound incredible, but in recent years, research on using signals from the brain to operate machines has taken great strides. Scientists have developed brain-machine interfaces that allow paralyzed humans to move a computer cursor or even use a robotic arm to pick up a piece of chocolate or touch a loved one for the first time in years. Nicolelis has set his sights even higher: He wants to get paralyzed people up and walking around. If he succeeds it could be a tremendous advance. Right now he’s still developing this technology in monkeys. There’s a long way to go.

But Nicolelis was brimming with confidence in January when I visited his lab at Duke University to see how his work is progressing. “We’re getting close to making wheelchairs obsolete,” he said....MORE
Here's the Doctor, Doctor in Scientific American last August:

Coming Soon: Artificial Limbs Controlled by Thoughts

The idea that paralyzed people might one day control their limbs just by thinking is no longer a Hollywood-style fantasy
In 2014 billions of viewers worldwide may remember the opening game of the World Cup in Brazil for more than just the goals scored by the Brazilian national team and the red cards given to its adversary. On that day my laboratory at Duke University, which specializes in developing technologies that allow electrical signals from the brain to control robotic limbs, plans to mark a milestone in overcoming paralysis.
If we succeed in meeting still formidable challenges, the first ceremonial kick of the World Cup game may be made by a paralyzed teenager, who, flanked by the two contending soccer teams, will saunter onto the pitch clad in a robotic body suit. This suit—or exoskeleton, as we call it—will envelop the teenager's legs. His or her first steps onto the field will be controlled by motor signals originating in the kicker's brain and transmitted wirelessly to a computer unit the size of a laptop in a backpack carried by our patient. This computer will be responsible for translating electrical brain signals into digital motor commands so that the exoskeleton can first stabilize the kicker's body weight and then induce the robotic legs to begin the back-and-forth coordinated movements of a walk over the manicured grass. Then, on approaching the ball, the kicker will visualize placing a foot in contact with it. Three hundred milliseconds later brain signals will instruct the exoskeleton's robotic foot to hook under the leather sphere, Brazilian style, and boot it aloft.

This scientific demonstration of a radically new technology, undertaken with collaborators in Europe and Brazil, will convey to a global audience of billions that brain control of machines has moved from lab demos and futuristic speculation to a new era in which tools capable of bringing mobility to patients incapacitated by injury or disease may become a reality. We are on our way, perhaps by the next decade, to technology that links the brain with mechanical, electronic or virtual machines. This development will restore mobility, not only to accident and war victims but also to patients with ALS (also known as Lou Gehrig's disease), Parkinson's and other disorders that disrupt motor behaviors that impede arm reaching, hand grasping, locomotion and speech production. Neuroprosthetic devices—or brain-machine interfaces—will also allow scientists to do much more than help the disabled. They will make it possible to explore the world in revolutionary ways by providing healthy human beings with the ability to augment their sensory and motor skills.....MORE
This stuff is pretty fresh, the Scientific Reports paper was published today, the Wired story, yesterday.
We're watching, in real time, someone win a Nobel Prize. 

Me? I'm trying to figure out why I posted "What Monkey Pornography and Celebrity Worship Tells Us About Human Nature".

Here's the Walk Again Project 

See also:
Maybe He Didn't See the Part Where the Monkey Controlled a Robot on the Other Side of the World With Its Little Monkey Brain 

Wednesday, February 27, 2013

Natural Gas Reverses, Gives Up All Morning Gains

Following up on this morning's "Natural Gas Goes Vertical After Gapping Higher" here's the action thus far:


And from

Natural Gas flat as market prices in cold weather forecasts
Natural gas futures traded largely flat on Wednesday as investors priced in colder-than-expected weather forecasts settling in for much of the country, locked in gains and then sold for profits.

On the New York Mercantile Exchange, natural gas futures for delivery in April traded at USD3.457 per million British thermal units, up 0.01%.

The commodity hit a session low of USD3.433 and a high of USD3.553.
Unseasonably cold weather is making its way towards the heavily populated central and eastern portions of the country, fueling talk March temperatures may average colder than normal before warmer weather patterns return in the spring....MORE
...Early withdrawal estimates range from 120 billion cubic feet to 173 billion cubic feet. Inventories fell by 106 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 118 billion cubic feet....
Well, now that we've got that nailed down...

Climateer Line of the Day: Build a Copper ETF Edition

From the Securities and Exchange Commisssion:
The Commission does not believe that the listing and trading of the Shares is likely to increase the likelihood of manipulation of the copper market and, correspondingly, of the price of the Shares. Generally, the Commission believes that increased transparency helps mitigate risks of manipulation....
Roger that, no increase in likelihood, over.
From Barron's Focus on Funds column:

Regulators OK BlackRock’s Copper ETF
BlackRock’s (BLK) iShares exchange-traded fund unit was given the greenlight to launch iShares Copper Trust in a regulatory filing dated Friday. The plan and a similar one by J.P. Morgan Chase (JPM) have together stoked opposition among end users of the metal, some of whom predict a supply crunch. Regulators have argued that the funds’ copper stockpiles wouldn’t disrupt the supply of copper available for immediate delivery.

Read here a three-page summary of the objections by copper end-users including Southwire Co. and Encore Wire Corp. (WIRE).

Here’s how the SEC handles this issue in last week’s filing, which is a worthwhile read if you’ve ever wondered about the cause-and-effect of building exchange-traded funds. The SEC isn’t convinced that this one will harm prices....MORE
In addition to the links above, here's the SEC's Feb. 22 "Notice of Filing of Amendments..."

Mining: Australian Engineering Construction Fell in Q4

Leading to this headline at MacroBusiness:

Whoa! Did the mining boom just peak?


In other news from Oz the cyclone weakened and turned away from the iron ore port of Port Hedland.
From Stuff:

Barrow island, 50 kilometres northwest of the Western Australia coast, seeing the first signs of Cyclone Rusty.

Natural Gas Goes Vertical After Gapping Higher

The March futures expired yesterday and book-squaring can account for some of the move over the last week but that doesn't explain today's up 8 cents at $3.54. I don't trust it and feel like the whole market (rather than a couple 'puters) is getting spoofed. Here's the recent action via FinViz:

The Journal is talking about a big EIA report tomorrow but unless something has changed in the production picture since last week even a 200 Bcf pull wouldn't matter much this late in the season. Here's the WSJ:
Natural Gas Rises on Expectations for Big Storage Withdrawal 
-Natural-gas prices up 0.9% to recently trade at $3.486/MMBtu
--Traders expect stronger storage withdrawal reported Thursday than last week
--Cold weather forecasts also helping prices
   By Nicole Hong 
NEW YORK--Natural-gas futures rose 1% on Wednesday on expectations that cold weather has cut supplies and trimmed fears about bloated stockpiles of the home-heating fuel.

Traders are betting on natural-gas prices to rise ahead of a weekly inventory report on Thursday, which is expected to show a larger natural-gas withdrawal than the previous week's 127 billion cubic feet. The U.S. Energy Information Administration releases the data at 10:30 a.m. EST Thursday.

Phil Flynn, energy analyst at Price Futures Group, said he anticipates a 160 bcf withdrawal, which is well above the five-year average withdrawal of about 118 bcf.

"We've had a big spike up in gas prices, but people are reluctant to sell into it because we should see a good draw in tomorrow's inventory data," Mr. Flynn said Wednesday.

He added, "It was very cold last week, and demand should be pretty good."...MORE
Here's a bit longer view of the action via FuturesMag:

Click to enlarge.

Even though it's a different contract and thus has no "trading memory" that gap from the 22nd  looks like a fair target.
As the young urban troubadours might put it "Know what I'm sayin'?" 

Hot Research: "3D Systems Outlook Slightly Flatter" (DDD)

The stock is trading up 3% at $36.20. This has been a rough month for DDD, is is down from a split adjusted (3:2 on the 25th) $44.93. Right now putting money in the 3D companies is not investing but rather is more akin to riding a tiger. By the time the bet is investing, with discounted cash flows and everything, the move will be over.
Any projections are at best educated guesses so caution is advised, at Monday's low the stock had suffered a 32% bear market in 20 days.
"Hot Research" is the name of the Barron's column:
Maxim Group cut the target price on the printer maker to $40 from $42.
3D Systems (DDD: NYSE)
By Maxim Group ($34.55, Feb. 26, 2013)

3D Systems reported December quarter revenue of $101.6 million, up 45% year-over-year and up 12% quarter-over-quarter, or modestly below Wall Street estimates of $103.9 million. This is a moderation in momentum when compared to March and September quarters when it reported annual growth of 63% and 57%, respectively.

We are increasing our 2013 revenue and non-GAAP earnings-per-share estimates for 3D (ticker: DDD) to $461.5 million and $1.12, respectively, from $457.3 million and $1.05, respectively. We are also increasing our 2014 revenue and non-GAAP EPS estimates to $548.5 million and $1.30, respectively, from $526.8 million and $1.35, respectively.

Our price target [down to $40 from $42] reflects a 30 times multiple on our calendar 2014 non-GAAP EPS estimate of $1.30 plus cash/per share of $1.81. The multiple represents a price-to-earnings growth multiple of 1.2 times or in line with the peer group average. On an absolute basis, the stock currently trades at 47 times trailing 12 months price/earnings or 3.4 times the Standard & Poor's 500 multiple. We are reducing our target on lower valuation multiple due to limited operational leverage and higher printer mix. Institutional money flow is very weak. Near-term support and resistance are at $29.25 (40-week moving average) and $39.93 (10-week moving average), respectively....MORE

VIX, The End of Arbitrage and the Death of Volatility (VIX; VXX; VVIX)

I've read this post twice and have asked some smart people if an idea that it begat is feasible.
And yes the headline is the mating of Fukuyama and the BusinessWeek cover, probably making this the first spot that's ever happened.
I will be coming back to this and wanted to make sure I had the link on the blog.
Here are Izabella Kaminska and Christopher Cole at FT Alphaville:
A powerful convexity in short-term Vix futures
Before we comment about the strange behaviour of the Vix this week, we’d like to engage in a bit of a thought experiment.
There are two hypothetical scenarios that we’d like you to consider.
The first relates to the rampant nationalisation of everything:
What happens to market prices and volatility in an economy where government intervention becomes de rigeur every time prices misbehave?
The second relates to efficiency:
What happens to arbitrage opportunities and market prices in an economy where supply and demand logistics become ever better at anticipating supply and demand shocks, and they are also better at predicting and tracking general supply and demand trends? What happens when supply and demand data (of both goods and financial assets) becomes fully available to all in real-time and can be immediately cross compared with real-time data sourced from the internet of things — everything from internet-connected goods and devices to internet tracked logistic chains?
The answer to the first question, we propose, is a major reduction in volatility, while the answer to the second question, we dare to suggest, could be the end of arbitrage itself.
Neither of which are an exciting prospect for any market trader, who depends on both volatility and inefficiency to capture profits....
...Cole, via our inbox (our emphasis):
The behavior of the front of the VIX futures curve indicates that traders and investors have bought into the hope we have entered into a new low-volatility regime and that central banks will succeed in limiting all tail risks.

VVIX is the CBOE's volatility of volatility index.

Tuesday, February 26, 2013

Alt Currency: The Bitcoin ATM Has Arrived

I wish I thought of this.
Thanks to a reader.
From cnet:

Need Bitcoins? This ATM takes dollars and funds your account
New Hampshire entrepreneurs have created a dollar-converting anonymous Bitcoin ATM, which they hope to sell to bars, restaurants, and other retail locations nationwide.

Zach Harvey, right, and Matt Whitlock created this ATM that accepts dollar bills and converts it to the alternative Bitcoin currency.
Zach Harvey, right, and Matt Whitlock created this ATM that accepts dollar bills and instantly converts them to the alternative Bitcoin currency.
(Credit: Declan McCullagh/CNET) 
NASHUA, N.H. -- Zach Harvey has an ambitious plan to accelerate adoption of the Internet's favorite alternative currency: installing in thousands of bars, restaurants, and grocery stores ATMs that will let you buy Bitcoins anonymously.

It's the opposite of a traditional automated teller that dispenses currency. Instead, these Bitcoin ATMs will accept dollar bills -- using the same validation mechanism as vending machines -- and instantly convert the amount to Bitcoins and deposit the result in your account.

"It's even easier than just using a regular ATM," says Harvey, 33, who demonstrated the device to CNET this weekend at the Free State Project's annual Liberty Forum. "You could probably do it in about five seconds. The thing that would take the longest would be the bill validator taking in the dollar."

Harvey and Matt Whitlock are partners in a New Hampshire-based venture, Lamassu Bitcoin Advisors, that's hoping to commercialize the ATM by selling to retail businesses, especially ones that also want to accept the decentralized alternative currency from customers....MORE

Today in Umlauts: The Stäubli Picker-Packer

From Singularity Hub:

Blazing Fast Staubli Robot Picks 200 Items Per Minute
Even John Henry, had he been a factory picker instead of a steel driver, couldn’t keep up with this robot. The Switzerland-based TP80 Fast Picker robot by Stäubli Robotics can sort your prescription bottles, Tic-Tac boxes – anything under 1 kilogram – at a blazing speed of 200 picks per minute. Line sorters and quality inspectors beware.

The TP80 has a work area of 1.6 meters. And working this fast, precision is key unless you want a stockpile of shattered merchandise. That’s why its movements don’t veer more than 0.05 mm off course. The 200 picks per minute rate is reached when its handling very light loads limited to 0.1 kilograms. It slows down to a still superhuman 170 picks per minute when handling its max of 1 kilogram....MORE


Automation Steals Jobs: Röböts Playing Motörhead
Today in Umlauts: Hästkött (Swedes love it)

That's a Wrap: Gold Trades Higher After Bernanke Speech, Seventh Seal Broken as Goldman Reiterates Sell (GLD)

$1612.50 up 25.90 fulfills the prophecy (gold up 2%, over $1600 by Tuesday), now on to the Anti-Christ. 
From Kitco:

UPDATE: Gold Trades Sharply Higher, Above $1,600, After Bernanke Remarks; Short Covering, Bargain Hunting, Safe-Haven Demand Seen
 Comex gold futures prices are trading sharply higher in late-morning trading Tuesday and quickly regained the losses that occurred in the immediate aftermath of some stronger-than-expected U.S. economic data and amid remarks from Fed Chairman Ben Bernanke. While Bernanke's remarks were pretty much what the market place expected, they were nonetheless dovish on U.S. monetary policy, and what the precious metals market bulls wanted to hear from the Fed chief. In prepared remarks, Bernanke told a U.S. Senate committee that the benefits of a very accommodative monetary policy outweigh the potential risks of such, helping assuage fears the U.S. central bank could end its quantitative easing of monetary policy sooner rather than later. While the overall risk appetite in the market place appeared to uptick just a bit Tuesday morning, from that seen late Monday and overnight, the gold market scored solid gains from a "buy the dip" mentality among bargain hunters and safe-haven asset seekers. April gold last traded up $20.30 an ounce at $1,607.00.
The Book of Revelation has the seals as:
The First Seal—Rider on White Horse
The Second Seal—War
The Third Seal—Famine 
The Fourth Seal—Death 
The Fifth Seal—Martyrs
The Sixth Seal—Terror
The Seventh Seal-Here's Goldman:

Goldman Sachs cuts 2013, 2014 gold price forecasts
Goldman sees gold at $1,600/oz in 2013 vs $1,810/oz
* Bank cuts 2014 price view to $1,450/oz vs $1,750/oz
* Reiterates call for turn in gold's bull cycle

Goldman Sachs cut its 2013 gold price forecast to $1,600 an ounce from $1,810 an ounce, saying the metal's recent price drop and an increase in U.S. real interest rates have led it to bring forward its projections for a decline in the metal.

If that projection proves accurate, it will mark the first year gold has recorded a lower average price year-on-year since 2001, when its record-breaking 12-year bull run began....MORE

Cyclone Rusty Shuts Down 20% of World Iron Ore Shipping (BHP; RIO)

I'm sure some in the industry have noted the cruel irony of a tropical cyclone named Rusty hitting the world's largest iron ore ports. The ports ship $120 million (A) per day and have already lost a half-billion in revenue.
So far ore prices have not jumped (actually trading down) but 175 mph winds could change that.
Projected landfall is 1p.m. EST (18:00 UTC)
From Wunderblog:
Australia's most dangerous tropical cyclone of the season so far is Tropical Cyclone Rusty, which has intensified to Category 1 strength and is lumbering southeastwards towards the northwestern coast of Australia at 6 mph. Rusty is expected to intensify further into a powerful Category 3 storm, and is predicted to make landfall near the town of Port Hedland (population 15,000) on Tuesday near 18 UTC (1 pm EST in the U.S.) 
Rusty formed on Saturday evening when westerly winds blowing near the Equator combined with easterly winds blowing south of New Guinea to create an unusually large tropical storm with a huge, 100-mile diameter cloud-free center. Ordinarily, a storm this large takes a long time to wind up, but Rusty intensified quickly, taking advantage of low wind shear of 5 - 10 knots, and near-record warm ocean temperatures of 31 - 32°C (88 - 90°F). It's not often that a tropical cyclone gets 31 - 32°C waters to feed off of; these temperature are about 1.5°C (2.7°F) warmer than average for this time of year. The hot ocean temperatures are largely due to Australia's hottest month in its history--the nationally-averaged monthly maximum temperature during January 2013 was the highest ever recorded....MORE

Figure 1. Radar image of Rusty showing the large cloud-free center and an intense band of precipitation to it southwest moving ashore over the coast of Australia near Port Hedland. image credit: Bureau of Meteorology.

Figure 2. Tropical Cyclone Rusty at 0555 UTC on February 24, 2013 as seen by NASA's Aqua satellite. At the time, Rusty was a tropical storm with 50 mph winds, and had an usually large cloud-free center more than 100 miles in diameter. Image credit: NASA.

Here's the official Government of Western Australia resource map. Besides BHP's massive Port Hedland operation (top, slightly right) and Rio Tinto's Port Walcott there are hundreds of mines, offshore natural gas wells and support infrastructure directly in the path of the cyclone. Via WA Today (tremendous coverage):

Click to enlarge

A. Gary Shilling and the Prospect of a 1% Ten Year

Mr. Shilling was better when he was younger but is still worth listening to.
He currently has a couple predictions that aren't looking too good. From Wikipedia:
...In June 2011, he predicted a 20% drop in housing in 2012 with a resulting global recession.[5] In October 2012 he predicted a global recession in 2013 [6]
Steve Forbes did a very lengthy interview with Shilling who is a Forbes columnist.
From Forbes:

...Forbes: Let’s hit first long treasuries. The yield now on the 30-year bond is 3%?
Shilling: 3%.

Forbes: The ten-year, 1.6%, 1.8%? Pick a number. When we last talked it was 4.5% on the 30-year, which seemed low at the time and was almost 3% on the ten. How much more is there and how long can it last?

Shilling: I’m suggesting 2% on the long bond and 1% on the ten-year.

Forbes: Time frame?

Shilling: One of the great forecasters said, “You know, you either forecast what’s going to happen or when it’s going to happen, but not both.” I would say over the next year or so, and that’s assuming that this grand disconnect does get closed. If we go from 3% to 2% on the long bond that’s a total return, assuming it takes place over a year so you get a year’s worth of interest. That’s a total return of about 16% and it’s about 25% on a 30-year zero coupon bond. That’s pretty attractive, relative to what I think would happen in stocks, which would be on the negative side.

Forbes: And the ten-year is going to go down to?

Shilling: The ten-year, but you don’t get nearly as much bang per buck in the ten-year. The shorter duration, the shorter maturity makes a huge, huge difference. That’s why I’m one of those guys who still likes a 30-year bond, even though the ten-year is sort of the standard by which the whole world judges government debt.

Forbes: Sounds like with a 30-year you don’t have to really leverage to get a good kick.

Shilling: No, you really don’t. You get even more bang per buck with the zero coupon. Unfortunately, it works both ways. If rates go up you lose more money in the zero than the coupon bond. But, you know, as you know, Steve, I’ve never, never, never bought treasuries — and I started buying them in 1981, when the yield was 15.21% — I’ve never bought them for yield. I couldn’t care less what the yield is, as long as it’s going down. That means the price is going up. It’s the same reason most people buy stocks....MUCH MORE
Here's page 1 of the 5 page transcript. 

HT: World Beta
We've been babbling about deleveraging for a while now. Here are some selected posts:

Hedge Funds: Halfway Through with Deleveraging, Halfway Through with Redemptions
Commodity funds gird for more deleveraging
The Great Deleveraging (and what it means)
Credit Contraction, Deleveraging and the Coming Interest Rate Cut
Magnus: Deleveraging and its two big deflationary forces
and from one very, very bad day:
September 15, 2008 
Fed Adds Most Reserves Since 9/11 Attacks as Banks Hoard Cash
The credit contraction we've seen and will see is massive. The credit card companies are already cutting limits, prime brokers are pulling in unused lines from hedge funds, upside down mortgages that have to be written off, it's in the Trillions, maybe tens of trillions. The Fed, the Treasury, the Bureau of Engraving can't reliquify as fast as we're contracting.
Irving Fisher, Deleveraging and the Lessons for Europe of 1873
"Has Derivatives Deleveraging Fueled the Stock Rally?"
America's Deleveraging Still a Long Way to Go
Bridgewater's Ray Dalio on Beautiful Deleveraging

And many more in-between those two endpoints.

Stars, Abandoned Babies and the Best Hedge Fund Manager of All Time (IYT)

Bearish Evening Star Doji's are one of the more reliable of the reversals in Candlestick charting, probably second only to the very rare Abandonded Baby.
(as always, your milage may vary)

Here's Kimble Charting Solutions:

Transportation ETF (IYT) about to fall at least 25% in value and take S&P 500 with it?

I am going to get "Very Picky" on the Transportation ETF (IYT).  Doji star or engulfing bear patterns, can often signal highs in any asset, especially at market highs or at resistance.

The above chart reflects a "Doji Star" pattern back in 2007 at (1), resulting in a 25% decline in a few months.  A "Engulfing Bear" pattern took place at (2) in 2008, resulted in a 65% decline. A Doji took place in 2011 at (3), resulting in a 30% decline.  Each of these declines impacted the S&P 500...MORE
Although I've been familiar with Japanese Candlestick charting for longer than I care to think about, until about five years ago I never knew where it came from. Now I try to repost this piece at least once per year.

Tuesday, April 15, 2008
The Best Hedge Fund Manager of All-Time
1440 Wall Street tips us to an amazing story of intellectual (and financial) achievement.
I've been using this fellow's invention for half my adult life and had never heard the backstory.
From Financial Sense:

Samurai Trader!
Homage to Homma
by John Needham, The Daniel Code Report | January 20, 2008

Our Hero

Munehisa Homma is an unsung Japanese hero. We know little of Homma’s life. In some reports his name is spelt Honma, and the activities that were to make him a hero are ascribed to any time from 1650 to 1750. This is his story.

Homma ran the family rice trading business and rice was the lifeblood of Japan. More than a food, rice was a culture, Rice growing villages lived their whole lives around the rice planting, growing and harvesting cycle. Various parts of this cycle were celebrated with festivals and formal ceremonies. Rice was a precious commodity. Rice was more than a commodity; rice was a culture central to Japanese life. From rice came Sake the famous Japanese rice wine, rice cakes, rice flour, rice vinegar and much more. The rice plant produced not only its precious grains but a large amount of lush green foliage which when dry became straw. Rice straw too was an essential part of Japanese life. From straw, traditional villagers in the north made hats, clothes, utensils and the exquisitely fine rice paper. They made important religious figures, masks, decorations and a hundred other everyday items

Rice was the Japanese economy. Feudal rulers, Daimyos collected grain from the farmers as land tax and sold it from their storehouses. Rice trading was the Japanese way of life for farmers and the merchant class. Soon rice would replace currency as the value of worth in the Feudal land of Japan.
Today would be the most important day of Homma’s life, the day he would launch himself on the great adventure that would see him reach dizzying heights of fame and fortune; the day that would eventually see a humble rice trader of the merchant class achieve the greatest honour his country could bestow....Either bookmark or follow this link, it is worth your time.
1440 Wall Street says simply:
You might not use candlestick charts, but you should probably read the story of Munehisa Honma, the greatest trader of all time.
and includes a link to another take on the story.

Here's a bearish abandoned baby, see the little guy just hanging there?

Not to be confused with the Hanging Man which is much less reliable.

Follow-up-- Edmunds Long-term Tesla Road Test: "2013 Tesla Model S: No Touchscreen, No Heat" (TSLA)

Following up on yesterday's intro to the road test piece, "The 2013 Tesla Model S Long-Term Road Test is Different from the NYT Version (TSLA)".
After getting hit for a 4.8% loss yesterday the stock is up two cents in early pre-market action. $34.40 last.

2013 Tesla Model S
I was looking forward to driving our new Tesla Model S into the office this morning. Figured I would sip some coffee in my kitchen for a few minutes while warming up the interior of the Tesla sitting outside via the phone app. No such luck. It wouldn't connect to the car even though it had been working great all weekend. No big deal I figured, there was plenty of time to try it later.

So I grabbed my things, hopped in the car (I had unplugged it the night before as it was already fully charged), pressed the brake to bring it to life — and nothing, or at least nothing from the main touchscreen. The rest of the car was ready to go, but there was a message in the instrument panel that said, "Please wait for touchscreen to power on."...MORE

Monday, February 25, 2013

Nikkei 225: What Me Worry?

Last:      11,448.80     -213.73     -1.83%
In the early going matching the 1.83% S&P 500 loss.
11,374.83 low (so far)
It could have opened worse, at one time USD/JPY indicated as much as a 6% drop:

What the Heck Does This Imply: Cash VIX Settles Higher Than Futures in Contango? (VIX; VXX)

Like the writer, I can't recall ever seeing this.
From Options Pit:

VIX Settling Higher Than 6 Futures
It is news when the VIX cash settles at a level that is higher than the VIX futures.  I think it is an even bigger deal when the VIX settles above 6 futures contracts like it did today (almost 7, actually).  Yet, there was something that was also interesting about today, the movement in the VIX futures themselves.  While the futures certainly reacted to the news,  the entire curve really didn't flatten up very much.


In fact, I cannot remember the last time I saw VIX cash trading higher than 6 months of futures while the curve was this flat/in contango.  I am not sure what to make of it.  Here is what I do know:
1.  Today was a total 'vol race', as traders were trying to buy every piece of premium they could get.
2.  This had NOTHING to do with Sequestration, or the Fed and everything to do with the Italian Elections......MORE
If that is the case, then I was right for the wrong reason.
But (and that's a big 'ol but) I won't concede the point just yet.
See also: attribution error:
...The Attribution Error says that when others screw up, we blame it on them, but when we screw up, we blame the situation and circumstances....

Market-on-Close Commentary

From Brokers With Hands on Their Faces:


HT: ZeroHedge

Possibly related:
UPDATED--Forecast For the Week: Gold Up, Equities Down

Private Equity: Where Has All the Alpha Gone?

Here's the graphic:

 Presentation1 - Microsoft PowerPoint_2013-02-22_17-45-31

Here's the paper:

We evaluate the performance of limited partners’ (LPs) private equity investments over time. Using a sample of 14,380 investments by 1,852 LPs in 1,250 buyout and venture funds started between 1991 and 2006, we find that the superior performance of endowment investors in the 1991-1998 period, documented in prior literature, is mostly due to their greater access to the top-performing venture capital partnerships. In the subsequent 1999-2006 period, endowments no longer outperform, and neither have greater access to funds who are likely restrict access nor make better investment selections than other types of institutional investors. We discuss how these results are consistent with the general maturing of the industry, as private equity has transitioned from a niche, poorly understood area to a ubiquitous part of institutional investors’ portfolios.
Both from Turnkey Analyst

"Iranian Airlines Unable to Pay for Jet Fuel"

I don't know if the original FARS story is true or propaganda but Uskowi has proven to be a straight-shooter.
From Uskowi on Iran:
Abdorreza Mousavi, director of Iranian Airlines Association, said today in Tehran that the domestic airliners do not have enough cash to pay for fuel and have been forced to cancel many flights. Mousavi said the state-run National Iranian Oil Company (NIOC) has threatened to confiscate airplanes for past due payments. His answer: Come and get them!

“We don’t have cash to pay for fuel. If the National Iranian Oil Products Distribution  Company (the company that provides jet fuel to Iranian airlines) wants to confiscate our planes, let them come and take them. We simply don’t have any money to pay for fuel,” Mousavi said. (Fars News Agency, 25 February)....MORE

2,011 Megawatts to Come Offline as American Electric Power Agrees to Stop Burning Coal (AEP)

From the Hill's E2 Wire:
The utility giant American Electric Power (AEP) will stop burning coal at three power plants by 2015 under a settlement agreement with the Environmental Protection Agency (EPA), several states and a handful of environmental and civil groups.

The Sierra Club said Monday that 2,011 megawatts of coal-generated electricity will come offline at facilities in Indiana, Kentucky and Ohio.

“This agreement is only the latest sign of progress as our country continues to transition away from dirty, dangerous and expensive coal-fired power plants,” Jodi Perras, Indiana campaign representative for the Sierra Club’s Beyond Coal campaign, said in a Monday statement.

AEP agreed to install 200 megawatts of wind and solar energy by 2015 in Michigan and Indiana to partially offset the loss of coal-fired power. It also will add pollution-control technology to a power plant in southern Indiana — though AEP would need to shut parts of the plant down beginning in 2025 if it cannot sufficiently lower sulfur dioxide emissions....MORE 
For those at home keeping score replacing the whole 2000 MW with wind would take around 1300 turbines.

Holy Cow, Is This a Paragraph or What? (Poor Nassim Taleb Never Stood A Chance)

By Joseph Cotterill (his ranting gets raves):
...Anyway as I was saying, I’m not doing a full critique of either Antifragile, or skin in the game, here. I don’t care for the associated attack on journalists as cowards and parasites on the doers, I will say that much. (“…modern journalists are designed to be either cowards, or have a need to escape reality.”) Heard it all before – every week. Usually from someone powerful trying to push me off a story about some moral hazard or other, or that I’m a fraud, or that I don’t know what I’m talking about, because I won’t pick up a Bloomberg terminal and trade on it. It’s never ever about how wonderful it is to take risk, or something highfalutin about convexity. It is about money, power, and (in traderspeak) being married to the position. Nick Dunbar already put it well in his review of Antifragile, regarding experts, politicians, and the Fannie Mae car-crash....
The rest of his comments on  Nassim Taleb are here.

We've visited with FT Alphaville's Mr. Cotterill a few times over the years.
In December's "European stocks closed generally mournful and reflective":
The headline was inspired by a bit of genius at FT Alphaville on Monday:
Five seven five / Is unsustainable, so / Haircut to seven
One of the following is an autumnal haiku composed on Twitter by Herman van Rompuy, President of the European Council. But which is it?
A season of mists
And of mellow fruitfulness
But not you; you’re Greek
And from last July:
Mandy Rice-Davies Sighting at FT Alphaville
Mandy Rice-Davies is a former model and showgirl known for her role in the Profumo affair.
When informed by the prosecuting attorney that Lord Astor disputed her version of events and denied having an affair she responded:
"Well, he would, wouldn't he?"
From the FT Alphaville post:
Spooks on the payrolls

...The report slipped out onto the DOL website this week. The Associated Press and Bloomberg have already torn it apart. But then, they would....
To the best of my knowledge, Mr. Cotterill is not a former model and showgirl....

Finally, "The Economist on Safe Assets":
...Harking back to last week's post on the robotic ride to serfdom the villein occupied the social space between the freeman and the slave, below the thane but above the feudal cotter (cottage in return for labor).
Thus the alpha-villein would be top dog.
And of course, a cotter rill is the brook beside the cottage.

Today in Umlauts: Hästkött (Swedes love it)

Following up on yesterday's "Automation Steals Jobs: Röböts Playing Motörhead".
From Foreign Policy's Passport blog:

The untold story of the Ikea meatball scandal is that Swedes love horse meat
It's tough to stomach, but Ikea is the latest big-name food maker to be felled by the no-it-isn't-beef-it's-horse-meat-scandal that is quickly spreading across Europe. Czech authorities alerted the discount furniture maker that they had found horsemeat in a sample of meatballs, and Ikea subsequently pulled the product from stores in 14 countries.

Ikea is of course outraged and put out a strongly worded statement promising that the company would get to the bottom of how the tainted Swedish staple turned up in stores. "We do not tolerate any other ingredients than the ones stipulated in our recipes or specifications, secured through set standards, certifications and product analysis by accredited laboratories," the company said.

The untold story in all of this is that Swedes love horse meat. Marketed under the name hamburgerkött -- that's right, "hamburger meat" -- Swedes put the stuff on toast, sandwiches, and the like. Consider, for example, Pärsons' (slogan: "Sandwich joy for the whole family!") version of hamburgerkött. They lead with the euphemistic name on the package, but a quick peek at the ingredients tells the real story -- hästkött, or horse meat.

Curious where the horses are sourced from? South America.
Which makes this headline from The Local not as brave as it otherwise might be:
Ikea official: I'd still eat our Swedish meatballs

Now about those East German forced labor camps... 

"What ARPA-E Can’t Do"

Following up on "The 2013 ARPA-E Energy Innovation Summit Starts Today".
From MIT's Technology Review:

The Advanced Research Projects Agency for Energy is highly popular, but its impact so far has been minuscule. 
At this week’s ARPA-E Energy Innovation Summit in Washington, D.C., politicians from both sides of the aisle, together with environmentalists and business leaders, will do something unusual—they’ll agree on something. They’ll all sing the praises of ARPA-E, the agency created in 2009 to fund the development of early stage energy technologies. But what could get lost in all the laudatory remarks is the fact that ARPA-E won’t solve our major energy challenges and can’t fulfill its mission alone.

That mission has always been limited. Its authorizing legislation directs it to identify promising advances in labs and give them a boost, enough to demonstrate the potential to private investors. A small company or university lab that has discovered a promising material, for example, might be funded to produce a working prototype battery or solar cell. But ARPA-E was explicitly not supposed to take over for venture capitalists in commercializing technology. The agency invests only in projects that are too risky for private investors. 

That the agency was never intended to commercialize technology is clear from its budget. Some new energy technologies will require large-scale demonstrations that could cost hundreds of millions of dollars before private investors are willing to take over. But ARPA-E’s entire yearly budget is less than $300 million, which is spread between dozens of projects. “The parts of the innovation chain that are the hardest in energy are the scaling up and demonstration phases, and that’s precisely what ARPA-E is not designed to do,” says David Victor, co-director of the Laboratory on International Law and Regulation at the University of California at San Diego....MORE

The 2013 ARPA-E Energy Innovation Summit Starts Today

Your tax dollars at work and who knows, something magical* may come of it.

The summit is rather a big deal in some circles. We'll be coming back to this over the next three days-tomorrow they have a Fireside Chat with Elon Musk and Steven Chu, PhD.
From the website:

Monday Agenda  
February 25, 2013

12:00-12:15 p.m.
Summit Kickoff
Potomac A
12:15-12:30 p.m.
ARPA-E Leadership Welcome
Potomac A
12:30-12:50 p.m. Potomac A
Technology Discussions with ARPA-E Program Directors
1:00-1:45 p.m.
  • Dr. Mark Johnson, Program Director, ARPA-E
  • Dr. Howard Branz, Program Director, ARPA-E
  • Dr. Timothy Heidel, Assistant Program Director, ARPA-E
  • Dr. Karma Sawyer, Assistant Program Director, ARPA-E
  • Potomac A
  • Dr. John Lemmon, Program Director, ARPA-E
  • Dr. James Klausner, Program Director, ARPA-E
  • Dr. Elizabeth Santori, Fellow, ARPA-E
  • Dr. Amul Tevar, Fellow, ARPA-E
  • Potomac C
  • Dr. Dane Boysen, Program Director, ARPA-E
  • Dr. Ilan Gur, Program Director, ARPA-E
  • Dr. Ping Liu, Program Director, ARPA-E
  • Dr. Bradley Zamft, Fellow, ARPA-E
  • Potomac 2
  • Dr. Jonathan Burbaum, Program Director, ARPA-E
  • Dr. Robert Conrado, Senior Fellow, ARPA-E
  • Dr. Ramon Gonzalez, Program Director, ARPA-E
  • Dr. William Regan, Fellow, ARPA-E
  • Dr. Bryan Willson, Program Director, ARPA-E


    *Arthur C.Clarke's three laws:
    1. When a distinguished but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong.
    2. The only way of discovering the limits of the possible is to venture a little way past them into the impossible.
    3. Any sufficiently advanced technology is indistinguishable from magic.

    BlackRock Jumps Ahead of JP Morgan in Copper ETF Race (BLK; JPM)

    From Reuters:

    BlackRock could eventually take 121,000 tonnes of copper to back product
    * BlackRock's copper ETF pool double the size of rival JPM product

    BlackRock Inc, the world's largest money manager, has won approval from the U.S. securities regulator to list a copper-backed exchange-traded fund, potentially moving ahead of JPMorgan whose listing of a similar product has been delayed by industry objections.

    The U.S. Securities and Exchanges Commission approved a proposed rule change to list and trade shares of the iShares Copper Trust on NYSE Arca, it said on its website (

    The launch of copper ETFs are intended to give large U.S.-based funds easier access to the copper market, but some industrial users worry that such products will remove a large chunk of the metal from the market and inflate prices....MORE

    The 2013 Tesla Model S Long-Term Road Test is Different from the NYT Version (TSLA)

    In pre-market action the stock is off three cents at $36.08.
    From Edmunds:
    • 2013 Tesla Model S - Burnout
      2013 Tesla Model S - Burnout

      Yep, it'll do burnouts. | February 21, 2013
    2013 Tesla Model S Long-Term Road Test: Introduction

    February 22, 2013
    Elon Musk is either a genius visionary or a complete fool. And we just paid him $110,000 to find out which.
    We bought a 2013 Tesla Model S. It's ours and, unlike most other newspapers, magazines and Web sites, we're going to test it without Mr. Musk loaning us the vehicle and tracking our every move.

    We've tested the Model S before. Several times. And it has consistently impressed us with its abilities and technology. But as with the rest of America's media, Tesla, which is based in Palo Alto, California and builds the cars in nearby Fremont, loaned us those sedans for evaluation. We would drive the car for a week or two and return it to Elon. In fact, the first Model S we tested was the man's personal car.

    But this time it's different. There are no time limits. And no scary big brother black boxes watching over us. It's our car. We paid for it. We picked it up at the Fremont factory with 50 Tesla-test-track miles on the odometer. And our plan is simple. We're going to drive the hell out of it for a year. We're going to drive it as much as possible. Where we want. When we want. And Mr. Musk can only sit back and read about it like everybody else.

    What We Bought
    The 2013 Tesla Model S is available in two trim levels, Base and Performance, starting at a totally reasonable $59,900. For your nearly $60 grand, you get 19-inch wheels, keyless entry, dual-zone climate control, cloth seats and a 40kWh battery pack producing 235 horsepower, 310 pound-feet of torque and a range of about 100 miles. But we've had EVs with a hundred-mile range before. That's no fun anymore and while you can get a base Model S with more juice, we decided to step up our game and get the Model S Performance.

    The 2013 Tesla Model S Performance starts off where the base leaves off, but leaves behind the boring 40kWh batteries in exchange for an 85kWh pack. This power plant delivers 416 hp, 443 lb-ft of torque and an estimated range of 265 miles. Last time we tested a Tesla Model S with the Performance pack, it hit 60 in 4.3 seconds (4.2 with 1 foot of rollout) and cleared the quarter-mile in 12.6 seconds at 108.3 mph.

    Beyond the upgraded powertrain that will give us real-car range and sports car speed, the Tesla Model S performance brings active air suspension with sport-tuned traction control and Napa leather. The cost? $93,750, including $990 for Tesla Personal Delivery (its words for destination and delivery) and $180 for "Final inspection, prep, and coordination" (its words for "give us more money").

    Even though we were already over $90,000, we didn't stop spending....MUCH MORE 
    HT: Kedrosky 

    Sunday, February 24, 2013

    "Yen Plunges As Über-Dove Kuroda Set To Head Bank Of Japan" (USD/JPY)

    There is serious money being made and lost in the various permutations of the Japan story.
    From ZeroHedge:
    In our prediction two weeks ago of who the next Bank of Japan governor was likely to be, we said that "the tussle lies between a slightly less dovish bureaucrat in Toshiro Muto (favored by the opposition) and a banker, Haruhiko Kuroda, who is a front-runner in Abe's camp.... we suspect Abe will err on the side of uber-dovish to fight the currency wars alongside him." Sure enough, the uber-dove Kuroda, not to be confused with the Yankees pitcher, is now set to become BOJ governor.
    From Reuters, "Japan's government is likely to nominate Asian Development Bank President Haruhiko Kuroda, who has called for pumping more money into the economy, as its next central bank governor, the Nikkei newspaper reported on Monday. Kuroda, formerly Japan's top currency diplomat, has already been offered the post unofficially by the government, which plans to submit its nominees for three BOJ leadership posts to parliament this week, the paper said. Kikuo Iwata, an academic known as one of the most vocal advocates of aggressive monetary expansion, is likely to be nominated as deputy BOJ governor, the Nikkei said without citing sources."...MORE

    Japan's Nikkei is In the Early Stages of an Historic Move
    "No typo: Analyst sets Nikkei 63 million target" (it's Société Générale's Dylan Grice)
    And many, many more.

    Writers: "The Dollars-Per-Word Pay Decoder"

     Poets, priests and politicians
    Have words to thank for their positions
    Words that scream for your submission
    And no-one's jamming their transmission...
    -noted philologist/ logophile, Sting

    What with the Pulitzer* juries beginning nomination deliberations this past Friday I thought we should let our writer friends know what the business side is really all about.

    From New York Magazine:
    What’s a word worth in the topsy-turvy economics of today’s content-providing business? Inspired by a University of Minnesota researcher who applied that metric to Sarah Palin’s three-year stint as a Fox News commentator (which paid her $15.85 for every utterance, it turns out), we did some math of our own. Here, our best estimates* of the rates other notables have collected for putting syllables together.

    Robert Caro: $.015 per word for the original manuscript of The Power Broker.
    Dave Eggers: $.77 per word for A Heartbreaking Work of Staggering Genius.
    Stephenie Meyer: $2 per word for the three Twilight books.
    Ira Glass: $3 per word for an episode of “This American Life.”
    Jonathan Safran Foer: $5 per word for Everything Is Illuminated.
    Stephen Colbert: $16 per word for a 2013 episode of The Colbert Report.
    Malcolm Gladwell: $19 per word for The Tipping Point.
    Bill Clinton: $33 per word for My Life.
    Hillary Clinton: $38 per word for ­Living History. 

    HT: Newmark's Door

    *Caro has a couple of the tchotkes.

    Fund Managers’ Short Gold Bets Hit Record: DJ

    One of the reasons I didn't title the post immediately below "Forecast for the Week: Whom the Gods Would Destroy they First Make Mad Edition".
    From Barron's Focus on Funds column Friday Feb. 22:
    Dow Jones Newswires’ Matt Day finds a record number of bets on lower gold prices in the weekly Friday regulatory data on the market for the commodity’s futures and options.
    From Day this afternoon:

    NEW YORK–Money managers held a record number of bets on lower gold prices on the main U.S. gold exchange, according to data released Friday by the Commodity Futures Trading Commission. 
    Hedge funds and other investment managers tracked by the commodity regulator boosted their bets on lower Comex-traded gold futures and options by 33%, to 65,617 contracts, during the week ended Tuesday. That is the most in weekly CFTC data going back to June 2006. 

    Money managers still held more bets that prices would rise than bets they would fall, though by the lowest margin in more than four years. Their net long, or the amount of bets on higher prices less the number of bets on lower prices, stood at 42,318 contracts, the least since November 2008....

    UPDATED--Forecast For the Week: Gold Up, Equities Down

    That's it, nothing fancy.
    Okay a bit of fancy: S&P down 1% by Thursday (sub-1500), gold up 2%, over $1600 by Tuesday.
    It's all about the media hype on the sequester.
    S&P Friday close: 1515.60; Kitco Friday spot close $1581.50.

    Fund Managers’ Short Gold Bets Hit Record: DJ

    Equities: Is 3.80 the Scariest Number For the Bulls?

    From ZeroHedge:
    'Nothing can stop us now' appears to be the message we are being fed as Bullard et al. confirm we should rest assured that the Fed will pump as long as there's a sun in the sky. However, there is a little fly in that ointment that just keeps on popping up. As Barclays' Barry Knapp notes, gas prices have risen high enough to hurt stocks if history is any guide. Gas prices, which have risen every day since January 17th are pressuring the critical $3.80 level that has capped valuations for the equity market in the last three years.

    The last times gas prices have risen this high, consumer spending growth has stalled and just as we have noted previously, it appears the only thing that can tame the enthusiasm of a liquidity-addicted equity market is a cash-strapped consumer pulling back. The double-edged sword is simple, Knapp notes: any slowing of economic growth that stems from higher gas prices may prevent companies from meeting earnings projections; whereas sustained expansion would increase the risk of inflation and put pressure on the Fed to scale back its QE4EVA. Rock meet hard place.
    Chart: Barclays and Bloomberg

    Saturday, February 23, 2013

    Automation Steals Jobs: Röböts Playing Motörhead

    We like röck döts umlauts.*

    From NoiseCreep: 
    Actual Robots Cover Motörhead Classic
    Give a trio of metal robots instruments to smash away at and what do you get? A shockingly good cover of Motörhead's classic anthem, "Ace of Spades."

    The trio is known as Compressorhead and is comprised of guitarist Fingers; bassist Bones; and drummer Stickboy, who miraculously has not two but four arms. When you are the drummer of a metal band, you can never, ever have too many arms.

    Yes, this terrific Motörhead cover is played by a "band" of robots. Not only do they hit the notes, but they've also got groove. They even headbang....MORE
    HT: Market Power 

    They also do covers of AC/DC (TNT), Joan Jett (I Love Rock N Roll, full frontal) and The Ramones (Blitzkrieg Bop).
     For real Teutonic vibe the spelling on the name should be Kömprëssörhëäd.

    *After Downgrade by Chinese Rating Agency Ünited Stätes Toughens Image With Umlauts
    WASHINGTON, DC—In a move designed to make the United States seem more "bad-assed and scary in a quasi-heavy-metal manner," Congress officially changed the nation's name to the Ünited Stätes of Ämerica Monday.

    "Much like Mötley Crüe and Motörhead, the Ünited Stätes is not to be messed with," said Sen. James Inhofe (R-OK). An upcoming redesign of the Ämerican flag will feature the new name in burnished silver wrought in a jagged, gothic font and bolted to a black background. A new national anthem is also in the works by composer Glenn Danzig, tentatively titled "Howl Of The She-Demon." Source
    See also:
    “It’s like a pair of eyes. You’re looking at the umlaut, and it’s looking at you.”
    -David St. Hubbins
    This Is Spın̈al Tap
    The röck döts link takes you to Jon Udell's description of the evolution of Wikipedia's Heavy Metal Umlaut page.
    Perhaps more than you cared to know.