Friday, August 30, 2013

Epic Response to Bogus Banker Legal Claim

I mean the claim is bogus.
The banker's bogosity has yet to be determined by a court of competent jurisdiction.
From Techdirt:

Best Response To A Copyright Threat Ever? Lawyers Explain Why ABA Is Full Of S**t In Claiming Copyright On Routing Numbers
from the enjoy dept
In our time we've seen some pretty epic responses to bogus legal threats, but it appears we have a new contender for the throne. As a whole bunch of lawyers suddenly emailed me this morning, it appears there's been a followup to our earlier story on the American Bankers Association claiming that bank routing numbers are covered by copyright, and threatening a website that had created a useful way to look up those routing numbers. The website, run by Greg Thatcher, was doing a public service, getting such info from the Federal Reserve's website, and making it much easier for people to find the numbers.

Thatcher is now being represented, pro bono, by Andrew Delaney of Martin & Associates, and his response letter to Nigel Howard, the lawyer from Covington & Burling LLP (the ABA's lawyer who sent the threat letter) is one of the most beautiful responses to a bogus threat letter you'll ever see. It gets bonus points for its usage of footnotes (which is to say, do not skip the footnotes). You really need to read the whole thing. I'd quote parts of the legal analysis, but you have to see the whole thing in context with the footnotes (linked above or embedded below). I will, however, quote the closing paragraph, to give you a sense of the tone of the letter:
If you do feel it's necessary to sue our client, we are open Monday through Friday from 8:00 A.M. to 6:00 P.M. and we have lollipops for people who serve process. So if you do file a complaint and send someone over with a summons, please have them wear something with a bit of purple... we all like purple.
Oh, and then there's this:
© Andrew B. Delaney and Jorge V. Pivar-Federici. All rights reserved. But wait . . . fair use allowed and encouraged. Actually, go 'head and publish the whole thing as is. We don't care.

Chartology: "This Pattern Often Leads to Lower Crude Oil Prices"

Front futures $107.66 down $1.14
One of our mental models has been a run from the hundo level to $115-120 for WTI and then a $30 drop.
That is not a forecast just a best guess arrangement of a bunch (technical term) of datapoints and insights from some very sharp people.*
Here's one more brick in the wall.
From Kimble Charting Solutions via Advisor Perspectives:



*From a week ago:
Looking For a Major Move in Oil
Crude is up $1.74 at $106.77.
Our medium term mental map is a fake-out shake-out, i.e. higher to suck in some buying and then a 10-15% drop, back under $100.
There is a lot of oil sloshing around and Asia isn't going to be needing it for a while.

India May Resume Rupee-denominated Oil Imports From Iran

And that's how economics can change foreign policy.
From the Deccan Chronicle (27Aug):

Economic crisis may prompt India to restart Iran oil import
New Delhi: Prime Minister Manmohan Singh has sought USD 25 billion cut in oil import bill to narrow current account deficit, Oil Minister M Veerappa Moily said on Tuesday.

India, which paid about USD 170 billion last fiscal for importing oil, is renewing imports of the fuel from Iran as unlike imports from other countries, it pays the Persian Gulf nation in rupees.

"Oil (imports) is one of the components responsible for CAD. Prime Minister has told us to save USD 25 billion in import bill. As of today, we have pieced together a plan to save USD 22 billion in import bill," Oil Minister M. Veerappa Moily told reporters here.

A large part of the plan includes restarting import of oil from Iran. As US and western sanctions blocked all payment routes, India pays Iran in rupees in a UCO Bank branch in Kolkata.

Officials said if India was to import 10 or 11 million tonnes oil from Iran this fiscal, it could save a minimum of USD 10 billion in foreign exchange outflow. India had last fiscal imported 13.1 million tonnes of oil from Iran.

India has been, since July 2011, paying in euros to clear 55 per cent of its purchases of Iranian oil through Ankara-based Halkbank. The remaining 45 per cent due amount was remitted in rupees in accounts Iranian oil company opened in Kolkata-based Uco Bank.

Payments in euro through Turkey ceased from February 6 this year and now Iran is paid only in rupees. Rupee payment helps save foreign exchange outgo, thereby reducing CAD. Moily refused to divulge details of his plan to cut oil import bill but said the savings planned will be 1 per cent of the GDP.

India, which in June won another 180-day waiver from the US sanctions after it cut crude oil imports from Iran by over 27 per cent, did not buy any oil from the Persian Gulf nation in first four months of current fiscal as insurance firms refused to provide cover to refiners processing Iranian oil....
That $22 bil. is a pretty big chunk of the trade deficit.
Meanwhile. it looks as though India wants to cut the same type of deal with Iraq:
Iraq PM flies to India to sell more oil
And, before I forget, back in January 2012 Debka had just the most innocuous little India-Iran story:
"India to pay gold instead of dollars for Iranian oil. Oil and gold markets stunned "

Natural Gas: Charts Show Patterns Within Patterns

This chart (daily) is the one we used to get on the right side of the up move from $3.24 to $3.60 (currently $3.62 and stalled):


the thinking being that prices could rise from that Aug. 8 spike low to ~$3.60 and still be in a down trend.
So, how to recognize the next turning point?

The 5-minute 1-hour chart shows a 4-day series of higher lows that define the short-term trend:

and which trendline will have to be broken before any decisive action shows up on the daily chart.

So, what might be the actuator for a reversal?

The temperature at the NYMEX is going to be a couple ticks chillier than average:

It's ridiculous I know but it's amazing how often it works out and by working out allows you to use all that power in your Baby Crays or NVIDIA Tesla supercomputers to watch cat videos:

"India doubles margins on gold futures trading to curb volatility"

Gold is down for the third day, off $18.00 at $1394.90.
Not to be confused with the moves the Reserve Bank of India and the Indian government have made this year, list below.
From Reuters:
India, the world's biggest buyer of gold, doubled margins on trading in gold futures effective Monday in a bid to tackle volatility after local prices of the metal rose by nearly a fifth this month to hit a record high.

The move is not related to India's numerous other measures to dampen buying of physical gold as the nation grapples with a widening current-account deficit and a tumbling rupee currency. India imports almost all of its gold.

But it is seen denting participation in futures trade and hurting the Multi Commodity Exchange (MCX), the country's biggest commodities trading bourse, which garners significant revenue from precious metals.
The Forward Markets Commission (FMC), which regulates the commodity futures market, hiked initial margin to 5 percent from 4 percent earlier, and also imposed an additional 5 percent margin on gold, silver and crude oil futures contracts from Monday.

"It will have an impact on volumes and participation. Due to high cost or margins, a trader would take only one lot compared to two lots earlier," said Haresh Galipelli, vice-president with Inditrade Derivatives and Commodities....MORE
And from ZeroHedge the list of steps the Gov. and the RBI have taken:

...The full list:
  • Jan 21 - The government raises the gold import duty by 2% to 6%.
  • Jan 22 - The government more than doubles the duty on raw gold to 5%.
  • Jan 30 - Finance Minister P. Chidambaram says there are no plans for additional taxes or curbs on gold imports.
  • Feb 1 - The Reserve Bank of India (RBI) plans to introduce three or four gold-linked products in the next few months.
  • Feb 6 - The RBI says it would consider imposing value and quantity restrictions on gold imports by banks.
  • Feb 14 - The central bank relaxes rules on gold deposit schemes offered by banks by allowing lenders to offer the products with shorter maturities.
  • Feb 20 - The Trade Ministry recommends suspending cheaper gold jewellery imports from Thailand.
  • Feb 28 - India keeps its gold import duty unchanged in its annual national budget, defying industry expectations.
  • Feb 28 - India proposes a transaction tax of 0.01% on nonagricultural futures contracts, including for precious metals.
  • March 1 - The Finance Minister appeals to people not to buy so much gold.
  • March 18 - The Reserve Bank of India says it is examining banks that sell gold coins and wealth management products to identify "systemic issues", with a view to closing any legal loopholes.
  • April 2 - The Finance Ministry suggests it is unlikely to raise the import tax on gold further to avoid smuggling and would instead introduce inflation-indexed instruments.
  • May 3 - The RBI restricts the import of gold on a consignment basis by banks.
  • June 3 - The Finance Minister says India cannot afford high levels of gold imports and may review its import policy.
  • June 5 - India hikes the gold import duty by a third, to 8%.
  • June 21 - Reliance Capital halts gold sales and investments in its gold-backed funds.
  • June 24 - India's biggest jewellers' association asks members to stop selling gold bars and coins, about 35% of their business.
  • July 10 - India's jewellers announce they might continue a voluntary ban on sales of gold coins and bars for six months.
  • July 22 - The RBI moves to tighten gold imports again, making them dependent on export volumes, but offers relief to domestic sellers by lifting restrictions on credit deals.
  • July 31 - India hopes to contain gold imports well below the 845 tonnes that were shipped last year, the Finance Minister says.
  • Aug 13 - India hikes the import duty on gold for a third time in 2013, to 10%. Duties for silver and platinum are also increased to 10%. The customs duty on gold ore bars, ore, and concentrate are increased to 8% from 6%.
  • Aug 14 - India turns the screws on gold buying again, banning imports of coins and medallions and making domestic buyers pay cash.

What Happens When You Mash Up 3D Printing And Amazon's Same-Day Delivery?

This might make more sense than the do-it-yourself Makerbot movement.
From the Washington Post:
They say waiting to get something is often more enjoyable than actually getting it.
That’s not how Jeff Bezos sees it. In the last few years, the founder has been in relentless pursuit of a lag-less future, one where you barely have enough time to utter the word “shipping” before your package arrives. In this utopia, deliveries take place in a matter of hours, not days. To make it a reality, Bezos is bringing the full power of Amazon’s supply-chain resources to bear. The company has plowed nearly $13.9 billion since 2010 into new warehouses near its customers. It’s an undertaking only a massive multinational would dare attempt.

But a handful of smaller companies are convinced there’s a way to get products to consumers just as quickly, with greater satisfaction and at a fraction of the overall cost. The future, these companies argue, is in on-demand 3D printing.

These two ways of delivering goods couldn’t be more different. One relies on scaling and infrastructure to reduce transportation time. The other eliminates as much infrastructure as possible and instead sinks money into materials and on-site manufacturing. Yet both share a common dream: achieving a just-in-timeness never before seen in the history of commerce.

It won’t be long before these technologies start overlapping and interacting — and that’s a good thing. The resulting combinations will iron out a lot of the inefficiencies of using either method alone. But however it happens, it probably won’t be hailed as a “3D printing revolution” or as a “shipping revolution.” It might simply be known as the just-in-time revolution.
The race to ‘instant’
Amazon is merely one of a growing number of businesses all jockeying to see who can shave the most delay off of their shipping options. Recently, eBay and WalMart both began testing same-day delivery in parts of the country. The competition to eliminate just a few extra shipping hours is intense; to get deliveries to customers in under an hour, eBay dispatches college students by foot, bike and taxi to pick up products at local big-box stores and bring them to people’s doorsteps.

Faster shipping is costly. As a share of Amazon’s total sales, the amount of money that went to shipping came to nearly 5 percent in 2011, up from just 3.2 percent in 2009. Shipping is increasingly eating into Amazon’s profits, and the move to same-day delivery promises to exacerbate that trend.

Amazon is moving ahead anyway. By bundling same-day delivery with Amazon Prime — whose members spend up to twice as much as non-members, according to some estimates — the company is likely to make up for any shipping-related shortfalls. It’s hard to see a mom-and-pop store pulling off a feat like this; only a company as large and coordinated as Amazon has the means to use same-day shipping as a loss-leader.
But same-day shipping doesn’t solve everything. It raises the pressure on Amazon to have an even more reliable inventory than it does now, lest an order come in and can’t be fulfilled within 24 hours.
(Rick Wilking/Reuters)
(Rick Wilking/Reuters)

The business case for 3D printing
Faster shipping has also played an important role behind the scenes, allowing companies to produce a wider variety of products with less unsold inventory. When air shipping first began to displace ocean freight in the mid-20th century, it cut weeks off of transportation times, enabling perishable goods to survive much longer trips. That trend has only accelerated as aircraft technology has improved, according to David Hummels, a Purdue University economist....MUCH MORE

"Nomura: Intervention in Syria will have little to no effect on global oil supply"

This is a day old but comports well with the sentiment in yesterday's "Trading the War of Non-intervention" where we deliberately left oil out of the asset class calls.
From City A.M:
A senior analyst at Nomura has said that a US-led military strike on Syria will have little to no disruption effect on global oil supply. Alastair Newton, senior political analyst at Nomura, said:
We cannot emphasize too strongly that, whatever option may be adopted we see little or no direct threat to global oil supply emanating from a US strike against the Syrian regime.
He drew a comparison with the movement of Brent crude oil prices in Egypt after the deposition of president Mohamed Morsi, which dropped to the lower end of the $105 to $120 per barrel range in the aftermath of the coup. This was due to “misplaced, we believe, concerns over the security of the Suez Canal”.
We therefore see sentiment, ie, perceived geopolitical risk, rather than reality (with all due respect to Henry Kissinger’s famous quote, ie, “Perception is reality”) as the primary driver of the 15% or so increase in the price of Brent over the past two months…. We therefore see recent price action around Brent in particular as an overreaction to the prospect and therefore expect the price to dip again after a strike (if not, perhaps, even before any military action relative to yesterday’s high)....MORE

Société Générale's Albert Edwards: Reiterates Crash Call: S&P to 450, Gold to $10,000

And the 10-year yield to sub-1%.
That last bit is the reason we are giving Albert pixel time on this pre-holiday Friday.
He has been one of the few analysts to correctly call rates. Unfortunately for SocGen's equity customers he, like Rosenberg and a few others, did not understand the old saying "Don't fight the Fed".
Plus, the S&P target is actually bullish compared to one he put out a couple years ago.*
From ZeroHedge:
It has been a while since Albert Edwards updated the world on his macro and market thoughts. He finally does so today with a tour de force on the crash in the emerging markets, which for him exposes the "idiocy of one of the key investment themes since the 2008 Great Recession – namely that with developed economies burdened with excessive debt and in the throes of multi-year deleveraging, investing in emerging markets would not only produce superior returns but was also less risky. Regular readers will know we have long railed against this idea, having dubbed the BRIC story a Bloody Ridiculous Investment Concept."
He links what is happening now to his "call at the end of last year that the EMs were heading for a balance of payments crisis and would see a currency debacle similar to 1997 was met with total indifference. We still find the same disregard to our call for a renminbi  devaluation."
Continuing the litany of vindication, Edwards next observes that the "global economy and markets have been far, far more vulnerable to a resumption of the 2008 crisis than the happy-clappy consensus would have us believe. At the moment, investors think that problems are isolated to a few EM countries that have allowed their current account deficits to get out of hand. I see this as the beginning of a process where the most wobbly domino falls and topples the whole precarious, rotten, risk-loving edifice that our policymakers have built."
Naturally no crash prediction will be complete without some fond reminiscences on the most historic crash of all: 1987.
The fabulously entertaining Zero Hedge website keeps running the charts showing that the evolution of bond yields and equity markets this year resembles closely what happened in 1987 (see below). Now we should all take these comparisons with a pinch of salt, but what if…

I remember the 1987 crash well. I was working at Bank America Investment Management as an economist/strategist at the time. Of course, the immediate trigger for the equity crash was the fear of US recession caused by the fear that the US would have to hike rates sharply to defend the dollar. Those fears were triggered by Germany raising rates at a time when the G6 had recently agreed to stabilise the US dollar at the February 1987 Louvre Accord, after two years of sanctioned dollar weakness. Investors got into a tizzy about recession, jumping many steps ahead of the game. But, in the wake of a run-up in US bond yields that year, equities were richly priced and so very vulnerable to recession fears, however unfounded. And then the machines took over. That couldn’t possibly happen again, or could it?

Therein lies one of the key lessons I learnt in my 30 years in the markets. It is not just to try to predict what will happen, but to second-guess what the markets fear might happen. Indeed a recession did not ensue and the 1987 crash turned into a tremendous buying opportunity.
And while Albert delves much deeper into the EM story, one extensively discussed here, it is the "next shoe" that concern Edwards the most. Namely China....MORE
May 2013
Société Générale's Albert Edwards on Copper: We Are Doomed (and that's the good news)
May 2011
Société Générale's Albert Edwards: "Many Think I am Mad..." (sub 2% Treasuries, S&P at 400 etc.) May 25, 2011
April 2013 
Hey, Société Générale's Albert Edwards is Still Alive and Still Looking For the S&P to Trade at 450 (and gold at $10,000)
Sept. 2011
Société Générale's Albert Edwards: "S&P Fall to 400 Is ‘Inevitable’" (Sept. 29, 2011)

And the string of calls he made in 2008:

June 26, 2008
Société Générale: “We see a y-shaped global recession. We are going down before looping backwards”
May 8, 2008
This Week’s Advice: Canned Food, Guns and a Ham Radio

On September 5, 2008 we posted "Meltdown"-Société Générale" which linked to Albert's research note of a couple days earlier:

***Alert****Economic and equity market meltdown imminent****Alert***
A good call.

On September 7, 2008 Fannie Mae and Freddie Mac were placed into conservatorship.
On September 14, 2008 Merrill Lynch agreed to be acquired by Bank of America.
On September 15 Lehman filed their bankruptcy petition.
On September 16 AIG became a 79.9% subsidiary of the U.S. Treasury.

Within 10 more days the Nation's largest thrift, WaMu was seized and five days later Wachovia gobbled up.

Good times, good times.

Thursday, August 29, 2013

How to Spot a Hedge Fund Fraudster

Bombast. In my experience they are all bombastic.
And stripper poles. You would not believe the number of stripper poles that crooks collect.
From Santangels Review:
This is a great article from Alpha magazine. They seem to have spotted a live “hedge fund” fraud.  The article, written by Amanda Cantrell, does an excellent job laying out the various red flags that led them to believe this hedge fund was not real. From my studies of SEC and court filings of convicted hedge fund fraud cases (here, here and here), it seems like the same handful of due diligence checks would lead one to run away from any of these frauds before even meeting the manager or studying their strategy. They are (in no particular order):
7.Something “odd” (For example, the fund in the Alpha article was supposedly managing $4.6 billion, but was accepting investments of a minimum of $30,000)...MORE
Some of the varlets who have graced our pages:
More Strip Clubs, Private Jets and Ponzis
...“Credit card and bank records show that Martin spent more than $1 million at a strip club and restaurants, nearly $1 million at elite hotels and another $1 million renting flight time on private jets,” prosecutors said.  “He purchased a fleet of luxury vehicles, donated hundreds of thousands of dollars to celebrity charity events, and hired personal security guards to accompany him in public.”...
The Dénouement: Perpetrator of $190 Million Minneapolis Foreign Exchange Ponzi Scheme Sentenced
...According to court documents made public, Cook purchased a Rolls Royce Silver Spur, a Maserati Quattroporte, a Hummer H2, a Jaguar S-Type, a Mercedes-Benz, a heavily customized Audi S8, a 60-foot houseboat (complete with a brass stripper pole), an island in Canada and a two-person submarine....
The Stripper and the Ponzi Schemer
A Holly Golightly for the Stripper-Embezzlement Age

Finally, no strippers but pretty funny.

Planktos Highlights Real Ocean/Climate Crises & Responds to Recent Misinformation Campaigns
But first, one of my favorite examples of a stock scam (I told you, I have a morbid fascination with the underbelly of the markets, it's like watching the lions approach the wildebeest at the watering hole, you don't want to see it but you can't look away):

...Peter Uttley, Equisure's chairman and a former Lloyds of London executive, took control of the company this week, assuming the chief executive post....

...Uttley said in the press release that his chairman role had been a "passive" one, but he now plans an active reorganization of the company, whose reputation has been stained by allegations that it is a scam insurance operation....

...In an unusually emotional statement to the press, sent from an Equisure board meeting Friday in London, Uttley told his version of events over the summer, which eventually led to the delisting of Equisure shares on the American Stock Exchange.

"The simple truth was consumed in the belly of deception, but now has been vomited for the world to see," Uttley began.

He then proceeded to tell a story of three men, whom he described as "liars," "cheats," and "scallywags," who worked with law enforcement officials and the press to spread false rumors about the company with the intent of buying Equisure out at 50 cents a share, a tiny fraction of the stock's trading price of $15, before AMEX suspended trading Aug. 1.

Isn't that damn fine bloviating? It's hard to research but I think Uttley et. al. got away with $100 mil....

Natural Gas Weekly Supply/Demand August 29, 2013

Mucking about in the natural gas markets is different from trading other commodities.
This is a normal day at the office:


It is probably best to check one's hubris/pride at the door because within 24 hours of saying something like:
So what to do? September's are expiring today and the next storage report is going to be more price supportive than we've seen in the last couple weeks so the best guess is up but jeez I wish we'd seen $3.61 so I wouldn't have to think.... 
you get the chart above.
From the EIA:
...At the Nymex, the price of the September 2013 contract increased slightly. The price of the September 2013 contract rose for the third consecutive report week, from $3.460 per MMBtu last Wednesday to $3.567 per MMBtu yesterday, its final day as the front-month contract. The October 2013 contract, which becomes the front month contract today, closed yesterday at $3.582 per MMBtu. The 12-month strip (the average of the 12 contracts between September 2013 and August 2014) increased from $3.771 per MMBtu last Wednesday to $3.821 yesterday.

Consumption increased during the report week, largely due to higher power demand. Total consumption in the Lower 48 states increased by 2.6% from the previous report week, according to Bentek, to 58.8 Bcf/d, but remained below the 59.6 Bcf/d average from two weeks ago. For the week, power sector consumption of natural gas (power burn) rose by 2.3 Bcf/d (8.5%) over last week to 29.1 Bcf/d, its highest level for the last five report weeks. Lower 48 power burn totaled 31.3 Bcf/d on Thursday, August 22, its highest level since July 19, 2013. It then fell to almost 26 Bcf/d over the weekend as temperatures cooled, and increased Tuesday and yesterday as temperatures recovered.

The highest weekly increase in power burn occurred in the Midwest (0.8 Bcf/d), followed by Texas and the Southeast (0.6 Bcf/d each). These increases, combined with increases in the Northeast and Midcontinent Producing region, outweighed a combined decrease of almost 0.6 Bcf/d, which primarily occurred in the Southwest.

This week’s 2.3 Bcf/d increase in total Lower 48 power burn, plus a 0.3 Bcf/d week-on-week increase in natural gas exports to Mexico at Texas border points, offset a combined 0.9 Bcf/d weekly decrease in industrial consumption, residential/commercial consumption, and exports to Mexico at Southwest border points.

Supply increased slightly during the report week. Total supply increased by 0.2% to 70.5 Bcf/d, its highest level since the last week of July. Dry gas production, imports from Canada and imports of LNG all rose week-on-week, by 0.1%, 1.5% and 8.0%, respectively. Imports from Canada increased in the West and Northeast, but decreased in the Midwest....MUCH MORE

"India might buy gold from citizens to ease rupee crisis"

$1411.70 last, up six nine bucks from the day's low.

We've been amazed by the Indian precious metals market for some years now. From 2007's "EU Emission Caps, Kyoto and Three Ancient Civilizations":
...As a side note, in December 1979, as silver was making its historic run, an old Jewish trader told me he was lightening up on Ag.

When I asked why he said "I hear the Indian ladies are taking their bracelets off and they've been trading it longer than I have".
Okay, make that some decades.

We and the poster of our second link below were paying attention to the Indian gold market last winter when it was just a parochial issue between she, me and a billion Indians, more after the (second) jump.
Now the story has moved far beyond the shiny stuff to the whole economy.

A Reuters exclusive:
India is considering a radical plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports and take some heat off the plunging currency.

A pilot project will be launched soon, a source familiar with the Reserve Bank of India's (RBI) plan told Reuters, although the idea was met with some scepticism.

India has the world's third-largest current account deficit, which is approaching nearly $90 billion, driven in a large part by appetite for gold imports in the world's biggest consumer of the metal. That has played a major role in driving the rupee to a record low.

With 31,000 tonnes of commercially available gold in the country - worth $1.4 trillion at current prices - diverting even a fraction of that to refiners would sate domestic demand for the metal. India imported 860 tonnes of gold in 2012....MORE
From FT Alphaville:

The golden rupee
The Indian rupee’s plunge continues.

As the FT reported on Wednesday, consensus opinion is that the weakness is connected to India’s growing current account deficit and unimpressive attempts thus far to bring it back to reasonable levels.

But Bloomberg on Wednesday alluded to another interesting connection: India’s attempts to suppress gold consumption. For, as the currency weakens in international terms, the greater the cost of gold also becomes for Indians. Indeed, as Bloomberg noted, the price of gold has now hit a record price in rupee terms, threatening jewellery demand in the world’s largest gold consuming country....MUCH MORE
Indian Central Bank Issues Guidelines on Dematerialized Gold in Effort to Reduce Need to Import Physical
As Indian Central Bank Restricts Gold Imports Spot Falls to a Three Week Low
Reserve Bank of India Launches Inflation Bonds to Reduce Demand for Gold
Largest (English language) Paper in Largest Gold Market: Time to Sell Gold Not Buy
As Indian Central Bank Restricts Gold Imports Spot Falls to a Three Week Low
"No Gold Rush in India After Latest Plunge"
Ahead of Hindu Holy Day Warnings on Gold Purchases and Discounts on Coins
"Chatter That India Will Ask IMF For Help"

And some good news:
The Astounding Decline in India's Birthrate

"Natural-Gas Futures Reverse Course After Inventory Data"

Following up on "Natural Gas Storage Tealeaves for 8/29/13".
Front futures $3.5180, down from the $3.6550 high.
From the Wall Street Journal:

Natural-gas futures reverse course after EIA inventory data
--U.S. inventories rose 67 billion cubic feet last week
--Analysts had predicted 63-bcf rise
   By Dan Strumpf 
NEW YORK--Natural-gas futures turned sharply lower after the government reported a bigger-than-expected increase in U.S. inventories, suggesting demand for the fuel was weaker than forecast last week.

Natural gas for October delivery recently fell 4.7 cents, or 1.3%, to $3.535 a million British thermal units on the New York Mercantile Exchange.

The contract was earlier at a one-month high of $3.655, but turned sharply lower after the 10:30 a.m. EDT report from the Energy Information Administration...MORE 
The Energy Metro editors forecast was +66 Bcf.

From the EIA:
Weekly Natural Gas Storage Report


Working gas in storage was 3,130 Bcf as of Friday, August 23, 2013, according to EIA estimates. This represents a net increase of 67 Bcf from the previous week. Stocks were 235 Bcf less than last year at this time and 45 Bcf above the 5-year average of 3,085 Bcf. In the East Region, stocks were 107 Bcf below the 5-year average following net injections of 49 Bcf. Stocks in the Producing Region were 95 Bcf above the 5-year average of 978 Bcf after a net injection of 16 Bcf. Stocks in the West Region were 58 Bcf above the 5-year average after a net addition of 2 Bcf. At 3,130 Bcf, total working gas is within the 5-year historical range....MORE

"Natural Gas Storage Tealeaves for 8/29/13"

From yesterday's"Natural Gas: So effing Close to the Target":
So what to do? September's are expiring today and the next storage report is going to be more price supportive than we've seen in the last couple weeks so the best guess is up but jeez I wish we'd seen $3.61 so I wouldn't have to think....
I got to put on my obsfucating academic hat and say "price supportive".
$3.6240 last.

From Energy Metro Desk via the CME:

Previewing the Energy Information Administration's 8/15/13 report.
Each week, we poll 40 professional storage forecasts for our weekly Natural-Gas Storage Box Scores (as seen in each bi-weekly issue of Energy Metro Desk*). This is North America's biggest and most comprehensive natural-gas storage survey and report.

Editors Forecast This Week: +66 Bcf
Average: +63.4 Bcf
Median: +63 Bcf
Range: +57 to 70 Bcf

Natural Gas Storage Tealeaves for 8/29/13
Once EIA's 57 Bcf surprise we were treated to last week had a chance to sink in a bit, we had a fairly good sense that this week would feature a small, semi-corrective surprise as well. The Early View report from last Friday featured a very wide range (55 to 77 Bcf) and that report's standard deviation was again unseasonably high at 6.2. The week before (another surprise report week) we saw a SD of 6.5. Weather was a little funny last week as well; the temperature drop-off in key regions was significant. But, as this week wore on, a different picture emerged. First, the range tightened up fairly quickly to a fairly tight 57 to 70 Bcf; and, the range between the three categories we track really tightened up: we note a very tight 0.9 Bcf spread between the three categories. This week's standard deviation is a low 3.1 - the lowest we've seen in 7 weeks. So, taken together, we'd say the EIA should come in right with the consensus at slightly over 63 Bcf. Our EMD Average was 63.4 and the average among the six big surveys we track was 63.3. We also note that our EMD All-Stars forecast has been tearing it up lately. All Stars forecast is at 62 this week. The Bentek Flow Model came in at 62 Bcf this week; though its S/D Model was much higher at 69 Bcf. Bentek sees high-side risk. On the other hand, the good folks at Genscape (at 65 Bcf) see risk to the low side of their forecast. The editor (at 66 Bcf) was hinting at low 60's coming into the week, but, eventually added a few to the mix to make up for EIA's short suit in last week's report. We think 61 to 66 Bcf should be right on the money; no surprises are anticipated. ** One final shop note for the week. We decided to toss out the EIA's 96 Bcf surprise report number from August 8, and instead we've accepted the would-have-been build of 82 Bcf. It was fairly well argued to us by several analysts this week that the surprise that occurred due to a paper reclassification change is impossible to anticipate or track (unlike a correction or revision) and so weekly boxscores should not be penalized. So, we updated the EIA report number and adjusted everybody's score. -the editor

Weather Tealeaves
Forecast Courtesy of the Commodity Weather Group (
Thought of the Day: European Drops the Rebound
The big story this morning is that instead of rebounding another surge of warming into the Midwest later next week behind a transient cool push, the pattern stays on the cooler side overall on the guidance consensus, leading the way to more significant cooler changes for the Midwest and East through the 6-15 day....MORE
Here's this morning's action:

Big Changes: "Girding for battle as electronic derivatives trading revived"

From Reuters:

The $300 trillion privately traded U.S. derivatives markets could be on the verge of the biggest change in their 30-year history if investors embrace new electronic trading platforms that would reduce the market dominance of large banks.

There is newfound optimism among many investors that rules to require swaps to trade electronically will open the markets to new competition, reduce trading costs, and bring price transparency.

Derivatives markets are among the largest in the world, but they remain a market where investors negotiate trades with dealers, instead of allowing investors to trade anonymously with each other. Trading is sometimes infrequent and typically in very large sizes.

Bank exposure to derivatives was a major contributor to the financial crisis that brought down Lehman Brothers and nearly destroyed several other firms. After the financial crisis peaked in 2008, some expected a swift move to exchanges and away from the price opacity of the bank-dominated model.

It didn't happen. Several credit derivatives trading platforms were readied for launch but none succeeded. A European antitrust investigation and a mounting number of lawsuits allege that banks killed a venture planned by Citadel Investment Group and CME Group, and others like it, to protect lucrative revenues they earn from keeping the market private.

Banks have long acted to maintain their intermediary role in fixed income and foreign exchange markets and some are likely to continue to resist trading models that increase competition....MORE

Child prodigy Carson Huey-You,11, starts freshman year at college

I hate kids.
He's studying physics.

Here's string theorist Luboš Motl, where I first saw the story:
...He's been reading approximately since his 2nd birthday. He knew the five basic mathematical operations – addition, subtraction, multiplication, division, and the Feynman path integral – a year later....

...At any rate, 11 years is a wonderful age to start with quantum physics. I would guess that it's low enough age so that if you start to learn related physics insights at this age, you are more likely to avoid Bohmian, Everettian, GRWian, material collapsian, and other delusions denying some fundamental and universal postulates of quantum mechanics....
I hate adults too.

I feel old.

16-year old Does Science Project, Finds Possible Cure for Cystic Fibrosis
What Did Your Kid Do Yesterday? "17-Year-Old Girl Wins $100,000 Award for Cancer Research"
10 Perfect ACT Scores From THE SAME HIGH SCHOOL

Trading the War of Non-intervention

This was the headline at the Financial Times yesterday-"Barack Obama marshals his forces for war of non-intervention in Syria".


Following up on Wednesday morning's "If The Markets Are Moving on War Get Ready to Reverse Every Move From Yesterday":
...Yesterday gold was up as the real-rate got clobbered by a nine BP move in the 10-year, the dollar was strong and stocks were weak.
Reverse 'em all. Gold currently $1425.90 up another $5.70, EUR/USD 1.3343, S&P futures 1,628.00 , 10 year yield 2.721 off another 3%....
Keep calm and Carry on.

Gold $1412.60
EUR/USD 1.3265
S&P futures 1,637.25
10-year yield 2.782

That's four-for-four. 

You may have noticed the complete lack of thoughts on oil.
I don't have a clue.


Wednesday, August 28, 2013

Isaac Asimov's Not Bad, Pretty Good, Alright Astonishing 1964 Predictions of the World in 2014

Dude was a freak of nature.
Wrote five hundred six books.

From BuzzFeed:
In 1964, famed science fiction writer Isaac Asimov ventured a guess at what you might find if you set foot inside the 2014 World’s Fair. Using his gift for envisioning future technology, Asimov’s predictions from 50 years out are both stunningly accurate and perhaps a little bit depressing. Here’s a look at what he got right....MUCH MORE
A couple of the predictions that pop out:
“By 2014, only unmanned ships will have landed on Mars, though a manned expedition will be in the works and in the 2014 Futurama will show a model of an elaborate Martian colony”
"By 2014, only unmanned ships will have landed on Mars, though a manned expedition will be in the works and in the 2014 Futurama will show a model of an elaborate Martian colony"
“Synchronous satellites, hovering in space will make it possible for you to direct-dial any spot on earth”
"Synchronous satellites, hovering in space will make it possible for you to direct-dial any spot on earth"


He ends the essay with:

"Indeed, the most somber speculation I can make about A.D. 2014 is that in a society of enforced leisure, the most glorious single word in the vocabulary will have become work!"

Natural Gas: So effing Close to the Target

$3.4980 last.
Long time readers know we've been babbling about "the futures could trade up to $3.60 (from last week's 3.129 spike bottom) and still be in a downtrend" blah, blah, blah since the cycle low on August 8.
Well, last night the futures traded at $3.5890:

So what to do? September's are expiring today and the next storage report is going to be more price supportive than we've seen in the last couple weeks so the best guess is up but jeez I wish we'd seen $3.61 so I wouldn't have to think.

Natural Gas: Gap Filled, Time for a Heat Wave Revelation
Natural Gas: Looking for Another Leg Lower After the Heatwave
Natural Gas: EIA Weekly Natural Gas Storage Report--Injections Far Under Estimates
Natural Gas: Today's 96 BCF Injections Would Have Been 82 BCF But For Reclassification
UPDATED--Natural Gas: EIA Storage report August 8, 2013: Futures rocked, Recover

How Do You Value Value?

What is the most valuable automobile in the world?

I bring this up because of a post at FT Alphaville: "What is the value of unique?".
Izabella intro's with a quick sketch of StarTrek NG's Data and his uniquity.
She follows up with:
...But it’s the uniqueness factor which really is worth some consideration at this point, due to the break-neck speed at which the art of copying is now progressing.

Tyler Cowen, for example, linked to a story this week about a new 3D copying technology which is being used by the Van Gogh museum. It suggests that the differentiating line between a reproduction and an original is getting ever smaller. The positive side-effect being the greater ubiquity of beautiful objects in the world:
Each reproduction is priced £22,000 – somewhat more than the cost of a postcard or poster. But the museum is hoping to increase access to pictures which, if they were sold, would go for tens of millions of pounds to Russian oligarchs or American billionaires.
Cowen is skeptical that he can be fooled by the technology. Yet even if that is the case for now, it does seem unlikely that the technology won’t improve with time. Some time soon it is highly likely that the naked eye will no longer be able to differentiate between reproductions and originals, and that the only way to know for sure which is which will be to carbon date or test the materials microscopically....MORE
Which reminded me of a few stories.
In July a Mercedes W196 established the auction world record, selling for $30 million which included a 12% commission for the auctioneer,  Bonham's.
A couple weeks ago a Ferrari  NART Spyder was auctioned at $27.5 million establishing U.S. and Ferrari auction records.

Then there are the private sales. The current world record price for a car is $35 million for a Ferrari 250 GT sold to Craig McCaw in 2012 which topped the $32 million paid for a 250 GT earlier that year.

There is another 1962 250 GT currently on offer at the UK's Ed Classics for $41 million.

My best guess at the most valuable?
In 2011 we posted "The Most Valuable Automobile in the World" which is insured for $57 million.
What is it?

A Rolls-Royce Motor Car, of course.

Here's Chassis no. 60551, registered AX 201:

I highlight the plate number because you if you look you will see this car in locations around the world. The owners are Bentley (Volkswagen) rather the expected Rolls-Royce (BMW) and Bentley runs the car as a goodwill ambassador, it is the Forrest Gump of the collector car world. This is the Silver Ghost.

And how does this tie in to Izabella's post?
There is another Rolls-Royce, AX198:

which is a recreation of AX201.

The auctioneer, RM Auctions, described the vehicle in 2010:
- Extraordinary eight-year recreation of the Barker Roi-de-Belges, the famed first Silver Ghost
- 1923 chassis with circa-1913 Barker Cabriolet de Ville body
- One of only 10 known “PK” Silver Ghost chassis in existence today
So here you have a car, a Rolls-Royce, a PK, very, very rare in its own right and when it went up for auction it sold for, drumroll please:


Not quite $57 million.

Izabella goes on to say:
...Of course, if you can convince more people to agree that your version is the best version, this can give your object superior value.

But, at its heart, this is an unstable sort of value, for it’s based on fad and cult-like, or even bubble-like, social responses and confidence tricks. It’s value that can evaporate as soon as the will and belief of the crowd is distracted by something else, or as soon as someone can tell a better narrative. Which is why the value of objects and resources which hold little utility, such as gold, tulips and art, are entirely mood-related. Their value, at best, is best explained by the Emperor’s New Clothes effect as well as boom and bust behaviour....
And I'm hard pressed to disagree.
I do wish to hell that I had been aware of the 2010 auction, that seems like value.

With either car though I'm sure that the old slogan is still true:
"The quality remains long after the price is forgotten." 
-Sir Henry Royce

Things You Don't See Every Day: "Billionaire philanthropist Pritzker announces she is now a woman"

From the Chicago Sun-Times:
The billionaire retired U.S. Army colonel James Pritzker has announced he is a woman — Jennifer Natalya Pritzker.

According to Crain’s Chicago Business, a memo dated Aug. 16 and sent to the Pritzker Military Library and Tawani Enterprises announced Pritzker’s name officially had been changed.

“This change will reflect the beliefs of her true identity that she has held privately and will now share publicly,” the memo stated.

“Pritzker now identifies herself as a woman for all business and personal undertakings.”...MORE

Cass Sunstein and the The Storrs Lectures at Yale: Behavioral Economics and Paternalism

This is the second post (here's the first) in what will end up being a series on Mr. Sunstein and his belief that government must decide any and all aspects of your life. Mr. Sunstein is President Obama's former regulatory czar and is married to Samantha Power, the U.S. Ambassador to the United Nations.
She is a war monger and the prime influencer behind the President's decision to muck about in Syria and North Africa.

I'm trying to get a feel for what the happy couple's pillow talk must be like and discover if there is a way to make money off these folks.

Via the Social Science Research Network:

The Storrs Lectures: Behavioral Economics and Paternalism

Cass R. Sunstein

Harvard Law School

November 29, 2012

Yale Law Journal, Forthcoming

A growing body of evidence demonstrates that in some contexts and for identifiable reasons, people make choices that are not in their interest, even when the stakes are high. Policymakers in a number of nations, including the United States and the United Kingdom, have used the underlying evidence to inform regulatory initiatives and choice architecture in a number of domains. Both the resulting actions and the relevant findings have raised the question whether an understanding of human errors opens greater space for paternalism. Behavioral market failures, which occur as a result of such errors, are an important supplement to the standard account of market failures; if promoting welfare is the guide, then behavioral market failures should be taken into consideration, even if the resulting actions are paternalistic. A general principle of behaviorally informed regulation – its first law – is that the appropriate responses to behavioral market failures usually consist of nudges, generally in the form of disclosure, warnings, and default rules. While some people invoke autonomy as an objection to paternalism, the strongest objections are welfarist in character. Official action may fail to respect heterogeneity, may diminish learning and self-help, may be subject to pressures from self-interested private groups (the problem of “behavioral public choice”), and may reflect the same errors that ordinary people make. The welfarist arguments against paternalism have considerable force, but choice architecture, and sometimes a form of paternalism, are inevitable, and to that extent the welfarist objections cannot get off the ground. Where paternalism is optional, the objections, though reasonable, depend on empirical assumptions that may not hold in identifiable contexts. There are many opportunities for improving human welfare through improved choice architecture. 

Free SSRN download (60 page PDF)

Probability: Identifying Pascal Scams

From Unenumerated:
Beware of what I call Pascal's scams: movements or belief systems that ask you to hope for or worry about very improbable outcomes that could have very large positive or negative consequences. (The name comes of course from the infinite-reward Wager proposed by Pascal: these days the large-but-finite versions are far more pernicious).  Naive expected value reasoning implies that they are worth the effort: if the odds are 1 in 1,000 that I could win $1 billion, and I am risk and time neutral, then I should expend up to nearly $1 million dollars worth of effort to gain this boon. The problems with these beliefs tend to be at least threefold, all stemming from the general uncertainty, i.e. the poor information or lack of information, from which we abstracted the low probability estimate in the first place: because in the messy real world the low probability estimate is almost always due to low or poor evidence rather than being a lottery with well-defined odds:

(1) there is usually no feasible way to distinguish between the very improbable (say, 1 in 1,000) and the extremely improbable (e.g., one in a billion). Poor evidence leads to what James Franklin calls "low-weight probabilities", which lack robustness to new evidence. When the evidence is poor, and thus robustness of probabilities is lacking, then it is likely that "a small amount of further evidence would substantially change the probability. "  This new evidence is as likely to decrease the probability by a factor of X as increase it by a factor of X, and the poorer the original evidence, the greater X is.  (Indeed, given the nature of human imagination and bias, it is more likely to decrease it, for reasons described below)....MORE

"The Numbers Behind BlackBerry’s Patent Goldmine" (BB.T)

Going pretty far afield with this but there may be a bucko or two here. Plus, it's a lot cheaper than when Mr. Watsa was buying.
From the Wall Street Journal's Corporate Intelligence blog:
Analysts at Scotiabank today shared their take on BlackBerry’s patent portfolio, which will be worth serious money even if the mobile device maker never manages to catch up to the competitors that have eclipsed it in recent years. If the company is serious about ideas of going private, this is where the valuation game gets interesting.
The market currently values BlackBerry at just under $5.5 billion, and Scotiabank says the patents alone could make up a big chunk of that, even if a very conservative valuation method is applied:
We have been suggesting a value of roughly $2.25B based on a discount to what was paid for the NortelNRTLQ 0.00% patents, given the sale of those patents occurred at a particularly opportune time. Again, those patents sold for roughly $1M each and the Motorola patents sold for roughly $735K. Given that BlackBerry maintains roughly 5,136 patents, to get to our $2.25B number the patents would have to sell for $438K each or a 40% discount to the Motorola patents and an almost 60% discount to the Nortel patents
Why such a conservative valuation? Part of it is timing: When the Nortel patent portfolio was sold for $4.5 billion in mid-2011, the mobile industry was in the midst of a frenzy of patent litigation, and the winning consortium of buyers, which included AppleAAPL -2.94%, MicrosoftMSFT -2.68% and BlackBerry, were willing to pay top dollar in an auction where, as the WSJ reported at the time, “the starting offer of $900 million was considered remarkable.”...MORE

So the Big banks Were Also Rigging Currency Trading

From Bloomberg:

Currency Spikes at 4 P.M. in London Provide Rigging Clues
In the space of 20 minutes on the last Friday in June, the value of the U.S. dollar jumped 0.57 percent against its Canadian counterpart, the biggest move in a month. Within an hour, two-thirds of that gain had melted away.

The same pattern -- a sudden surge minutes before 4 p.m. in London on the last trading day of the month, followed by a quick reversal -- occurred 31 percent of the time across 14 currency pairs over two years, according to data compiled by Bloomberg. For the most frequently traded pairs, such as euro-dollar, it happened about half the time, the data show.

The recurring spikes take place at the same time financial benchmarks known as the WM/Reuters (TRI) rates are set based on those trades. Now fund managers and scholars say the patterns look like an attempt by currency dealers to manipulate the rates, distorting the value of trillions of dollars of investments in funds that track global indexes. Bloomberg News reported in June that dealers shared information and used client orders to move the rates to boost trading profit. The U.K. Financial Conduct Authority is reviewing the allegations, a spokesman said.

“We see enormous spikes,” said Michael DuCharme, head of foreign exchange at Seattle-based Russell Investments, which traded $420 billion of foreign currency last year for its own funds and institutional investors. “Then, shortly after 4 p.m., it just reverts back to what seems to have been the market rate. It adds to the suspicion that things aren’t right.”

Global Probes
Authorities around the world are investigating the abuse of financial benchmarks by large banks that play a central role in setting them....MUCH MORE

If The Markets Are Moving on War Get Ready to Reverse Every Move From Yesterday

That's the lesson of war moves. Unless you were trading the Denarius/Shekel in A.D. 70 and got caught on the wrong side.
Yesterday gold was up as the real-rate got clobbered by a nine BP move in the 10-year, the dollar was strong and stocks were weak.

Reverse 'em all. Gold currently $1425.90 up another $5.70, EUR/USD 1.3343, S&P futures 1,628.00 , 10 year yield 2.721 off another 3%.

"Analysis: AllThingsD At Crossroads - Founding Team Wants Buyout From Dow Jones"

A little who's who and what's what via Silicon Valley Watcher:
JP Mangalindan and Dan Primack at Fortune have produced an excellent article on tech gadget and news site AllThingsD and the discussions between owner Dow Jones and the founding team of Walt Mossberg and Kara Swisher.

Here are the main points: AllThingsD nears split with Dow Jones - Fortune

- Dow Jones owns AllThingsD but the contract with Walt Mossberg and Kara Swisher will expire at the end of this year. The two co-executive editors are trying to gain ownership of the property.
AllThingsD is working with investment bank Code Advisors to find outside investors at an enterprise value that could exceed the $25 million that AOL (AOL) reportedly paid in 2010 for rival site TechCrunch. One source says that the asking price is between $10 million and $15 million for a 25% or 30% stake in the company.
- They don't want VC money because of the conflict of interest afflicting other tech news sites such as Pando Daily, GigaOm, and VentureBeat. Their representatives have approached several large media companies but there could be conflicts of interest there, too.
Dow Jones officially owns the AllThingsD brand, website and content. It also manages the site's ad sales, but only Mossberg is an actual Dow Jones employee. Swisher and the rest of her AllThingsD editorial colleagues are contractors paid via an independent limited liability company.
One scenario could involve the AllThingsD team leaving to start an independent venture with a new name, while Dow Jones retains the AllthingsD brand.
Foremski's Take: Walt Mossberg and Kara Swisher should have started out on their own ten years ago. However, large salaries of at least $500K for Walt Mossberg, proved too comfortable to leave. Kara Swisher and other staffers are paid competitive salaries by an independent company....MORE

"Economics is Mostly a Policy Debate Masquerading as a Scientific Debate"

That's the early leader for the prestigious Climateer Line of the Day Award.
Story at Pragmatic Capitalism.

Tuesday, August 27, 2013

Bet You Didn't Think You Were Going To See A Painting Of Putin in Women's Underwear Brushing Medvedev's Hair

From the Wall Street Journal's Speakeasy blog:
A painting depicting politicians Vladimir Putin and Dmitry Medvedev in women’s underwear was one of the items Russian authorities confiscated Monday upon raiding a newly-opened St. Petersburg art gallery that had shown solidarity with Russia’s gay-rights movement.

The off-beat gallery, known as the Museum of Authority, opened on August 15 with an inaugural exhibit called “The Rulers” that featured paintings by artist Konstantin Altunin of public figures such as President Barack Obama, former Libyan leader Moammar Gadhafi and Mr. Putin. The idea of the museum had been to put on exhibits relating to various authorities, said founder Alexander Donskoi....MORE
HT: Inagist who titled their post "Not the Mona Lisa"

The Paradox of Wearable Technology: Does this Computer Make My Butt Look Fat?

From MIT's Technology Review:
Can devices like Google Glass augment our activities without ­distracting us from the physical world?
Ever talk to someone at a party or conference reception only to discover that he or she is constantly scanning the room, looking this way and that, perhaps finding you boring, perhaps looking for someone more important? Doesn’t the person realize that you notice?

Welcome to the new world of wearable computers, where we will tread uneasily as we risk continual distraction, continual diversion of attention, and continual blank stares in hopes of achieving focused attention, continual enhancement, and better interaction, understanding, and retention. Google’s latest hardware toy, Glass, which has received a lot of attention, is only the beginning of this challenge.
wearable computing illustration
Actually, it isn’t the beginning—this stuff has been around for over a decade. In my former roles as a cognitive scientist and vice president of technology at Apple, and now as a management consultant in product design, I visit research laboratories at companies and universities all over the world. I’ve experienced many of these devices. I’ve worn virtual-reality goggles that had me wandering through complex computerized mazes, rooms, and city streets, as well as augmented realities where the real world was overlaid with information.

And yes, I’ve worn Google Glass. Unlike “immersive” displays that capture your full attention, Glass is deliberately designed to be inconspicuous and nondistracting. The display is only in the upper right of the visual field, the goal being to avoid diverting the user’s attention and to provide relevant supplementary information only when needed.

Even so, the risk of distracting the user is significant. And once Google allows third-party developers to provide applications, it loses control over the ways in which these will be used. Sebastian Thrun, who was in charge of Google’s experimental projects when Glass was conceived, told me that while he was on the project, he insisted that Glass provide only limited e-mail functionality, not a full e-mail system. Well, now that outside developers have their hands on it, guess what one of the first things they did with it was? Yup, full e-mail....MORE
Also from Technology Review: The Paradox of Wearable Technology: I don't look too dorky do I?

A Wearable Computer More Powerful than Glass, And Even More Awkward
Meta founder Meron Gribetz
 Steve Mann, a pioneer in the field of wearable computing, has been touting the benefits of head-mounted computers for decades. Now, the University of Toronto professor is also lending his weight and experience to a company hoping to loosen Google Glass’s grip on the nascent market with a different take on computer glasses that merges the real and the virtual.

The company, Meta, is building computerized headwear that can overlay interactive 3-D content onto the real world. While the device is bulky, Meta hopes it can eventually slim it down into a sleek, light pair of normal-looking glasses that could be used in all kinds of virtual activities, from gaming to product design. The company, which was founded by Meron Gribetz and Ben Sand, counts Mann as its chief scientist. One of Mann’s graduate students, Ray Lo, serves as chief technical officer. The company just completed a stint with Y Combinator, the successful startup accelerator based in Mountain View, California....MORE

Citigroup on 3D Stocks: Market to Triple in 5 Years (DDD; SSYS)

After spiking yesterday the stocks are giving it back, DDD down 4.39% at  $49.62 and SSYS down 4.99% at $104.55.
From Barron's Tech Trader Daily:

Citigroup: 3D Printing Mkt at $6B by ’18; Launches 3D Systems, Stratasys at Buy
3-D printing companies are printing up returns for investors. Shares prices were firmly in the green after Citigroup initiated coverage of 3D Systems (DDD) and Stratasys (SSYS) with Buy ratings.

In a note published today, analyst Kenneth Wong argued that the industry is “ready to push beyond prototyping” and sits on the cusp of “much broader adoption across more upstream production applications and the consumer end market.” He predicted the current $2 billion market for the technology could triple in size in the next five years.

Wong sees 3D Systems’ stock price rising to $60 in the next 12 months and sees the company earnings 98 cents a share this year. He writes:
…We believe DDD’s product line is best positioned to capitalize on all three potential market opportunities (Prototyping, Manufacturing, Consumer). We expect meaningful margin expansion from growing recurring revenue mix to drive earnings growth in excess of 30%. DDD’s numbers already reflect years of investing in low-priced consumer market giving margins a clearer upward trajectory.
As for Stratasys, Wong sees the stock reaching $125 a share and expects the company to earn $1.89 a share this year....MORE

Hitler is Short Tesla and Not Happy (TSLA)

The stock is changing hands at $167.73 up $3.51 with the larger market indices down between 1/2 and 1%.

This is not the best of the Der Untergang parodies, Der Führer would not be impressed.

HT: ZeroHedge

Much better is 2008's "Hitler gets a margin call".

If Gawker Is Writing About Stock Bubbles We Probably Aren't In One

Although the story told about Joe Kennedy deciding to bail on the market in 1929 when his shoeshine boy started giving him tips is most likely apocryphal* the psychology lesson is probably true.
As is the inverse.
From the Columbia Journalism Review:

Bubbles, bubbles everywhere
Stocks, like housing, are not detached from realistic prices
Press hysteria about another housing bubble seems to have cooled off a bit in the last few months. Which is good, since we’re not in another housing bubble.

But once you become convinced that we’re in a bubble, you start seeing them everywhere. Take this post by Gawker’s Hamilton Nolan headlined “Bubble Watch: Ridiculous Stock Values Edition.”
Which ridiculous stock values? Nolan quotes a Bloomberg report on growing earnings multiples:
The benchmark gauge for U.S. equities has risen 14 percent relative to income over the past 12 months to 16 times earnings, according to data compiled by Bloomberg. Valuations last climbed this fast in the final year of the 1990s technology bubble, just before the index began a 49 percent tumble. The rally that started in March 2009 has now outlasted the average gain since 1946, the data show.
And adds this:
A replay of the year just before the collapse of the tech bubble, and a rally that is, historically speaking, ripe for its end. What could go wrong?
Now, it’s somewhat interesting that P/E ratios have risen so fast. But the pace of an increase in average P/E doesn’t in and of itself tell us much of anything about a bubble. For that, you have to look at the P/E multiple itself.

And it’s at 16 times earnings, which is hardly hair-raising. That’s right at its historical average through bull runs and busts.

It’s still well below the average P/E ratio for bull markets, as Bloomberg points out in the very same story:
The average multiple during bull runs since 1957 has been 17.4 times reported profits, about 10 percent higher than today’s ratio, data compiled by Bloomberg show. Advances ended at 20.2 times earnings on average, 26 percent higher than the present level.
Price increases—even large, rapid ones—don’t necessarily mean something is a bubble. They have to be accompanied by investor expectations that have become detached from fundamentals....MORE
*This Bernard Baruch story rings truer:
...“Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day’s financial news as he worked with rag and polish. An old beggar who regularly patrolled the street in front of my office now gave me tips and, I suppose, spent the money I and others gave him in the market. My cook had a brokerage account and followed the ticker closely. Her paper profits were quickly blown away in the gale of 1929."... 
Kennedy had a very different view of Wall Street, exemplified by this quote:
"It's easy to make money in this market," said Kennedy, famously, to an associate. "We'd better get in before they pass a law against it."...
And  from our June '07 post "Robert Kennedy Jr., Global Warming and Wall Street":
...Already a wealthy man Joe Kennedy had another Wall Street trick up his sleeve, a classic pump-and dump. In 1929 he and some other rascals got together to run the .com of the day, Radio Corporation of America.

What a run it was! The pool picked up $5 million in ten days. My BLS inflation calculator says that's a bit over $60 million today (although the PBS special linked below says $100 million).

When the question arose as to who should manage the pool the answer was easy. Who better than the specialist in the stock, Michael J. Meehan! PBS did a good job on their show "The Crash of 1929", even interviewing Meehan's grandson. Here are some of my links, Senate Hearings (4 page PDF), 1948 SEC chief counsel memo on the Act of '33 (5 page PDF), Colliers story on the early SEC....

Hurricane Watch: 1st August With Zero Hurricanes Since 2002, Here's September's Outlook

Historically the day with the highest number of hurricanes is September 10 with a pretty quick drop-off to the end of the season.
From Wunderblog:
...An active weather pattern coming to the Tropical Atlantic
It's been an unusually quiet August for hurricane activity in the Atlantic, and if we finish the month without a hurricane, it will mark the first year since 2002 without an August hurricane. However, the quiet weather pattern we've been blessed with is about to come to an end, as conditions favorable for hurricane formation move into place for the last few days of August and the first week of September. The big guns of the African Monsoon are firing off a salvo of African tropical waves over the next two weeks that will find the most favorable conditions for development that we've seen this year. While there is currently a new outbreak of dry air and dust from the Saharan Air Layer (SAL) over the Eastern Atlantic, the latest European model forecast calls for a reduction in dry air and dust over the Tropical Atlantic during the 7 - 14 day period, accompanied by low wind shear. The Madden Julian Oscillation (MJO), a pattern of increased thunderstorm activity near the Equator that moves around the globe in 30 - 60 days, has begun a new active phase. The most active part of the MJO has not yet crossed into the Atlantic, but is expected to do so during the period 7 - 14 days from now. The MJO will bring rising air that will aid strong thunderstorm updrafts and thus tropical storms--and their subsequent intensification into hurricanes. According to Dr. Michael Ventrice, an MJO expert at WSI, Inc., the latest run of the GFS model predicts that this MJO event will be the 3rd strongest in the Western Hemisphere since 1989. During the last four comparable strong MJO events, 68% of all the tropical depressions that formed during these events (21 out of 31 storms) intensified into hurricanes. The MJO will likely continue to support Atlantic hurricane activity through September 15. The MJO is then expected to progress into the Western Pacific for the last half of September, which would likely bring sinking air over the Atlantic and a quieter portion of hurricane season.

Figure 2. Saharan Air Layer analysis at 8 am EDT on August 26, 2013. A burst of dust and dry air had emerged over the Eastern Atlantic, along with a new tropical wave to watch just south of the driest air. Image credit: University of Wisconsin CIMMS and NOAA/HRD.
The first tropical wave to watch is one that came off the coast of Africa on Sunday. This disturbance is moving westward at 10 - 15 mph, has a modest amount of spin, but is relatively thin on heavy thunderstorm activity. It has not yet earned status as an area of interest ("Invest") by NHC, but they are giving the wave a 30% chance of developing by Saturday....MORE