The 2014 Atlantic hurricane season is officially underway on Sunday,
June 1. What will this year's hurricane season bring? My top six
questions for the coming season:
1) When will the first "Invest",
tropical depression, and named storm of the 2014 Atlantic hurricane
season form? We have a chance of all three of these events occurring in
the Gulf of Mexico during the first week of hurricane season, though the
models are currently hazy about this. An area of disturbed weather in
the Eastern Pacific located a few hundred miles south of Southeast
Mexico is forecast to move slowly northwards towards the Gulf of Mexico
Sunday through Tuesday. In their 8 am EDT Friday Tropical Weather Outlook, NHC gave this system a 50% chance of developing into a tropical depression or tropical storm by Wednesday. The 06Z Friday run of the GFS model
predicts that this disturbance will make landfall in Southeast Mexico
on Tuesday, then spread moisture northwards over the Gulf of Mexico late
in the week. The model predicts that wind shear will be light to
moderate over the Gulf late in the week, potentially allowing the
disturbance to spin up into a tropical depression. The 00Z Friday run of
the European model has a different solution, predicting that the
Eastern Pacific tropical disturbance will remain south of Mexico through
Friday.
However, the model suggests that moisture streaming into the
Gulf of Mexico late in the week will be capable of spawning an area of
low pressure with the potential to develop in the Southern Gulf of
Mexico's Bay of Campeche. In any case, residents of Southeast Mexico and
Western Guatemala appear at risk to undergo a multi-day period of very
heavy rainfall capable of causing flash flooding and dangerous mudslides
beginning as early as Monday. This disturbance may cross over Mexico
and into the Gulf of Mexico and create the Atlantic's first "Invest"
with the potential to develop late in the week, sometime June 5 - 7.
Figure 1.
Satellite image taken at 7:45 am EDT Friday May 30, 2014, showing an
area of disturbed weather a few hundred miles south of Southeast Mexico.
Will this disturbance cross over into the Gulf of Mexico and create the
Atlantic's first "Invest" of 2014 late in the week? Image credit: NASA/GSFC.
2) All of the major seasonal hurricane forecasts
are calling for a below-average to near-average season, with 9 - 12
named storms, 3 - 6 hurricanes, and 1 - 2 major hurricanes. Hurricane
seasons during the active hurricane period 1995 - 2013 averaged 15 named
storms, 8 hurricanes, and 4 major hurricanes. Will an El Niño event
indeed arrive, bringing reduced Atlantic hurricane activity, allowing
the pre-season predictions to redeem themselves after a huge forecast
bust in 2013?
Affordable drones are flooding the market. Our current favorites: The
capable DJI Spreading Wings S1000 and the budget-minded Blade 180 QX HD.
DJI Spreading Wings S1000
Price: $3600 Diagonal width: 41.1"
Flaunting eight powerful blades on retractable carbon-fiber arms, the
S1000 octocopter is as steady as it is daunting. The remote-controlled
workhorse lugs up to 15 pounds of camera equipment—enough to shoot next
summer's blockbuster. What's more, the UAV stays aloft for 15 minutes
and can maintain stability even in the event of a midair rotor loss.
Watching the attachable lower gimbal fluidly move to keep a camera
steady as its rotors maneuver above is almost creepy.
Blade 180 QX HD
Price: $150 Diagonal width: 11.5"
The 180 QX is compact enough to land on the palm of your hand, but this
3.3-ounce bot packs a lot of tech under its shell. With the drone's
adjustable flight-stability software, built-in 720-pixel camera, and
intuitive remote control, it flies smoothly for 10 minutes per charge
and delivers quality video that easily competes with its larger
rivals'—at a fraction of the cost. Ready to go right out of the box,
it's an ideal starter for the uninitiated.
A SENIOR executive at Macquarie Group was involved in establishing a
fake family office to extract confidential financial information from a
competitor.
An investigation by The Australian Financial Review
has found that Tim Hornibrook, head of Macquarie Agricultural Funds
Management, obtained sensitive details about a competitor's profits, fee
structure and returns by posing as a wealthy investor.
Mr
Hornibrook sought the information on his competitor at a time when
Macquarie was trying to raise $700 million through the investment
vehicle Macquarie Crop Partners, sources said.
An email was sent
in late 2011 from a Macquarie office in London claiming to be from a
private investor called the Brook Family Office.
Using the
address investments@brookfo.com, the email said the fictitious company
was considering investing in the fund and needed detailed financial,
performance and organisation information. The competitor, believing it
was a legitimate potential investor, provided a detailed response days
after receiving the email.
The email's details show it originated
from the computer of a junior marketing employee at Macquarie Funds in
London. A Macquarie spokesman said the bank "expects the highest
standards of its employees and will be fully investigating this matter".
Mr Hornibrook, a well-known figure in agribusiness investment,
did not respond to questions put to him through Macquarie. The
revelations are likely to focus attention again on how it conducts
business at a time when global investment banks are still under fire for
their role in the global financial crisis.
The competitor that unwittingly disclosed the information to Macquarie
does not wish to be named and is considering taking legal action....MORE
"1 billion, gagillion, fafillion, shabolubalu million illion yillion..."*
From Barron"s:
There are a million ways to die in the market–and A Million Ways to Die in the West. The former we’ll get to in a minute; the latter is a new movie from the Family Guy’sSeth MacFarlane that spoofs films like Once Upon a Time in the West, AFistful of Dollars and any number of classic westerns. Rolling Stone’s Peter Travers gives A Million Ways to Die a middling review but notes that “there are lots of ways to die laughing at this Western raunchfest,” while the Wall Street Journal’sJoe Morgenstern says it’s “seldom as funny as it promises to be.” The New York Times Stephen Holden says you “might call the movie ‘Revenge of the Übernerd.’” A Million Wayswon’t top the box office–that honor will go toWalt Disney’s (DIS) Maleficent–but if nothing else its a reminder of just how nasty, brutish and short life was back in the good old days of the Wild West.
Just like trading in the markets. The financial markets love to
punish those who think they know all the answers, and that’s exactly
what they’ve done this year. Very few people thought Treasury yields
would fall this year, but that’s exactly what they’ve done. And no one
expected the complete wash out in high-flying stocks like Twitter (TWTR) and Amazon (AMZN), but that’s exactly what we got.
Now everyone is simply confused. Sure, the S&P 500 gained 1.2% to 1,923.53 this week–another record high–while the Dow Jones Industrial Average rose 0.7% to 16,717.17–also a record high. The Nasdaq Composite jumped 1.4% to 4,242.62. The CBOE Volatility Index, also known as the VIX, fell to 11.40. That’s very low.
Strategists, however, would like to see bigger gains from the beaten-down Russell 2000, which advanced just 0.7% to 1,134.50 and continues to lag big caps. The 10-year Treasury yield
fell 0.19 percentage points to 2.46% this week, the third lowest this
year–causing more worry among those who think the bond market is always
right.
The mixed signals were apparent even among the S&P 500′s best performing stocks, including Exelon (EXC), a utility that’s nearing completion of a merger with Pepco Holdings (PHI), and Priceline (PCLN),
a high-flying internet stock that rose, well, because it could. Exelon
gained 7.9% to $36.83 this week, while Priceline rose 6.8% to $1,278.63.
Bespoke Investment Group sums up the market’s vibe:
It was a short week for traders and investors due to the
Memorial Day holiday on Monday, but that didn’t stop the market from
continuing to amaze (or confuse) as many as possible. In a week where Q1
GDP was revised down to negative 1% on an annualized basis, which was
the lowest level of growth in three years, the S&P 500 followed
through from last week’s peek to new highs and continued to trade at
levels never before seen.
Citigroup’s Robert Buckland and team aren’t worried about falling bond yields:
This year’s rally in US Treasuries has caught most
investors by surprise. 10 year yields have fallen from 3.0% at the start
of the year to 2.4% at present, despite the previous consensus
expectation of yields rising towards 3.25% by the end of the year. So
why has the US bond market caught so many out? Perhaps the most obvious
reason is that too many investors were already positioned for a further
increase in treasury yields. There has been a classic bear squeeze....MORE
*That's Dr. Evil's demand (in Yen) in the third Austin Powers film about which Wikipedia comments:
This time his demand is met with simple confusion from the world leaders.
Because the last thing you need is some grizzled old time-traveler looking at you and sneering "Rookie". (it's all about how to think)
From Quirkbooks:
Author's Note: I assume that some day, this article will serve as
an invaluable guide and warning for our time traveling ancestors-to-be
(who will of course be unable to read books and learn these lessons for
themselves, either because [a] all the books will have been burned, or
[b] kids will have stopped reading books entirely, because grumble
grumble, god damn kids, when I was your age, video games, blah blah,
detriment to society, buncha hooligans, kids these days, no respect,
etc). In the meantime, just enjoy it for all of its delightfully
entertaining/convoluted/paradoxical pleasures.
As anyone who’s anyone who’s read any time travel story ever could
easily tell you, time travel is a tricky subject. Temporal paradoxes
might seem simple and straightforward at the start (no they don’t), but
they always devolve quite quickly (linear time-wise) into some sort of
trippy, philosophically complicated, timey-wimey conundrum that makes
even the most convoluted middle school relationship make sense by
comparison. Come to think of it, maybe the reason that all those cool
kids in middle school suffer from impossibly complicated and
melodramatic romances to begin with is because they’re all too “cool” to
read time travel stories in the first place, which would obviously
teach them the benefits of temporally linear dating, if nothing else.
I’m looking at you, River Song.
For the most part, any paradox related to time travel can generally
be resolved or avoided by the Novikov self-consistency principle, which
essentially asserts that for any scenario in which a paradox might
arise, the probability of that event actually occurring is zero -- or,
to quote from LOST, “whatever happened, happened,” meaning that no
matter what anyone does, they can’t actually create a paradox, because
the laws of quantum physics will self-correct to avoid such a situation.
Still, I’m wary of such a loose explanation for things, and so below,
I’ve compiled a list of a few of the more popular time travel paradoxes
-- and what to do to avoid them.
ONTOLOGICAL PARADOX: Also known as the “Bootstraps
Paradox,” an ontological paradox arises when a person or object is sent
through time and recovered by another person, whose actions then lead to
the original person or object back to the time from when it came in the
first place, thus creating an endless loop with no discernible point of
origin. Thus, the original person or object is essentially “pulling
itself up by its own bootstraps,” hence the nickname (thanks in no small
part to the Robert Heinlein story “By His Bootstraps”).
Example: The Terminator films are a prime and
popular example of the Ontological Paradox. In the future, a Terminator
is sent back in time to kill the mother of resistance leader John Connor
before he is born. While the original T-800 is ultimately destroyed,
the leftover pieces are found by scientists who use the technological
to...develop and create Skynet, and the Terminator-series robots. Skynet
would have never been created if Skynet hadn’t taken over the world and
then sent a Terminator back in time to get destroyed and ultimately
lead to the creation of Skynet. Trippy, right?
There's also the fact that Future John Connor sends his buddy Kyle
Reese back in time to protect his mother from the T-800, only Kyle ends
up totally bangin' John's mom (dude high five! I mean, not cool, man)
and impregnates her with his buddy John Connor. So to top it all off, if
John hadn't sent his friend back in time, his friend would never have
had sex with John's mom, and John would never have been born (meaning
that Kyle Reese is either the best or worst friend, ever).
How to Avoid: No one’s really sure if a real-life
ontological paradox would lead to some massive hemorrhaging of
spacetime, or if the closed loop is kind of automatically self-corrected
since it all works itself out evenly in the end anyway. Still, better
to avoid these kind of complicated situations, and the best way to do
that would simply be to stop taking candy from strangers -- “candy” in
this case being mysterious or alien artifacts with questionable origins,
possibly given to you by mysterious people who may or may not come from
the future. See? Maybe all those warnings that your Mom gave you when
you were a little kid still mean something today. Or maybe all along she
was just trying to prevent you from sending your friends back in time
to sleep with her. Or perhaps encourage it....MUCH MORE
I am reasonably competent at manipulating language and other symbols,
and in recognizing the techniques of rhetoricians and homilists.*
Sometimes though, politicians baffle me....
*Sting nailed it in "De Do Do Do De Da Da Da"
Poets, Priests and Politicians
Have words to thank for their position
Words that scream for your submission
And no-one's jamming their transmission
'Cos when their eloquence escapes you
Their logic ties you up and rapes you...
Back in the '90s I was approached by some guys who thought they had "the breakthrough" to make VR real but they just couldn't solve the 'uncanny valley'*. I'm not sure that Oculus Rift has either but it's much closer.
From Wired:
As he flew from Orange County to
Seattle in September 2013, Brendan Iribe, the CEO of Oculus, couldn’t
envision what the next six months would bring. The rhapsodic crowds at
the Consumer Electronics Show. The around-the-block lines at South by
Southwest. Most of all, the $2 billion purchase by Facebook. That fall
Oculus was still just an ambitious startup chasing virtual reality, a
dream that had foiled countless entrepreneurs and technologists for two
decades. Oculus’ flagship product, the Rift, was widely seen as the most
promising VR device in years, enveloping users in an all-encompassing
simulacrum that felt like something out of Snow Crash or Star Trek.
But it faced the same problem that had bedeviled would-be pioneers like
eMagin, Vuzix, even Nintendo: It made people want to throw up.
This was the problem with virtual reality. It couldn’t just be really
good. It had to be perfect. In a traditional videogame, too much
latency is annoying—you push a button and by the time your action
registers onscreen you’re already dead. But with virtual reality, it’s
nauseating. If you turn your head and the image on the screen that’s
inches from your eyes doesn’t adjust instantaneously, your visual system
conflicts with your vestibular system, and you get sick.
There were a million little problems like that, tiny technical
details that would need to be solved if virtual reality were ever to
become more than a futurist’s fantasy. The Rift had made enough headway
to excite long-suffering VR enthusiasts, but it was still a long way
from where it needed to be.
“This is the first time that we’ve succeeded in stimulating parts of the human visual system directly.”
But then Iribe got a call from Michael Abrash, an engineer at Valve;
the gaming software company had conducted VR research for a while and
had begun collaborating with Oculus. Valve had a new prototype, and it
didn’t make people sick. In fact, no one who had tried the demonstration
had felt any discomfort. Iribe, who was famously sensitive to
VR-induced discomfort—“cold sweat syndrome,” he calls it, or sometimes
“the uncomfortable valley”—flew up to Valve’s offices outside Seattle to
be the ultimate guinea pig.
Abrash escorted Iribe into a small room tucked off a hallway. The
walls and ceilings were plastered with printouts of QR-code-like symbols
called fiducial markers; in the corner, a young engineer named Atman
Binstock manned a computer. Connected to the computer was Valve’s
prototype headset—or at least the very beginnings of a headset, all
exposed circuit boards and cables. Iribe slipped it over his head and
found himself in a room, the air filled with hundreds of small cubes.
He turned his head to look behind him—more floating cubes. Cubes to
the left, cubes to the right, cubes overhead, floating away into
infinity. Iribe leaned forward and peered around to see the side of the
cube closest to him; he crouched and could see its underside. A small
camera on the headset was reading the fiducial markers on the (real)
wall and using that spatial information to track his position among the
(virtual) cubes. So far, so good; no motion sickness yet....MORE
The "uncanny valley" usually applies to human
aesthetics. It describes that vague sense of revulsion you get when you
see a fabricated person—a robot, usually—who looks aaaaalmost human …
but not quite. So, for example, this lady. This dude. Anything displayed here.
The "valley" refers to the emotional reactions humans have toward
anthropomorphized machines, when those reactions are charted: It's the
deep dip in comfort level we tend to experience, based on our finely
honed survival instincts, when we humans come face-to-quasi-face with
beings that are at once extremely like us and extremely not....MORE
Mary Meeker can synthesize trends, pinpoint interesting numbers and
research, and deliver hundreds of slides like nobody’s business. The
Kleiner Perkins partner presented her annual Internet trends report at
the inaugural Code Conference this week.
Falcone, whose Harbinger Capital hedge fund owns the bankrupt
LightSquared, a high-speed wireless start-up, is asking the Federal
Communications Commission to take “immediate” action to stem the barrels
of red ink flowing from the company.
In a letter to the FCC, Falcone is
urging the regulator to “mitigate further damage” to Harbinger, which
invested $3 billion in LightSquared only to see the agency pull the plug
on the company in 2012. On Wednesday, Falcone asked the FCC to take
“immediate, positive action” to reverse Harbinger’s losses, according to
the letter sent by his legal team. [NYP]
Humans have long wondered whether we are alone in the universe.
According to scientists working with the Search for Extraterrestrial
Intelligence (SETI) Institute, the question may be answered in the near
future.
"It's unproven whether there is any life beyond Earth," Seth Shostak, senior astronomer at the SETI Institute, said at a HouseCommittee on Science, Space and Technology hearing Wednesday (May 21). "I think that situation is going to change within everyone's lifetime in this room."...
Gold is at $1245.00, down $11.30 and down $46.70 for the week.
From Kitco:
Comex Gold Extends Slide On Technically Oriented Selling
U.S. gold futures are extending the losses from earlier this week
Friday largely on technically oriented selling, traders said.
As of 11:17 a.m. EDT, gold for August delivery
was $12.10, or 1%, lower to $1,245 per ounce on the Comex division of
the New York Mercantile Exchange. The contract bottomed at $1,243.70,
its weakest level since February. July silver was down 24.9 cents, or 1.3%, to $18.765 an ounce.
“It’s technical more than anything else,” said Charles Nedoss, senior market strategist at LaSalle Futures Group.
The market dipped below the roughly
$1,250-an-ounce level that was offering support after prior weakness
this week. “You picked up some (sell) stops there,” Nedoss said. These
are pre-placed orders activated when certain chart points are hit,
either to book profits, exit a losing position or establish a fresh one....MORE
While both of the "Money" metals are looking weak, silver in particular is interesting as it goes through what had been support:
A lot of people are puzzled over why US yields are falling when nothing has changed on the Fed communication side, and QE is supposed to be slowing.
Frances Coppola notes
an even stranger phenomenon. When you look at the very big picture you
realise that if there is a correlation between QE and rates, it’s
actually a very counterintuitive one:
Every time QE is announced, yields rise: when it ends,
they fall. And no, this doesn’t just affect the 10-year yield. The same
basic shape can be observed on just about any maturity over 1 year
(short-term rates are propped up by the positive IOER policy).
It’s counterintuitive because people tend to believe that QE
suppresses rates by creating a bid where there otherwise wouldn’t be
one.
The standing theory, consequently, is that a QE exit should encourage rising yields....MUCH MORE
Who can forget where they were when they first saw this:
From IEEE Spectrum:
So, Where Are My Robot Servants?
Tomorrow’s robots will become true helpers and companions in people’s homes—and here’s what it will take to develop them
Four years ago, researchers at the University of California, Berkeley, uploaded a video to YouTube. It featured a demonstration they’d done using a powerful new robot called PR2,
a dishwasher-size machine with two hefty arms and six camera eyes on
its face. In the demo, PR2 stands before a disorderly pile of small
towels. Then, slowly but surely, it stretches its arms, picks up a
towel, and neatly folds it, even patting it gently to smooth out the
wrinkles. The robot repeats the routine until no more towels are left in
the heap.
The researchers
were pleased with their work, but they didn’t quite expect what came
next: Their video went viral. Within days, hundreds of thousands of
people watched it as news of the robot spread through social media and
the blogosphere. Reports popped up on newscasts and publications around the world. One Twitter user humorously summed up what the achievement might portend: “I, for one, welcome our towel-folding robot overlords.”
This robotic laundry experiment had obviously struck a nerve. The idea of robots doing choresaround the house
has long captured people’s imaginations. For some, robots would mean
freedom from tasks they don’t have time for or don’t want to do. For
others, robots would mean even more: They would help them liveindependently longer, providing care and perhaps even some degree of companionship.
It’s disappointing, then, that other than robotic toys and vacuum cleaners,
robots are a rare sight in our homes today. And yet, here we are, still
eagerly waiting for this technology to blossom. So, where are the robot
servants?
Some recent developments suggest that they might not be too far away.
Processors, sensors, and other components that robots need have gotten
much better and cheaper, propelled by advances in smartphone technology....MORE
The science of inequality What the numbers tell us
In 2011, the wrath of the 99% kindled
Occupy movements around the world. The protests petered out, but in
their wake an international
conversation about inequality has arisen, with tens
of thousands of speeches, articles, and blogs engaging everyone from
President
Barack Obama on down. Ideology and emotion drive
much of the debate. But increasingly, the discussion is sustained by a
tide
of new data on the gulf between rich and poor.
This special issue uses these fresh waves of data to explore the origins, impact, and future of inequality around the world.
Archaeological and ethnographic data are revealing how inequality got its start in our ancestors (see pp. 822 and 824). New surveys of emerging economies offer more reliable estimates of people's incomes and how they change as countries develop
(see p. 832).
And in the past decade in developed capitalist nations, intensive
effort and interdisciplinary collaborations have produced
large data sets, including the compilation of a
century of income data and two centuries of wealth data into the World
Top
Incomes Database (WTID) (see p. 826 and Piketty and Saez, p. 838).
It is only a slight exaggeration to liken
the potential usefulness of this and other big data sets to the enormous
benefits
of the Human Genome Project. Researchers now have
larger sample sizes and more parameters to work with, and they are also
better able to detect patterns in the flood of
data. Collecting data, organizing it, developing methods of analysis,
extracting
causal inferences, formulating hypotheses—all of
this is the stuff of science and is more possible with economic data
than
ever before. Even physicists have jumped into the
game, arguing that physical laws may help explain why inequality seems
so
intractable (see p. 828)....MORE
This whole thing could have been avoided with a little peer review but no; Piketty had to write a book and commenters had to comment without the least bit of effort beyond turning the pages.
I swear economists have to be the most worthless, most self-absorbed bunch of scamsters one is likely to run into.
So there I was, gathering my thoughts, such as the above, for the 700K word comment when Chris Giles drops out of one of the feedreaders.
From Money Supply:
Capital in the 21st Century – a response
Professor Thomas Piketty has given a more detailed response to the Financial Times articles and blogs on his wealth inequality data in Capital in the 21st Century (here, here, here and here). He says it is “simply wrong” to suggest he made errors in his data.
There are a few things on which we agree. First, the source data on
wealth inequality is poor. I have written that it is “sketchy” and Prof
Piketty says it is “much less systematic than we have for income
inequality”. Second, it would have been preferable for Prof Piketty to
have used a more sophisticated averaging technique than a simple average
of Britain, France and Sweden to derive an estimate for European wealth
inequality. Third, the available data suggests a broad trend of
reduction in wealth inequality during most of the 20th Century.
There are more aspects on which there remains disagreement. Prof
Piketty does not explain the multiple missing data points in his data or
tweaks to it; he explains transcription errors as deliberate
adjustments to overcome discontinuities in data, but does not provide
formulas or an explanation of why these undocumented adjustments should
apply to only one data point in a time series; he does not explain why
it is consistent to favour household surveys over estate tax records for
the US but not the UK; nor why his UK series showing rising wealth
inequality differs so materially from his source materials, which show falling UK wealth inequality in eight of the most recent nine decades....MORE
In the News: Russian natural gas pipeline exports to Western Europe grow 20%
In 2013, Russia exported an average of 15.6 billion cubic feet
per day (Bcf/d) of natural gas on pipelines to countries in Eastern and
Western Europe, 16% more than in 2012, according to data from the U.S.
Energy Information Administration, Eastern Bloc Research, and Russian
Energy Monthly. Russia's natural gas pipeline exports to Western Europe
drove most of this increase, rising by 20%, to 12.3 Bcf/d.
The entire increase in Russian natural gas exports to Western Europe
in 2013 occurred in three countries – Italy, Germany, and the United
Kingdom:
Italy had the largest increase in natural gas pipeline imports from
Russia in 2013, receiving 2.4 Bcf/d of natural gas. This reflected a 1.0
Bcf/d increase over 2012. Italy accounted for 16% of total Russian
natural gas pipeline exports to Eastern and Western Europe in 2013,
versus 11% in 2012. Italy can receive Russian natural gas on the
Bratstvo (Brotherhood) and Soyuz (Union) pipelines, which pass through
Ukraine.
Germany saw its natural gas pipeline imports from Russia increase in
2013 to 3.9 Bcf/d. This was 0.7 Bcf/d over 2012 levels. Germany can
receive Russian gas on the same pipelines as Italy, as well as the
Yamal-Europe and Northern Lights pipelines. However, most of Germany's
Russian gas imports now flow via the Nord Stream pipeline, which
bypasses transit states, such as Ukraine and Poland, and brings gas
directly from Russia via the Baltic Sea.
The United Kingdom's natural gas pipeline imports from Russia
increased to 1.2 Bcf/d in 2013, 0.4 Bcf/d more than in 2012. The United
Kingdom mainly imports natural gas from Russia via the Nord Stream
pipeline, along with other interconnecting pipelines.
Currently, Russia's entire natural gas pipeline exports flow to
Europe, with the exception of small volumes to Armenia, in Eurasia....MUCH MORE
In The Capitalist’s Dilemma, Clayton
Christensen and Derek van Bever introduce a powerful new theory which
explains the relative paucity of growth in developed economies. They
draw a causal relationship between the mis-application of capital in
pursuit of innovation and the failure to grow.[1]
In particular, they observe that capital is allocated toward the type
of innovations which increase efficiency or performance and not toward
those which create markets (and hence long term growth and jobs.) This
itself is caused by a prioritization and rewarding of performance ratios
rather than cash flows and that itself is due to a perversion of the
purpose of the firm.[2]
For this statement of causality to be confirmed we need to observe
whether it predicts measurable phenomena. For instance, we need to see
whether companies which create markets apply capital toward
market-creating innovations and whether companies which create value
through efficiencies or performance improvements hoard abundant capital.
Over the entire global economy, the pattern of capital over-abundance is easy to see. The amount of cash or securities on balance sheets is extraordinary and unprecedented (estimated at $7 Trillion, doubling over a decade). However, growing cash is not a perfect indicator of inactivity. Cash is the by-product of earnings after
investment. So if operating profits are growing and investment is
growing, but not as fast, then it’s possible to grow cash while still
growing investment.
The better measure is investment in capital equipment or, more specifically, purchases of plant, property and equipment.[3] Indeed, on a global scale, capital expenditure as a percent of sales is at a 22-year low.
CapEx is a good proxy for non-financial “investment”. It’s also a
measure that can be easily obtained as companies report this activity in
their Cash Flow Statements....MORE
A new paper via the Social Science Research Network:
Abstract:
We investigate the relationship between value, growth
and momentum investment styles across a wide range of developed and
emerging economy equity markets. As would be anticipated, value
investing generally beats growth. We then determine whether the
application of relative momentum or trend following filters can enhance
the risk-adjusted performance for either value or growth investors. We
find that both value and growth portfolios benefit from momentum filters
but particularly the latter, though the application of such a filter
still leaves investors with return volatility that is typical of equity
markets along with negative skewness and with high maximum drawdowns.
However, our results show that the use of a simple trend following
filter typically delivers a much more favourable investment performance
than relative momentum with considerably lower volatility and smaller
drawdowns. Furthermore, the application of a simple trend following
filter either on its own or in combination with a relative momentum
filter, not only reduces the performance advantage of value over growth
investing but actually reverses this advantage.
The family and followers of one of India’s wealthiest Hindu spiritual
leaders are fighting a legal battle over whether he is dead or simply
in a deep state of meditation.
His Holiness Shri Ashutosh Maharaj, the founder of the Divya Jyoti
Jagrati Sansthan religious order with a property estate worth an
estimated £100 million, died in January, according to his wife and son.
However, his disciples at his Ashram have refused to let the family
take his body for cremation because they claim he is still alive.
According to his followers, based in the Punjab city of Jalandhar, he
simply went into a deep Samadhi or meditation and they have frozen his
body to preserve it for when he wakes from it.
His body is currently contained in a commercial freezer at their Ashram....MORE
“Companies, especially financial institutions, will do almost anything
to avoid a tough enforcement action and therefore have a natural and
powerful incentive to make prosecutors believe that death or dire
consequences await,” he said. “I have heard assertions made with great
force and passion that if we take any criminal action, the skies will
darken; the oceans will rise; nuclear winter will be upon us; and the
world as we know it will end.”
-Preet Bharara,
U.S. Attorney for the Southern District of New York
The other day, while I was navigating Reddit I found an interesting post that was called The 10 Algorithms That Dominate Our World by the author George Dvorsky
which was trying to explain the importance that algorithms have in our
world today and which ones are the most important for our civilization.
Now if you have studied algorithms the first thing that could come to your mind while reading the article is “Does the author knows what an algorithm is?” or maybe “Facebook news feed is an algorithm?” because
if Facebook news feed is an algorithm then you could eventually
classify almost everything as an algorithm. So I’m going to try to
explain in this post what an algorithm is and which are the real 10 (or
maybe more ) algorithms that rule our world.
What is an algorithm?
Informally, an algorithm is any well-defined computational procedure that takes some value, or set of values, as input and produces some value, or set of values, as output. An algorithm is thus a sequence of computational steps that transform the input into the output. Source: Thomas H. Cormen, Chales E. Leiserson (2009), Introduction to Algorithms 3rd edition.
In
simple words is possible to say that an algorithm is a sequence of
steps which allow to solve a certain task ( Yes, no just computers use
algorithms also humans use them). Now, an algorithm should have three
important characteristics to be considered valid:
It should be finite: If your algorithm never ends trying to solve the problem it was designed to solve then it is useless
It should have well defined instructions: It has to be precisely defined each step of the algorithm; the instructions should be unambiguously specified for each case.
It should be effective: The
algorithm should solve the problem it was designed to solve. And it
should be possible to demonstrate that the algorithm converges with just
a paper and pencil.
Also is
important to say that algorithms are used in Computing Sciences but they
are a mathematical entity, in fact the first mathematical algorithms
that we have registry are from 1600 BC — Babylonians develop earliest known algorithms for factorization and finding square roots.
So here we have the first problem with the post mentioned before, it
treats algorithms as computing entities, but if you take the formal
meaning of the word the real top 10 algorithms that rule the world can
be found in a book of arithmetic (addition, subtraction, product, etc).
But
lets take computing algorithms as our definition of algorithm in this
post, so the question remains: Which are the 10 algorithms that rule the
world?. Here a put a little list of which are this algorithms in no
particular order.
What
is the best algorithm to sort elements? It depends in what you need and
that’s why I put the three more used sort algorithms in the same place,
maybe you have a preference in one of them but all of them are equal
important.
The Merge Sort algorithm
is by far one of the most important algorithms that we have today. It is
a comparison-base sorting algorithm that uses the approach divide and
conquer to solve a problem that once was a O(n^2). It was invented by
the mathematician Jhon von Neumann in 1945.
Quick
Sort is a different approach to the sorting problem, it can use
in-place partition algorithms and is a divide and conquer algorithm too.
The problem with this algorithm is that is not a stable sort but is
really efficient for sorting RAM-based arrays.
Finally,
Heap Sort algorithm uses a priority queue that reduces the search time
in the data. This algorithm is also an in-place algorithm and is not
stable sort.
These algorithms are a
big improvement over other approaches used like bubble sort, in fact is
thanks to them that today we have Data mining, artificial intelligence,
link analysis and most of the computing tools in the world including the
web.
2. Fourier Transform and Fast Fourier Transform
Our
entire digital world uses these simple but really powerful algorithms
that transform signals from their time domain into their frequency
domain and viceversa. In fact, you are seen this post thanks to these
algorithms.
The internet, your WiFi,
smartphone, phone, computer, router, satellites, almost everything that
has a computer inside use this algorithm to work, in one way or another.
You can’t study a degree in electronics, computing or
telecommunications without studying these important algorithms.
3. Dijkstra’s algorithm
Is
not crazy to say that the internet wouldn't work as efficient as it
does if it wasn't because of this algorithm. This graph search algorithm
is used in different applications where the problem can be modeled as a
graph and you have to find the shortest path between two nodes.
Even
when today we have better solutions for the problem of finding the
shortest path, Dijkstra’s algorithm is still used in systems that
require stability....MORE
Uber will eventually replace the people who drive its cars with cars
that drive themselves, CEO Travis Kalanick said today at the Code
Conference. A day after Google unveiled the prototype
for its own driverless vehicle, Kalanick was visibly excited at the
prospect of developing a fleet of driverless vehicles, which he said
would make car ownership rare. "The reason Uber could be expensive is
because you're not just paying for the car — you're paying for the other
dude in the car," Kalanick said. "When there's no other dude in the
car, the cost of taking an Uber anywhere becomes cheaper than owning a
vehicle. So the magic there is, you basically bring the cost below the
cost of ownership for everybody, and then car ownership goes away."...MORE
The stock is at $21.18, up $1.71. For the last couple years the money has definitely not been in the module or polysilicon makers but rather in the installers and financiers, especially the latter, links after the jump.
From MarketWatch:
SunEdison Inc. rallied Thursday following news its “yieldco” subsidiary has filed for an initial public offering.
TerraForm Power will own and operate clean-power plants and other assets acquired from SunEdison SUNE+8.65%
and other companies, SunEdison said.
Goldman Sachs and Barclays are the joint bookrunners, and price and number of shares have not been decided yet, it added.
SunEdison is following on the footsteps of giant NRG Energy Inc., which
last year launched NRG Yield Inc., bundling solar and natural gas
power-generation assets and raising nearly $500 million in capital in
July.
Shares of Missouri-based SunEdison rose 9.4%.
Several solar companies are looking into bundling existing solar-power
plants and projects into subsidiaries, known in the industry as
“yieldcos.”
Revenues would flow from long-term, predictable power purchase
agreements with utilities, and shares of the yieldcos would trade in
stock exchanges just like any stock, providing liquidity and
transparency....MORE
Finally
for investors in rent-seeking organizations there is the real risk that
the politicians will change the rules. Heed the words of Sen. Simon
Cameron (R&D!-Pa.):
Our Hero
"The honest politician is one who when he is bought,
Putin forms ex-Soviet trade bloc to challenge EU, US
Astana, Kazakhstan—Russian President Vladimir Putin Thursday signed a
treaty with his counterparts from Kazakhstan and Belarus creating a
trading bloc of more than 170 million people to challenge the United
States and European Union.
The formal creation of the Eurasian Economic Union in the Kazakh
capital of Astana marks the culmination of two decades of talks between
former Soviet republics.
Kyrgyzstan and Armenia are seeking to join the union by the end of the
year, the countries’ leaders said at the signing ceremony today.
Putin, facing sanctions from the US and EU for his annexation of
Crimea from Ukraine, said the three countries will “gradually align”
their currency and monetary policies to facilitate trade and minimize
risks. The Russian leader has pushed for Ukrainian membership in the
union and, before relations soured with the EU, urged the creation of a
free-trade zone from Lisbon to Vladivostok on the Pacific Ocean.
“The Eurasian Union is a realization of Putin’s geopolitical dream,”
said Nikolay Petrov, a scholar at the Carnegie Moscow Center research
group. “The Eurasian Union is a demonstration that Russia is not alone.”...MORE
No word on what this means for Kazakhstan's "Don't call me Stan" name change.
We had estimates coming in at 107-111 bcf but as always it's the second derivative that matters: not the actual number and not what the other guy thinks the number will be but how Guy the second reacts to what he thinks Guy the first is thinking.
Front futures $4.594 down 2.1 cents.
The headline at Natural Gas Intelligence is:
Bears Barely Moving Following Stout EIA Storage Report
Natural gas futures dropped Thursday morning following the release of
government storage figures that were somewhat on the high side of what
traders were expecting.
The injection report of 114 Bcf was about 4 Bcf higher than market
surveys and independent analyst projections. For the week ended May 23,
the Energy Information Administration (EIA) reported an increase of 114
Bcf in its 10:30 a.m. EDT report. July futures fell to a low of $4.529
shortly after the number was released but by 10:45 a.m. July was at
$4.587, down 2.8 cents from Wednesday's settlement.
Prior to the release of the data, analysts were looking for a build
just above 110 Bcf. A Reuters survey of 24 traders and analysts revealed
an increase of 110 Bcf with a range of 100 Bcf to 115 Bcf. United ICAP
forecast a build of 113 Bcf and Bentek Energy's flow model anticipated
an injection of 111 Bcf.
A New York floor trader remarked that with the reaction to the storage
report "nothing has really changed. We are still in the range of $4.25
to $4.75. It's not an 'a-ha' moment. It was not a significant
development."...MORE
From the Energy Information Administration:
....Summary
Working gas in storage was 1,380 Bcf as of Friday, May 23, 2014,
according to EIA estimates.
This represents a net increase of 114 Bcf from the previous week.
Stocks were 748 Bcf less than last year at this time and 922 Bcf below
the 5-year average of 2,302 Bcf.
In the East Region, stocks were 438 Bcf below the 5-year average
following net injections of 64 Bcf.
Stocks in the Producing Region were 374 Bcf below the 5-year average of
918 Bcf after a net injection of 31 Bcf.
Stocks in the West Region were 110 Bcf below the 5-year average after a
net addition of 19 Bcf.
At 1,380 Bcf, total working gas is below the 5-year historical range...MORE
This is earlier in the cycle than expected. I mentioned the transmutations that small companies can go through back in 2008's "Chameleons on the Pink Sheets":
...A classic history
would be a Vancouver "junior resource" company in 1979, after the
collapse of the oil and gold markets became a solar deal in '81 , an
Aloe Vera deal to the yuppies mid '80's, a biotech in '86 ("we're the
next Amgen"or "A cure for AIDS"), then on to neutraceuticals or spas,
Indian casinos, software, then the great "i", "e-" and ".com" gold
rush. Someday I'll get around to checking if some lunatic scammer
actually went with "e-iTrade.com".
The next group of parasites were the "homeland security" companies,
then land deals. The "resource" scams never went away and became more
prominent in 2002 after gold had moved off its $252 bear market low. We're in the Green boom (happy Earth day by the way) now, who knows what's next....
From Kitco:
With the mining sector proving to be ruthless in the junior mining
space as a lack of capital in the industry continues, junior miners
turned their heads to new opportunities, including the lucrative medical
marijuana industry.
March saw several penny stocks jump as juniors essentially
told the market they were looking at possibilities with medical
marijuana.
The move was generally hiring consultants to explore the
possibility in the field. However, in Canada, mining companies would
have to go through the same steps as anyone to receive one of the few
medical marijuana producers’ licenses. Only 12 have been handed out to
date.
In a statement to Kitco News, Department of Health Canada said
“to become a licensed producer, all applicants must meet all of the
requirements of the new Marihuana for Medical Purposes Regulation,
including obtaining the proper personal security clearances, meeting
the physical security requirements for the cultivation and storage
areas, and submitting a completed licensed producer application."
Supreme Pharmaceuticals (TSX:CL), formerly metals mining company Supreme Resources, has applied to Health Canada for a “Marihuana for Medical Purposes Regulations” (MMRP) license.
The company recently completed the acquisition of a greenhouse
complex for medical marijuana production on May 23, and said they will
be able to begin production upon receipt of an MMRP license.
Satori Resources Inc. (TSXV:BUD) recently completed a strategic alliance with Jourdan Resources Inc. (TSXV:JOR)
involving the Picnic Phosphate property in Quebec, which is focused on
phosphate minerals for specialized agriculture and fertilizer....MORE
For most Londoners, the most common view they enjoy as they trudge to
work is the back of another commuter's head but now, thanks to the
Streetmuseum app, anyone traipsing through the capital's streets can
step back in time to see what London looked like in the 19th and 20th
century compared with today - all in the same image.
The pictures below are part of a series in which historic and
contemporary images are blended together, allowing users to see just how
much London's streets have been transformed.
An exterior shot of the completed Gloucester Road Station in 1868 and 2014. (Photo by Museum of London/Streetmuseum app)
A street seller
of sherbert and water on the streets of London in 1893 and the same
street in 2014. (Photo by Museum of London/Streetmuseum app)
The view north up
Brick Lane in Spitalfields, close to the markets in 1957 and 2014.
From Harry Tchilinguirian’s team at BNP Paribas, this is apparently what the death of volatility looks like:
And here’s the explainer:
More than mid-way through the second quarter, the oil
market has indeed been mostly range-bound. And despite geopolitical
flare-ups in Ukraine or Libya, implied oil volatility, be it on WTI or
Brent, has moved lower still from the time of our recommendation. As
volatility fell over the recent months, many in the market
initiated long volatility positions in the hope of mean reversion
higher, only to suffer from the cost of carry associated with time
decay, while volatility itself continued to erode.
We haven't linked to Cramer in so long I'd forgotten about him.
On the topic of oil prices we're thinking down then up but we've been thinking that for a year. From our March 29, 2014 post: Barron's Cover: "Here Comes $75 Oil"
There is a lot of the stuff sloshing around.
Throw in the geopolitical angles (US/EU v. Russia; Saudia v. Persia) and a bit of downside protection may be in order.
Plus, we've been calling for it since $106-107, seven months ago and frankly I'm getting tired of the répétition, know what I'm sayin'?
Apparently contradicting the 'sloshing around' statement is the forward
curve for WTI, currently in pretty steep backwardation from May 2014 at
$101.67 to June 2016 at $84.73. That's a simplistic view however and
does not account for above ground oil entangled in financing deals (Hi
Izzy) and in situ storage. Remember July 4, 2008?
Oil began its historic decline from the previous day's all time high with the curve backwardated....
From CNBC:
The strength in oil prices may not be terribly long-lasting.
That's the broad takeaway from technical analysis provided by Carley Garner, author of "A Trader's First Book on Commodities."
Although Jim Cramer is first and foremost a
fundamental investor, he often turns to technical analysis for insights,
especially when an analyst has an impressive track record.
And Cramer says few analysts have been more
accurate than Garner. "So, when Garner says to be cautious about crude, I
take her seriously."
We have looked at the problem quite a few times especially from the natural gas angle and are pretty sure we will see $8.00 gas before we see $2.00 gas. For oil we are thinking down then up but WTI in particular has been quite stubborn about staying in a $90-$110 trading range.
From Bloomberg:
The U.S. shale patch is facing a
shakeout as drillers struggle to keep pace with the relentless
spending needed to get oil and gas out of the ground.
Shale debt has almost doubled over the last four years
while revenue has gained just 5.6 percent, according to a
Bloomberg News analysis of 61 shale drillers. A dozen of those
wildcatters are spending at least 10 percent of their sales on
interest compared with Exxon Mobil Corp.’s 0.1 percent.
“The list of companies that are financially stressed is
considerable,” said Benjamin Dell, managing partner of
Kimmeridge Energy, a New York-based alternative asset manager
focused on energy. “Not everyone is going to survive. We’ve
seen it before.”
Some investors are already bailing out. On May 23, Loews
Corp. (L), the holding company run by New York’s Tisch family, said
it is weighing the sale of HighMount Exploration & Production
LLC, its oil and natural gas subsidiary, at a loss.
HighMount lost $20 million in the first three months of the
year, after being unprofitable in 2013 and 2012, Loews said it
its financial reports. As with much of the industry, HighMount
has shifted its focus to oil after natural gas prices plunged
and has struggled to find sites worth developing, company
records show.
Mary Skafidas, a spokeswoman for Loews, declined comment.
Production Declines
Quicksilver acknowledges the company is over-leveraged,
said David Erdman, a spokesman for Quicksilver. The company’s
interest expense equaled almost 45 percent of revenue in the
first quarter. “We have taken concrete measures to reduce
debt,” he said.
Drillers are caught in a bind. They must keep borrowing to
pay for exploration needed to offset the steep production
declines typical of shale wells. At the same time, investors
have been pushing companies to cut back. Spending tumbled at 26
of the 61 firms examined. For companies that can’t afford to
keep drilling, less oil coming out means less money coming in,
accelerating the financial tailspin.
Interest Expenses
“Interest expenses are rising,” said Virendra Chauhan, an
oil analyst with Energy Aspects in London. “The risk for shale
producers is that because of the production decline rates, you
constantly have elevated capital expenditures.”
Chauhan wrote a report last year titled “The Other Tale of
Shale” that showed interest expenses are gobbling up a growing
share of revenue at 35 companies he studied. Interest expense
for the 61 companies examined by Bloomberg totalled almost $2
billion in the first quarter, 4.1 percent of revenue, up from
2.3 percent four years ago.
The drilling spree boosted U.S. oil production to 8.4
million barrels a day, 16 percent more than a year ago and the
highest since 1986. Growth has been driven by advances in
horizontal drilling and hydraulic fracturing, or fracking, which
unlocked crude and natural gas trapped in formations like North
Dakota’s Bakken shale or the Marcellus in the U.S. northeast....MORE
This is an extreme view, probably promulgated to sell a book, but it highlights the problem with decline rates.
There are some plays which are uneconomic over the life of the well
(more money in than out) but which are drilled anyway because of the
quick cash flow which can be used as the basis for another round of debt
or equity.
Stripped of all the hype, there are E&P companies that are basically
Ponzi schemes but with a tail long enough that the miscreants will
probably get away with it....
We are still in a bull market and markets being perverse we'll probably have a summer rally that drives the Sell in May folks insane. Their prayers for a correction to scale back in on go unanswered and in their madness to participate they put in the top.
Or something.
From Pension Partners:
Back in Time
Are you telling me that you built a time machine… out of a DeLorean?
Of course not. It’s 2014 and the environmentalists would go crazy. We built one out of a Tesla Model S and we’re headed back to…
May 2007. The economy is humming along and we’re over five years into
an expansion that began in late 2001. The S&P 500 is hitting new
bull market highs almost daily and investors are looking forward to a
fifth consecutive year of gains. The credit markets are booming, with
record demand for risky debt and high yield spreads hitting new lows.
There is some evidence of weakness in the housing market but this is
surely a healthy development considering the incredible advance over the
previous few years.
Given this backdrop, Investors are broadly optimistic, with Bulls
outnumbering Bears in the Investors Intelligence poll by over 2.5 to 1.
Also key to this bullishness is the new “low volatility regime,” with
the VIX trading between 12 and 14 after crossing below 10 briefly in
January and February. As long as volatility is low, Hedge Funds seem
more than happy to increase leverage and net exposure to “boost
returns,” creating a strong underlying bid beneath the market.
S&P 500, May 2007: What’s not to like?
While on the surface all is well in the markets, there is a subtle
rotation going on underneath. Energy and Materials are the leading
cyclical sectors while Consumer Discretionary and Financials are the
weakest sectors. Together, this backdrop is classic late cycle behavior
and not typically what you see in a strong economy....
"The parallels between May 2007 and May 2014 are unmistakable, with
broad market strength masking underlying weakness," according to the
post. "That is not to say what happens next will play out in the same
fashion this time around as it most certainly will not. But at the same
time, to completely ignore what the market is telling us here would be
foolish as well."
