Sunday, November 30, 2014

When GM Was Google

From The New Yorker:
The art of the corporate devotional.
Every brilliantly successful corporation spawns books relating its success to management methods that you, too, can follow.
Every brilliantly successful corporation spawns books relating its success to management methods that you, too, can follow.

One Friday afternoon a dozen years ago, Larry Page, one of the founders of Google, posted on the wall of the office kitchen a printed-out screenshot of Google ad results, with “These Ads Suck!” scrawled on it. Google’s AdWords engine was supposed to serve up ads that were relevant to your search terms. He was finding that if you searched for Kawasaki H1B, the vintage motorcycle, you’d get ads for lawyers who would help you with your H-1B visa. That sort of thing. By Monday morning, five engineers who weren’t even on the advertising team had, acting on their own, devised a software solution to the problem—a solution that proved to be worth billions of dollars. “It wasn’t Google’s culture that turned those five engineers into problem-solving ninjas who changed the course of the company over the weekend,” Eric Schmidt and Jonathan Rosenberg—the company’s former C.E.O. and its former head of product development, respectively—write in “How Google Works” (Grand Central). “Rather it was the culture that attracted the ninjas to the company in the first place.”

What’s Google’s secret? This is an irresistible question, because Google is the most successful new business corporation of the twenty-first century. Still only fifteen years old, it is worth about three hundred and eighty billion dollars; its revenues are more than fifty billion dollars a year, and around a quarter of that is profit. More than a billion people perform a Google search every month. It’s natural to wonder whether there’s something each of us can do to emulate Google, with directionally similar, if perhaps more modest, results. What makes the Google model especially alluring is that, as Page and Sergey Brin put it in the statement that accompanied their initial public offering, ten years ago, “Google is not a conventional company.” Getting very rich is always fascinating, but getting very rich while proclaiming that you’re breaking the rules about how to run a business is even more so. Every publishing season seems to bring books about how to capture some of the Google magic. The new crop includes not just “How Google Works” but also “Think and Grow Digital” (McGraw-Hill), by Joris Merks-Benjaminsen, a Google executive who holds the title of Benelux Head of Branding Solutions & Innovation, and, coming soon, “Work Rules! Insights from Inside Google That Will Transform How You Live and Lead” (Twelve), by Laszlo Bock, Google’s senior vice-president of people operations.

“Think and Grow Digital” is presented as a guide for “millennials” to finding their way in the beginning and middle stages of a business career, so it’s filled with references to its intended audience’s youth and technological savvy—their “brains are different”—and to the bother of having to work with people who are middle-aged. Merks-Benjaminsen confesses that he used to see such people as “old, gray, resistant guys, stuck in their old-fashioned business thinking,” but he has learned to become more compassionate: “Place yourself in the position of those who had limited access to the Internet and computers during the first 20 to 50 years of their lives and try to imagine how much new stuff they have to digest in order to understand what you are saying.” But the book is filled with maxims, slogans, charts, and other catchy ways of imparting lessons that even a non-millennial can apply. We learn Google-isms like “moonshot thinking” and “the funnel of focus.” And we get a closing proclamation: “Greatness is for everyone.”

Books like these obviously have some debt to the old and well-established tradition of American success literature; Merks-Benjaminsen’s title echoes Napoleon Hill’s 1937 “Think and Grow Rich,” which is still very much in print. And, for at least a few readers, the burnished tale of Larry Page’s scrawled protest and the “problem-solving ninjas” who dealt with it may bring to mind Elbert Hubbard’s 1899 essay “A Message to Garcia,” which for decades was an inescapable part of the national culture. Hubbard’s “preachment” took off from a possibly apocryphal incident during the Spanish-American War: the President must get a message to General Garcia, the leader of our insurgent friends, who is somewhere in the mountains of Cuba. When a fellow named Rowan is given this daunting charge, well, by God, he carries it out. He doesn’t ask why; he doesn’t ask for Garcia’s exact location; he doesn’t look for someone else who might do the task instead. Hubbard was celebrating success, and he was celebrating employees with the goodness and the gumption “to be loyal to a trust, to act promptly, concentrate their energies on a thing—‘Carry a message to Garcia.’ ” (Having grown up in the culturally lagging Deep South, I was raised on this sacred text. The director of my summer camp read “A Message to Garcia” to us every year, in front of a mystically flickering bonfire, and we went away properly awed.)...MORE
HT: The Big Picture

Europe's #2 Hedge Fund Firm to Close Commodity Fund

The thing I have trouble processing about hedge funds not being able to make money in falling commodity markets is the fact the wee beasties can be traded from either side.

It's almost enough to make one think the managers are nothing but closet trend-followers charging 2-and-20 for what's actually nothing but leveraged beta.
Or something.

From the Wall Street Journal:

Brevan Howard to Close Commodity Fund Due to Poor Performance
Fund, With $630 Million In Assets, Is Down 4.3% This Year 
Brevan Howard Asset Management LLP plans to close its commodity hedge fund following recent poor performance, according to two people familiar with the matter.

The fund, managed by Stephane Nicolas, has $630 million in assets. It lost 4.2% last year and is down 4.3% this year to the end of October, according to performance data reviewed by The Wall Street Journal.

It is not clear what Mr. Nicolas’s role might be following the commodity fund’s closure, a person familiar with the matter said. Attempts to reach Mr. Nicolas were unsuccessful.

Brevan Howard is among Europe’s largest hedge fund managers with about $37 billion in assets.

Brevan’s Macro fund, managed by billionaire Alan Howard , has about $26.5 billion in assets. The macro fund, which has never reported an annual loss, has faced headwinds this year, struggling to deliver a positive performance in the ultralow interest rate environment. The Wall Street Journal reported in August that the firm sharply cut risk levels in the macro fund during the first half of the year....MORE 
I've made the point a few times over the years, here's a couple from this year:

Sept. 2014 iteration:
"Falling commodity prices flash warning on widening global divergences"
The thing I don't get about some commodity "specialists" is why they can't make money in down markets.

I mean you can trade from either side but for some reason the mean-reverting nature of commodity prices seems to challenge some folks who really should know better....
July 2014 
"Goldman Forecasts Lower Commodity Prices as Super-Cycle Ends "
Following up on this morning's "Commodities: 'Goldman Thrives as Commods Rivals Melt Away' (GS)" and yesterday's "Charting the Roll-over in Commodity Prices".

Just as we expect bankruptcies among the mining companies to mark the bottom in gold we would expect front page human interest stories on the travails of the American farmer before the ags turn decisively.
CME corn 378'2 up 4'2 after a $3.71 bottom tick last night, NYMEX gold $1298.50 up $1.60. WTI popped back over $100, up 81 cents last.

Good thing you can take either side of the bet....
And many more.

Quiet Atlantic Hurricane Season Comes to a Snowy End: The Insurers Win

From the New Orleans Times-Picayune Nov. 24:

Quiet 2014 Atlantic hurricane season ends Sunday with 6 hurricanes, 2 major; only 1 U.S. hit

Hurricane Arthur reached Category 2 strength on July 3 before cutting across North Carolina's Outer Banks. (NOAA
A quiet 2014 Atlantic hurricane season ends on Sunday (Nov. 30) after producing only eight named storms, including six hurricanes, of which only two were major, National Weather Service forecasters said.

None of the storms posed any threat to metro New Orleans, and forecasters don't expect any additional tropical systems for the rest of this week.

The end of the season will mark the second consecutive quiet year for our region since 2012, when Hurricane Isaac flooded hundreds of homes across parts of our area....MORE
Florida counts its blessings, Miami Herald, Nov. 30, 2014:
Nine years and counting: Florida’s hurricane lucky streak continues

Here are the U.S. and Northern Hemisphere snow cover maps via NOAA's National Operational Hydrologic Remote Sensing Center: 

"Swiss Say ‘No’ to Measure Forcing SNB to Acquire More Gold"

Although the market apparently, and belatedly, began to believe the polls there is more downside ahead.Front futures settled at $1165.80, Kitco spot $1168.50.
From Bloomberg:
Swiss voters rejected a referendum requiring their central bank to hold a portion of its assets in gold, a measure its President Thomas Jordan termed an “invitation to speculators” that could have hamstrung the economy.

The “Save Our Swiss Gold” proposal stipulating the Swiss National Bank hold at least 20 percent of its 520-billion-franc ($540 billion) balance sheet in gold and never sell any bullion was voted down by 77 percent to 23 percent, the government said. Polls had forecast the initiative’s rejection. Two other initiatives on tax privileges for foreign millionaires and immigration limits also were rejected.

SNB policy makers warned repeatedly that the measure, which also required the 30 percent of central bank gold stored in Canada and the U.K. to be repatriated, would have made it harder to keep prices stable and shield the central bank’s cap on the franc of 1.20 per euro. That minimum exchange rate was set three years ago, with the SNB pledging to buy foreign currency in unlimited amounts to defend it.

“The key word is relief, but it’s not a reason to crack the champagne corks yet,” said Janwillem Acket, chief economist at Julius Baer Group Ltd. in Zurich. Due to the rejection, “the SNB has more options and fewer constraints on monetary policy,” he said....MORE
From Kitco the last three day's spot bids:
Live 24 hours gold chart [Kitco Inc.]

"Partners in Crime: The Telegraph Industry, Finance Capitalism, and Organized Gambling, 1870-1920"

A repost from January 2013.

The writer is too kind to the bucketeers, they were thieves, pure and simple.
The buckets were straight up gambling houses with the action comprised of side bets on the actual stock movements, not unlike collateralized default swaps when purchased by someone who doesn't own the underlying debt.
See our Nov. 2011 post "Are Derivatives Contracts Nothing More than Unenforceable Gambling Debts?"
From the I-triple E ( Institute of Electrical and Electronics Engineers) History Center at Rutgers:

One day in August 1887 President Abner Wright of the Chicago Board of Trade forcibly removed the instruments of the Postal Telegraph Company and the Baltimore and Ohio Telegraph Company from the floor of the exchange, literally throwing their equipment out of the building.

A few months later, on the night of December 15, Wright discovered some mysterious electrical cables leading out of the basement of the exchange building. Thinking that they were telegraph lines, he cut them with an axe. Wright was neither deranged nor a Luddite. Instead, his forceful actions were dramatic examples of the troublesome technological, cultural, and economic relationship between the telegraph industry, finance capitalism, and organized gambling in the United States during the Gilded Age and Progressive Era.

Wright’s actions occurred in the context of a 25-year struggle between the Chicago Board of Trade and hundreds of bucket shops. Bucket shops, depending on whom one believed, were either gambling dens or small brokerage houses. Brokers and directors of the large exchanges claimed that bucket shops were nothing more than betting parlors in which patrons wagered on the price movements of stocks and commodities. Defenders of the bucket shops denied that they were gambling dens and asserted instead that they were independent brokers attempting to compete with the plutocrats and monopolists who controlled the New York and Chicago exchanges. In either case, bucket shops flourished between about 1880 and 1910. They purchased ticker service from the telegraph companies and depended upon the market quotations from the major exchanges to conduct their trades.

They charged lower commissions, required minimal margins, and traded in smaller lot sizes than brokers on the major exchanges. In this sense they democratized speculation: anyone with a few dollars could become part of the action on the Chicago and New York exchanges. However, customers’ trades were fictitious; bucket shops could not deliver actual stock certificates or grain to their patrons. Bucket shops were able to take root and to flourish in the late 19th and early 20th centuries for two major reasons, one technological and the other cultural. During the 1870s, two important innovations revolutionized the American telegraph industry. In the late 1860s Edward Calahan  invented the ticker, a low-cost and low-maintenance printing telegraph which allowed brokers to monitor transactions on exchange floors.

Several inventors working for Western Union, including Thomas Edison, brought the ticker to a state of technical perfection by the mid-1870s. During the same period, Edison invented the quadruplex, a system which allowed four messages to travel simultaneously over one telegraph wire. The quadruplex gave Western Union a great deal of flexibility in handling its traffic.

On major trunk routes, it effectively quadrupled its circuit capacity without requiring the costly installation of more lines. More significantly from the standpoint of financial markets, the quadruplex allowed Western Union to lease excess circuit capacity to financiers and bucket shops. Taken together, the ticker and the quadruplex allowed Western Union to exploit the growing demand for realtime financial information. After about 1880 Western Union aggressively marketed its ticker service and private wire leases.

Within a few years, both brokers and bucket shops were leasing thousands of tickers and circuit miles to obtain real-time market quotations. Ticker service and wire leases soon became Western Union’s most lucrative activities. The company was reluctant to abandon this highly profitable market, and it did so halfheartedly around 1910 only under pressure from the major exchanges, courts of law, and antigambling reformers.

At the same time that Western Union earnestly began to exploit the demand for its ticker service, there existed widespread confusion about the difference between legitimate and economically useful speculation and illegitimate and harmful gambling. Farmers who blamed the Chicago Board of Trade for their economic woes, judges who protected the right of bucket shops to receive ticker service, economists who sought to explain how financial markets worked, and even brokers themselves all equated speculation with gambling. Many Americans saw little difference between the transactions on exchange floors and in bucket shops.

Bucket shops came to the notice of exchange officials in the late 1870s.
The leadership of the Chicago Board of Trade first recognized their growing threat in the summer of 1880, and they asked telegraph companies transmitting the Board’s market quotations to cease supplying ticker service to them. By 1890, anti-gambling reformers estimated that 5000 bucket shops existed throughout the country, including some 200 in New York, over 100 in Chicago, and at least one in each town with a population of 10,000. One reformer claimed in 1887 that bucket shops had so penetrated rural areas that they accounted for 90% of commodity trading in the countryside, and that they had depressed the price of agricultural commodities by a total of some $2.5 billion since 1880.

Stock brokers as well as commodity traders felt serious competition from bucket shops. One prominent broker on the New York Stock Exchange complained in 1889 that the “indiscriminate distribution of stock quotations to every liquor-saloon and other places has done much to interfere with business. Any person could step in a saloon and see the quotations.”

Indeed, by 1889 competition from bucket shops had depressed the value of a seat on the New York Stock Exchange by nearly half, from $34,000 to $18,000, and a seat on the Chicago Board of Trade by over two-thirds, from $2500 to $800.  When they first opened for business in the late 1870s and early 1880s, bucket shops were small, independent store-front operations, typically located in the vice districts of large towns and cities.

Like the rest of the American economy in this period, bucket shops soon exhibited a trend toward consolidation and monopoly. As early as 1890 the New York Times reported that a syndicate popularly known as the “Big Four” controlled all the bucket shops in Manhattan, had offices in “every city of consequence in the Union,” and possessed capital amounting to “millions of dollars.”...MUCH MORE (8 page PDF)

Although the bucket shops rigged the game in their own favor to the point that if a "customer" kept coming back the mark would lose 100% of the amount wagered, there were some who understood the game, very few but enough that the operators kept an eye on the trades.*

Here's one of Haight & Freese' NYC shops. H&F were the largest of the stock operators with some 70 shops around the country.

*For example Jesse Livermore as describe by Edwin Lefèvre in his roman à clef  Reminiscences of a Stock Operator.:
"I began in the smaller bucket shops, where the man who traded in twenty shares at a clip was suspected of being John W. Gates in disguise or J. P. Morgan traveling incognito."

"I kept my business to myself. It was a one-man business, anyhow. It was my head, wasn't it? Prices either were going the way I doped them out, without any help from friends or partners, or they were going the other way, and nobody could stop them out of kindness to me. I couldn't see where I needed to tell my business to anybody else. I've got friends, of course, but my business has always been the same - a one-man affair. That is why I have always played a lone hand."

Livermore's Fortune Reaches $10,000 - But There's Trouble
Livermore's success soon caused him problems. Bucket shop owners began to recognize him as a consistent winner - and they only wanted to trade against losers. He began having to take smaller positions than he wanted to, or even lose money in his first trades, only to later hit the bucket shop with "stings" where he took large winning positions.

As he became widely recognized, the shops began refusing to take his trades. They called him the Kid Plunger. (Plunger = reckless speculator.)

"I tried the other branches one after another, but they all got to know me, and my money wasn't any good in any of their offices. I couldn't even go in to look at the quotations without some of the clerks making cracks at me. I tried to get them to let me trade at long intervals by dividing my visits among them all. But that didn't work."

Despite the bucket shops refusing to deal with him (if they recognized him - Livermore took to disguising himself) or only trading with him under severe handicaps - such as Livermore paying higher prices for stocks he wanted to buy and getting less for stocks he wanted to sell than other customers - Livermore continued to trade profitably. By the age of 20 his fortune had grown to $10,000.

He had now reached a point where bucket shops began cheating on prices to prevent him winning. It was time, he realized, to move on and begin trading through legitimate stockbrokers....
By the time he was twenty-one his net worth had fallen to $2500.
So much for the "legitimate brokers".

Jon Markman's annotated edition hints strongly that Haight & Freese was one of the firms trying to get Livermore's business.

Saturday, November 29, 2014

"20 nifty tricks to argue like a charlatan"

From Three Men Make a Tiger:
For scientists, skeptics, debaters, or indeed anyone who values useful information over shrill soundbites, there is little more infuriating then crass manipulation of the facts to mislead an audience. Purveyors of woo and snake oil are particularly skilled at this cynical sideshow, but they are by no means alone in the practice which all too frequently raises its ugly head in politics too. And when constructive debate breaks down along ideological barriers, you can be sure the quality of discussion suffers.  When discussions arise, those with a vested interest are adept at sidetracking the debate with enough petty logical fallacies to fool an audience into thinking their claims have some merit. “What beastly intellectual cowardice!” I hear you mutter. And I concur.

But just for a moment, let me play advocatus diaboli. Perhaps we should look at their techniques and admire the smoke and mirrors approach to discussion that can leave the most well informed earnest orator flummoxed and flustered. Let's give these rogues their due, and identify some of their little tricks, in the hopes we can catch them out at their own game.

So for your viewing pleasure, I present..

20 nifty tricks to argue like a charlatan
  • Use circular reasoning liberally – Circular reasoning is purely tautological but because you're repeating your assertions it'll just reinforce your message it for the less astute in the audience. “The bible is the literal truth because God wrote it and we know that because the bible says it!” 
  • Construct straw man arguments – If you can't rebut an argument, misappropriate your opponents position and pummel it to great applause. Essentially, if you can't attack your opponents position with a decent retort, make a mock-up of their position and trounce that instead. Odds are your audience mightn't notice, particularly if you insinuate something shocking. “Obama's health care reforms will bring in death panels for old people so protest at your town halls
  •  Use ad hominem attacks to reinforce your thesis - Remember that smearing your opponent can be a sure way to turn the audience against him, provided you exploit their prejudice. “My opponent may be an expert on this subject. But he is also homosexual who associates with known socialists. Is this the kind of person we want to be taking advice from?!” 
  • Construct false dilemmas – There is usually a spectrum of valid views on a subject. Many of the less extreme views require careful nuanced reasoning to explain - screw that; go nuclear. Fool the audience into thinking that the choice is a binary one. “You are either with us or with the terrorists!” 
I'm afraid it's not that simple, Lord Vader...
  • Argue from purely anecdotal evidence – No matter how much the evidence is against you, simply quote a coincidental success story and cite this as proof of your position. This also works if you're trying to argue that something is endemic when it isn't - merely keep restating your experience, no matter how untypical it may be. “I had a headache and when I took some homeopathic remedy it cured it! Therefore it proves homeopathy works!”

HT: Improbable Research 

Possibly also of interest:
UPDATED--Are You a Recent Graduate Who Hasn't Found a Job? Consider Becoming a Charlatan
"Follow-up: Choosing the Charlatan Career Path
A Job the Robots Won't Take: Become a Financial Charlatan
Re-post: Peak Oil Stalwart to Shutter Forum/News Site, Persue Career as Astrologer 

Also at Improbable Research and definitely of interest to our 13-year-old-boy demo:
Boob Glue® (New Patent)

Peak Piano: Casablanca Piano Sells For $3.4 Million

From Outside the Beltway:

Casablanca Piano
Perhaps the most famous piano in movie history was sold at auction for more than $3 million dollars:
The letters of transit — “signed by General de Gaulle, cannot be rescinded, not even questioned” — were hidden under its unusual hinged lid. It is golden yellow with touches of green and gold, a surprise to people who know it only from its black-and-white adolescence. It has a wad of chewing gum in a place where a wad of chewing gum really should not be.
It is the stuff that dreams are made of.
It is one of the most famous pianos in the world, the piano Ingrid Bergman was close to when she delivered one of Hollywood’s unforgettable lines: “Play it, Sam. Play ‘As Time Goes By.’ ” It is the short little upright from Rick’s Café Américain in the movie “Casablanca.”
And it has become the stuff of very expensive dreams. It was sold at auction on Monday for $3.4 million, gum and all. The price included a 12 percent commission.
Of all the auction houses in all the towns in all the world, it had been wheeled into Bonhams on Madison Avenue for a sale of movie memorabilia.
Bonhams did not identify the buyer of the piano, one of two seen in “Casablanca.” The other piano, the one in the Paris flashback scene, sold for $602,500 at Sotheby’s in December 2012. But as some collectors noted at the auction on Monday, that piano was on the screen for only 70 seconds.
And via OTB:

Media: ISIS Writes a Cookbook

We do not use the term Islamic State as ISIS is not the Islamic State.

The world’s deadliest terror group issues a pancake recipe
THE IS agency for women, has launched a ‘cookbook’, explaining how to keep jihadists happy and fulfilled by making pancakes after a day of fighting. 
The agency known as Al-Zawra that “prepares sisters for the battlefield for jihadists” has been dubbed a “finishing school” for young women hoping to wed militants.

In a step-by-step guide, published by Al-Zawra, the recipe calls for one egg, four tablespoons of sugar, one tablespoon of oil, 4 tablespoons of salt, one cup of milk and one cup of flour.

This follows the first recipe released earlier in November, “balls of date mush”.

In an effort to recruit and train female jihadis, the institution offers classes in everything from sewing to weapons training.

In their mission statement they explain the school is for women “interested in explosive belt and suicide bombing more than a white dress or a castle or clothing or furniture.”...MORE

The recipe via Just Paste It

For a time the various Al Queda franchises were putting together a stable of media properties à la Murdoch:

Media: "Al-Qaeda has launched a women's magazine that mixes beauty and fashion tips with advice on suicide bombings"
Media: "Al Qaeda issues English-language advice magazine for militants"
Al Qaeda Using Hashtag “#Suggestions_to_Develop_Jihadist_Media.”, Hilarity Ensues

Prompting critiques:
Media Critique: "Is al Qaeda's new English-language magazine any good?"
And counter-critiques:
Al-Qaida on U.S. Media: "Fox News 'lacks neutrality'; MSNBC 'Good' Until it Fired Keith Olbermann" 

Oil: So Where Does the Decline Stop?

Right here (for now).
After settling at $66.15 the Jan. futures drifted down to $65.99 in late trade.
From our Nov. 14 post "Chartology: Four Possible Stopping Points For the Decline in Oil Prices":
Our target is $70 but like anything involving humans, that could change.
We just experienced  a noticeable weakening of the dollar feeding into:
 Dec. WTI $75.15 up 94 cents; Brent $79.50 up $2.01.

From Dragonfly Capital:
The sun seems to be setting on Crude Oil ($USO, $CL_F). It has had a quick run lower for a price of about $108 down to $74 per barrel in less than 5 months. The bad news for those looking for a turn around is that the technical picture still looks bleak. The momentum indicators are pointing lower and the RSI (top scale) has only just moved in the bearish zone. With that backdrop there are 4 important spots to watch if there is more downside....
Countertrend and then lower.
More to come.

"Lower oil price could stoke US stock bubble"

UPDATE: "Oil: So Where Does the Decline Stop?"
Previously: "UPDATED--Oil: Rout (XLE; ERY)"

The action in the oil markets is the most important story in global macro.
Right now it is the engine driving the whole narrative from currencies to GDP to junk bonds and figuring out the effects will be very profitable.
Here's John Authers writing for the FT:
Opec’s position on output could have profound consequences 
Oil anchors world financial markets, and Opec has just decided to raise its anchor. The consequences could be profound, and go far beyond the power game between the traditional oil producers in the Middle East and the new generation of shale producers in North America.
Oil, it is true, is less important than it was. Steady improvement in technology has rendered the developed economies less “oil-intense”, and less vulnerable to a repeat of the 1970s, when oil price spikes twice led to savage recessions.

But ever since the postwar version of the gold standard ended in 1971, with President Richard Nixon’s decision to end the dollar’s fixed price in gold, oil has been its closest replacement as a store of value in the world economy. In the 1970s, the savage oil price spikes in terms of dollars, engineered by a far more active Opec, merely restored oil’s value in terms of gold. US economic pump-priming had weakened the dollar.
A loose “oil standard”, with Opec adjusting supply to limit oil’s volatility, has cohered ever since.

Oil anchors capital markets most clearly through its tight inverse relationship with the dollar. When oil rises, so the dollar tends to depreciate against other currencies. Typically oil exporters receive payment in dollars and then sell them, meaning that higher oil prices lead to a lower dollar.

The dollar depreciated significantly in the years leading up to the 2008 financial crisis, and its nadir overlapped closely with a speculative bubble in oil. Now, it is strengthening significantly.
That correlation with the dollar leads to a second clear correlation, with emerging market equities. They tend to outperform when the dollar is weakening (as in the years leading up to 2008), and to underperform when the dollar grows stronger.

The last period to see falling oil prices (albeit at a much lower level), and a strengthening dollar was the late 1990s. That saw a US equity bull market melt up into a full-blown bubble, while emerging markets suffered a succession of crises. A stronger dollar made it harder to pay off their dollar-denominated debt....MORE
See also: 
And we still think the broader market is going higher....
A Potentially Very Bullish Pattern For A Very Bearish Oil ETF (ERY) 
"Dollar's Next Leg Up"
Second only to declining oil prices* in importance to the current global-macro playing field is the strength of the dollar...
Oil: There's Bearish and There's Betting On $50/Barrel Bearish
And that gets us back to October 30.
Ther are another 20 or so in October.
This is a big deal.
Oct. 27
Oil Shows Some Resilience (today)
At the moment oil is probably the most important story in the global economy.
The stimulative effects of lower oil prices are immense, maybe two trillion dollars, and more important than anything the central bankers are up to, for now anyway.


Update: "Lower oil price could stoke US stock bubble"
Update II:"Oil: So Where Does the Decline Stop?"
Original post:

I'm Troy McClure. You may remember me from such earlier posts as:
Nov. 4
"Energy shares lead Wall St lower in broad decline" (XLE; ERY) 
You may remember us from our previous hit posts such as October 21's "Oil Sell-off, the Goldman View (XLE; ERY)":

We are seeing a lot of recommendations to buy hydrocarbon companies and want to note:

It's Too Early
More to come.
Oct. 22's "WTI Crude Slides Below $81":
It's Too Early
Or Oct. 27's "Oil: Goldman Lowers Forecast, Brent and WTI Both Down":

It's Too Early

Repetitious but at least we varied the type size/face.

And we still think the broader market is going higher.
The XLE has just rebounded a bit, $84.14 down $1.90 (2.21%).
The triple levered inverse ERY up $1.24 (6.82%) at $19.42 with a target of $21.00.
WTI $76.45 down 2.96% on the day....MORE
WTI settled at $66.15 yesterday, Nov. 28 and the ERY closed at $21.92 up $3.57 or 19.46%. 
Now what?
We'll get to that over the course of the weekend but first a look at where we're at right now:

Prices were down along the entire curve (CME) but the contango steepened dramatically.
Our $70 target was beaten handily and I'd expect some countertrend action on Monday. 
The ERY is a triple levered inverse of the XLE, be careful. On Friday the triple-levered gold miner ETF NUGT was down 25.05% (4.01) at $12.00. These things are dangerous.
Brent $70.15. 

From the FinancialTimes:
Market rout as oil slide rocks energy groups
Shares in the world’s biggest energy groups have tumbled in a market rout as plunging oil prices put at risk billions of dollars of investment and jeopardised future supplies of crude.

The sharp slide in the price of Brent oil after Opec’s decision not to cut output triggered warnings that oil companies would cut as much as $100bn of capital spending in response, imperilling the US shale bonanza and threatening much Arctic oil exploration.

Meanwhile oil’s fall continued to play havoc with the currencies of oil exporting countries, especially Russia. At one point on Friday, the rouble slid to a record low.

Leonid Fedun, vice-president of Lukoil, Russia’s second largest crude producer, told the Financial Times that Opec was trying to turn the US shale oil “boom” into a “bust” for smaller producers.
He compared the surge in North American shale to the dotcom and subprime mortgage booms, and said Opec’s objective now was “to get small producers with large debts and low efficiency to pack up and leave the market”.

Opec said on Thursday that it was leaving its output ceiling of 30m barrels a day unchanged, prompting a swift 8 per cent drop in the oil price, which was already down by nearly 40 per cent since mid-June. Brent fell $2.80 on Friday to $69.78, a four-year low....MORE
“We cannot overstate what a dramatic and fundamental change this is for the oil market,” said Mike Wittner, senior oil analyst at Société Générale.
That would be a bingo.

Hi, I'm Troy McClure from Chris Coleman on Vimeo.

"Gold Miner ETF Suffers Biggest One-Day Loss in Over a Year" (GDX; GDXJ)

From Barron's
Friday’s oil crash laid waste to energy shares, but the gold miners were similarly trampled: the Market Vectors Gold Miners (GDX) just quietly suffered its biggest one-day decline in nearly 1 1/2 years.
GDX, the biggest exchange-traded fund holding precious-metal miner stocks, dropped 8.7% on to close at $18.36 on Friday. Miner stocks, which tend to act like spring-loaded vehicles for trading gold or silver themselves, have been hugely volatile in recent weeks as gold has flirted with multiyear lows.

But Friday’s plunge in miners was extreme compared with the move in gold, and even with the recent turmoil for miner stocks; indeed, Friday was the biggest one-day percentage decline for GDX since April 15, 2013, a day when gold suffered its biggest ever one-day price drop, according to data from FactSet.

Miners slipped on Friday in tandem with prices for the yellow metal, which dropped 2.7% to $1,165 an ounce in recent trading. Bloomberg’s Joe Deaux and Laura Clarke note that falling oil and gasoline prices conspire to tamp down inflation expectations, reducing demand for gold, often singled out as a hedge against rising prices.

Investors are also looking ahead to vote in Switzerland Sunday; a “yes” vote for a measure would require the Swiss National Bank to ramp up its gold assets. But most expect to measure to fail, which would hit gold prices more and in turn pressure gold miners even more....MORE
At least one investor was caught on the wrong side of the action, again. Here he is the first time around:

Wednesday, November 26, 2014

Dressing: "The Urbane Turkey"

 From the Paris Review:

“Boys, I feel I’m going to a change of climate.” A vintage Thanksgiving card.
As fans of holiday ephemera know, there are several primary genres of Weird, Old-Timey Thanksgiving Cards. There is the Greedy Child. There is the Doomed Turkey. There is the Turkey in Vehicle, which is sometimes a Corncob Car. There is the Anthropomorphic Root Vegetable. It hardly needs saying that Thanksgiving pinups are a thing unto themselves. Sexy Pilgrims, under-dressed squaws, and women cooking in lingerie and filmy cocktail aprons are all fairly ubiquitous.

By far my favorite subgenre is that of the Urbane Turkey. This foppish specimen is usually in evening dress, so as to indicate his sophisticated couth. Needless to say, he sports a top hat. Sometimes a monocle, or a cigarette. All in all, he has the trappings of a big-screen rich nincompoop, which I suppose added a certain glee to his consumption.

The Urbane Turkey is not always complacent. Sometimes he’s a sharp. He’s in the know. This Urbane Turkey is the turkey who knows where to find the best feed and the keenest pea-hens.
As befits his man-of-the-world air, he smokes a cigar; and his citified duds are less Union Club than pool hall. This tom doesn’t take any wooden nickels; he sees the way the wind’s blowing and he’ll be out on the next train, before the axe is even sharpened. He doesn’t need pardoning; he makes his own luck....MORE 
For some more examples of how truly awful the various genres can be see Vintage Everyday's:
20 Funny and Cute Vintage Thanksgiving Postcards

"Corporate profits juggernaut continues"

From Calafia Beach Pundit:
In my view, one of the most enduring and extraordinary features of the current business cycle expansion has been the strength of corporate profits. According to the GDP stats released yesterday, third quarter after-tax corporate profits hit a new nominal high of $1.87 trillion, and a new high relative to GDP of 10.3%. So it's no wonder that equities are hitting new highs. Indeed, despite profits hitting all-time record highs, PE ratios today are only slightly above average. Stocks by this measure still look quite attractive.
From 1958 through 2004, after-tax corporate profits averaged about 5.3% of GDP. Since then, and including the profits collapse of the Great Recession, after-tax corporate profits have averaged 8.8% of GDP. As the chart above shows, over the entire period since 1958, corporate profits have averaged about 6% of GDP. For the past 5 years, equity bears have in effect argued that profits were unsustainably high because they had a strong tendency to be mean-reverting to, say, 6% of GDP. Instead, profits have just continued to grow, both nominally and relative to GDP. A pessimistic outlook for corporate profits has essentially been the driving force behind the equity market's gains, because profits have far exceeded expectations. In a sense, the market has been forced higher because profits have been much stronger than expected....MUCH MORE

"Space station's 3-D printer pops out 1st creation"

From the Associated Press' The Big story feed:
The first 3-D printer in space has popped out its first creation.

The 3-D printer delivered to the International Space Station two months ago made a sample part for itself this week. It churned out a faceplate for the print head casing.

Space station commander Butch Wilmore removed the small plastic creation from the printer Tuesday for eventual return to Earth. About 20 objects will be printed in the next few weeks for analysis back home, NASA said. The space agency hopes to one day use 3-D printing to make parts for broken equipment in space.

Made in Space, the Northern California company that supplied the space station's 3-D printer, called it "a transformative moment." The newly created, rectangular faceplate — considered functional by the company — includes the Made in Space name, as well as NASA's.

"When the first human fashioned a tool from a rock, it couldn't have been conceived that one day we'd be replicating the same fundamental idea in space," Aaron Kemmer, chief executive officer, said in a statement....MORE

Deere Warns of Accelerating Ag Market Decline (DE)

Ya think?
From Agrimoney:
Deere & Co warned of an accelerating decline in the global farm equipment market as the agricultural machinery giant cautioned of a 40% tumble in earnings over the next year, a bigger drop than Wall Street had expected.
The maker of John Deere machinery unveiled results for the August-to-October period, the fourth quarter of its financial year which, while down 10.6% at $3.16bn, exceeded market forecasts.
The results were equivalent to $1.83 per share, ahead of the $1.57 per share that analysts had pencilled in.
Samuel Allen, the Deere & Co chairman and chief executive, said the company had achieved a "solid performance in spite of weaker conditions in the global farm sector", for which profits are being undermined by lower crop prices.
Sales drop
However, the group cautioned of a deepening decline in the ag machinery market, expecting the group's own sales in the sector to fall by 20% in the year to October 2015.
Deere reported a drop of 9% in sales in the year to the end of last month, and 13% in the August-to-October period....MORE
Here's the last three quarter's price action from FinViz:

"Prepare for the rare 'deflationary boom"'

From Jon Markman via Yahoo:
"Deflation" and "boom" are not two words that normally go together. They are almost like "sad happiness," "lo-cal donut." But in their very unlikely pairing they appear to do a good job of explaining the unusual economic and market environment that may lie ahead.

It’s a term discussed this week by Cornerstone Macro analyst Francois Trahan to describe a rare condition in which a country’s economic activity rises but inflation falls. He believes that is the right interpretation of the Philadelphia Fed data released on Tuesday that showed output in the region up but prices paid falling, as shown in the chart below.
The improvement of the Philly Fed can be seen in part as a result of the stimulative effect of falling crude oil prices, and their ripple effect on the broad economy. The chart below, created by Cornerstone, shows the Philly Fed Index (green line) charted against the six-month percent change in the price of Brent Oil, advanced four months (gray) and inverted.
The oil price is advanced four months to show the lagged effect that oil has on economic activity. In other words, when oil falls in price it takes about four months for the change to have an effect on end users’ decisions....MORE

Feldstein: The Geopolitical Impact of Cheap Oil

WTI $73.59, last. Our target is $70.00 but if the shale guys don't cut back on their drilling the price is going quite a bit lower. Brent $77.95.
From Project Syndicate:
The price of oil has fallen more than 25% in the past five months, to less than $80 a barrel. If the price remains at this level, it will have important implications – some good, some bad – for many countries around the world. If it falls further, as seems likely, the geopolitical consequences on some oil-producing countries could be dramatic.

The price of oil at any time depends on market participants’ expectations about future supply and demand. The role of expectations makes the oil market very different from most others. In the market for fresh vegetables, for example, prices must balance the supply and demand for the current harvest. By contrast, oil producers and others in the industry can keep supply off the market if they think that its price will rise later, or they can put extra supply on the market if they think the price will fall.

Oil companies around the world keep supply off the market by reducing the amount of oil that they take out of the ground. Oil producers can also restrict supply by holding oil inventory in tankers at sea or in other storage facilities. Conversely, producers can put more oil on the market by increasing production or by running down their inventories.

The market expectations reflected in today’s price reflect lower future demand and increased future supply. Lower demand reflects both the current weakness of economic activity, particularly in Europe and China, and, more important, the longer-term changes in technology, which will increase cars’ fuel efficiency and induce the use of solar power and other non-oil energy sources. The increase in the future potential supply of oil reflects new output produced by fracking, the development of Canada’s tar sands, and Mexico’s recent decision to allow foreign oil companies to develop the country’s energy sources.

These changes in demand and supply suggest that the future price of oil will be lower than industry participants expected until just a few months ago. Some of the recent changes in expected future demand and supply could have been anticipated earlier. But there is no way to know when attitudes and expectations will change. The historic volatility of oil prices reflects these psychological shifts as well as changes in objective reality.

Today’s oil price is also linked to anticipated future interest rates. More specifically, oil producers have an investment choice: They can increase production now, selling the additional oil at today’s price and investing the proceeds at the existing long-term interest rate, or they can leave the oil in the ground as an investment.
A low rate of interest encourages producers to leave oil in the ground. When the current abnormally low interest rates on long-term bonds rise over the next few years, it will become more attractive for producers to increase the supply of oil and invest the resulting income at the higher rate. Unless expectations about the fundamentals of future supply and demand change, the rise in the interest rate will cause oil prices to fall further.

The low price of oil is good news for the United States economy, because it implies higher real incomes for American consumers. Within the US, the lower price is transferring real income from oil producers to households, which raises short-term demand because households spend a higher proportion of their incomes than oil firms do. For the same reason, the lower price also gives a boost to aggregate demand in Europe, Asia, and other oil-importing regions....MORE

Forget the Market, The Earth's Magnetosphere is Collapsing (and there's a little black spot on the sun today)

Among the things to be thankful for that we so often take for granted are things like the magnetosphere...
Sometimes it's hard to stay topical
A repost from Feb. 4, 2014: prompted by last month's "Earth's Magnetic Field May Be About to Flip":

I fear I am becoming addicted to the Daily Mail.
From the Daily Mail:
  • Earth's magnetic field has weakened by 15 per cent over the last 200 years
  • Could be a sign that the planet's north and south poles are about to flip
  • If this happens, solar winds could punch holes into the Earth's ozone layer
  • This could damage power grids, affect weather and increase cancer rates
  • Evidence of flip happening in the past has been uncovered in pottery
  • As the magnetic shield weakens, the spectacle of an aurora would be visible every night all over the Earth
Deep within the Earth, a fierce molten core is generating a magnetic field capable of defending our planet against devastating solar winds.

The protective field extends thousands of miles into space and its magnetism affects everything from global communication to animal migration and weather patterns.

But this magnetic field, so important to life on Earth, has weakened by 15 per cent over the last 200 years. And this, scientists claim, could be a sign that the Earth’s poles are about to flip.
Scroll down for videos...
The Earth's protective field extends thousands of miles into space and its magnetism affects everything from global communication to animal migration and weather patterns
The Earth's protective field extends thousands of miles into space and its magnetism affects everything from global communication to animal migration and weather patterns
Experts believe we're currently overdue a flip, but they're unsure when this could occur.
If a switch happens, we would be exposed to solar winds capable of punching holes into the ozone layer.

The impact could be devastating for mankind, knocking out power grids, radically changing Earth’s climate and driving up rates of cancer.

‘This is serious business’, Richard Holme, Professor of Earth, Ocean and Ecological Sciences at Liverpool University told MailOnline. ‘Imagine for a moment your electrical power supply was knocked out for a few months – very little works without electricity these days.’

The Earth's climate would change drastically. In fact, a recent Danish study believes global warming is directly related to the magnetic field rather than CO2 emissions.

The study claimed that the planet is experiencing a natural period of low cloud cover due to fewer cosmic rays entering the atmosphere.

Radiation at ground level would also increase, with some estimates suggesting overall exposure to cosmic radiation would double causing more deaths from cancer.

Researchers predict that in the event of a flip, every year a hundred thousand people would die from the increased levels of space radiation.
The magnetosphere is a large area around the Earth produced by the planet's magnetic field. It presence means that charged particles of the solar wind are unable to cross the magnetic field lines and are deflected around the Earth

The magnetosphere is a large area around the Earth produced by the planet's magnetic field. It presence means that charged particles of the solar wind are unable to cross the magnetic field lines and are deflected around the Earth
'Radiation could be 3-5 times greater than that from the man-made ozone holes. Furthermore, the ozone holes would be larger and longer-lived,' said Dr Colin Forsyth from the Mullard Space Science Laboratory at UCL....MORE
Daily Sun: 26 Nov 14
Earth-facing sunspots AR2216 and 
AR2217 pose a threat for M-class 
solar flares. Credit: SDO/HMI

Finally, from Mudvayne, a nasty little version of King of Pain

Seven global trends to be really, really thankful for

From the Washington Post's Wonkblog:
Journalists may have many biases, but among the most important is that they always see the glass as half empty. It's a phenomenon researchers call "negativity bias," and studies show all humans share it. This is why Thanksgiving is a useful holiday. It gives us a reason to think about what's actually in the bottom half of the glass.

The facts, once you look at them, are indisputable. The world in the 21st century is really a remarkable place to live, and it's getting better all the time, even for its poorest inhabitants.
-- Wars claim fewer lives today than ever in human history, by several orders of magnitude. Here's the Associated Press:
Before there were organized countries, battles killed on average more than 500 out of every 100,000 people. In 19th century France, it was 70. In the 20th century with two world wars and a few genocides, it was 60. Now battlefield deaths are down to three-tenths of a person per 100,000.
-- Just in the last two decades, global poverty has declined by half, and there's reason to think we could nearly eliminate it in the next two decades.
-- Also just in the last two decades, the infant mortality rate has similarly declined by about half, according to the World Health Organization....MORE

BuzzFeed's Chairman Is Invested In A Uber Competitor

Is it "a Uber" or "an Uber"?
I know Churchill went with "A History of the English-Speaking Peoples" rather than "An History..."
Anyhoo, there's more to the BuzzFeed/Uber contretemps than we got to last week.

From The Federalist, Nov. 19:

BuzzFeed’s Executive Chairman Is Invested In Uber’s Competition
There’s been a bit of controversy over the past several days regarding a piece that BuzzFeed published about an executive for Uber, a large ride-sharing company. According to BuzzFeed editor-in-chief Ben Smith, an Uber executive revealed that he wasn’t above digging up dirt on journalists in order to influence news coverage of the company.

Smith disclosed this admission from Uber in an 800-word exclusive on Monday. The piece is written in the third person in order to deliberately obscure the fact that Smith himself was the BuzzFeed editor who attended the off-the-record event at which the Uber executive’s remarks were made.

Ben Smith also failed to disclose his boss’s investment in Sidecar, one of Uber’s main competitors. Ken Lerer, the executive chairman of BuzzFeed, is also the managing director of Lerer Hippeau Ventures (previously known as Lerer Ventures), a New York City-based venture capital firm. Lerer, through Lerer Ventures, was an early investor in Sidecar, a ride-sharing competitor of Uber. From TechCrunch:
Sidecar is announcing this morning that it’s raised a Series A round of $10 million led by Lightspeed Venture Partners and Google Ventures. The funding follows on a seed round raised late last year from investors that include Spring Ventures, Huron River Ventures, SV Angel, Lerer Ventures, First Step Fund, Jeff Clarke, Lisa Gansky, Robert Goldberg, Jared Kopf, Konstantin Othmer, Mark Pincus, Martin Roscheisen, Josh Silverman, and Thomas Varghese.
Sidecar is also listed as a portfolio company on the web page for Lerer’s VC firm:
Ken Lerer Sidecar
The seed stage deal between Sidecar and its group of investors, which included Lerer Ventures, was first announced in a press release after the deal official closed on December 1, 2011, according to Marketline/Datamonitor.

Lerer isn’t just a top BuzzFeed executive, though. He’s also an investor in the company:
Lerer Buzzfeed
In his broadside against Uber’s dirt-digging executive, Ben Smith never disclosed that his boss, one of BuzzFeed’s top executives, has an ownership stake in one of Uber’s competitors. Nor is there any such conflict-of-interest disclosure in any of BuzzFeed’s numerous other hit pieces on Uber (including this one, which was posted mere hours ago)....MORE
HT: Scott Adams (yes, Dilbert's boss. the comments are also worth a look)

"Uber Executive Suggests Digging Up Dirt On Journalists"
UPDATED--Here's the Real Problem With Uber: You Can't Trust Them

You may also be interested in:
Buzzfeed Story Generator
Journalism: BuzzFeed Releases Internal Style Guide--Updated
The Wolf of Buzzfeed-Official Trailer

Let's Get Ready to Rumble: "Gross Vs. Gundlach: Who Has More Skill?"

Y'all ready for this?

From Advisor Perspectives:
Mankind has landed a spacecraft on a comet 300 million miles away. Yet, after decades of academic research, the challenge of distinguishing skill from luck among actively managed mutual funds has remained largely unsolved.

Much is at stake in this challenge. If skill can be identified, then it is likely to persist, affording clients superior performance. But a manager who is merely lucky will eventually succumb to underperformance.

If rocket science has a counterpart in financial analysis, it is in the quantitative analytics from companies like Boston-based Northfield Information Services. Last week, I spoke with Dan di Bartolomeo, founder and CEO, to see if he could detect skill or luck among the two biggest fixed-income managers: Bill Gross, when he managed the PIMCO Total Return Fund (PTTRX), and Jeffrey Gundlach, manager of the DoubleLine Total Return Fund (DBLTX).

Northfield has been providing risk analysis and tools for portfolio construction to institutional asset managers for 30 years. Among its noteworthy accomplishments, Northfield’s analysis was used by Harry Markopolos to confirm that Bernie Madoff was engaged in a massive Ponzi scheme.

Scores of academicians and commercial vendors have attempted to identify skillful managers. The problem, di Bartolomeo said, is that most people “do this badly” and don’t deal with all the issues in sufficient detail.
Northfield’s methodology was originally published in this 2006 paper. Di Bartolomeo said the published results documented predictive power that was three times stronger than what was previously reported in the academic literature. It was both economically and statistically significant.

I’ll discuss the results of the Gross versus Gundlach analysis, but first let’s review Northfield’s system for distinguishing skill from luck.

A four-step process
Northfield’s methodology is based on the assumption that skill –once identified—will persist. If a manager’s performance is due to skill, that skill – or lack thereof – will continue. If a manager’s performance is due to luck, however, the best guess for future performance is the average of an appropriately constructed peer group. In other words, if a manager’s outperformance is due to luck, it will eventually revert to the mean.
According to di Bartolomeo, the academic literature has found that performance is persistent over a relatively short time horizon, “one to three years, depending on who you believe.” Northfield tested its results over a one-year time horizon.

Each fund is analyzed using a four-step process. Northfield first determines the appropriate peer group for each fund. An iterative methodology with returns-based analysis is used, a tool first developed by William Sharpe. Di Bartolomeo described this as a “very numerically intensive” processes, which uses a large group of funds to find ones that act similarly. For every fund, Northfield determines a distinct and custom peer group.

“Unless you correctly classify funds, there is no persistence in fund performance,” di Bartolomeo said. “If you don’t, you might as well be throwing darts.”

The second step is to identify how much history should be used in that fund’s analysis. Northfield does this with a tool known as CUSUM. Developed in the 1950s, CUSUM is a sequential probability test that was first used to measure quality control on assembly lines. It looks for trends in the number of rejects. Bad performance for a mutual fund is like a reject on an assembly line....MORE
Previously on the pump up the music channel:

UPDATED--Cliff Asness vs. Paul Krugman: Let's Get Ready To Rumble
Let's Get Ready To Rumble II: Paul Krugman Responds to Cliff Asness

"SCOTLAND to tax its millionaires because they could never find anywhere nicer to live."

From the Daily Mash:
The country, which has lured oligarchs from across the globe with its mix of urban realness and refreshing weather conditions, will hugely increase the top rate of tax knowing they are too enraptured with Scotland to consider moving elsewhere.

Oil magnate Roy Hobbs said: “Scotland is both an Eden and a trap.

“Barbados is worthless after an afternoon on the beach at Broughty Ferry and once you’ve seen Glasgow, how could New York ever satisfy?...MORE

Tuesday, November 25, 2014

Former Soros Sidekick Buying Assets In Russia

From FT Alphaville:

Jim Rogers’ contrarian view on Russia
The rouble may be down more than 25 per cent versus the dollar this year, but the currency’s recent slide won’t be enough to dissuade legendary investor and author Jim Rogers from adding to his Russia investments.
Rogers told the Financial Times on Tuesday his bullish case was based on the view there had been a fundamental change in the Kremlin’s mindset when it came to the treatment of foreign investors. This, he said, had led him to about-turn on his previous scepticism about the country’s potential and views he had set from the moment he had first visited the country over 46 years ago.

“They understand that they can’t treat investors the same way Stalin did anymore, and that you have to treat them properly.”
Rogers caveated the point with the assertion that investors had at least been treated better until the international community implemented sanctions on Russia in response to its activities in Ukraine earlier this year. But he added he had no doubt the current crisis would pass like most other crises he had experienced over his lifetime. He said his views were ultimately based on looking to the long term because he was a terrible market timer, and his aim was to invest in an economy while it was still in a depressed state.

Rogers’ Russian investments now include stakes in fertiliser maker Phosagro, airliner Aeroflot, a Russia ETF and the Russian stock exchange, but he said was looking to expand into different sectors as well.

With respect to his position in Phosagro, Rogers’ cited GMO’s Jeremy Grantham longstanding position that because phosphorus cannot be made or substituted there isn’t enough of the vital fertiliser element to serve the needs of a growing global farming industry....MUCH MORE
 On peak fertilizer Rogers and Grantham are either very, very early or flat out wrong.
See for example the backround pieces:
"Has The Earth Ever Run Out of a Natural Resource?"
"Jeremy Grantham on Tesla, Fertilizer Wars" (and lessons learned from 47 years at the market)
The Lore and Lure of Fertilizer: A Century of Potash Intrigue (POT; MOS; IPI)

and more importantly:
Vaclav Smil Takes on Jeremy Grantham Over Peak Fertilizer