Saturday, January 31, 2015

"In Denmark You Are Now Paid To Take Out A Mortgage"

My liege, and madam, to expostulate
What majesty should be, what duty is,
What day is day, night night, and time is time,
Were nothing but to waste night, day, and time;
Therefore, since brevity is the soul of wit,
And tediousness the limbs and outward flourishes,
I will be brief. Your noble son is mad. . . .
-Polonius, Hamlet (Act II, scene II)
On Friday Izabella Kaminska wrote about Denmark in "Is the DKK the new CHF?":
It’s been a long time since so many developed central banks were tested by free market forces. And free market forces aren’t finished yet.
Hot on the heels of the SNB giving up on its euro ceiling policy, the market is zoning in on the Danish central bank and its ability to maintain its euro-peg....
And all I could think of was: "Where are the Hamlet references?"

I mean come on, Polonius and the gang--including the "Prince of Denmark" (not to be confused with HRH Freddie)--were made for this.
"Something is rotten in the state of Denmark."
- Marcellus to Horatio (Act I, Scene IV)
From ZeroHedge:
With NIRP raging in the Eurozone and over €1.5 trillion in European government bonds trading with negative yields, many were wondering when any of this perverted bond generosity will spill over to other debtors, not just Europe's insolvent governments (who can only print negative interest debt because of the ECB's backstop that it will buy any piece of garbage for sale in the doomed monetary union). In fact just earlier today we, rhetorically, asked a logical - in as much as nothing is logical in the new normal - question: 
Little did we know that just minutes after our tweet, we would learn that at least one place is already paying homeowners to take out a mortgage. That's right - the negative rate mortgage is now a reality.
Thanks of Mario Draghi's generosity with "other generations' slavery", and following 3 consecutive rate cuts by the Danish Central Bank, a local bank - Nordea Credit - is now offering a mortgage with a negative interest rate! This means, according to, that Nordea have had to pay instead of charging interest to to a handful of customers, says housing economist at Nordea Kredit, Lise Nytoft Bergmann for Finance.
"Neither a borrower nor a lender be; For loan oft loses both itself and friend, and borrowing dulls the edge of husbandry." 
 -Polonius to Laertes (Act I, Scene III) 
The interest rate has balanced around 0 in a level between minus 0.03 percent plus 0.03 percent. Most have paid a modest positive interest rate, but there are so few who have had a negative rate. It is quite an unusual situation, says Lise Nytoft Bergmann.

It is residential customers who have chosen to stick with F1-loan that now benefit from the negative interest rate. F1 loan form has otherwise been strong returns in recent years in favor of fixed interest loan.

Although interest rates are negative, it is not something that can be felt by customers as contributions and other costs continue to be paid. In turn, interest will be deducted from the contribution.

Precisely because it is an unusual situation, Nordea Kredit's IT systems are not geared to the situation when the computers are only used to collect interest.

Lise Nytoft Bergmann says that there is no cause for concern, and that the new situation can be handled, "but sometimes we have to use duct tape and paste."
This is just the beginning: according the Danish media outlet, as a result of variable-refinancing, as recently as a week from now "a greater share of customers could have a negative rate."
Mortgage Denmark is one of the mortgage banks, where F1 rate also is close to zero, and here you are very excited about the upcoming negotiations, says Christian Hilligsøe Heinig, chief economist of the Mortgage Denmark....
"Though this be madness, yet there is method in't." 
Polonius, aside to audience (Act II, Scene II)

....And just like that, first in Denmark, and soon everywhere else in Europe, a situation has now emerged where savers who pay the bank to hold their cash courtesy of negative deposit rates, are directly funding the negative interest rate paid to those who wish to take out debt. In fact, the more debt the greater the saver-subsidized windfall....MORE
"That it should come to this!"
-Hamlet (Act I, Scene II)

"How the Superrich Hedge Their Bets"

This is very serious stuff.
There are two questions you should be able to answer in the affirmative to establish a base from which to develop:
1) Do I have a talent or skill that I can market should the worst happen?
2) Do I have friends in countries outside my own domicile.
Link after the jump.

From Barron's Penta:
The world of the superrich is getting more fluid and complicated by the day. The very wealthy increasingly have a second passport, far-flung homes, and assets to escape to, if the going gets rough at home. Wittingly or not, we have created an elite subset of globe-trotters who are residents of this city or that, but they may no longer be citizens, in the deepest sense, of one specific nation or the other.

That’s our conclusion from reading the latest in-depth wealth report. According to insurer National Financial Partners and Wealth-X, a research outfit, there are 211,275 ultra-high net-worth individuals on the globe, defined as those with assets of more than $30 million each. All told, these folks lord over $29.7 trillion. But the superrich are aging, and $16 trillion of that pile is expected to pass to their heirs over the next 30 years.
Victor Habbick/Visuals Unlimited, Inc.
The world is their oyster: The globe’s ultra-wealthy are increasingly reducing their risks by acquiring a second nationality.
That means roughly the equivalent of the current U.S. economy is going to trade hands during this wealth transfer, producing a long list of private bank winners and losers across the globe. Wealth-X came to that $16 trillion wealth transfer figure by presuming wealth creation will follow its historical trend, with the ultra-high net-worth population growing annually by 4.6%, and the wealth they control, by 6.7% annually. Assuming that’s the case, the world’s billionaire population will, by 2020, grow by nearly 80% and increase by 1,700 individuals.

It’s a staggering notion.

Where is their money going to wind up? That, it seems, is up for grabs. About 64% of the ultra-rich are first-generation wealth creators and are, on average, 59-years-old. They have an average net worth of $141 million and they keep 38% of their net worth in privately-owned businesses.

They’re also world-travelers. The average billionaire, for example, owns four properties worth $78 million, most of which are outside their primary country of residence. David Friedman, Wealth-X’s president, says that “luxury real estate is the new Swiss bank account.”

That’s an important point. The superrich hedge their bets way beyond simply diversifying their portfolio; they spread their assets around the globe and pick up passports. Billionaires are five times more likely than the ultra-high net-worth crowd to apply for an immigrant investor program, seeking either residency or second citizenship (see Penta Asia’s “A Golden Entry Ticket for Asia’s Wealthy,” Nov. 14, 2014).

Buy an expensive property overseas, and some countries will throw in citizenship. In the last year, Malta received over 400 “naturalization” applications worth 450 million euros ($524 million) in investment. “The concept of citizenship is fast evolving, and we want to be at the forefront of this innovation,” said Malta’s prime minister.

According to Friedman, Russians usually snag extra passports for security reasons; Chinese want them as status symbols (but also, we suspect, as a quiet exit in case they run afoul of Communist Party authorities); while in the Middle East, the rich eagerly seek escape routes from local instability. Good schools and ease of travel are also deciding factors....MORE

From our April 2011 post "How Travel can be an Education for Investors and Could Possibly End Up Saving Your Life and Fortunes":
...If there is an effective hedge against calamity, it is a combination of geographic diversification, retention of capital in mobile form and the keeping in personal touch with active businesses, both at home and in other centers.

One must keep personally alert, active and in the swim. Retired businessmen, in my opinion haven't much chance. One must not tie up all one's assets in one's home town or in a form that is not liquid and subject to easy shifts. There are far too many people who have a small business in their home city, their own house in the same city, and if they own any securities, some shares perhaps of the local utility company.
In addition their friends and connections are all in a radius of 10 to 15 miles.

My real thought is that one's greatest assets are his mental competence to do something useful and his connections.

Therefore establish some emergency connections away from home. Establish a fund or funds away from home as well, both as a "calamity hoard" and as an aid to keeping your foreign interests alive....

...One ought to be able to move to several parts of this country and the world, and have enough friends to be happy and get a helping hand to start, and have ready at hand enough funds for a grubstake to start.

Ask yourself how many widely separated  places you could go to and make a successful new start in life....
Excerpted from Chapter 29, "Travel as an Education for Investors" of Gerald M. Loeb's The Battle For Investment Survival, Simon & Schuster, 1935.

See also:
Happy 75th Anniversary to one of the few MUST READ Investing Books: Gerald M. Loeb's "The Battle for Investment Survival" Chapters 1-3

Financial Times Weekend Special Issue: Forensics

From the Financial Times Weekend Magazine:

Police forensics: the inside story
From footwear identification prints to the digital analysis of cyber crime, the world of police forensics is rapidly evolving  
A vacuum metal deposition (VMD) machine which uses vapourised metals to enhance fingerprints on materials such as plastics
The burglars of Birmingham all wear Nike Air Max trainers. Within minutes of being called to a domestic break-in in the north of the city, Nick Parker, a forensic scene investigator, has dusted down the floor with magnesium powder and identified two sets of offending footprints. “You need fashionable footwear to burgle people’s houses,” he says wryly, crouched uncomfortably between the dining table, dresser and patio doors as he brushes away excess powder to sharpen the image. Soon, the characteristic pattern of squares emerges across the sole, together with a bow-shaped curve separating the ball of the foot from the heel. Parker knows that the criminals he tracks are particular about their appearance. When he’s called upon to confiscate suspects’ clothing, “it’s rare that you don’t open the wardrobe and see row after row of designer brands,” he says.

Parker, who started his career in the military, could not be more different from the ostentatiously fashionable criminals he describes. He has spent the past 23 years examining crime scenes and, like all investigators at West Midlands Police, wears a simple uniform of dark fleece, dark trousers and sturdy lace-up leather boots. FSIs, as they are known, find out what they’ll be doing the next day from watching the news the night before. As civilian police staff, they arrive at the scene only after warranted officers, paramedics and fire service personnel have torn through it, making arrests, dousing flames and tending to stricken bodies. Entering this aftermath, the investigators work with senior detectives to decide what evidence they need, before dusting, lifting, swabbing and photographing the traces left behind by offenders.

But in recent years, forensics has been forced out of the shadows. High-profile successes, such as the discovery of new DNA evidence in the murder of black London teenager Stephen Lawrence, have ­enabled historic convictions. At the same time, the profession — its profile raised by TV programmes such as Silent Witness and US equivalents CSI and NCIS — is facing a host of new difficulties. Forensics teams have suffered a disproportionate share of government cuts to police funding. Admittedly, dramatic falls in burglary and vehicle theft over the past decade have meant fewer crime scenes for FSIs to attend. However, these have been offset by sharp rises in online fraud and cyber crime, which demand new skills in digital analysis and preserving evidence from phones, tablets and laptops....MORE
Also at FT Weekend:
‘Forensics: The Anatomy of Crime’ at the Wellcome Collection
DNA: the next frontier

"The Purpose of Silicon Valley"

From MIT's Technology Review:
The view from Mike Steep’s office on Palo Alto’s Coyote Hill is one of the greatest in Silicon Valley.
Beyond the black and rosewood office furniture, the two large computer monitors, and three Indonesian artifacts to ward off evil spirits, Steep looks out onto a panorama stretching from Redwood City to Santa Clara. This is the historic Silicon Valley, the birthplace of Hewlett-Packard and Fairchild Semiconductor, Intel and Atari, Netscape and Google. This is the home of innovations that have shaped the modern world. So is Steep’s employer: Xerox’s Palo Alto Research Center, or PARC, where personal computing and key computer-­networking technologies were invented, and where he is senior vice president of global business operations.

And yet Mike Steep is disappointed at what he sees out the windows.

“I see a community that acts like it knows where it’s going, but that seems to have its head in the sand,” he says. He gestures towards the Hewlett-Packard headquarters a few blocks away and Hoover Tower at Stanford University. “This town used to think big—the integrated circuit, personal computers, the Internet. Are we really leveraging all that intellectual power and creativity creating Instagram and dating apps? Is this truly going to change the world?”

After spending years at Microsoft, HP, and Apple, Steep joined PARC in 2013 to help the legendary ideas factory better capitalize on its work. As part of the job, he travels around the world visiting R&D executives in dozens of big companies, and increasingly he worries that the Valley will become irrelevant to them. Steep is one of 22 tech executives on a board the mayor of London set up to promote a “smart city”; they advise officials on how to allocate hundreds of millions of pounds for projects that would combine physical infrastructure such as new high-speed rail with sensors, databases, and analytics. “I know for a fact that China and an array of other countries are chasing this project, which will be the template for scores of similar big-city infrastructure projects around the world in years to come,” Steep says. “From the U.S.? IBM. From Silicon Valley? Many in England ask if anyone here has even heard of the London subway project. That’s unbelievable. Why don’t we leverage opportunities like this here in the Valley?”
“This town used to think big—the integrated circuit, personal computers, the Internet. Are we really leveraging all that intellectual power and creativity creating Instagram and dating apps? Is this truly going to change the world?”
Steep isn’t alone in asking whether Silicon Valley is devoting far too many resources to easy opportunities in mobile apps and social media at the expense of attacking bigger problems in energy, medicine, and transportation (see Q&A: Peter Thiel). But if you put that argument to many investors and technologists here, you get a reasonable comeback: has Silicon Valley really ever set out to directly address big problems? In fact, the classic Valley approach has been to size up which technologies it can quickly and ambitiously advance, and then let the world make of them what it will. That is how we got Facebook and Google, and it’s why the Valley’s clean-tech affair was a short-lived mismatch. And as many people point out with classic Silicon Valley confidence, the kind of work that made the area great is still going on in abundance.

The next wave
A small group of executives, surrounded by hundreds of bottles of wine, sits in the private dining room at Bella Vita, an Italian restaurant in Los Altos’s picturesque downtown of expensive tiny shops. Within a few miles, one can find the site of the original Fairchild Semiconductor, Steve Jobs’s house, and the saloon where Nolan Bushnell set up the first Atari game. The host of this gathering is Carl Guardino, CEO of the Silicon Valley Leadership Group, an industry association dedicated to the economic health of the Valley. The 400 organizations that belong to the group are mostly companies that were founded long before the mobile-app craze; only 10 percent are startups. That is evident at this dinner, to which Guardino has invited three of his board members: Steve Berglund, CEO of Trimble, a maker of GPS equipment; Tom Werner, CEO of the solar provider SunPower; and Greg Becker, CEO of Silicon Valley Bank.

These are people who, like Steep, spend much of their time meeting with people in governments and other companies. Asked whether the Valley is falling out of touch with what the world really needs, each disagrees, vehemently. They are almost surprised by the question. “This is the most adaptive and flexible business community on the planet,” says Becker. “It is always about innovation—and going where the opportunity leads next. If you’re worried that the Valley is overpursuing one market or another, then just wait a while and it will change direction again. That’s what we are all about.”...MORE

Friday, January 30, 2015

"Boston Beats Seattle in Venture Capital Bowl With Biotechs as MVPs "

Seattle isn't really known for its VC scene, more of a BA, MSFT; AMZN vibe whereas Boston had the ashes of the Route 128 VC community to build on.
And some schools.

From Xconomy Boston:
It’s Super Bowl Friday—Super Blue Friday, here in Seattle, where the sun shines in January. Time for a good old fashioned venture capital showdown between Seattle and New England.

It’s not much of a contest, unfortunately. Venture investors did 390 deals in the greater Boston area last year, compared to 173 in Seattle, according to Seattle-based PitchBook.

By dollar value, the final score was New England, $4.8 billion, Seattle, $1.9 billion.

Interestingly, PitchBook counts 24 venture firms or angel groups that made investments in Seattle last year compared to only 19 in the Boston area.

The top-five most-active investors in each market, with the number of deals they did:

Atlas Venture, 36
TechStars, 14
Start Tank Boston, 12
General Catalyst Partners, 12
.406 Ventures, 12

Madrona Venture Group, 20
WRF Capital, 10
Ignition Venture Partners, 8
Maveron, 8
Vulcan Capital, 7

The top deals in each market were in biotech. New England wins again with Moderna Therapeutics’ $450 million round. Intarcia Therapeutics $200 million raise came second. In Seattle it was Juno Therapeutics, which closed two venture rounds in 2014, raising some $310 million, before going public to raise $265 million more. Adaptive Biotechnologies raised more than $200 million, also over the course of two rounds....MORE

"Crude Oil Prices Are Spiking (Again)"

Crude is up 6.78% on the day at $47.55.
From ZeroHedge:
Because - everything is awesome again. So the machines run the stops for the week but fail to hit $47, and no news, no catalyst, but naturally stocks decide to inch higher on this latest algorithmic idiocy.

Here's the close-up into the NYMEX close.. and drop...

And here's why... and how - this happened, and has happened so many times before, courtesy of your friendly, stop-hunting neighborhood algo:
...In early 2007, Defendants Optiver US, LLC ("Optiver"), Optiver Holding BV C'"Optiver Holding"), and Optiver VOF C'Optiver VOF") - the U.S. and Netherlards branches of a global proprietary trading fund headquartered in the Netherlands - developed and, in March 2007, implemented a scheme to manipulate the price of futures contracts in Light Sweet Crude Oil, New York Harbor Heating Oil, and New York Harbor Gasoline on the New York Mercantile Exchange ('"NYMEX").

... least 19 separate instances during the month of March 2007, Optiver, Optiver Holding, and Optiver VOF, led by head traders, Defendant Chrstopher Dowson C'Dowson") and Defendant Randal Meijer ('"Meijer"), repeatedly attempted to manipulate market prices - or in Dowson's own words, "'bully the market" - for the above-referenced energy futures contracts towards the end of the trading day.

... On at least five of the nineteen instances, Defendants succeeded in their manipulative scheme by causing artificial prices in certain of these energy futures contracts, resulting in serious harm to other market participants and, ultimately, to the public at large

"The Coming Shelter Dog Shortage"

I should note that children, women and dogs seem to like me, cats and some men, not so much.
From Out the Front Door:
It is becoming more and more obvious that supply and demand for shelter dogs in the United States is coming into balance. For example, the entire state of Colorado had a live release rate for dogs of 92% for 2013, and that was with over 17,000 dogs imported from kill shelters in other states. Dog transports have become big business, with dogs being moved from areas where they are not getting adopted to areas where they go out the door quickly. Generally speaking, New England and parts of the northeast, upper midwest, and Pacific northwest now have shortages of shelter dogs. With the spectacular progress that No Kill is making in places like Jacksonville, Atlanta, Baton Rouge, and other cities and counties in the southeast, the sending shelters may not be needing to send dogs for much longer.

If these trends continue – and it certainly seems like they will – we will have a shortage of shelter dogs for people wanting to adopt. What happens then? If the usual laws of supply and demand apply, commercial breeders will step up the number of dogs they breed to take advantage of the shelters who no longer have enough dogs to challenge them for market share. (Note: I’m talking about commercial, for-profit breeders here, not show breeders. Show dogs have their own set of problems, but most show breeders take reasonably good care of their breeder dogs and puppies and many of them do an outstanding job, including helping with rescue.)

So is there anything wrong with commercial breeders increasing their output? After all, the United States was built on commerce. I think commercial breeding is bad, though, for several reasons. First, dogs are not widgets. Commercial breeding has long been associated with puppy mills, where breeder dogs (who often have heritable health problems) are kept in terrible conditions and puppies are poorly socialized. The puppies are shipped, sometimes for long distances, to pet stores where they are kept in less than ideal conditions, which makes them more vulnerable to illness and trauma. They are then sold by people who may make little or no effort to match puppy temperament to the temperament of the purchaser. The puppies will likely be sold intact. Then, after the sale, there will be little or no follow-up to make sure the puppy is settling in with no problems....MORE
There's always a trade, somewhere.

Chartology: Silver Support and Resistance

Most active (Mar,) futures $17.18 up 40.7 cents
From Nifty Charts:


EIA Natural Gas Supply/Demand Report: Rise in Power Burn Offset By Flat Out Production

Repeating, for new readers, our natural gas thesis for this heating season:
Average temperatures swamped by record supply. We're going lower.
Most active March futures  $2.676  -0.043 last.
The market is in backwardation with March 2016's at 3.233.
20.8% for one year if you have the storage.

From the Energy Information Administration:
Led by growth in Texas, the Southeast, and Northeast, power burn is headed for a January record

Regional natural gas consumption for electric power generation, January 1-28, 2010-15Natural gas consumed in electric generation (power burn) has generally increased over the past 10 years, and power burn during the first 28 days of January is at record levels this year, according to data from Bentek Energy. So far in January 2015, power burn is more than 6% greater than the same period in 2014, and 16% higher than the five-year (2010-14) average for this period.

Regional growth for power burn is strongest in Texas, which increased its power burn so far this January by 17.5 billion cubic feet (Bcf), an 18% increase over 2014. Strong power burn growth this January also occurred in the Northeast and Southeast, which had power burn increases of 10% (12.5 Bcf) and 7% (13.5 Bcf), respectively. These three regions are among the largest users of natural gas for power generation in the country.

Contributing to this growth is an increasing share of natural gas-fired capacity and relatively low natural gas prices. From January through November 2014, 66 power plant units, with a total net summer capacity of 3,787 megawatts (MW), were retired in 19 states. The primary generation fuels for these plants were coal and petroleum liquids. More than half of the generating capacity retired during this period came from the Southeast and Northeast. In the Southeast, this included the 200-MW W. S. Lee power plant in South Carolina and the 444-MW Widows Creek facility in Alabama, both coal-fired. And in the Northeast, the Salem Harbor 744-MW coal-and-oil-fired facility in Massachusetts was retired. Additionally, in December, the 604-MW Vermont Yankee nuclear power plant was closed.

More than 300 utility-scale generating units, with a net summer capacity of 9,656 MW, were brought online in January-November 2014, with 46 being natural gas-fired units representing 48% (4,624 MW) of the total added capacity....MUCH MORE
And from FinViz a graphic depiction of supply/demand:

Russian Bombers Intercepted Over English Channel

bomber russia
A photo taken in October and provided by Britain’s Royal Air Force shows a Russian “Bear” bomber 

From The Guardian:
Russian ambassador summoned to explain bombers over the Channel 
British Typhoon fighter jets were scrambled to intercept the two Russian planes, which were flying close to UK airspace

The Foreign Office summoned Moscow’s ambassador to London this afternoon to complain about a flight by two Russian bombers over the Channel, which Britain says posed a potential danger to civilian flights.

The Ministry of Defence confirmed that RAF Typhoon jets were scrambled to intercept a pair of Tupolev 95 “Bear” planes on Wednesday, as they flew along the south coast. A spokeswoman said: “The Russian planes were escorted by the RAF until they were out of the UK area of interest. At no time did the Russian military aircraft cross into UK sovereign airspace.”

A FCO spokeswoman said: “While the Russian planes did not enter sovereign UK airspace and were escorted by RAF Typhoons throughout the time they were in the UK area of interest, the Russian planes caused disruption to civil aviation. That is why we summoned the Russian ambassador to account for the incident.”...MORE
RAF Fighter Command was unavailable for comment.

Charting the Divergence Between Oil and Energy Sector Equities

It's too early for the equities.
March WTI $45.15 up 0.62; XLE $74.26 down 0.85%; XOP $44.88 down 0.64%.
From Hard Assets Investor:

Despite Oil Price Collapse, Valuation Of Energy Stocks Surge 
A rebound in oil and natural gas is already priced into shares.

“The plunge in crude oil and natural gas prices has spurred a sell-off in energy stocks, making it a good time to buy the beaten-down sector.”

That's the thesis that many investors are embracing, with billions of dollars flowing into oil and gas stocks and exchange-traded funds in recent weeks. Nearly $10 billion has flowed into energy-related ETFs since late November.

But are energy stocks really a bargain, or is there more downside to come? A look at the sector earnings reveals that energy companies are actually trading at their most lofty valuation in years, a reflection of investors' expectations that the drop in oil prices will be short-lived.

Not Falling As Fast As Oil
While oil's decline has been swift and relentless since peaking above $107 in mid-June, the decline in oil stocks hasn't been as nearly as dramatic. In that period, WTI crude oil, the U.S. benchmark, has fallen 58 percent, while the energy sector within the S&P 500 has shed about 24 percent.

Oil Performance Since Peak

Some of the divergence can be attributed to the fact that the S&P energy sector is heavily weighted in integrated oil giants. Big Oil like Exxon Mobile and Chevron are conceivably benefiting from oil's slide in their downstream (refining) operations at the same time their oil-price-dependent upstream (exploration and production) operations suffer.

But that's certainly not the whole explanation. Exxon's earnings-per-share estimate for 2015, for example, has fallen from nearly $8 in August to $4.32 today, a decline of 46 percent. Analysts have been slashing earnings estimates for energy companies left and right, yet they are still using price decks well above the current market.

The analyst estimate consensus for WTI crude oil prices is $62 for 2015 and $75 for 2016, down from $94 for both years just three months ago, but above current prices near $44. At the same time, analysts have sliced their natural gas price estimates to $3.71 for 2015 and to $4 for 2016, down from a few months ago, but well above current prices near $2.70/mmbtu.

Oil Rebound Already Priced In
Yet even at analysts' price deck of $62 for oil and $3.71 for natural gas, energy stocks are trading at their highest valuation since 2002. Based on current 2015 estimates, the sector has a forward price-to-earnings ratio of more than 23. That compares with the 10-year average of 12.3....MORE

"Is China Moving to Control the Indian Ocean?"

From The Diplomat:
Is China Moving to Control the Indian Ocean?
USS Carl Vinson and the Indian navy oiler INS Shakti
Your Friday China reading:

Two fascinating pieces on China’s military strategy emerged this week. First, Abhijit Singh takes up the question of China’s naval ambitions in the Indian Ocean as part of the PacNet series hosted by CSIS. Singh points to China’s recent naval deployments in Sri Lanka as “evidence that Beijing has its sights set on dominating the Indian Ocean.” Particularly worrisome for Singh is the fact that China’s submarine did not dock with the Sri Lanka Port Authority in Colombo, but chose instead to dock “at the Colombo South Container Terminal (CSCT), a deep-water facility built, controlled and run by a Chinese company.” That and other dockings at the Chinese-built port, Singh explains, have strengthened “Indian suspicions that PLA-N assets are being allowed privileged access to Sri Lankan ports funded by Chinese investments.” Given China’s major push to invest in ports throughout Southeast and South Asia (and even Africa) as part of its Maritime Silk Road, the question of how (if at all) the PLA Navy plans to use these assets will only gain in importance....MORE
Shadow War: We Told You the Indian Ocean Would Be Hot
In our November 2010 post "India Orders Firms to "Scour the Earth" for Energy Supplies as President Obama Heads Over" I mentioned:
I have a hunch that American schoolkids today will be hearing a lot about the Indian Ocean before they graduate and might even be able to find it on a map.*...
...*I mean come on, just look at the land masses that border it:

Map of Indian Ocean
Here's the latest, from Wired's Danger Room blog...
See also:
Indian Ocean Geopolitics: China Goes to the Maldives

"The Secret to Getting a 99,766 Percent Return in the Art Market"

From Bloomberg:

<p><em>Salisbury Cathedral from the Meadows</em> by John Constable</p>
Near the end of the Old Master Paintings sale at Sotheby’s New York today, a small painting of a church steeple and fields by the British artist John Constable flashed on the screen.

Bidding for the painting began slowly—it started at $1 million and went upward in $100,000 increments—but the pace picked up when two anonymous phone bidders faced off, driving the price well past its presale estimate of $2 million to $3 million. By the time it hit $4 million the room had become totally silent, and it was then that one untraceable male voice in the back muttered, “Someone at Christie’s is going to get fired.”

Normally, when a painting does well at Sotheby’s, the only reaction from its archrival Christie’s is off-the-record disdain (or at most, professional jealousy for missing out on the consignment in the first place). In the case of the Constable, titled Salisbury Cathedral from the Meadows, the problem for Christie’s is that it had in fact been consigned to them just two years ago. And they’d sold it, too … for just $5,212, or approximately 57,559 percent less than Sotheby’s presale high estimate.

Come again?

Even in today’s white-hot art market, the only way for a painting to realize that percentage increase in value in so short a time is if it’s “discovered” as a painting by a different artist entirely, and that’s exactly what happened with the Constable.

It was sold in a 2013 estate sale of Hambleden Manor in Buckinghamshire by Maria Carmela Viscountess Hambleden, then 83, who had decided to liquidate the contents of her house and move into a nearby cottage. The painting was auctioned as a “Follower of John Constable” and carried an estimate of £500 pounds to £800. Its final sale price was £3,500.

Sotheby’s catalogue states that at the time of the purchase, the painting was “heavily retouched with a dark and opaque pigment which probably dated to the late 19th or early 20th century, in a misguided attempt to ‘finish’ the painting.” After the painting was cleaned by the new buyer, Sotheby’s says, “the Constable’s original and brilliant conception has been once again revealed.”

Christie’s, however, has a different take on things. In statement today, a spokesperson said, “We are aware that Sotheby’s have sold this work as by Constable. We took the view at the time of our sale in 2013 that it was by a “follower of.” We understand that there is no clear consensus of expertise on the new attribution.”...
Also at Bloomberg:
You Can Own a Banksy for Only $5,317 

Venture Capital: "Quantum" Computing Co. D-Wave Raises $29 Mil From Goldman, Bezos, CIA

The usual suspects. although technically In-Q-Tel is distinct from the CIA.
From PE HUB:
D-Wave Systems Inc, a quantum computing company headquartered in Burnaby, British Columbia, has secured C$29 million in funding. The investors in this round were not named; however, D-Wave’s previous backers include Bezos Expeditions, BDC Capital, DFJ, Goldman Sachs, Growthworks, Harris & Harris Group, In-Q-Tel, International Investment and Underwriting and Kensington Partners Limited.

Burnaby, British Columbia – January 29, 2015 – D-Wave Systems Inc., the world’s first quantum computing company, today announced that it has closed $29 million in funding from a large institutional investor, among others. This funding will be used to accelerate development of D-Wave’s quantum hardware and software and expand the software application ecosystem. This investment brings total funding in D-Wave to $174 million (CAD), with approximately $62 million raised in 2014.

“The investment is a testament to the progress D-Wave continues to make as the leader in quantum computing systems,” said Vern Brownell, CEO of D-Wave. “The funding we received in 2014 will advance our quantum hardware and software development, as well as our work on leading edge applications of our systems. By making quantum computing available to more organizations, we’re driving our goal of finding solutions to the most complex optimization and machine learning applications in national defense, computing, research and finance.”

The funding follows a year of strong growth and advancement for D-Wave. Highlights include:
• Significant progress made towards the release of the next D-Wave quantum system featuring a 1000 qubit processor, which is currently undergoing testing in D-Wave’s labs.
• The company’s patent portfolio grew to over 150 issued patents worldwide, with 11 new U.S. patents being granted in 2014, covering aspects of D-Wave’s processor technology, systems and techniques for solving computational problems using D-Wave’s technology....MORE

"AP's 'robot journalists' are writing their own stories now"

Gets hired on Monday….Laid off on Friday…

 From The Verge:
Minutes after Apple released its record-breaking quarterly earnings this week, the Associated Press published (by way of CNBCYahoo, and others) "Apple tops Street 1Q forecasts." It's a story without a byline, or rather, without a human byline — a financial story written and published by an automated system well-versed in the AP Style Guide. The AP implemented the system six months ago and now publishes 3,000 such stories every quarter — and that number is poised to grow.

Quarterly earnings are a necessity for business reporting — and it can be both monotonous and stressful, demanding a combination of accuracy and speed. That's one of the reasons why last summer the AP partnered with Automated Insights to begin automating quarterly earnings reports using their Wordsmith platform.

You wouldn't necessarily know it at first blush. Sure, maybe reading it in the context of this story it's apparent, but otherwise it feels like a pretty standard, if a tad dry, AP news item. The obvious tell doesn't come until the end of an article: "This story was generated by Automated Insights." According to AI's public relations manager James Kotecki, the Wordsmith platform generates millions of articles per week; other partners include Allstate, Comcast, and Yahoo, whose fantasy football reports are automated. Kotecki estimates the company's system can produce 2,000 articles per second if need be.

"I wouldn't expect a good journalist to not be skeptical."

Philana Patterson, an assistant business editor at the AP tasked with implementing the system, tells us there was some skepticism from the staff at first. "I wouldn't expect a good journalist to not be skeptical," she said. Patterson tells us that when the program first began in July, every automated story had a human touch, with errors logged and sent to Automated Insights to make the necessary tweaks. Full automation began in October, when stories "went out to the wire without human intervention." Both the AP and Automated Insights tell us that no jobs have been lost due to the new service. We're also told the automated system is now logging in fewer errors than the human-produced equivalents from years past....MORE
Yeah, but can the robots balance three cups of coffee?
Or do photojournalism?

Journalisming like a boss #partylikeajournalist 

P. Murphy?
More links at "Robot Writing Moves from Journalism to Wall Street"

"Unconscious thought not so smart after all"

Apparently scientific journals have changed since I was in school.

From Nature:
Study on decision-making stokes controversy over power of distracted mind.
John Springer Collection/Corbis

Under debate: can solving an unrelated puzzle help someone make a complex decision?
If you have to make a complex decision, will you do a better job if you absorb yourself in, say, a crossword puzzle instead of ruminating about your options? The idea that unconscious thought is sometimes more powerful than conscious thought is attractive, and echoes ideas popularized by books such as writer Malcolm Gladwell’s best-selling Blink.

But within the scientific community, ‘unconscious-thought advantage’ (UTA) has been controversial. Now Dutch psychologists have carried out the most rigorous study yet of UTA — and find no evidence for it.
Their conclusion, published this week in Judgement and Decision Making, is based on a large experiment that they designed to provide the best chance of capturing the effect should it exist, along with a sophisticated statistical analysis of previously published data1.

The report adds to broader concerns about the quality of psychology studies and to an ongoing controversy about the extent to which unconscious thought in general can influence behaviour. “The bigger debate is about how clever our unconscious is,” says cognitive psychol­ogist David Shanks of University College London. “This carefully constructed paper makes a great contribution.” Shanks published a review last year that questioned research claiming that various unconscious influences, including UTA, affect decision making2.

A typical study probing UTA asks subjects to make a complex decision, such as choosing a car or a computer, after either mulling over a list of the object’s attributes or viewing the list quickly and then engaging in a distracting activity such as a word puzzle. However, such studies have drawn different conclusions, with about half of those published so far reporting a UTA effect and the other half finding none.

Proponents of the theory claim that the effect is exquisitely sensitive to experimental variations, and often attribute the negative results to the fact that many research groups varied elements of the set-up, such as the choice of puzzle used for the distraction3. Critics say that the positive results came from having too few participants in the experiments....MORE
HT: Marginal Revolution

Ya gotta love the deeper dive:

Related stories

Thursday, January 29, 2015

London’s FTSE 100: Battling 15 year Resistance Level

Thursday close: 6810.60 down 15.34.
But that was before today's big reversal in the U.S. markets,
From See It Market:
With London’s FTSE 100 Index, the current price area has stood as particularly durable resistance for more than a decade. We are watching to see whether the index can leave a lower high at the start of 2015.
The FTSE includes the top 100 stocks on the London Stock Exchange based on market capitalization. Together, the 100 companies represent more than 80% of the market capitalization of the entire exchange. Thus it has a role similar to those of the S&P 500 Index.
Market bulls have been unable to push the index above the two sets of prior highs — the most recent in 2007 at 6754.10 and the all-time high in late 1999. If the resistance area holds again, the index could start a new retracement process that lasts several months or even persists for years, taking price back to the lower edge of the 15-year range.
FTSE 100 Index Monthly Chart
FTSE resistance levels_ftse 100 index monthly chart
The weekly chart below shows how frequently the index has probed the resistance line during the last two years. Also, since last autumn, price has spent a considerable amount of time below the lower boundary of the weekly channel. This is not something one should see if there is still much appetite for buying.
FTSE 100 Index Weekly Chart
FTSE resistance levels_ftse 100 index weekly chart
The silver lining of a downward forecast is that a retest of the lower price areas around 4,300 or 3,650 could become the platform from which another advance is built — one lasting several years or even a decade....MORE

Shipping: "Baltic Dry Index Death Spirals to Near 30-Year Low"

From Reuters via gCaptain:
The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, spiralled downwards to its lowest level in nearly three decades as rates for all the four vessel types continued to flounder.

The overall index, which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertiliser, was down 34 points, or 5.11 percent, at 632 points, the lowest since August 1986. The index is also seen by investors as an indicator of global industrial activity.

Brokers said the dry bulk market was expected remain in the doldrums due to weak commodity demand at present especially from top global importer China.

“Dry bulk remains under pressure across all segments on the back of very thin spot demand,” Omar Nokta of Clarkson Capital Markets, said.

Weak demand for commodities, such as iron ore, has put pressure on smaller, higher-cost producers and this has taken its toll on the dry freight market.

“We believe that despite softer prices/margins, low cost Australian producers will continue to meet targeted production with negative implications for dry bulk tonne-mile demand,” Wells Fargo Securities analyst Michael Webber said, referring to producers such as Rio Tinto and BHP Billiton....MORE

Venture Capital: "Investors Think Business Insider Doubled Its Value in Less Than a Year"

From re/code:
Last March, Jeff Bezos and other investors who put money into Business Insider thought the news site was worth $100 million.

Now they think it’s twice as valuable. Sources say Business Insider’s newest funding round, led by German publisher Axel Springer, pegs the company’s value at $200 million*. Business Insider’s backers invested $25 million in this round, which means the company has raised more than $55 million since 2007.

The company won’t comment on its valuation or financials, but a person familiar with Business Insider said it generated $30 million in revenue last year, up from around $18 million in 2013.

For context: Lots of digital publishers are raising lots of money! Last summer Vice raised $500 million in a round that valued the company at $2.5 billion, and BuzzFeed raised $50 million at an $850 million valuation. Last fall Vox Media raised $46.5 million in a round that valued that company at $380 million. Oh! And Mashable just raised $17 million as well. No word on that valuation.

Business Insider says it will use the new money to grow in the U.S. and internationally. Last year, the company launched a U.K. edition, and people familiar with the company expect it to look at a German version, likely in conjunction with Axel Springer. The German publisher is already in a joint venture with Washington, D.C.-based Politico and plans to launch a European version of Politico this spring....MORE

It's The Internet, Stupid: "The Real Problem with Public Discourse"

For readers too young to remember, "It's the economy, stupid" was a variant of the line Bill Clinton's #1 strategist for the '92 campaign, James Carville, came up with to motivate and focus the campaign's workers.

From Drexel University's The Smart Set:

"the stamp act sux thanks obama"
From Humphrey Ploughjogger to plowjag666
I distinctly remember when I stopped reading online comments about my essays. For some time I had been reading them on a website of a magazine that published me and allowed unedited comments. To my disappointment, no knowledgeable critic had pointed out errors in my work that I could correct, or made informed arguments that forced me to rethink my position. The commenters seemed more interested in insulting one another. 

Mrpoophispants, for example. The avatar that went with the name showed a wailing baby in diapers. (I have changed the name and image slightly, to protect the guilty). In the comments section under my essay, Mrpoophispants accused the Incredible Hulk (again, I have slightly changed the name) of being like Hitler. No, the green and musclebound Hulk told the baby in diapers, you are like Hitler. It went downhill from there.
I remember thinking: Really, who insults people online while hiding behind the screen name of Mrpoophispants? Around that time I had read about the case of a well-respected dentist who was outed as a notorious online troll. (And you wonder what your doctors are doing, while they keep you waiting — they are writing snarky comments about newspaper columnists and TV anchors). I had also read that online commenters are disproportionately middle-aged and elderly men. This information helped me to imagine my online commenter’s alter ego, his Clark Kent or Bruce Wayne:
Bob Anderson, 64, chuckled to himself, as he settled down in his Snuggies behind his computer, having returned from picking up his arthritis meds at the drugstore. A whole afternoon of anonymous online vituperation against famous authors and other online commentators awaited him. And the best thing about it was, nobody in his life — not his parents, his adult children, his grandchildren, not his neighbors nor the members of his church congregation—knew that Bob Anderson, retired accountant, family man, churchgoer and pillar of his suburban community, was really the infamous scourge of the Internet, that dreaded and admired titan among trolls, Mrpoophispants.
I thought of Mrpoophispants when I read Jonathan Chait’s widely-discussed essay for New York magazine, “Not a Very P.C. Thing to Say,” and Glenn Greenwald’s response, “The Petulant Entitlement Syndrome of Journalists.” For what is worth, I think both get a lot right — but they also get some things wrong.
Unlike Chait, I think that public discourse is threatened less by a resurgence of 1990s-style political correctness than by Internet-enabled anonymity (yes, Mrpoophispants, I’m talking about you). Wearing a mask tends to liberate repressed impulses; that was the whole point of Venetian costume ball masks and the white robes and hoods of the Ku Klux Klan. Allowed to hide their identities, progressives, conservatives, and centrists alike are liable to abandon self-restraint and hoot and shriek from the safety of anonymity in an online mob. Anonymity turns the Internet into the Id Net....MORE

A moral case for bank money

From Magic, Maths and Money:
Finance is a skeleton that supports the development of a healthy society, not a utility that plumbs the economy together. The justification for this observation is historical. Richard Seaford has argued that the culture that emerged in Greece some two and a half thousand years ago, creating a unique approach to science and democratic politics, was a consequence of a peculiar Greek invention; money, a token that signifies trust between citizens. The flowering of European culture, and the genesis of modern science, in thirteenth century Europe followed, and some argue was a consequence of, a period of rapid monetisation of society that initiated the end of feudalism. Similarly, western Europe’s development accelerated ahead of the rest of the world in the seventeenth century powered by financial innovations in the Netherlands and Britain.

Charles Mackay in his classic comparison of England’s South Sea Bubble and France’s, almost simultaneous, Mississippi Bubble, emphasises the different reactions in France and Britain to the credit bubbles. In the aftermath of the crises, the French inhibited the development of private banks but maintained the autocratic political system, whereas the British reformed the political system and enabled the development of finance. The results of Britain’s Financial Revolution were Agricultural and Industrial Revolutions along with the eclipse of France as a global power. For France, dependent on taxation to fund the state, there was the ultimate collapse of the political system in bloody revolution.

Getting the structure of our financial system right is not a trivial matter.

One argument gaining support is that the root of recent problems in finance is the private creation of money by banks, and so the solution is to strip banks of this ability. What this would entail is not clear but a core theme is that transactions would involve minted cash (physical or electronic), not paper money. We can visualise the practical consequence of this in little brown envelopes on pay-day containing coins and Bank of England notes. No bank transfers, certainly not in the foreseeable future, meaning no debit cards at the supermarket checkout and the replacement of cyber-crime by good old-fashioned robbery. This makes concrete part of the problem  Martin Wolf identifies when he makes the observation that "The transition to a system in which money creation is separated from financial intermediation would be feasible, albeit complex."   It might prove impossible to get through the Christmas binge, when there is widespread short-term demand for cash.  Could a computer system cope with the funds transfers associated with Black Fridays and Cyber Mondays without the ability to create money? Banks, in this environment, would come to resemble peer-to-peer lending facilitators and the consequence would be that people who have wealth, or are connected to wealthy networks, could buy expensive things, but for the majority it would be harder to get a mortgage.  While this might sound a bit draconian to the British, Germans still have a preference for cash and traditionally live in rented accommodation, having long connected debts (schulden) and guilt (schuld) and, after all, they have done well economically.

Unfortunately it is not certain that German economic success rests on the German preference for cash. An equally plausible explanation is the structure of the German banking system, which, unlike the British and U.S. systems, is not dominated by private profit seeking banks but has a significant sector of not-for-profit, regional, financial institutions. An IMF paper highlights how countries with this type of financial system, including France and Spain, did not require the massive government bailouts that British and U.S. banks did in 2008-2009. Mutuals and public banks create money in the same way as privately owned banks and so preventing banks from creating money seems to be a rather extreme solution when the problem might be elsewhere.

Calls to prevent banks from creating money to ensure financial stability resemble calls to ban the internal combustion engine to prevent climate change. It would clearly go a long way to solving the problem, in theory, but is totally impractical. One group who would like to see the debate on banking reform focus in on money creation are the banks themselves, because they can be confident that if this is where the debate is centred, nothing will change. Most voters need bank credit just as they need cars....MORE

Fed Tells Markets It Will Be A Patient and Gentle Lover, Markets Puke a Little

From Real Time Economics:

7 Takeaways From the January Fed Statement: ‘The Committee Judges That It Can Be Patient’ 
What caught our eye in the Federal Reserve’s January policy statement released Wednesday.

No Rate Hikes Until at Least June as Fed ‘Patient’
Fed officials have reaffirmed their assurance they are likely to remain patient in considering the timing of the first interest rate increase since 2006. That, according to Yellen, means no lifting rates from zero for at least another two policy meetings.—Pedro Nicolaci da Costa

Fed Upgrades its Assessment of Job Gains, Economic Growth
The Fed is feeling a little better about the state of the job market and economic growth more broadly. The statement says economic activity has been expanding at a “solid pace,” versus December’s description of a “moderate pace.” The statement calls recent job gains “strong,” an upgrade from last month’s “solid” job gains. But the Fed also added language about inflation heading lower due to falling energy prices. —Ben Leubsdorf

Fed a Bit More Worried About Inflation Outlook
Fed policy makers still believe U.S. inflation will return to the central bank’s 2% target after dipping further in the near term due to oil’s slump. But their confidence is showing signs of fraying. In particular, the Fed today flags a substantial decline in market-based inflation compensation. In December, they had described those expectations as having fallen “somewhat further.”—Pedro Nicolaci da Costa
You can probably figure out the time the release came out:

Looking for a Replacement for SkyMall?: Oh Wow Tao Bao

From Tao Bao via the OhWowTaoBao tumblr (once seen, it can't be unseen):

HT: I think it was Mark Andreessen

Smart Talk On Oil Stocks

I'm getting bored with saying "It's Too Early" to mess with oil stocks but if you must have exposure...
From Barron's Stocks to watch:

Chevron & ExxonMobil: Time For Plan B?
Citigroup’s Alastair Syme and team worry that big-oil companies like Chevron (CVX), ExxonMobil (XOM), and ConocoPhillips (COP) might betting too much on a return to higher oil prices. They explain:
Until now the industry’s Plan A to restoring profitability has been to rely on a return to higher oil prices. The industry now looks to be adopting a variant – Plan A-star – which emphasises some capex cuts and cost-control but still with a fundamental view that higher oil prices will come to the rescue. We think investor’s interests will only be achieved if the industry commits to full self-help action – a Plan B – where the underlying principle is that oil prices may not recover any time soon…
Within this context we think the equity market’s focus on Big Oil dividend yield as a valuation tool is an unhealthy obsession. The truth is that dividend cover for the group remains poor (the marginal income investor – the bond investor – we think continues to shy away due to the lack of security) and cutting capex will not pay dividends forever. Getting return-on-equity back above cost-of-equity is paramount. If spot oil prices persist then we think the group needs to push through a minimum of 20% cost-reduction in the E&P business to achieve this....MORE

The Astonishingly Clever Ways the Chinese Launder Money and Move Assets

As long time readers know, I have a morbid fascination with the underbelly of the markets, in all its permutations.
Following up on (and linking to) yesterday's "China Cracks Down on Using Art for Corruption" David Keohane spots the larger story.

And no, we didn't link simply because he gave us the HT, this is quite amazing stuff and if one can figure out how to interposition one's self in the flow, there is money to be made.

As it is, I'll have to wait a couple hours before my ace translator can tell me the Mandarin for "Would you like to come up and see mein Klimt?"

From FT Alphaville:
Remember Roubini going off about the art market in Davos? About how “Whether we like it or not, art is used for tax avoidance and evasion” and “While art looks as if it is all about beauty, as a business it is full of shady stuff”?
Well here are two bits of related Chinese art market shenanigans for you.
The first, from the Epoch Times, is about corrupt officials who peddle their works of calligraphy to disguise bribes (via Climateer and The Art Market Monitor)....

... The second is part of a motley assortment of ways in which dodgy money in China gets moved about. Check out “Hard-to-value assets” about half way down and then realise how art is just a small part of this.
From the ever reliable Anne Stevenson-Yang of JCapital:
In a series of meetings with the anti-money-laundering offices of banks, brokerages, and insurance companies a couple of weeks ago, I learned about the channels through which the big money passes. The business is enormous. Banks and insurers typically flag roughly half of large transactions, over RMB 10 mln, for eyeball review, after which around 10% of all large transactions are reported to the PBOC as potential laundering. Channels for moving the money are astonishingly varied, and household-level transactions, under 10 million RMB, would have a similarly eclectic list. Major takeaways:
  • Insurers: Insurance companies are the biggest channels for money laundering. This is because settlements do not match premium income and therefore become virtually impossible to audit. Likewise, insurance payouts are often directed to inheritors, companies, or other parties who are not the premium payer. Recent liberalization of insurance company capital investment rules abets their participation in large money transfers of all sorts....

Speaking of Klimts, Here's the one Ronald (Thanks Mom)  Lauder dropped $135 mil. on (NYT), #5 on the world's most expensive paintings list.

Portrait of Adele Bloch-Bauer I (1907)

Wednesday, January 28, 2015

"DoubleLine’s Gundlach is Bullish on Gold"

This is not making me happy.
We know that by the year 2160 gold will be trading hands for pennies, but between now and then...
$1284.60 last.

From Barron's Focus on Funds:
The King of Bonds is buying gold.

Jeffrey Gundlach told attendees at the Inside ETFs conference on Tuesday that he added to his position in the yellow metal in recent weeks amid a “cyclone of major events” unfurling across the globe. Gundlach also said that Treasury bond yields could fall farther in 2015 and that oil prices are likely to remain stubbornly low for the rest of this year.

Gundlach, chief investment officer at $64 billion investment firm DoubleLine Capital, voiced optimism for gold in a sprawling presentation punctuated with nursery-rhyme analogies (pat-a-cake, pat-a-cake = European Central Bank monetary easing).
“Gold remains a safe haven in times of turmoil,” Gundlach said. “People have given up because [it was] boring and painful.”
He added that gold price gains typically are reasonably good at predicting market volatility and quipped gold’s yield (zero) is higher than that of Swiss bonds. Payouts on Swiss government bills recently turned negative.

Gundlach said that the Federal Reserve is likely to raise interest rates this year, but also that uncertainty about the future of the European monetary union will drive demand and suppress yields. That’s a reiteration of what Gundlach told Barron’s in an interview last month. Gundlach was among the only market forecasters to predict that yields would fall in 2014. Still, he cautioned against flip-flopping this late into the bond price move:
“Buying bonds now, when you hated them last year, can only be called performance chasing.”
Fallout from tumbling crude oil prices likely hasn’t manifested everywhere in the U.S. economy yet, Gundlach said, keeping him leery about junk debt in spite of recent price declines...MORE 
See also:
"The Price of Gold in the Year 2160"
Chartology: Silver Just Crossed A Very Important Level (SLV)

We changed direction with the Swisscapades of Jan. 15 in:
Chartology: A Possible Trend Change as Gold Rises Above Its 200-Day Moving Average (GLD)
Following up on my earlier reasoned analysis, "*#$ @! Swiss".
Feb. gold $1262.10 up $27.10....
Here's the recent action via FinViz:

Chartology: Oil Support at $40, $35, $32.50, $27...

This is the Line of Death.

This is the new Line of Death.

From Dragonfly Capital:

The Longer Outlook in ….. Crude Oil
Crude Oil had a log flume like ride lower over the last 7 months. Except that the water at teh bottom has not splashed yet. This has many experts talking about the sustainable price of drilling via fracking and oil sands, as well as the break even cost for many Middle Eastern countries. There are discussions about how the drop is somewhat intentional to stick to Putin and Russia, or how the Saudi’s are trying to reassert themselves on the global energy scene following the US becoming energy independent. Lot of talk. And with every move lower in the black liquid come lower price targets from those same professionals and analysts. Nothing new here.

But for technical analysts talk is cheap. Oh, now all the narratives out there can have some value, but stories do not come with a timestamp and price move. The actual price data has a whole lot more to offer and then chart of Crude Oil below has a lot to say.
crude oil
The first thing that stands out in this chart is the weighted volume at price bars on the left hand side. There was a lot of price history to work through between 85 and 105, and then still large history all the way down to 65/barrel. But since then the price history has hit a pot hole and that pot hole gets deeper until the price reaches 32.50/barrel.

The second thing to notice is that the price has broken the rising 16 year price trend support line, and unless it rises back over 48/barrel by month end (3 trading days as I write, I will revise this section Saturday) will close under it. That would be a major breakdown....MORE

Oxford's Bodleian and the University of Michigan Libraries Release 25,000 Early English (1473-1700) Books to the Internet

Via MetaFilter: 
January 28, 2015 7:12 AM   Subscribe
The University of Michigan Library, the University of Oxford's Bodleian Libraries and ProQuest have made public more than 25,000 manually transcribed texts from 1473-1700 — the first 200 years of the printed book. Full text access. Multiple format downloads, including ePUB. Or just download the entire corpus.

The texts represent a significant portion of the estimated total output of English-language work published during the first two centuries of printing in England.

The release via Creative Commons Public Domain Dedication marks the completion of the first phase in the Early English Books Online-Text Creation Partnership (EEBO-TCP). An anticipated 40,000 additional texts are planned for release into the public domain by the end of the decade.
posted by Bobby Rijndael (17 comments total) 21 users marked this as a favorite
Great stuff there! A few nuggets for fans of Sam Pepys.
posted by beagle at 7:23 AM on January 28 [2 favorites

Oil Collapse: Build In Inventories Double Estimate; Goldman Says Sell

March WTI $45.25 down 98 cents after trading down to $44.52.
We're going lower.
From ZeroHedge:

Crude Supplies Surge To Highest Since At Least 1982
EIA Inventory build was double expectations at 8.87 million barrels...

With Total Crude Supply at its highest since at least 1982...

*  *  *
Remember how exuberant yesterday's small gains in Crude Oil were perceived to be? Yeah - that's all over, with WTI back near a $44 handle - following a large 12.7 million barrel inventory build according to API (EIA reports the 'main event' at 1030ET today - which Saxo Bank warns "a bigger-than-expected build would likely push the mkt over the cliff edge.") Additional weakness overnight is also likely due to Goldman's shift to a 'sell' for the next 3 months.