Saturday, December 31, 2016

This Land Is Your Land, This Land Is My Land: Woody Guthrie's New Year's Resolutions

Via Flashbak:

‘Wash Teeth If Any’ And Woody Guthrie’s 32 Other New Year’s Resolutions (1943)
1. Work more and better
2. Work by a schedule
3. Wash teeth if any
4. Shave
5. Take bath
6. Eat good — fruit — vegetables — milk
7. Drink very scant if any
8. Write a song a day
9. Wear clean clothes — look good
10. Shine shoes
11. Change socks
12. Change bed cloths often
13. Read lots good books
14. Listen to radio a lot
15. Learn people better...

And from a simpler time (the 2004 Presidential contest) JibJab:

Happy New Year 2017!

A Quick Victory Lap (and some wisdom from Warren Buffett) NVDA

It's not every year that a stock we incessantly yammer-on about ends up being the best performer in the S&P 500 but that's what happened with NVIDA in 2016. So I'm going to take the VL while I can.

Our first 2016 post on the company was January 5's "Class Act: Nvidia Will Be The Brains Of Your Autonomous Car (NVDA)" which began:
This is one of the very few individual names you'll see us touting out in public on the blog.
As it turned out, in 2015 NVDA was the fourth best performing stock in the S&P 500.
Sometimes you get lucky.
$32.37 Monday close, $36.24 all-time high, August 2007....
We had been posting on the company since May 2015's "Nvidia Wants to Be the Brains Of Your Autonomous Car (NVDA)" but it was that January post, following on November 2015's "'NVIDIA: Expensive and Worth It, Says MKM Partners' (NVDA)" that really began the hard sell:
We don't do much individual stock stuff on the blog but this one is special.
We use it as an example of what Silicon Valley used to be, when high tech meant high technology and not a new app for some (still) mundane task.

Simply put, NVIDIA makes some of the fastest computer chips in the world.
They are used in gaming systems that require graphics that don't  make you (literally) puke. Right now automakers use their chips for graphic displays....
By May the spiel had evolved to:
NVIDIA Sets New All Time High On Pretty Good Numbers, "Sweeping Artificial Intelligence Adoption" (NVDA)
We are fans.
Before we go any further, our NVIDIA boilerplate: we make very few calls on individual names on the blog but this one is special.

They are positioned to be the brains in autonomous vehicles, they will drive virtual reality should it ever catch on, the current businesses include gaming graphics, deep learning/artificial intelligence, and supercharging the world's fastest supercomputers including what will be the world's fastest at Oak Ridge next year.
Not just another pretty face.

Or food delivery app....
And in July's "Nvidia’s Eye-Tracking Tech Could Revolutionize Virtual Reality" (NVDA) I started moaning by adding to the boilerplate:
...While we are long-time fans of this little superstar we've given up posting each time NVIDIA trades at a new all-time high: we'd have something on the blog almost every day and there would be no time to get any actual work done. the stock is down $1.05 (1.95%) at $53.17 and this dropped out of one of the feedreaders....  
All told, we put up something like 100 posts on NVDA. Here's the quick search if interested.
Anyhoo, you probably know how the story ends and are getting impatient wondering "Where's Warren Buffett?"
Here's our second-to-last 2016 post on NVIDIA, yesterday's "Chipmaker Nvidia tops S&P 500 as best performer of the year"

And here's Warren, from his letter to shareholders, 1985:
Our gain in net worth during the year was $613.6 million, or 48.2%. It is fitting that the visit of Halley’s Comet coincided with this percentage gain: neither will be seen again in my lifetime. Our gain in per-share book value over the last twenty- one years (that is, since present management took over) has been from $19.46 to $1643.71, or 23.2% compounded annually, another percentage that will not be repeated....
And that's why we take the lap now, it won't happen again before Halley's big rock returns in 2062.

And as for 2017?

That '85 Berkshire letter continues one of my favorite BRK stories.
First the background, from the 1984 Chairman's Letter:
"...Using my academic voice, I have told you in the past of the drag that a mushrooming capital base exerts upon rates of return. Unfortunately, my academic voice is now giving way to a reportorial voice. Our historical 22% rate is just that - history. To earn even 15% annually over the next decade (assuming we continue to follow our present dividend policy, about which more will be said later in this letter) we would need profits aggregating about $3.9 billion. Accomplishing this will require a few big ideas - small ones just won’t do. Charlie Munger, my partner in general management, and I do not have any such ideas at present, but our experience has been that they pop up occasionally. (How’s that for a strategic plan?)..."
And then, the dénouement in the paragraph which immediately preceded the Halley's bit in the 1985 letter:
...You may remember the wildly upbeat message of last year’s report: nothing much was in the works but our experience had been that something big popped up occasionally. This carefully- crafted corporate strategy paid off in 1985. Later sections of this report discuss (a) our purchase of a major position in Capital Cities/ABC, (b) our acquisition of Scott & Fetzer, (c) our entry into a large, extended term participation in the insurance business of Fireman’s Fund, and (d) our sale of our stock in General Foods....
So for 2017 we think something might turn up but until it does we'll leave you with a post that might be important to remember if you hold NVIDIA: "Big Winners and Big Drawdowns (NVDA; AAPL; AMZN)".

And the final word on Buffett's '84-'85 tale?
Actually Buffett was wrong: the gain thirteen years later, in 1998, was a peg higher, 48.3 percent, with no big rock whizzing by.
So hope springs eternal.

1998 story paraphrased from Tap Dancing to work: Warren Buffet on Just About Everything.

The 1MDB Fraud as told by the FBI

One of the awards conferred by Euromoney. See:
Euromoney Free to View: (Your Chance To See the Alternative Year In Review)
Only hours to go!

From Euromoney:

Investigative journalists of the year
The U.S. Department of Justice
We journalists do our best, but sometimes we have to applaud the work of others.

That was our response when the US Department of Justice launched its filing in July, nominally against "The Wolf of Wall Street Motion Picture", but in truth covering the whole sprawling mess of the 1MDB scandal.

The 136-page document has everything. It has a New York penthouse and a Bombardier Jet (identified right down not only to its registration but the serial numbers on its Rolls Royce engines). It has Van Gogh artwork and incriminating emails from Malaysian financier Jho Low to Goldman executives that start with "Bro". More than anything, an elaborate and fabulously complicated story is narrated with remarkable professional zeal as cash flits from Malaysia to Swiss and Singaporean private banking accounts and to Saudi Arabian petroleum joint ventures.

Sometimes it feels like a Watergate report, such as when reading a verbatim transcript of a conversation between two Deutsche Bank staffers and an officer from 1MDB. The Deutsche guys try humbly to understand why $700 million is going to PetroSaudi: "This is where they want to send, they want to send to Timbuktu also, we don’t care," says the 1MDB man. Sometimes it feels like a James Bond movie: "The Venetian Casino used customer account number XXX4296 to identify Low. On or about July 10, 2012, $11,000,000 was deposited into Low’s account at the Venetian Casino, and records show that Low gambled there for approximately seven days."

 But mostly, it shows the most extraordinary forensic investigative skill, through 513 numbered paragraphs each packed with detail, account numbers, transfers, subsidiaries and unmasked deceit. It is signed off by "Robert B Heuchling, special agent, Federal Bureau of Investigation."

It is a work of art, agent Heuchling.
The filing

Euromoney analysis

The tycoon's denial 

See also: @euromoney on Twitter. 

A Look the past 4.5 billion years

Trying to get a little perspective on things.
An oldie but goodie via (home of fine hypertext products).

From AFNS:

Evolution Going Great, Reports Trilobite
Slowly inching his segmented exoskeleton across the sea floor, a local marine arthropod, class Trilobita, reported that Earth's natural evolution was "progressing quite nicely."

"Things are looking mighty fine," announced the prehistoric invertebrate, taking measure of his surroundings through a series of small, hexagonal eyelets located at the tip of his thorax. "Sulfurous gas seems to be bubbling up to the surface pretty good, and several single-cell organisms appear to be mutating at a rather steady pace. Also, just today, I developed the ability to roll into a small protective shell in order to avoid predators."

Added the trilobite, "Yup, this evolution thing is going great."
According to the 4-inch-wide arthropod, the entire planet—once nothing more than a large, tedious mass of molten rock—has really taken shape recently....
 Neanderthal Man Flocking To Caves 
All over Western Europe and Central Asia, Neanderthal man is inhabiting caves in record numbers. What do you think?
"Cave good. Man happy. Need shelves."
Gron, Gatherer
Early Humans Finally Drunk Enough To Invent Dancing
Prominent ethnochoreologists now believe that roughly 20,000 years ago, early humans finally consumed an amount of fermented fruits and vegetables staggering enough to develop the impulsive series of rhythmic movements known today as dancing. "While human beings had experimented with rudimentary forms of shimmying and gyration as early as the Neanderthal period...
Deaths Of 550,000 Confirm Which Mushrooms Are Okay To Eat 
Following the lethal poisoning of more than a half million people over the course of several millennia, cultures across the globe finally learned how to identify which mushrooms could be safely consumed.

"Thousands upon thousands of human beings sacrificed themselves to determine which varieties of wild mushroom are delicious and which will paralyze and kill you on the spot," historian Marcus Whiting told reporters....
Sumerians Look On In Confusion As God Creates World
Members of the earth's earliest known civilization, the Sumerians, looked on in shock and confusion some 6,000 years ago as God, the Lord Almighty, created Heaven and Earth.

According to recently excavated clay tablets inscribed with cuneiform script, thousands of Sumerians—the first humans to establish systems of writing, agriculture, and government—were working on their sophisticated irrigation systems when the Father of All Creation reached down from the ether and blew the divine spirit of life into their thriving civilization.

"I do not understand," reads an ancient line of pictographs depicting the sun, the moon, water, and a Sumerian who appears to be scratching his head. "A booming voice is saying, 'Let there be light,' but there is already light. It is saying, 'Let the earth bring forth grass,' but I am already standing on grass."...
Four Or Five Guys Pretty Much Carry Whole Renaissance
Following 1,000 years of cultural decline and societal collapse known as the Dark Ages, the 15th century brought forth the Renaissance, an unprecedented resurgence in learning and the arts, which four or five guys pretty much just strapped onto their backs and carried the whole way. 

"Our research indicates that da Vinci, Michelangelo, Shakespeare, and Galileo basically hoisted the entire intellectual transformation of mankind onto their shoulders while everyone else just sat around being superstitious nimrods," said Sue Viero of the Correr Museum of Art in Venice, Italy. "Here's da Vinci busting his ass to paint such masterpieces as The Last Supper and the Mona Lisa, while some loser like Albrecht Dürer is doing these dinky little woodcuts that are basically worthless."...
Some Of Man's Most Important Inventions
Inclined Plane: A simple machine consisting of a flat surface whose topmost point is higher than its bottommost point, this is yet another example of mankind's propensity for "inventing" things they just found lying around.
Printing Press: The mass production of printed matter was an instant hit with readers everywhere, who at the time numbered nearly 1,000 and were spread out over some 57.4 million square miles.

Easy Cheese: A pioneering aerosol-powered food- delivery system that made it possible for people
to discharge high-velocity streams of cheese directly into their mouths, usually from a prone or inverted position [the correct spelling is 'cheez' -ed]....
Internet Archaeologists Find Ruins Of 'Friendster' Civilization 
Researchers conducting the Friendster excavation say the site has been deserted since the year 2005
The Ones We Lost
  • Cro-Magnon Grok, 20, drowned in a river in 24,900 B.C. after a failed attempt to eat his own reflection.
  • Ramses II


Also at AFNS:

Best Photojournalism 2016

...#2 Noam Chomsky Opens In Las Vegas

Friday, December 30, 2016

Japanese Insurance Firm to Replace Human Workers with Artificial Intelligence System (plus: an analyst, a fisherman and a tailor walk into a bar...)

From The Mainichi:
Fukoku Mutual Life Insurance Co. is planning to slash nearly 30 percent of its payment assessment department's human staff after it introduces an artificial intelligence (AI) system in January 2017 to improve operating efficiency.

While concrete examples of AI systems making human workers redundant are currently rare, observers have pointed out that such cases are likely to increase.

The insurance firm will introduce an AI system based on IBM Japan Ltd.'s Watson, which according to IBM is a "cognitive technology that can think like a human," and "can analyze and interpret all of your data, including unstructured text, images, audio and video." The Watson-based system will be tasked with reading medical certificates written by doctors and other documents to collect information necessary for making payouts, such as medical histories, length of hospital stays, and surgical procedure names....MORE
And relatedly, easily the most terrifying news of the year:

"Equity Analysts Join the Gig Economy"

I suppose the fear factor depends on your perspective though.
As noted last June:
In yesterday's "Questions America Wants Answered: How Will Brexit Affect The Art Market?" I amused myself with the provincialism of the headline question, somewhat akin to the old joke about the small Italian town that sent its most esteemed resident, a tailor by trade, to represent said villaggio at an audience with the Pope. Upon his return from Rome the citizens crowded around and asked "What kind of man is Il Papa?

Their emissary replied, "About a 42 regular"....

Technology Means You Can't Trust ANY Media Any More

Following up on "How To Make Any Celebrity Smile" and any number of fake news stories.
(hmmm...possible punctuation problem there, might be time to dust off Eats Shoots and Leaves)

From Singularity Hub:

Think Tech Is Blurring Fact and Fantasy? Just Wait
Are you questioning the validity of news sources and headlines lately?
You’re not alone.
As the end of 2016 is upon us, media's role in society has never been shakier. From social media bubbles to the fake news “crisis” and a spike in user-generated content, a new era of media experiences and consequences is impacting everyone.

Much of this is the result of older technologies like social media and the digitization and democratization of online news. But it’s unlikely to end there. 

What’s to come?

Very real emerging technologies look certain to continue undermining media’s once static role of “captured” content by transforming the familiar into a fluidly editable medium. Eventually, it may be difficult to separate real from fake without great effort—and video, audio, and photographic evidence are far from immune.

For better and worse, one thing is certain, we'll soon have even more power to create and consume media. The below selection of video articles featured on Singularity Hub this year offer a glimpse of how new technologies will further redefine media as we know it today. 

Welcome to the New Era of Easy Media Manipulation
“Engineered to make audio editing easier, Adobe’s Project VoCo allows users to edit voices by rearranging words or saying phrases never actually recorded, all via typing...In short, this is the audio version of Photoshop—the ability to create something from nothing. A new generation of 'sound-shopping,' à la photoshopping, has been born.”...

... New Digital Face Manipulation Means You Can’t Trust Video Anymore
“How will advanced video manipulation impact credibility? As the creators of this tool have shown, using political figures to exhibit live facial re-enactment has major implications for trusting online videos; especially when it comes to sensitive personalities and ideas.”


If People Are So Stupid They Are Swayed By Fake News, They Are Too Stupid To Vote

But, fortunately, folks aren't as dumb as elites like Pitruzzella think.*
Or, in the words of Alphaville's Kadim Shubber, "This is super creepy":
*I, on the other hand, may be a moron.

Because the snippet in Kadhim's tweet only says 'Mr. Pitruzzella', here is the guy I initially thought they were referring to, Lord Marco:
Marco Pitruzzella is the drummer for Anomalous and Six Feet Under, and is the former drummer of death metal groups Brain Drill, Vile, Vital Remains and The Faceless.
And then I thought "That can't be right".
So I read the story.

The Financial Times Gives NVIDIA a Nod (NVDA)

A smart thumbnail, the writer points out the strengths and weaknesses without the oohing-and-ahhing we're starting to see elsewhere. And no pictures of rocket ships. (sorry Barron's, I know you were joking) 

From the Financial Times, Dec. 30 2016: 

Chipmaker Nvidia tops S&P 500 as best performer of the year
High expectations for artificial intelligence drive stock up 238%
Soaring expectations for artificial intelligence may have threatened to tip over into tech industry hype this year, but they have thrown up at least one clear winner: chipmaker Nvidia, which has ridden a late-year rally to make it the top-performing stock in the S&P 500 by a wide margin.

Like Levi Strauss, who made his fortune selling goods to miners during the California gold rush rather than doing the mining himself, Nvidia has become a key supplier to all the leading tech companies involved in deep learning, the current state of the art in AI.

It is widely credited with having developed the best chips for training the artificial neural networks built by companies including Google, Amazon and Baidu to do things like recognise images or understand language.

“I’ve never seen such agreement about a technology,” said Patrick Moorhead, a chip analyst at Moor Insights and Strategy. “I think they’re two to three years ahead of Intel.” He added that the world’s biggest chipmaker now had its sights set on the same market and “can’t be counted out”....MORE
The stock is down $2.84 at $108.59 and should be able to hold the top spot in the S&P rankings.
Unless #2 ONEOK doubles in the next five hours.

The Ghost of GDP Past

I can't look at a GDP decomposition without thinking of the old "What's Mozart doing? He's decomposing" joke.
I am so sorry.
From Newfound Research, Dec. 12. 2016:

This blog post is available as a PDF here
  • Economic growth is a key driver of long-term stock and bond returns.
  • Economic growth comes from two main sources: demographic changes (i.e. increases in the number of workers) and productivity growth (i.e. each worker producing more output). Historically, approximately 55% of growth has come from productivity growth and 45% has come from demographic changes.
  • Slowing population growth and an aging population make it unlikely that demographics will continue to be a strong tailwind to economic growth over the next 50 years.
  • Barring a productivity miracle, future economic growth is likely to disappoint those who anchor expectations to the past. Investors must adjust their expectations and strategies to fit this new reality.
Trend GDP growth is a critical determinant of traditional asset class returns.  For equities, GDP growth has historically served as an upper bound to earnings growth.  For bonds, short-term interest rates can be modeled as the sum of GDP growth, time preferences (i.e. the relative preference between saving and investment), and monetary policy effects.

When thinking about GDP growth, we prefer to follow an unbundle/re-build framework.  With this approach, we unbundle the sources of GDP growth, analyzing each both individually and in concert with the other sources of growth, and only then re-aggregate the components to top level GDP growth.

There are a number of valid methodologies for decomposing GDP growth.  In this piece, we will use a supply-side approach.  The basics are as follows.

In the equation below, let Y denote real GDP and N denote total population.  We can decompose real GDP per capita (Y / N, the amount of output/income produced on average by each member of the population) as follows:
where E is total employment and L is the working age population.

The first term on the right-hand side of the equation (Y/E) reflects the amount of output generated per worker.  This is a measure of productivity.  (Note: Productivity is typically measured as output per hour worked since output per worker can change simply due to fluctuations in hours worked.  For example, increases in part-time jobs as a proportion of total jobs would reduce hours worked and output per worker even though productivity was unchanged.  That being said, long-term output per worker trends have been driven almost entirely by changes in productivity.  As a result, we are comfortable using output per worker as a proxy for productivity.)

The second term (E/L) is the proportion of the working age population that is employed.  This will be a function of the labor force participation rate (the proportion of the population that wants to work) and the employment rate (the proportion of the labor force with a job, which equals one minus the unemployment rate).

The third term (L/N) is the percentage of the population that is of working age (16 years and older).
Using a mathematical tool called the Shapley decomposition, we can represent changes in real GDP per capita as a weighted average of changes in each of these three quantities.

Once we understand the sources of per capita GDP (Y / N) growth, we can easily pivot to total GDP (Y) growth since the growth rate in per capita GDP will be approximately equal to the difference between total GDP growth and population (N) growth.  Equivalently, total GDP growth will be approximately equal to the sum of per capita GDP growth and population growth.

A Case Study: Understanding Long-Term GDP Growth in the United States (1948 to 2015)
As a case study, let’s unbundle the sources of U.S. GDP growth from 1948 to 2015.  In 1948, real GDP was $2.0 trillion in 2009 dollars.  By 2015, real GDP had growth to $16.4 trillion, an annualized growth rate of 3.2%.
Summarizing U.S. Economic Growth (1948 to 2015)
Of this 3.2% growth, a little less than two-thirds (2.0%) resulted from more output per person (i.e. growth in real per capita GDP).  The remaining growth (1.2%) came simply from an increase in population.
We can go a step further by using the aforementioned Shapley decomposition to attribute the per capita GDP growth to changes in productivity (output per worker), changes in the employment rate (the percentage of the working age population that is employed), and changes in population composition (the percentage of the population that is of working age).
The vast majority (~89%) of per capita GDP growth can be attributed to increases in productivity.  In 1948, the average worker produced $34,613 worth of output.  This figure grew to $110,167 by 2015.  Changes in the employment rate and population composition combined to contribute just 0.23% to real per capita GDP growth.

To gain more intuition around the drivers of productivity growth, we can break it into two components:...MORE

Another 2016 Story

From Medieval Problems:

When your future kids start complaining about their day and you're about to hit them with another 2016 story
Also at Medieval Problems, one for New Year's Eve:

Shipping: gCaptain's Top Maritime Stories 2016

From gCaptain:

modern express salvage
A helicopter drops a salvage team aboard the Modern Express, January 30, 2016. Photo credit: Marine National
Congratulations, you’ve (almost) made it to 2017! As 2016 comes to end, we’re taking a look back at some of the top maritime stories making headlines throughout the year, as chosen by our editors and presented in no particular order. Also if you’re interested, we have already taken a look back at the Top 10 Most Viewed Posts and Best Maritime Videos of 2016, so be sure to check those out.
Have anything to add? Definitely email us and we will update.
El Faro Investigation
el faro wreck
The investigation into the sinking of the American cargo ship El Faro with the loss 33 crew was in full-swing throughout the year. Highlights included when search crews located and later retrieved the ship’s Voyage Data Recorder, leading to the release of the tough-to-read bridge audio transcript earlier this month.
Panama Canal Expansion
After two years of delays, the Panama Canal expansion opened to longer and wider ships on June 26, 2016 amid controversy over the design and safety of the new locks. Since their inauguration, more than 500 Neopanamax ships have successfully transited the larger locks, including the first LNG carriers to ever use waterway.
SEE: Panama Canal Welcomes Largest Ship to Date

Let A Thousand Oil IPOs Bloom: Can U.S. Shale Add 1 Million Bpd In 2017?

It's all about the money.
First up, Bloomberg, Dec. 28:   

Oil IPOs Ready to Bloom Across the U.S.
  • Tudor Pickering CEO sees as many as 40 offerings through 2018
  • ‘It feels like we’ve entered a good window’ for deals: Holt
It may be time for a baby boom in U.S. oil.

Rising crude prices and a deregulatory push in Washington may spur as many as 40 companies to hold initial public offerings over the next two years, potentially tripling 2016’s activity, according to Maynard Holt, chief executive officer at Houston-based investment bank Tudor Pickering Holt & Co.
After a year in which explorers in the Permian shale basin straddling Texas and New Mexico dominated the business, interest in new oil-industry offerings is likely to spread wider. It could include pipeline operators and regions like the Bakken in North Dakota and Wyoming’s Powder River basin, Holt said in a telephone interview Wednesday. Mergers and acquisitions should pick up as well.

“The number of companies expressing interest in going into this window is really high, and the number of investors saying we’d like to see something different is really high," the CEO said.
After two years of crashing crude prices, the number of North American IPOs for oil and natural gas companies fell to 13 this year, worth a collective $2.23 billion, according to data compiled by Bloomberg. That was down from 44 announced offerings, worth $14.15 billion, in 2014, when oil topped $100 a barrel....MORE
And from Reuters, Dec. 29, can't do the equity? Have we got some debt for you: 

U.S. shale companies to boost spending as banks loosen purse strings
U.S. shale drillers are set to ramp up spending on exploration and production next year as recovering oil prices prompt banks to extend credit lines for the first time in two years.

The credit increase is small, but with major oil producers worldwide aiming to hold down production in 2017, U.S.-based shale drillers are looking to boost market share to take advantage of higher prices, and greater availability of capital will make that easier.
North America-focused oil and gas producers are expected to increase capital investments by 30 percent in 2017, according to analysts at Raymond James....MORE
Finally, from OilPrice, Dec. 27:

Can U.S. Shale Add 1 Million Bpd In 2017?
Oil prices are up on expectations that OPEC will contribute to a faster balancing in 2017, with up to 1.8 million barrels per day in cuts along with some non-OPEC countries. That has put a floor beneath prices, with fears of another downturn largely dissolved after OPEC’s announcement.

But what if U.S. shale comes roaring back and ruins the price rally? Estimates run the gamut on how quickly U.S. shale production can rebound and by what magnitude. Citigroup sees output rebounding by 500,000 barrels per day if oil prices average $60 per barrel. A December 12 report from Macquarie said that oil prices above $60 could spark a 1 million barrel-per-day revival.

U.S. shale is already up about 300,000 barrels per day from a low point in the summer of 2016, at least according to preliminary data. The gains are expected to continue. The industry is producing about as much oil as it was two years ago, with only one-third of the more than 1,700 rigs in 2014. Drillers are producing just as much oil with a lot less effort.

If U.S. shale surges back by 1 mb/d as Macquarie suggests, it would offset most of the cuts from OPEC and non-OPEC countries. Additionally, one would have to assume some degree of non-compliance and/or “cheating” on the cuts from participating countries, plus an expected increase in supply from Libya and Nigeria. Altogether, a rise in oil prices could be self-defeating, leading to prices falling once again later in the year....MORE

"Dollar Slips into Year End"

From Marc to Market:
In exceptionally thin conditions that characterize the year-end markets, a reportedly computer-generated order lifted the euro from about $1.05 to a little more than $1.0650 in a few minutes early in the Asian sessions.  Before European markets opened the euro drifted back toward $1.05 where buying re-emerged.   Other European currencies, like the Swiss franc, and the Scandis tracked the euro.  Sterling traded higher, though lagged behind the others in the euro orbit.    The dollar tested the JPY116.00 in early Asia, though, by early European activity, it was encountering offers above JPY117.00.  

The news stream is especially light.  In terms of economic data, the only report of note is the preliminary December CPI from Spain.  It jumped 0.5% on the month for a 1.4% year-over-year pace.  This is the fastest pace in a little more than three years.  Recall Spain was still experiencing deflation (negative CPI readings) as recently as August.  It may offer investors an inkling of what to expect from the eurozone in early January when the region's inflation report is released. The headline CPI is expected to jump to 1.0% from 0.6%.    It will appear to be largely an energy story as the core rate is expected to be little changed from the 0.8%, where it has been since August.  

There are two other developments that are talking points.  First, with around three weeks left in his presidency, Obama cited reports by the FBI and Homeland Security that linked Russia's military and civilian intelligence services to the computer hacking that tried to influence the US election.  Obama announced sanction against top Russian officials and agencies and expelled 35 Russian operatives.   He hinted that there were be other measures as well, but did not specify, leading some to believe the other measures may include its own cyber efforts.    The Russian ruble is off 1.8% today and is the weakest currency.   Russia's 10-year yield is up two basis points.  Of course, the new US President could reverse these sanctions, but it puts it in an awkward position, especially given the support showed by Republican leadership in Congress.  

The other development is yesterday's announcement by China that it was nearly doubling the number of currencies that it will be included in its reference basket.  As we noted yesterday, the dollar's weight in the basket will be reduced by 4%.  However, we disagree with the media reports that suggest that this is an attempt by China to reduce the role of the dollar.   For example, in some media coverage, it is not even reported that the euro's weighting was cut by more than the dollar's share.   

Given that, the dollar, euro, yen, and sterling's weightings were reduced, while mostly emerging market currencies were added, including incidentally, the Saudi riyal, which is pegged to the dollar, a fairer description may be the China adjusted its basket to give more weight to the emerging market currencies.  The Korean won was given a 10.8% weighting, making it the fourth most important currency, behind the dollar, euro, and yen.   Proportionately, it is almost half the weight of the US dollar.  One implication of this adjustment is that if the emerging market currencies weaken next year as we expect, then Chinese officials can continue to show that although it is falling against the dollar, it is stable against is basket....MORE

Thursday, December 29, 2016

Uber Picked Up Its Toys and Went To Arizona

As (almost) foretold by the prophecy.*
I get a kick out of the fact the author refers to Uber and the other autonomous vehicle testers as "the innovator" and "the innovators".
From The Hill, Dec. 29:

Why Uber moved its fleet from California to Arizona
States are the laboratories of democracy. One state can choose to heavily regulate an emerging industry, while another state is free to take a permissive approach to the technology.

The laboratory concept is on full display between California and Arizona. Uber, the transportation disruption company, recently announced it would launch autonomous vehicle services in San Francisco to compliment its Pittsburgh, Pennsylvania fleet. Instead of welcoming the announcement with open arms, the State of California ordered Uber to cease autonomous operations until such time as Uber could comply with California’s regulatory scheme.

Uber decided California opposed the introduction of new transportation technologies, promptly moving its entire San Francisco autonomous fleet to Arizona. Gov. Doug Ducey welcomed Uber’s announcement. “While California puts the brakes on innovation and change with more bureaucracy and more regulation, Arizona is paving the way for new technology and new businesses,” Ducey said.

California heavily regulates emerging, autonomous vehicle technologies, while Arizona takes a much more permissive approach. California wants developers to ask permission first, while Arizona has exhibited a desire to learn what challenges emerging technologies will actually face.

California’s autonomous vehicle regulations number some 35 pages. The regulations govern everything from insurance, to driver and driver testing requirements, to the vehicles themselves. The regulations prohibit the testing of autonomous technologies on public roads, unless the innovator meets certain other requirements. Once an innovator satisfies those requirements, California limits the number of autonomous vehicles to ten per innovator. This is not ten on the road at a time, but ten total autonomous vehicles.

If these requirements are not enough, California requires innovators to report any accident, whether the vehicle was in autonomous mode or not, within ten days of the accident. Even worse, California requires innovators to report any time a driver disengages a vehicle’s autonomous mode. The innovator must include in the disengagement report, “the location: interstate, freeway, highway, rural road, street, or parking facility” along with the “facts causing the disengagement including: weather conditions, road surfaces, construction, emergencies, accidents or collisions, or whether the disengagement was the result of a planned test.”...MORE
*At about the same time I was posting "As Uber Pulls Autonomous Vehicles Off San Francisco Streets, A Meta-Analysis Of Uber's Bargaining Stance In California" last Thursday:
...The one question that comes to mind is will Kalanick attempt the petulent 'bro' manipulator move of taking the testing to Nevada or Michigan with a "see what you made us do!" 
Uber was actually loading the cars onto their OTTO autonomous trucks-presumably not in autonomous mode-and heading off to Arizona. Missed it by |...| that much.

Doing the point/counterpoint to The Hill, here's Silicon Valley's hometown newspaper, the San Jose Mercury News with an editorial (and a picture), Dec. 23:

Self-driving Uber cars head to Arizona after the company was forced to remove them from San Francisco streets. (Courtesy of Uber)
Self-driving Uber cars head to Arizona after the company was forced to remove them from San Francisco streets. 
(Courtesy of Uber) 

Arizona’s Uber gain is not necessarily California’s loss 
Gov. Doug Ducey, you’re welcome!

Over the past week, you got a lot of mileage for yourself and the great state of Arizona thanks to California.

You also got a bunch of Uber self-driving cars, fresh from their week of driving around San Francisco, ducking pedestrians and bicyclists, without the required DMV permit.

No need to reciprocate with the people of California. We’re good.

We are so used to hearing how the Golden State is losing jobs to other regions like Texas – even as our economy grows – that we often tune out those who attack the state to sell their own.
Sometimes, we really do lose out. See Tesla’s decision to build its gigafactory in Reno, Nevada. That hurt. But particularly in this economic cycle, companies continue to come to California to set up innovation centers in Silicon Valley, wanting to be in this ecosystem. It’s never been just about the weather.

This time, Arizona’s gain isn’t California’s loss.

Governor, there is something a tad unseemly, if you don’t mind me saying, about celebrating the way Uber thumbed its nose at another state’s rules.

Shouldn’t alarm bells go off if your main selling point is a lack of regulations? What’s the message to companies? If you can make it in Arizona, you still have to learn how to make it everywhere else?

See, there are 20 other companies here testing self-driving cars and following the rules. And in doing so, they are building trust with the public and officials for the eventual widespread adoption of this new transportation technology. That’s how changing society is done.

To be fair, Governor, you deserve enormous credit. Like any good politician, you saw an opportunity in California’s dustup with Uber and launched an old-fashioned state versus state smack down.

As the drama was unfolding here, you didn’t waste time. You took to Twitter to lobby Uber and poke fun at California officials for being uptight bureaucrats in love with regulation. The hashtag #ditchCalifornia was a nice touch of marketing and the giant banner at the Phoenix state building that read, “AZ welcomes Uber! #ChooseAZ” was impressive. How did you get it printed so fast?

On CNBC Friday, you rolled out the welcome mat even wider, saying that in the Copper State, entrepreneurs “are not going to have overly-aggressive government bureaucrats. I want entrepreneurs around the country to see Arizona as the place to be.”

And like any savvy politician would, you personally welcomed the flatbed truck of Uber cars as if it was a cargo of cash being driven by a Hollywood starlet....MORE
Interesting mental image there, truckloads of cash being driven by Hollywood starlets.
The woman does know how to write to make sure one is paying attention.

"Why Your Brain Hates Slowpokes"

From, March 5, 2015:

The high speed of society has jammed your internal clock. 
Not long ago I diagnosed myself with the recently identified condition of sidewalk rage. It’s most pronounced when it comes to a certain friend who is a slow walker. Last month, as we sashayed our way to dinner, I found myself biting my tongue, thinking, I have to stop going places with her if I ever want to … get there!
You too can measure yourself on the “Pedestrian Aggressiveness Syndrome Scale,” a tool developed by University of Hawaii psychologist Leon James. While walking in a crowd, do you find yourself “acting in a hostile manner (staring, presenting a mean face, moving closer or faster than expected)” and “enjoying thoughts of violence?”

Slowness rage is not confined to the sidewalk, of course. Slow drivers, slow Internet, slow grocery lines—they all drive us crazy. Even the opening of this article may be going on a little too long for you. So I’ll get to the point. Slow things drive us crazy because the fast pace of society has warped our sense of timing. Things that our great-great-grandparents would have found miraculously efficient now drive us around the bend. Patience is a virtue that’s been vanquished in the Twitter age.

Once upon a time, cognitive scientists tell us, patience and impatience had an evolutionary purpose. They constituted a yin and yang balance, a finely tuned internal timer that tells when we’ve waited too long for something and should move on. When that timer went buzz, it was time to stop foraging at an unproductive patch or abandon a failing hunt.
We now insist that Web pages load in a quarter of a second, when we had no problem with two seconds in 2009 and four seconds in 2006.
“Why are we impatient? It’s a heritage from our evolution,” says Marc Wittmann, a psychologist at the Institute for Frontier Areas of Psychology and Mental Health in Freiburg, Germany. Impatience made sure we didn’t die from spending too long on a single unrewarding activity. It gave us the impulse to act.

But that good thing is gone. The fast pace of society has thrown our internal timer out of balance. It creates expectations that can’t be rewarded fast enough—or rewarded at all. When things move more slowly than we expect, our internal timer even plays tricks on us, stretching out the wait, summoning anger out of proportion to the delay.

“The link between time and emotion is a complex one,” says James Moore, a neuroscientist at Goldsmiths, University of London. “A lot is dependent on expectation—if we expect something to take time then we can accept it. Frustration is often a consequence of expectations being violated.”
“Time stretches,” Wittman says. “We get mad.”

Make no mistake: Society continues to pick up speed like a racer on Bonneville Speedway. In his book, Social Acceleration: A New Theory of Modernity, Hartmut Rosa informs us that the speed of human movement from pre-modern times to now has increased by a factor of 100. The speed of communications has skyrocketed by a factor of 10 million in the 20th century, and data transmission has soared by a factor of around 10 billion.

A down-to-earth gauge was established by psychologist Robert Levine in the early 1990s, when he sent his students around the world to take the pulse of 31 large cities. They timed random people as they walked over a distance of 60 feet. In Vienna, Austria, where I live, pedestrians covered the ground in a respectable 14 seconds. But in my former home of New York, pedestrians zoomed by in 12 seconds. In the 2000s, psychologist Richard Wiseman found worldwide walking speeds had gone up by 10 percent. 

The pace of our lives is linked to culture. Researchers have shown society’s accelerating pace is shredding our patience. In tests, psychologists and economists have asked subjects if they would prefer a little bit of something now or a lot of it later; say, $10 today versus $100 in a year, or two pieces of food now versus six pieces in 10 seconds.

Subjects—both human and other animals—often go for the now, even when it’s not optimal. One study showed that exposing people to “the ultimate symbols of impatience culture”—fast-food symbols like McDonald’s golden arches—increases their reading speed and preference for time-saving products, and makes them more likely to opt for small rewards now over larger ones later.

Our rejection of slowness is especially apparent when it comes to technology. “Everything is so efficient nowadays,” Wittmann says. “We’re less and less able to wait patiently.” We now practically insist that Web pages load in a quarter of a second, when we had no problem with two seconds in 2009 and four seconds in 2006. As of 2012, videos that didn’t load in two seconds had little hope of going viral.

Of course, we’re not going to die if a website doesn’t load immediately. But in what is probably a hangover from our primate past—when we could starve if impatience didn’t spur us to act—it sure can feel like it. “People expect the payoff to come at some kind of rate, and when it doesn’t come, this creates annoyance,” posits evolutionary anthropologist Alexandra Rosati, a primate expert, who is finishing a postdoc at Yale before joining the faculty at Harvard.

The result is a less-than-virtuous cycle. The accelerating pace of society resets our internal timers, which then go off more often in response to slow things, putting us in a constant state of rage and impulsiveness. Your mileage may vary, of course, but overall, “we are getting to be a more and more impulsive society,” Wittmann says.

Recent research points to a possibility that could make this cycle worse. As my slow-walking friend and I strolled at a snail’s pace down the street, I started to fear that we would be so late for our reservation that we would miss it. But when we got to the restaurant, we were no more than a couple minutes behind. My sense of time had warped.

Why? Rage may sabotage our internal timer. Our experience of time is subjective—it can fly by in a flash, or it can drag out seemingly forever. And strong emotions affect our sense of time most of all, explains Claudia Hammond in her 2012 book Time Warped: Unlocking the Mysteries of Time Perception. “Just as Einstein’s theory of relativity tells us that there is no such thing as absolute time, neither is there an absolute mechanism for measuring time in the brain,” she writes.
Can we stave off the slowness rage and revive patience? We need to find a way to reset our internal timers and unwarp time.
Time stretches when we are frightened or anxious, Hammond explains. An arachnophobe overestimates the time spent in a room with a spider; a fearful novice skydiver, the time spent hurtling to Earth. People in car accidents report watching events unfold in slow motion. But it’s not because our brains speed up in those situations. Time warps because our experiences are so intense. Every moment when we are under threat seems new and vivid. That physiological survival mechanism amplifies our awareness and packs more memories than usual into a short time interval. Our brains are tricked into thinking more time has passed.....MORE
Somehow related:
"How to Enter a Room Like a Boss"

"Amazon patents show flying warehouses that send delivery drones to your door" (AMZN)

From TechCrunch:

We’ve known about Amazon’s drone delivery ambitions since 2013.  But patent filings from Amazon, circulated today by CB Insights’ Zoe Leavitt, reveal more details about how the e-commerce titan could make drone deliveries work at scale, namely through “airborne fulfillment centers.” Yes, that’s a warehouse in a zeppelin.

The airborne fulfillment centers, or AFCs, would be stocked with a certain amount of inventory and positioned near a location where Amazon predicts demand for certain items will soon spike.
Drones, including temperature-controlled models ideally suited for food delivery, could be stocked at the AFCs and sent down to make a precise, safe scheduled or on-demand delivery.

An example cited in the filing was around a sporting event. If there’s a big championship game down below, Amazon AFC’s above could be loaded with snacks and souvenirs sports fans crave.

The AFCs could be flown close to a stadium to deliver audio or outdoor display advertising near the main event, as well, the filing suggested....

Blimps circling overhead blasting advertising at the captive audience.

Facebook Is Buying Detailed Data On Users Offline Lives (you can log in but can never log out) FB

From ProPublica:
Facebook Doesn’t Tell Users Everything It Really Knows About Them
The site shows users how Facebook categorizes them. It doesn’t reveal the data it is buying about their offline lives.  
Facebook has long let users see all sorts of things the site knows about them, like whether they enjoy soccer, have recently moved, or like Melania Trump.

But the tech giant gives users little indication that it buys far more sensitive data about them, including their income, the types of restaurants they frequent and even how many credit cards are in their wallets.

Since September, ProPublica has been encouraging Facebook users to share the categories of interest that the site has assigned to them. Users showed us everything from “Pretending to Text in Awkward Situations” to “Breastfeeding in Public.” In total, we collected more than 52,000 unique attributes that Facebook has used to classify users

Facebook’s site says it gets information about its users “from a few different sources.”
What the page doesn’t say is that those sources include detailed dossiers obtained from commercial data brokers about users’ offline lives. Nor does Facebook show users any of the often remarkably detailed information it gets from those brokers.

“They are not being honest,” said Jeffrey Chester, executive director of the Center for Digital Democracy. “Facebook is bundling a dozen different data companies to target an individual customer, and an individual should have access to that bundle as well.”

When asked this week about the lack of disclosure, Facebook responded that it doesn’t tell users about the third-party data because it’s widely available and was not collected by Facebook.
“Our approach to controls for third-party categories is somewhat different than our approach for Facebook-specific categories,” said Steve Satterfield, a Facebook manager of privacy and public policy. “This is because the data providers we work with generally make their categories available across many different ad platforms, not just on Facebook.”

Satterfield said users who don’t want that information to be available to Facebook should contact the data brokers directly. He said users can visit a page in Facebook’s help center, which provides links to the opt-outs for six data brokers that sell personal data to Facebook.

Limiting commercial data brokers’ distribution of your personal information is no simple matter. For instance, opting out of Oracle’s Datalogix, which provides about 350 types of data to Facebook according to our analysis, requires “sending a written request, along with a copy of government-issued identification” in postal mail to Oracle’s chief privacy officer.

Users can ask data brokers to show them the information stored about them. But that can also be complicated. One Facebook broker, Acxiom, requires people to send the last four digits of their social security number to obtain their data. Facebook changes its providers from time to time so members would have to regularly visit the help center page to protect their privacy.

One of us actually tried to do what Facebook suggests. While writing a book about privacy in 2013, reporter Julia Angwin tried to opt out from as many data brokers as she could. Of the 92 brokers she identified that accepted opt-outs, 65 of them required her to submit a form of identification such as a driver’s license. In the end, she could not remove her data from the majority of providers.
ProPublica’s experiment to gather Facebook’s ad categories from readers was part of our Black Box series, which explores the power of algorithms in our lives. Facebook uses algorithms not only to determine the news and advertisements that it displays to users, but also to categorize its users in tens of thousands of micro-targetable groups.

Our crowd-sourced data showed us that Facebook’s categories range from innocuous groupings of people who like southern food to sensitive categories such as “Ethnic Affinity” which categorizes people based on their affinity for African-Americans, Hispanics and other ethnic groups. Advertisers can target ads toward a group — or exclude ads from being shown to a particular group.
Last month, after ProPublica bought a Facebook ad in its housing categories that excluded African-Americans, Hispanics and Asian-Americans, the company said it would build an automated system to help it spot ads that illegally discriminate.

Facebook has been working with data brokers since 2012 when it signed a deal with Datalogix. This prompted Chester, the privacy advocate at the Center for Digital Democracy, to file a complaint with the Federal Trade Commission alleging that Facebook had violated a consent decree with the agency on privacy issues. The FTC has never publicly responded to that complaint and Facebook subsequently signed deals with five other data brokers....MORE
HT to and partial headline from Digg:

Facebook Knows A Whole Lot About Your Offline Life

Goldman Sachs Says Nice Things About NVIDIA Ahead of Next Week's Consumer Electronics Show (NVDA)

Before the headline story a quick note on the stock price.

When we posted "As NVIDIA Notches Its 10th Straight Daily Gain, Lots Of People Say Nice Things...HOWEVER (NVDA)" on Tuesday at $116.49 up $6.71:
...We agree and start to lighten up right here, right now.
And any weakness in the overall market means lighten up some more.
We didn't have any special insight or anything, just pattern recognition.
The stock price had achieved verticality on the charts, so much so that four minutes after the close Tuesday the usually sober folks at Barron's posted "The Hot Stock: Nvidia Soars 6.9%" with this as their illustration:
We didn't have the advantage of seeing that, our post came out at fifty minutes before the close but if we had our declarative "right here, right now" (which they really caution against in junior analyst school) would have been even more emphatic. A picture really is worth a thousand words, or a few millions of dollars.

The stock is currently at $104.79  down $4.46 (-4.08%) which, interestingly enough, is just about where we posted "So, After NVIDIA More Than Triples, Goldman Sachs Puts It On Their 'Conviction Buy' List (NVDA)" on December 20th:
Shades of First Solar.
I'll have to explain that remark after Christmas.
The stock is trading at $104.82 up $3.19 (+3.14%) after hitting another all-time high at $106.13....
I see I still owe patient yet wary reader an anecdote on FSLR. I'll get to it
But first, MarketWatch:

Tech event in January could spur volatility, more Nvidia gains, Goldman says 
Nvidia could rise another 18% in 2017, says Goldman analyst
It’s been quiet for stocks in the final trading week of the year, as is typical, but expect volatility to return early in 2017, particularly in the retail and technology sectors, Goldman Sachs wrote on Thursday.

Both groups could see big moves around the Consumer Electronics Show (CES), which runs from Jan 5-8 and is a “historically stock moving event,” the investment bank wrote in a note to clients. Goldman, which recently warned that January could also be volatile for health care stocks, added that the options market was not pricing in the potential moves that could result from the event....MORE
... On the upside, Goldman sees further potential for gains in Nvidia Corp. NVDA, -3.96% which is already the biggest S&P 500 percentage riser of the year, up more than 200%.

Since 2006, Nvidia shares have moved about 7%—either up or down—over CES, according to Goldman data, a trend the firm expects to continue this year, as Nvidia’s chief executive is scheduled to make the opening keynote address and the company will be unveiling new products.

The Goldman analyst who covers Nvidia sees upside of 18% over the coming year, calling it “a unique growth story in semis, levered to positive secular trends in gaming, virtual reality, artificial intelligence/machine learning and automotive.”

Shares of Nvidia fell 3.7% on Thursday, continuing a pullback from Wednesday. Garmin shares were flat.
A few things to note about the CES. The gaming stuff is not why NVDA is trading at a 40 P/E (that's forward; it's 70 for TTM).
Offsetting that, NVIDIA's CEO Mr. Huang is a bit of a showman and will most likely take the opportunity of the keynote speech to introduce a new chip or two to maximum press coverage.

Additionally this years show will have the most attention to the automotive sector in the history of the CES.

HOWEVER...there is a bunch of stock in taxable accounts that didn't want to sell in the last days of tax year 2016 that could very easily be persuaded it's the prudent thing to do on January 6th or 9th.

Regarding Mr. Left and Citron, he was probably seeing the same thing we, and Investor's Business Daily and just about anyone else paying attention were seeing.
And calling for a short he's playing a dangerous little game. Here are a couple prior posts to get at what I'm trying to say:
Dec. 19 
Is Short-Seller Muddy Waters Losing Its Mojo?
,,,Block told Bloomberg‘s Lisa Pham:
“I’m always a fan of shorting total frauds and Hong Kong has its share so it will always be a place for us,” Block said, commenting generally about listed companies in the city. “The trading volumes generally aren’t that good and I think there are a lot of stock manipulations in Hong Kong and that’s a function of the volumes being poor.”
Unfortunately, Muddy Waters’ recent track record is not good....MORE
At least he's talking the right stuff.
In a bull market the only place to risk a short is in the questionable companies whereas in a bear going after the valuation shorts can also give you an acceptable risk/reward.
October 2014
Questions America Wants Answered: "Do Valuation Shorts Work Better Than Fraud Shorts?"

So good luck to Left.

Possibly also of interest:
Short Selling Prerequisite: Empathy (and Charlie Munger quotes)

Futures: Hedge Funds Position for Showdown Against Index Funds in Grains

Last Chg
Corn 347-4-0-6
Soybeans 1014-4-2-0
Wheat 403-6+2-2

From Agrimoney, Dec. 28:
Hedge funds sold down heavily in ags in the run up to Christmas - leaving themselves vulnerable to a clash with index funds, which many observers believe fuelled buying pressure in grains evident in Tuesday's rally.
Managed money, a proxy for speculators, cut its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by 51,632 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.
The selling was led by grains (including the soy complex) in which the net long - the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall – was cut by 44,259 lots to less than 29,000 contracts.
That selldown in grains was more significant than many observers expected, according to Terry Reilly at Chicago broker Futures International.
"The CFTC report showed funds less long than estimated for soybeans, and more short than expected for Chicago wheat," and less bullish than expected on corn too, he said.
Fund showdown
However, this selling potentially leaves hedge funds on track for a showdown in index funds, for which the early-year period brings a crucial portfolio rejig which is expected, this time, to bring buying in grains. 
During the so-called "rebalancing" process, index funds rejig their portfolios to the weightings of the index they follow....


Euromoney Free to View: (Your Chance To See the Alternative Year In Review)

Only two days left.
If you don't subscribe, this is an opportunity to kick the tires.

From Euromoney's twitter feed:

This year's review has such awards as:
Survivor of the year/’ 'How’s he still in a job?’ award

Truest bank CEO statement of the year

The 'Timing is everything’ award

Machiavellian manoeuvre of the year
An alternative review of the year 2016 

Crispin Odey Doesn't Sound Crazy But...

But he's doing crazy stuff.

From ZeroHedge, Dec. 23:

In His Latest Letter, Odey Refuses To Throw In The Towel
With his fund down ~50%  YTD, one wonders if Crispin Odey should be thinking about quietly exiting stage left after a long and mostly illustrious career. However, as his latest letter suggests, Odey is just getting his second, or maybe third, wind and is confident that he will ultimately win the war against central bankers, although as he himself points out, the risk is not so much his own fund blowing up as much as LPs saying enough to active investing altogether, and cautioned that "skilled investors are being driven out by mindless (passive) investing."

Putting it mildly (especially for his own fund), Odey said that “this has been a difficult year for active managers,” and added that “passive investing has taken money which typically would have been in the bond market and deposited it in the equity market.”

While it remains to be seen if active management is on the endangered list, Odey has bigger troubles with his own LPs in the coming weeks, although his fortune may change in 2017 when as he warns, “central bankers will have to respond to what their governments are doing fiscally, rather than bolstering asset prices with low interest rates. There could be trouble ahead.”

There could, indeed, which simply means the cycle starts from scratch and central banks LBO even more of the global capital markets, until the 0.01% own all the assets while the rest "own" the debt.
His full November letter below:
This is not the beginning of a new cycle. This recovery which began in 2009 on the back of zero interest rates is long in the tooth. After 7 years, the benefits of low interest rates – cheaply financed cars and houses – are played out, whilst oil is now a conundrum. For half the world, the problem is that oil has fallen 50% and for the other half the problem is that the price of oil is up 50%.

What is true is that there are two problems for the developed world that have not gone away. They are that house prices, and assets in general, are too expensive to be bought out of income. The disparity between the “Haves” and the “Have-nots” is too great. Secondly and relatedly is the brutal difference in lifestyle of the young and the old.

QE has resulted in very high asset prices and ushered in weaker and weaker productivity gains. Low growth cannot sit alongside rising inequality.
Brexit, Trump, the Italian referendum came about because the problems seem impossible to solve. Everyone is now looking to any individual who believes he can solve the problem....MORE
There is one scary explanation for Odey's seemingly intelligible mutterings.
From the Journal of Near-Death Experiences:

Terminal Lucidity in People with Mental Illness and Other Mental Disability: An Overview and Implications for Possible Explanatory Models 
Michael Nahm, Ph.D. Freiburg, Germany
The (re-)emergence of normal or unusually enhanced mental abilities in dull, unconscious, or mentally ill patients shortly before death, including considerable elevation of mood and spiritual affectation, or the ability to speak in a previously unusual spiritualized and elated manner.
Is Mr. Odey dying?

Dec. 9
In Which FT Alphaville's Bryce Elder Shreds Former Big Wheel Hedgefunder Crispen Odey
Nov. 3
Follow-Up: "Odey Hedge-Fund Assets Dip 60% as Clients Shun ‘Bitter Pill’"
Nov. 2  
The Stress May Be Getting To Hedgie Crispin Odey--UPDATED
Oct.4 ZeroHedge
For Crispin Odey This Is The Endgame: Hedge Fund Billionaire Goes All In Betting On "Violent Unwind" Of QE Bubble
Sept. 16 
Crispin Odey Is Getting Crushed
Aug. 13 Zerohedge
Billionaire Crispin Odey, Who's Had A Pretty Terrible Year, Is Betting Everything On Gold
May 23 
Hedge Funder Crispen Odey Has Become a Parody of.....Crispen Odey