Sunday, December 16, 2018

The Financial Times' David Keohane On The Role of Weather In Popular Insurrection (also Jeremy Grantham)

Mr. Keohane is currently based in Paris where in addition to SocGen and Renault and CMA CGM he is also looking at sociology in the streets. His latest at the FT, earlier this morning:
Police clamp down on fifth weekend of French protests 
And on Twitter yesterday:

And the reason for this visit to Mr. K's Twitter feed?

We've been touting the S&P 500 to trade to the original target that GMO's Jeremy Grantham set over two years ago, at least 3000 and on up to 3300 before the real fun-and-games begin.
While looking at some search results ('search blog' box, upper left) this from early 2018 dropped out:

Thursday, January 4, 2018
The FT's David Keohane's Shorter Jeremy Grantham 
S&P 500:
2,723.01 +9.95 (+0.37%)

In the interim Mr. Grantham has scaled back his certainty to the magical '40% chance' number favored by analysts everywhere.
S&P 500 close 14 December: 2,599.95 

A Culture of Chance, A Nation of Chancers

From Cabinet Magazine:

Rolling the Dice: An Interview with Jackson Lears

In late spring 2005, the online gaming empi­re known as PartyGaming— home of the wildly lucrative website—announced that it would take its company public on the London stock market. Speculators predicted that, on the open market, PartyGaming would be valued at over $10 billion, just a few poker chips less than the value attributed to the venerable British department store chain Marks & Spencer. Despite historic attempts to control or marginalize games of chance as a socially disreputable practice, the multibillion-dollar gambling industry in both its virtual and physical incarnations—from online poker websites to lottery tickets and off-track betting parlors to suburban casinos and the emergence of Las Vegas as a cultural capital—seems to have never been stronger or more resilient.

In his recent book Something for Nothing: Luck in America (2003), Jackson Lears, the Board of Governors Professor of History at Rutgers University and the editor-in-chief of Raritan, asserts that gambling is a central component of contemporary culture. Lears argues that this is not because Americans are a nation of gamblers per se, but because gambling is a modern distillation of what can best be described as a “culture of chance.” For Lears, the concept of chance and its various metaphysical siblings Luck, Fortune, and Grace have profoundly influenced American life in everything from personal expression to social policy. With the rise of the market economy in the early nineteenth century, Lears argues, the culture of chance has fought tooth and nail for survival against the rational appeals of a “culture of control.”

The divinatory dimensions of chance through which Americans experienced the world, as embodied in games of luck and skill and as practiced by the confidence man and gambler, were transmuted into rational systems of forecasting and speculation practiced by the stockbroker and day trader. Trying to predict the future while trying to maintain control, Lears suggests, remains a ritualized component of both religious and secular cultures. The gambler’s dice, the soothsayer’s bones, the fortune-teller’s tea leaves, and the financier’s econometric charts are more closely aligned than we’ve been led to believe. David Serlin spoke with Lears by phone in June 2005.

Cabinet: How did you become interested in the study of chance or, as you call it in your book, the “culture of chance”?

Jackson Lears: There were a lot of different streams that came together in this book. Since my first book, No Place of Grace, I have thought seriously about the cultural longing for transcendence that survived the economic rationality of the nineteenth century. I perceived that there was some kind of longing for grace that animated the impulse to gamble, and once I had hit on that hunch I began to find evidence of it everywhere. I began to see that there were connections between the gambler’s dice and the soothsayer’s bones. The gambler and the diviner were brothers under the skin. This led me to situate gambling in the midst of what I call a culture of chance, which includes all sorts of rituals and practices that use chance as a way of knowing or a way of trying to discern the will of the cosmos, the meaning of the universe, or even—in the case of Calvinist casting of lots—the will of God. The notion of luck is always communicated as an unearned gift, a free gift. Luck, like grace, is something that happens to you. You don’t earn it. To me, this represented a very deep realization at some fundamental level of the futility of striving and trying to control all outcomes, which seems to me at the heart of our dominant culture, whether in religious or secular forms. I began to see gambling and the culture of chance as a kind of counterpoint to this.

The other stream that fed my interest in chance came about while I was on a subway platform in Manhattan. I was waiting in a short line to buy a subway token and noticed that there was a much longer line next to mine, snaking all the way around the platform, for the lottery machine. This was 1994. Newt Gingrich and his buddies had just won a huge victory in Congress, the “Contract with America” was in the air, and there were all sorts of messages directed at Americans to take responsibility for their own economic fate, pull themselves up by their bootstraps, and refuse welfare and other “handouts” that they didn’t deserve. The rhetoric of the self-made man was making a comeback. I looked around at these people waiting in line for the lottery ticket and I thought, these people work hard, but the fact that they’re in this lottery line suggests that they realize, at their core, that hard work is not the whole story. Sometimes you just have to catch a break. And catching a break is basically the secular American version of grace.

Cabinet:  Was this epiphany—seeing working people spending their hard-earned money on lottery tickets—the origin of the distinction that you draw throughout your book between the “culture of chance” and the “culture of control”?

Jackson Lears:  What I wanted to show in this book is that there was, and continues to be, a huge overlap between the culture of control, which relies on some predictability and systematic direction of fate, and the culture of chance, which is much less certain that diligence is the only path to success and is willing sometimes to roll the dice. These two cultures not only overlap, but they interpenetrate each other. One finds some combination of chance and control working together, whether you’re talking about sports or investment or religious faith. Some imagine life as a series of calculated risks, more like a poker game than a lottery, in which people realize that they can’t control all outcomes; but some also want to be able to use their skills to their best advantage, as one does in poker. Yet, at the same time, people recognize that they cannot control all outcomes and that, in the end, luck will play a role as well, and we have to acknowledge its power.

We find this invariable coexistence of chance and control on Wall Street and in the history of speculation. People debate whether or not speculation is mere gambling or whether it’s an investment. Huge sums of money are spent by investment banking firms and brokerage houses to persuade people that, in fact, they aren’t taking a risk when they invest and that they can put their portfolios together in various ways that can minimize if not eliminate risk altogether. Of course, anyone who claims they can eliminate risk ought to be brought up immediately on charges before the U.S. Securities and Exchange Commission.

Cabinet:  Your book describes how the culture of control secularized some of the religious or spiritual elements of chance. So is the oxymoronic concept of the “safe risk” or “safe beta” part of that process of secularization? There’s an unspoken sense that a “safe beta” is not a bet at all; it’s almost a guarantee, such as when aspiring students identify a college as their “safety school.”

Jackson Lears:  That’s one of the paradoxes that we look at every day in the culture of capitalism. On the one hand, there has to be this promise of a magical reward of wealth without work; at the same time, this magic has to be stabilized and rationalized and made to seem predictable in order to cancel out, or threaten to cancel out, the elements of luck and risk. Since the turn of the last century, folks like J.P. Morgan have attempted to make speculative capitalism seem safe and predictable. Of course, this falls apart completely in the Great Depression and only begins to emerge again in the long bull market of the 1980s and 1990s. But there is something quite misleading about the attempt to be reassuring on the subject of risk, to say that what is genuinely a risk is not a risk but is, in fact, a safe option. I’m reminded of the celebrity cowboy Roy Rogers’s farewell to his faithful TV viewers in the 1950s, and it seems to me to be the signature advice of that era: “Be brave, but don’t take chances.” This is a perfectly self-canceling sentence. It says, in effect, “Experience the frisson of bravery, the excitement, the pleasure of feeling like you are doing something heroic. But never bet on anything less than a sure thing.”

Human beings want the excitement of risk, but they also want the safety that comes with containing its worst possibilities. I think that, in some ways, these paired desires capture the dialectic I was trying to get at in my book. The culture of control is not just rooted in a desire to dominate other people and the environment. It is rooted in a desire that is just as natural, I think, and as universal and timeless as the desire for risk and uncertainty and luck, and that’s the desire for stability and predictability....MUCH MORE

The First Forbes Rich List, 1918

From Forbes, Sepetember 27, 2002:

The First Rich List

This year, we mark the 20th anniversary of the Forbes 400 listing of America’s wealthiest, but Forbes did not produce its first rich list in 1982. It was, in fact, in 1918. Compiled by B.C. Forbes, it estimated the wealth of the 30 richest Americans and was based upon informed speculation by “the leading bankers in America” and information on income tax filings.

For those curious about how much–and how little–has changed, we present the complete text of the very first Forbes rich list and B.C. Forbes’ March 2, 1918, story in Forbes magazine.

More From B.C. Forbes:
· Who Made Our First List · Three Women Among Richest Americans
· Annual Incomes Of $5 Million · Frick Is Second Richest American
· Carnegie Comes Next · Fortunes From Staple Products
· Henry Ford’s Hundred Million · Five Pay Income Tax On $70 Million
· Guggenheims Are Second Richest Family · A Few Possessors Of $60 Million
· Schiff In The $50 Million Class · Swift Company Second In Business Volume
· A Trifle Of Ten Millions Each
· Our 30 Richest Americans
· Sources of America’s 30 Greatest Fortunes
· 206 Have $1 Million A Year
Who are the 30 richest persons in America?
This article gives the answer. It embodies not any guess of mine, but the consensus of opinion among the foremost bankers in the country. This can be accepted, therefore, as the most authoritative compilation ever made on this subject.
The combined fortunes of the 30 richest total $3,680,000,000.
The average individual fortune is $122,666,666. Not one of the 30 has less than $50,000,000.
The total annual income of the 30 is figured at $184,000,000, of which John D. Rockefeller’s share is computed at $60,000,000, or almost half as much as the other 29 put together.
The average income of these multimillionaires is $6,133,333. The smallest income is estimated at $2,500,000 a year.
More From B.C. Forbes:
· Three Women Among Richest Americans · Annual Incomes Of $5 Million
· Frick Is Second Richest American · Carnegie Comes Next
· Fortunes From Staple Products · Henry Ford’s Hundred Million
· Five Pay Income Tax On $70 Million · Guggenheims Are Second Richest Family
· A Few Possessors Of $60 Million · Schiff In The $50 Million Class
· Swift Company Second In Business Volume · A Trifle Of Ten Millions Each
· Our 30 Richest Americans
· Sources of America’s 30 Greatest Fortunes
· 206 Have $1 Million A Year

Three Women Among Richest Americans

There are three women on the list: Mrs. E. H. Harriman with $80,000,000 (the richest woman in the country), Mrs. Russell Sage with $60,000,000 and Mrs. Lawrence Lewis with $50,000,000, the last-named sum having descended from Henry H. Flagler of Standard Oil and Florida railroad fame.
The aggregate amount of money in circulation in the United States is less than $5,000,000,000. If the 30 could turn their wealth into cash, they could absorb more than two-thirds of all the money in the country.
That is a sensational and somewhat misleading way of expressing it. The total wealth of the United States is now reckoned at almost $250,000,000,000, so that the 30 richest control less than one-seventieth of it. The 30, however, exercise more than one-seventieth of the financial power of the United States, although they are far from being able to carry out arbitrarily many of the things alleged by demagogues and believed by many of the public.
Seventy years ago a pamphlet published in New York put the number of millionaires in the Metropolis at only 19. Last year 206 Americans pleaded guilty to having annual incomes of $1,000,000 or more–and paid income taxes on them...


First posted May 5, 2014

Coin-Operated Capitalism: Analysis of the Inner Workings of Initial Coin Offerings.

First the Hat Tip:

The Journal of Things We Like (Lots)–JOTWELL 
Extraordinary Popular Delusions and the Madness of ICO Crowdfunding
Oldthinkers unbellyfeel blockchain. We are told that blockchains, cryptocurrencies, and smart contracts are about to revolutionize everything. They remove fallible humans from every step where a transaction could go wrong, replacing them with the crystalline perfection of software. Result: clarity, certainty, and complete freedom from censors and tyrants.

And yet we still don’t get it. Some oldthinkers think that not all regulation is tyranny, while others point to the environmentally disastrous costs of blockchain strip mining. And then there are those of us who think that the entire premise of blockchain boosterism is mistaken, because the new “smart” contracts are not so different from the old “dumb” contracts. Coin-Operated Capitalism, by a team of four authors from the University of Pennsylvania, is the best recent entry in this vein. It is a playful, precise, and damning look at how smart contracts actually function in the real world.

This is one of very few law-and-computer science articles that takes both sides of the “and” seriously, and is one of the best examples I have ever seen of what this field can be. It is a law-review article about an empirical study of contracts and software. To quote the star footnote’s description of the authors’ combined expertise, “Cohney is a fifth-year doctoral student in computer and information science at the University of Pennsylvania, where Hoffman is a Professor of Law, Sklaroff received a JD/MBA in 2018, and Wishnick is a fellow in the Center for Technology, Innovation and Competition.” (Jeremy Sklaroff, the (alphabetically) third author, wrote an unusually good law-review comment on smart contracts last year.) Another nine research assistants helped, presumably with the extensive white-paper reading and coding. It takes a village to write a truly interdisciplinary article.

Coin-Operated Capitalism’s target is the initial coin offering (ICO). As the name suggests, an ICO is a blockchain analogue to a corporate initial public offering (IPO) of equity shares. Instead of receiving stock in a new business, an ICO investor receives tokens that give her a stake in a new smart contract. The token typically gives the holder some transactional rights (the authors’ example is to receive sodas from vending machines) and some control rights (e.g. to vote on investment opportunities, or to approve modifications to some of the terms of the ICO contract), both of which are coded into the smart contract. The promoters use the funds thereby raised for the associated venture (e.g., building and filling the vending machines), for the development and maintenance of the smart contract itself, and sometimes for further investments as directed by the new class of token-holders.

Anyone who has ever heard of securities law should be hearing alarm bells at this point....

And the paper via the Social Science Research Network:

Coin-Operated Capitalism
105 Pages Posted: 18 Jul 2018 Last revised: 11 Dec 2018
This Article presents the legal literature’s first detailed analysis of the inner workings of Initial Coin Offerings. We characterize the ICO as an example of financial innovation, placing it in kinship with venture capital contracting, asset securitization, and (obviously) the IPO. We also take the form seriously as an example of technological innovation, where promoters are beginning to effectuate their promises to investors through computer code, rather than traditional contract. To understand the dynamics of this shift, we first collect contracts, “white papers,” and other contract-like documents for the fifty top-grossing ICOs of 2017. We then analyze how such projects’ software code reflected (or failed to reflect) their contractual promises. Our inquiry reveals that many ICOs failed even to promise that they would protect investors against insider self-dealing. Fewer still manifested such contracts in code. Surprisingly, in a community known for espousing a technolibertarian belief in the power of “trustless trust” built with carefully designed code, a significant fraction of issuers retained centralized control through previously undisclosed code permitting modification of the entities’ governing structures. These findings offer valuable lessons to legal scholars, economists, and policymakers about the roles played by gatekeepers; about the value of regulation; and the possibilities for socially valuable private ordering in a relatively anonymous, decentralized environment. 

Saturday, December 15, 2018

"If You Don’t Have Bread, Eat Art: Contemporary Art and Derivative Fascisms"

Monday is the anniversary of Bitcoin's top-tick so let's talk currency.

From e-flux:
Is art a currency?
Investor Stefan Simchowitz thinks so. He wrote with uncompromising clarity about the post-Brexit era: “Art will effectively continue its structural function as an alternative currency that hedges against inflation and currency depreciation.” Have silver paintings become a proxy gold standard? How did it come to this? During the ongoing crisis, investors were showered with tax money, which then went into freeport collections, tower mansions, and shell companies. Quantitative easing eroded currency stability and depleted common resources, entrenching a precarious service economy with dismal wages, if any, eternal gigs, eternal debt, permanent doubt, and now increasing violence. This destabilization is one reason the value of art looks more stable than the prospects of many national GDPs. In the EU this takes place against a backdrop of mass evictions, austerity, arson attacks, Daesh run amok, and Deutsche scams. Results include child poverty, debt blackmail, rigged economies, and the fascist scapegoating of others for widely self-inflicted failed policies. Art is an “alternative currency” of this historical moment.

It seems to trade against a lot of misery.
Meanwhile, reactionary extremism intensifies in many places. I won’t bore you with specifics. There’s always another attack, election, coup, or someone who ups the ante in terms of violence, misogyny, snuff, or infamy. Derivative fascisms continue to grow, wherever disenfranchised middle classes fear (and face) global competition—and choose to both punch down and suck up to reactionary oligarchies. Ever more self-tribalized formations pop up that prefer not to abolish neoliberal competition—but instead eliminate competitors personally. Derivative fascisms try to fuse all-out free trade economics with (for example) white nationalism[6] by promoting survival of the fittest for everyone except themselves. Authoritarian neoliberalism segues into just authoritarianism.

A permanent fog of war is fanned by permanent fakes on Facebook. Already deregulated ideas of truth are destabilized even further. Emergency rules. Critique is a troll fest. Crisis commodified as entertainment. The age of neoliberal globalization seems exhausted and a period of contraction, fragmentation, and autocratic rule has set in.

Alternative Currency
Art markets seem not overly concerned. In times in which financial institutions and even whole political entities may just dissolve into fluffy glitter, investment in art seems somehow more real. Moreover, as alternative currency, art seems to fulfill what Ethereum and Bitcoin have hitherto only promised.

Rather than money issued by a nation and administrated by central banks, art is a networked, decentralized, widespread system of value. It gains stability because it calibrates credit or disgrace across competing institutions or cliques. There are markets, collectors, museums, publications, and the academy asynchonously registering (or mostly failing to do so) exhibitions, scandals, likes and prices.

As with cryptocurrencies, there is no central institution to guarantee value; instead there is a jumble of sponsors, censors, bloggers, developers, producers, hipsters, handlers, patrons, privateers, collectors, and way more confusing characters. Value arises from gossip-cum-spin and insider information. Fraudsters and con artists mix helter-skelter with pontificating professors, anxious gallerists, and couch-surfing students. This informal ecology is eminently hackable, but since everyone does it, it sometimes evens out—even though at highly manipulated levels. It is at once highly malleable and inert, sublime, dopey, opaque, bizarre, and blatant: a game in which the most transcendental phenomena are on collectors’ waiting lists.

Further down the food chain, media art, like Bitcoin, tries to manage the contradictions of digital scarcity by limiting the illimitable. But for all its pretense to technological infallibility, Bitcoin is potentially just as dependent on group power as art-market values are dependent on consent, collusion, and coincidence. What looks like incorruptible tech in practice hinges on people’s actions.

As to the encryption part in art: art is often encrypted to the point of sometimes being undecryptable. Encryption is routinely applied, even or especially if there is no meaning whatsoever. Art is encryption as such, regardless of the existence of a message with a multitude of conflicting and often useless keys. Its reputational economy is randomly quantified, ranked by bullshit algorithms that convert artists and academics into ranked positions, but it also includes more traditionally clannish social hierarchies. It is a fully ridiculous, crooked, and toothless congregation and yet, like civilization as a whole, art would be a great idea....MORE

"The Wayward Millions of Lithuania’s Runaway Banker"

From The Organized Crime and Corruption Reporting Project, 14 December:

Lithuania’s Vladimir Romanov absconded to Russia more than four years ago, leaving investigators grasping to recoup millions they believe he stole from Ukio Bankas. They’re still chasing the money today.
Vladimir Romanov, on the lam from Lithuania, is suspected of robbing his own bank. Investigators say evidence contained in the Paradise Papers leak of offshore financial data points to how it was done.

The story starts with a small patch of ground on the outskirts of Lithuania’s capital city of Vilnius. It was supposed to be developed into a modern residential neighborhood, funded by a €10.3 million (US$ 15.62 million) loan from Romanov’s bank. The money was used instead to buy a £14.9 million ($29.6 million) property in London at 43 Grosvenor St., Mayfair. The ultimate beneficiary of the deal was Romanov’s niece, Julija Goncaruk.

Romanov has been hiding in Russia since 2014, and a legal battle is still raging over the cash sunk into that London property, according to Lithuanian investigators. Among the claimants jostling for a piece of the spoils is a company that appears to be tied to Romanov’s inner circle.

A Bank With a History
Romanov was long one of the most flamboyant personalities in the Lithuanian financial universe. He owned a football club in Scotland and a basketball team in Lithuania. In both cases, he was famous for sacking coaches and other impulsive actions.

He also established a political party which came in last in the 2012 parliamentary elections with a meager 0.25 percent of the vote. It was the third-worst performance in Lithuanian parliamentary elections in the 21st century.

But Romanov didn’t make his money in sports or politics; he made it in banking.

His Lithuanian bank, Ukio Bankas, surfaced in several money laundering investigations, including allegations that it handled some of the Russian money stolen in a scandal uncovered by the late Sergei Magnitsky. Ukio became infamous in 2013, when Lithuania’s Central Bank revoked its license and took it over. A criminal case was launched into alleged embezzlement, and Romanov departed Lithuania for Russia, where he has been granted asylum.

Lithuania cited “harmful actions” by Ukio Bankas’ shareholders as the principal reasons for intervening. Authorities feared that the financial institution, already on the brink of collapse, was being systematically stripped of assets by the people running it.

Moving Lithuania to London
Daniliskes is the small patch of land outside Vilnius that was supposed to be transformed into a modern residential area in 2008. According to leaked documents prepared by Lithuanian law enforcement, Ukio Bank lent €10.3 million (15.62 million $) for the plan to a Lithuanian company called Tristanas, owned by Ilja Jaroslavskis, a long-time associate of various Romanov-related companies.

But within days, Tristanas wired the money to England. The company never laid a single brick in Daniliskes. Instead, it went into liquidation a few years later.

This is where the Paradise Papers come in. That’s the name for a leak of 13.4 million documents from two offshore services firms based in Bermuda and Singapore, as well as from 19 corporate registries maintained by governments in secret offshore jurisdictions.

The documents, which surfaced more than a year after the similar Panama Papers scandal, were obtained by the Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists (ICIJ), which in turn organized a collaborative investigation with dozens of outlets across the world. The group included the Organized Crime and Corruption Reporting Project (OCCRP) and its Lithuanian partner, MORE

"Russia’s central bank quietly raised its key interest rate by 0.25 percentage points on Friday"

If you think having Donald Trump question the Fed head for raising rates is playing rough, just imagine working for Vlad Putin as his popularity drops.
Considering the hand she's been dealt, the chief of the Russian central bank, Ms. Nabiullina, should have garnered a couple more Euromoney Central Banker of the Year awards to sit next to the one she received in 2015.

Seriously, since she took over in 2013 oil prices collapsed, then doubled, the annexation of Crimea led to the first set of sanctions, the rouble fell 50%, the U.S. Treasury threatened Russian banks with exclusion from SWIFT, the second set of sanctions on companies and oligarchs led to the retraction of multi-billion dollar credit facilities which had to be replaced internally and a couple other things that I'm having trouble remembering.
And all the while Vladimir is looking over your shoulder.

Anyway, all good mini-rants come to an end, here's the headline story from Sputnik:
Russia’s central bank quietly raised its key interest rate by 0.25 percentage points on Friday, to 7.75 percent, for the second time in four months, amid the threat of new US sanctions.

"In the current conditions, it's very important for us to maintain our conservative approach to assessing risks and conducting monetary policy," Russian central bank Governor Elvira Nabiullina said at a recent press conference, Bloomberg reported this week. "We must make sure that inflation remains under control."

"Now, when risks are higher, it's particularly important to behave with caution. That approach is one of the most important principles in inflation-targeting policy," she said, the Financial Times reported.

"The decision taken is proactive in nature and is aimed at limiting inflation risks that remain elevated, especially over the short-term horizon. There persists uncertainty over future external conditions, as well as over the reaction of prices and inflation expectations to the upcoming VAT [value added tax] rate increase. The increase in the key rate will help prevent firm inflation anchoring at the level significantly exceeding the Bank of Russia's target," Nabiullina pointed out....MORE
Ah, here's one more thing she had to do on the fly.

When the SWIFT threat was being bandied about, Russia had no alternatives so she needed both an emergency solution and a longer term solution,
The longer term plan became the Mir payment system which inspired China's CIPS.
And the emergency solution, first proposed by the patriarch of the Russian church inspired some truly awful headlines:
"...Unorthodox Orthodox Financial Alternative"

And worse.

Protective Coloration: "The Crucial Moment of Deception"

From Cabinet Magazine:
Abbott Thayer’s sketch for a textile and uniform design based on disruptive patterning, ca. 1915. 
Courtesy Abbott Henderson Thayer & Thayer Family Papers, Smithsonian Archive of American Art.
On 11 November 1896, an American painter known for his society portraits and demure landscapes made an unusual appearance at the Annual Meeting of the American Ornithologists’ Union in Cambridge, Massachusetts. Abbott Thayer arrived at the Harvard Museum of Comparative Zoology on Oxford Street bearing a sack of sweet potatoes, oil paints, paintbrushes, a roll of wire, and two new principles of invisibility in nature that together formed his “Law Which Underlies Protective Coloration.”1 In his afternoon open-air lecture, Thayer argued that every non-human animal is cloaked in an outfit that has evolved to obliterate visual signs of that animal’s presence in its typical habitat at the “crucial moment” of its utmost vulnerability. According to him, all animal coloration was a function of this need to hide in the environment.

Thayer identified two visual phenomena undergirding this invisibility: “obliterative countershading” and “disruptive patterning.” In the first, animal skins achieve an illusion of monochrome flatness via coloration darkest in sunlit parts and lightest in areas generally bathed in shadows: examples include the light bellies of otherwise dark rabbit coats or the silver undersides of sharks. The resulting visual compression of a three-dimensional form produces an illusion of monochrome flatness. The second principle takes this illusion to the next level of protective concealment: mottled patterns corresponding to the animal’s habitat disrupt the contours of its flat silhouette, resulting in an impression of not being there.2 An example is the coloration of bullfrogs. Natural selection, continued Thayer, favors individuals visually expressing one or both of these traits and constructs a world of momentarily evanescent animal objects.

This protective coloration was, claimed Thayer, related to a notion of concealment specific to a particular instant snapped out of a continuum of time. As he would later write, “At these crucial moments in the lives of animals when they are on the verge of catching or being caught, sight is the indispensable sense. It is for these moments that their coloration is best adapted, and when looked at from the viewpoint of the enemy or prey as the case may be, proves to be obliterative.”3
For the assembled audience of scientists, bird enthusiasts and interested passersby, Thayer introduced his law as a scientific discovery of great importance, uncovered through the workings of an artistic mind. He then used his props to present a disappearing act with painted and posed sweet potatoes, making ones that had been painted lighter on the undersides—“countershaded”—disappear from view.4 Unpainted monochrome specimens, meanwhile, stood out like sore thumbs against the dirt. “The effect was almost magical,” recounted one audience member.5

This game of hide-and-seek was no joke. By 1896, Thayer was increasingly inserting himself into what was a longstanding debate over the origins, effectiveness, and pervasiveness of protective concealment in the natural world. After the publication of Charles Darwin’s Origin of Species in 1859, animal coloration—both its origins and its role in animal behavior—had become a key locus of debate among natural historians, artists, and the lay public. Prior to this period, naturalists had noted instances of animals’ blending in with their backgrounds. It seemed remarkable that God had “dropped” them into place just so—“nature by design.”6 By contrast, in an evolutionary model, there was a gradual “fitting together” over time. Evolutionary theories, both Darwin’s and that of his colleague Alfred Russel Wallace, presented a range of explanations for animal colors. Darwin emphasized interrelations between the sexes as the cause of the showy coloration found in the male of many species; females chose the more colorful males for mating. Wallace, meanwhile, thought color was better understood as the result of strictly environmental pressures. Studying the colors of many insects, he interpreted bright hues and complex patterns alike as either warning signals to potential predators, modes for assimilation in the environment, or mimicry of other, more dangerous, species.

Thayer’s interest in nature’s visual illusions originated in his hobbies as a birdwatcher, hunter, and amateur photographer, as well as in his classical training as a painter. He kept a journal of bird sightings from the woods surrounding his summer home in Dublin, New Hampshire, and collected dead birds to skin for visual analysis and three-dimensional modeling, becoming “an excellent taxidermist through his inborn sense of form and gesture.”7 In the 1880s, he became a reader of Darwin and Wallace, as well as of later biologists inspired by them to focus on the evolution of color.

Within a culture generally fascinated by deceptive visual fields, bird study became a vital link between the concerns of natural science and those of representational art making. Philosopher-psychologist William James, a friend of Thayer’s and a fellow birder, discussed the experience of bird watching in his 1890 Principles of Psychology, describing the study of illusions, or so-called “false perceptions,” as critical to efforts to understand sensations related to depth, color, and movement perception. In the section on illusions, James brings to his readers’ attention the following anecdote recounted by a colleague:
A sportsman, while shooting woodcock in cover, sees a bird with the size and color of a woodcock … but through the foliage, not having time to see more than that it is a bird of such a size and color, he immediately supplies by inference the other qualities of a woodcock, and is afterwards disgusted to find that he has shot a thrush.8
James extended examples drawn from hunting to the world of men at war with enemies within and without: “as with game, so with enemies, ghosts, and the like.”9

In the immediate aftermath of the Great Financial Crisis we would often note that banker pinstripes make lousy protective coloration should the mob demand retribution.
As it turned out the U.S. Department of Justice didn't go after anyone.

So maybe pinstripes were perfect coloration.
As noted in one of our 5-year anniversary pieces "Today in the Financial Crisis, Saturday September 20, 2008: Music to Hunt Bankers By" we had settled on the rondo from Mozart's Horn Concerto No. 2 as our theme music:

BlackRock: "A better gauge of financial conditions"

From BlackRock's blog:

Common measurements of financial conditions can give misleading results. We believe our new Financial Conditions Indicator (FCI) is a better gauge. Elga explains why.
U.S. financial conditions have tightened significantly since risk assets began to falter in the summer. Why does this matter for investors? Financial conditions describe how changes in financial asset prices impact economic growth. The more they tighten, the more they weigh on economic growth. The more they ease, the more they boost growth. But financial conditions are tough to measure.
Common gauges—which include interest rates, market volatility and asset valuations—can give misleading results. This is because unadjusted financial asset prices tend to both reflect growth news as well as drive growth news. Take the following example: Rising U.S. growth expectations can push up yields and the dollar. This could lead to the deceptive conclusion that financial conditions are tightening and the growth outlook is deteriorating. Most common gauges account for the impact of the business cycle thus far on financial asset prices, but they do not account for the fact that current economic expectations also affect today’s asset prices and hence financial conditions.

Financial Conditions Indicator (FCI)
Our latest Macro and market perspectives, A tale of tighter conditions, introduces our Financial Conditions Indicator (FCI)–a better gauge of financial conditions, we believe, than common measurements. Our new FCI seeks to avoid the problem of common gauges by fully stripping out the impact of growth news on asset prices from the underlying asset prices for government bonds, corporate credit, equity markets and the exchange rate. Once the forward-looking factor is also removed, our FCI behaves more closely in line with economic theory. Case in point: an increase in interest rates and yields following better growth news does not lead to an assessment by our metric that financial conditions have tightened.
Our FCI provides a measure of the impact that financial conditions are exerting on the growth outlook–as proxied by the BlackRock Growth GPS–and not the impact of the current growth outlook on financial conditions. Its inputs include policy rates, bond yields, corporate bond spreads, equity market valuations and exchange rates.

What is our new FCI telling us?
It shows financial conditions in the U.S. and in the euro-zone are tightening. Moves in our FCI have historically led our growth GPS by around six months. Tighter financial conditions suggest that growth in the U.S. will likely decelerate in the coming twelve months.  See the Tighter times chart.
All other things equal, this implies slowing, but above-trend global growth in 2019, we believe. The sell-off in financial markets since the summer and ongoing Fed policy tightening would be consistent with U.S. gross domestic product (GDP) growth slowing to just under 2.5% next year from almost 3% now. The market sell-off since September has alone caused a tightening in financial conditions equivalent to a 35 basis point decline in the U.S. Growth GPS.

What does our FCI say about monetary policy?....

Here’s what your phone can learn from the sound of your voice

From The Next Web:
The vast majority of people in developed countries now carry a smartphone everywhere.
And while many of us are already well aware of privacy issues associated with smartphones, like their ability to track our movements or even take surreptitious photos, an increasing number of people are starting to worry that their smartphone is actually listening to everything they say.

There might not be much evidence for this but, it turns out, it isn’t far from the truth. Researchers worldwide have begun developing many types of powerful audio analysis AI algorithms that can extract a lot of information about us from sound alone.
While this technology is only just beginning to emerge in the real world, these growing capabilities – coupled with its 24/7 presence – could have serious implications for our personal privacy.

Instead of analyzing every word people say, much of the listening AI that has been developed can actually learn a staggering amount of personal information just from the sound of our speech alone.
It can determine everything from who you are and where you come from, your current location, your gender and age and what language you’re speaking – all just from the way your voice sounds when you speak.
If that isn’t creepy enough, other audio AI systems can detect if you’re lying, analyze your health and fitness level, your current emotional state, and whether or not you’re intoxicated.
There are even systems capable of detecting what you’re eating when you speak with your mouth full, plus a slew of research looking into diagnosing medical conditions from sound.
AI systems can also accurately interpret events from sound by listening to details like car crashes or gunshots, or environments from their background noise.
Other systems can identify a speakers’ attitude in a conversation, pick up unspoken messages or detect conflicts between speakers.

Another AI system developed last year can predict, just by listening to the tone a couple used when speaking to each other, whether or not they will stay together. These are all examples of current AI technology developed in research labs worldwide....

"China Targets Control Over Internet of Things for Spying, Business" (IoT)

A smart piece from a surprising source.
I'm pretty sure this is the first time we've linked to the Free Beacon since they went all political in 2016, our thinking being readers can find that stuff, left, right, breatharian, whatev pretty much anywhere. I mean the barriers to entry for political commentary are set pretty low

Anyhoo, from the Washington Free Beacon, October 25:

Report warns Beijing working to dominate Internet
China is aggressively seeking to dominate the Internet of Things and plans to use access to billions of networked electronic devices for intelligence-gathering, sabotage, and business purposes, according to a forthcoming congressional report.

China for nearly a decade has been investing heavily in the emerging technology on the Internet of Things (IoT) and has made outpacing similar U.S. efforts one of the ruling Communist Party of China's highest strategic goals.

"China’s unique approach to the development of IoT and its enabling infrastructure poses significant challenges for U.S. economic and national security interests," says a report by the U.S.-China Economic and Security Review Commission due out Thursday.

"The highest echelons of the Chinese regime view IoT development and deployment as critical matters of China’s economic competitiveness and national security."

A major concern outlined in the report is China's efforts to uncover vulnerabilities in IoT systems that can be used by Beijing for strategic objectives in both peacetime and war, the report said.

"Aside from industrial control systems, unauthorized access to health care devices could kill patients and exploitation of smart car vulnerabilities could kill drivers and pedestrians alike, among other examples of possible misuse of data and devices that could have dire consequences," the report warns.

"The future destructive potential of unauthorized access to IoT devices appears potentially limitless."

The IoT is an ill-defined term for a global information and communication infrastructure. It is made up of linked devices ranging from biomedical devices for monitoring patients to self-driving cars to critical infrastructure.

The universe of IoT devices includes billions of electronic systems such as, video cameras, smart phones and smart watches, and industrial control systems used in electric grids.
Chinese IoT objectives include building "smart cities" that monitor public utilities, flows of people and traffic, underground pipelines, and air and water quality, the report said.

Other Chinese IoT plans include advanced remote industrial controls; medical IoTs; smart homes equipped with remote controls for appliances and security systems; and smart cars linking vehicle sensors to drivers, roads, cloud services, and other electronic devices.
The IoT is expanding rapidly and will be further enhanced with emerging advanced information technologies, such 5G cellular technology.

Use of 5G networks will increase the ability of networked devices to interact through faster data transfer speeds.
China, according to the report, is working on major programs to find vulnerabilities in IoT technology ostensibly for cyber security.

However, the report suggests the research is cover for plans to conduct for cyber espionage, sabotage, and military cyber reconnaissance using the Internet of Things.

One example of an IoT cyber attack took place in 2016 when the malware known as the Mirai botnet infiltrated thousands of linked devices by scanning the Internet for video cameras—most made in China—and DVRs that were not protected and easily accessed by using default passwords such as "password."

Mirai "commandeered some one hundred thousand of these devices, and used them to carry out a distributed denial of service (DDoS) attack against DynDNS that shut down many popular websites," the report said.

A second botnet called IoTroop targeted several brands of Chinese-made Internet Protocol cameras in late 2017.

A Chinese case discovered in 2016 by security researchers revealed that firmware update software made by the Shanghai ADUPS Technology Co. Ltd. was secretly siphoning off private data and sending it to China.

"ADUPS’s firmware update software is currently in use on more than 700 million low-end mobile phones and IoT devices around the globe, including devices in the United States," the report said.
Chinese IoT researchers also are preparing to use cyber attacks against the "Internet of Underwater Things" that has applications for submarine warfare.

"The imperfect availability of enemy location information in underwater warfare offers a strategic advantage to any nation with advanced underwater sensor technology, and compromised IoT devices and sensor networks operating underwater at a variety of depths could nullify any such advantage," the report said....MUCH MORE
HT to a friend to whom I mentioned the U.S.-China Economic and Security Review Commission in the context of what Huawei is up to.
We'll have more on that next week.

The Methuselah Trust of Hartwick College

A repost from 2011:
From Lapham's Quarterly:
Hartwick College didn’t really mean to annihilate the U.S. economy. A small liberal-arts school in the Catskills, Hartwick is the kind of sleepy institution that local worthies were in the habit of founding back in the 1790s; it counts a former ambassador to Belize among its more prominent alumni, and placidly reclines in its berth as the number-174-ranked liberal-arts college in the country. But along with charming buildings and a spring-fed lake, the college once possessed a rather more unusual feature: a slumbering giant of compound interest.

With bank rates currently bottomed out, it’s hard to imagine compound interest raising anyone much of a fortune these days. A hundred-dollar account at 5 percent in simple interest doggedly adds five bucks each year: you have $105 after one year, $110 after two, and so on. With compound interest, that interest itself get rolled into the principal and earns interest atop interest: with annual compounding, after one year you have $105, after two you have $110.25. Granted, the extra quarter isn’t much; mathematically, compound interest is a pretty modest-looking exponential function.
Modest, that is, at first. Because thanks to an eccentric New York lawyer in the 1930s, this college in a corner of the Catskills inherited a thousand-year trust that would not mature until the year 2936: a gift whose accumulated compound interest, the New York Times reported in 1961, “could ultimately shatter the nation’s financial structure.” The mossy stone walls and ivy-covered brickwork of Hartwick College were a ticking time-bomb of compounding interest—a very, very slowly ticking time bomb.
One suspects they’d have rather gotten a new squash court.
The notion of a “Methuselah” trust has a long history—and as with many peculiar notions, Benjamin Franklin got there first. Upon his death in 1790, Franklin’s will contained a peculiar codicil setting aside £1,000 (about $4,550) each for the cities of Boston and Philadelphia to provide loans for apprentices to start their businesses. The money was to be invested at compound interest for one hundred years, then a portion of the fund was to be used in Boston for a trade school. For Philadelphia, he recommended using the money for “bringing, by pipes, the water of Wissahickon Creek into the town”—or perhaps “making the Schuylkill completely navigable.” The whole scheme was perfectly suited for a man who once half-jokingly proposed that, in preference “to any ordinary death” he be “immersed in a cask of Madeira wine” for later revival, as he had “a very ardent desire to see and observe the state of America a hundred years hence.”
Franklin’s plans soared beyond a mere century, though. After a portion of the funds were to be paid out for a first set of public works, the remainder was then to grow for another century—until, by Franklin’s estimate, in 1990 both cities would receive a £4,061,000 windfall from their most famous native son.
“Considering the accidents to which all human affairs and projects are subject in such a length of time,” Franklin admitted, “I have, perhaps, too much flattered myself with a vain fancy that these dispositions, if carried into execution, will be continued without interruption and have the effects proposed.”

Nonetheless, Franklin’s experiment inspired Peter Thellusson, a London merchant and a director of the Bank of England, to even dizzier heights. Thellusson had an impressive fortune of some £600,000 by his death in July 1797, worth about $68 million today. But at the reading of the old financier’s will, his reckless sons received the shock of their lives. “It is my earnest wish and desire,” he lectured them from beyond the grave, “that they will avoid ostentation, vanity, and pompous shew; as that will be the best fortune they can possess.”

It would also be almost the only fortune they’d possess. Most of the estate was to be invested at compound interest until every currently existing heir was dead, whereupon upward of £19 million would cascade onto their distant descendants. It was as if, one legal scholar marveled, Thellusson had “locked his treasure in a mausoleum and flung the key to some distant descendant yet unborn.”

His heirs did not take the news well: one took out a pistol and shot the old man’s portrait....MORE

Friday, December 14, 2018

"'Kipper und wipper': rogue traders, rogue princes, rogue nuns and the German financial meltdown of 1621-23"

From A Blast From The Past:
The great German hyperinflation of 1923 is passing out of living memory now, but that doesn’t mean that it has been forgotten. Indeed, you don’t have to go too far to hear it cited as a terrible example of what can happen when a government lets the economy spin out of control, and the episode still remains a minor feature of the British history curriculum, studied – briefly – by 15 and 16 year olds taking their GCSE. In consequence, a surprisingly large number of Brits can recall at least some of the details of that period. They may remember, for instance, that at its peak German inflation hit 325,000,000 percent, while the exchange rate plummeted from 9 marks to 4.2 billion marks to the dollar. They may recall that it became cheaper to decorate a room with high-denomination banknotes than with wallpaper; or that when thieves robbed a worker who had used a wheelbarrow to cart off the billions of reichsmarks that were his week’s wages, it was reported that they stole the wheelbarrow but left the useless wads of cash piled on the kerb. Others have had one or other of the famous photos taken in this period burned into their memories, such as one that shows a German housewife firing her boiler with an imposing pile of worthless notes [below left].

It’s easy, in these circumstances, to suppose that 1923 was a uniquely strange and terrible episode, but the truth is that it was not. Indeed, the German hyperinflation was not even the worst of the twentieth century; its Hungarian equivalent, dating to 1945-46, was so much more severe that prices in Budapest began to double every 15 hours. (At the peak of this crisis, the Hungarian government was forced to announce the latest inflation rate via radio each morning, so workers could negotiate a new pay scale with their bosses, and issue the largest denomination banknote ever to be legal tender: the 100 quintillion (1020) pengo note. When the debased currency was finally withdrawn, the total value of all the cash then in circulation in the country was reckoned at 1/10th of a cent. [Bomberger & Makinen pp.801-24; Judt p.87])   Nor was 1923 even the first time that Germany had experienced an uncontrollable rise in prices. It had also happened long before, back in the early years of the 17th century. And that hyperinflation (which is generally known by its evocative German name, the kipper- und wipperzeit) was a whole lot stranger and more colourful than what happened in 1923.

In fact the kipper- und wipperzeit was – at least in my opinion – quite possibly the most bizarre episode in the whole of economic history– and that’s a judgement, incidentally, that I reached having written an entire book on the unquestionably strange Dutch tulip mania of 1636-37.

What made the kipper- und wipperzeit so incredible, and so unlike other instances of hyperinflation, was that it was the product not only of slipshod handling of the economy, but also of quite deliberate attempts made by a large number of German states to systematically defraud their neighbours. This international monetary terrorism – as it may be helpful to think of it – had its roots in the economic problems of the late sixteenth century, and lasted long enough to merge into the general crisis of the 1620s caused by the outbreak of the hideously bloody Thirty Years’ War, which killed roughly 20 percent of the population of Germany. While it lasted, the madness infected large swathes of German-speaking Europe, from the Swiss Alps to the Baltic coast, and resulted in some surreal scenes: bishops took over nunneries and turned them into makeshift mints, the better to pump out debased coinage; princes indulged in the tit-for-tat unleashing of hordes of crooked money-changers, who crossed into neighbouring territories equipped with mobile bureaux de change, bags full of dodgy money and a roving commission to seek out any gullible peasants who could be persuaded to swap their good money for for the changers’ bad. By the time it stuttered to a halt, sometime partway through the 1620s, the kipper- und wipperzeit had undermined economies as far apart as Britain and Muscovy, and – just as was the case in 1923 – it was possible to tell how badly things were going wrong from the sight of children playing in the streets with piles of worthless currency....

"Dow Jones Falls Almost 500 Points, Marks 7-Month Closing Low As Apple Struggles To Bottom"

From Investor's Business Daily:
5:00 PM ET
The Dow Jones industrial average capped a dismal week with sharp losses in the stock market today, losing 2% to post its worst close since May 3. At 24,100, the Dow also sank nearly 1.2% for the week, following a 4.5% shellacking in the prior week.

More evidence of slowing growth in retail sales and industrial production last month in China and fresh signs of a softening manufacturing picture in Europe spurred broad selling across the board on Wall Street. Fewer than a dozen of 197 IBD industry groups posted a gain on Friday.
Apple (AAPL) helped lead the broad decline, dropping more than 5 points, or 3%, to 165.48. The iPhone and digital services titan is now trading nearly 30% below a 233.47 peak. Analysts continue to shave their ratings for Apple on concerns over iPhone sales.

It's not uncommon for stock market leaders to form a base, such as the cup with handle, and shed 30% to 33% of their market value in the process. Given that Apple has been in correction mode for more than 10 weeks, it's guaranteed that the Dow Jones industrial component will need months to recover and properly form the right side of a complete new base.

The S&P 500 slid 1.9% lower while sellers beat the Nasdaq composite down by more than 2.2%. The Russell 2000 fell 1.5%.

Volume came in a touch higher vs. Thursday on the Nasdaq, according to early data. NYSE turnover was roughly flat. The current outlook remains under severe selling pressure. Read IBD's The Big Picture column for a daily assessment of the outlook. The Dec. 4 Big Picture story noted a key downgrade in the current outlook for growth stocks.

Dow Jones Leader Gets Whacked
Johnson & Johnson (JNJ) led the downside among the 30 components of the Dow Jones industrials. The medical products giant, which according to a Reuters report had known for decades that its baby powder product contained asbestos, plunged 15 points, or 10%, to 132.80 in volume that jumped seven times its 50-day average....MORE 
With the current DJIA divisor at  0.14748071991788, JNJ's $14.84 decline shaved 100.62 off the Down Jones's but even worse, to have what is usually regarded as among the bluest of blue chip defensive stocks get hit like that is a little disconcerting.

In olden times when a trader was going short against the box he was shorting against the speculative stuff at the top of his box of certificates. Something like Johnson & Johnson would be at the bottom of the pile and and wouldn't get sold until things got very dire. And even then the preference would be to offer it up as collateral to your friendly neighborhood Shylock rather than sell.

Bluest of blue chip defensive issues down 10% is, in technical terms, suckey wuckey, not so lucky. 

Equities: "Banks Are Bleeding Profusely " (BKX; XLF)

Last week we mentioned Goldman Sachs, trading below tangible book, is the worst performing member of the DJIA:

GS The Goldman Sachs Group, Inc. daily Stock Chart

$179.06 last. A trend appears to be emerging. 

Well now it is down to $173.04 and the old analyst line has been modified to "A trend appears to be accelerating."
Down another 3.35% in a week. As the retail guys say: "And if you annualize that Mr. Bigg..."

From StockCharts:
The banking sector has been drilling holes in the bottom of empty Christmas stockings this year. All the big name US stocks are making new lows, but the real concern is the sheer size of the drop. Citi (C) is down 16% in just 2 weeks! BAC is down 25% from the annual highs! Wells Fargo (WFC) is down 28% this year! With the $SPX just slightly negative on the year, you can see the real pain for investors. While these banks are bleeding, there might be some hope showing up next week in the form of the Fed meeting.

You'll notice BAC is plotted on the lower half of this chart. The Fed meeting dates are visualized on the chart as vertical lines. The increasing Fed rates have pushed this stock around as most of the Fed meetings have the stock rolling over shortly after. If the Fed indicates any level of dovishness towards interest rates, this may be a nice inflection point for the stock.

The last few days have seen the stock trying to stabilize. The bullish outside bar on BAC is a positive while the overall market is down 1.42% on the chart above. I think we all know that weak bank charts are not bullish. 
At this point, I'd be looking for the Fed to move in line with what the market is expecting, but any dovish comments could be a big accelerator. We also have quadruple witching on Friday December 21st, which is usually a high volume event. If the banks can start to rally, I think it will set the stage for a big bullish push. 
While some are looking at the yield curve as "the problem," it is definitely just one of the factors. The global picture for banks is horrific and has been for some time. To offset my expectation of a bounce above, look at this global banking chart display. These charts look terrible.


"‘Fitbits for cows’ is a game changer"

Here comes another bubble.

From the Global Farmer Network:

2018 Kleckner Award recipient Gina Gutierrez from Mexico was interviewed Oct 19 by Ag News Daily during the week of the Global Farmer Roundtable in Des Moines.  Below is an excerpt of Gina’s discussion with Mike Pearson and Delaney Howell followed by the link to the full interview.
...Question:  Once they try chocolate milk, they’re always going to buy chocolate milk.
Answer:  Of course. They would give up soda and instead have chocolate milk. That would be heaven. But also as a farmer I rely on trade in many aspects because I not only buy corn for my operation but soymeal and canola meal and all of that may be coming from Canada as well. And also I need trade because technology is a big part of my farm. So we have Fitbits on all of the cows and you know the software and all, so it’s an important part of our operation.
Question:  Did you just say you have Fitbits on all of your cows?
Answer:  I did. They were a game changer. We have two kinds of Fitbits on our cows because the timing was off so we started with pedometers, which help us keep track in the milking parlor as well. So they show activity and the cow gets IDed on the milking parlor. And they show us electro conductivity of the milk, so that is like a sign that we need to keep attention on a cow. And then we got the Fitbits on their necks. They’re a microphone and they establish a pattern for an individual cow for their rumination and you get the signs even before the cows get sick. So you are treating individuals now, which is really cool. My dad is a vet and he comes to a cow and we check the manure – the consistency, temperature – if a cow – do you look sad. OK, I’m going to check up on you. And that’s the thing. And then my dad comes with the stethoscope and he sees nothing. He doesn’t know what the cow has because she’s not even sick yet. So it’s a huge chance for him as well as a vet to go to a cow that’s not even sick but you know she’s gonna get something. And then sometimes a little bit of vitamins we use and it helps a little and OK I’ll check it later or tomorrow and that’s a game changer.
Question:  That’s really neat. And it makes a lot of sense. I’m assuming with the pedometer aspect of the Fitbit you can see which cows are up and mobile and which are laying down a little more than usual. So when you look ahead, you guys are pretty cutting edge – what’s the future hold, Gina? What are you excited about technology wise on the dairy farm?
Answer:  I would like to have robots. They’re very cool and to think that a cow can give milk whenever she wants, it’s pretty cool – you know?...MORE
"Friendship bracelets + news is a game changer"
The Richter Scales:

Wheels Come Off The Leveraged Loan Market: Banks Unable To Offload Loans Amid Record Outflows

Over the last six months ZH, FT Alphaville and Bloomberg have been doing the best job keeping track of what is becoming a real mess.
From ZeroHedge, Dec 14:
To think it was less than three months ago that we wrote that "leveraged loan demand is off the charts as dangers mount." Since then, a lot has happened in the credit market, with yields and spreads blowing out in credit in a much delayed response to said mounting dangers and turmoil in the equity market, eventually hitting the leveraged loan market too, where as we wrote last week, loan prices have fallen precipitously as loan funds suffered dramatic redemptions in recent days, most notably the Blackstone leverage-loan ETF, SRLN, which last week saw its largest ever one-day outflow since its inception.
Fast forward to today when while credit appears to have found a shaky, tentative floor over the last few days, leveraged loans - which started falling later than other markets this quarter - are still sliding, and as long as funds keep pulling money out, will probably keep falling.

While floating-rate loans tend to track bonds, they are often slower to react both to the upside and downside. Since Oct. 1, loans have lost about 2%, including a 1% drop this month, while both high-yield and investment grade bonds rose slightly. In fact, since we last checked in on the S&P/LSTA lev loan index last week it has fallen another full point, and is now down to 95.4, its lowest price in over two years.
"It’s a bit of a catch up," James Schaeffer, deputy CIO at Aegon Asset Management told Bloomberg. "Aggressiveness - on terms and structure - has created more price volatility than in the high-yield market, now that we’ve seen demand for loans slow a bit."

That's putting it mildly: as we noted last week, JPMorgan had to slash the price on a $210 million loan to 93 cents on the dollar from par to sweeten investor demand and help finance a private jet takeover. This represented one of the steepest discounts seen in the leveraged loan market this year. And with the market on the verge of freezing, the size of the deal was cut by $70 million from the originally targeted amount. Meanwhile, in Europe, the market appears to have already locked up, as three loans were scrapped over the last two weeks. To wit, movie theater chain Vue International withdrew a 833 million pound-equivalent ($1.07 billion) loan sale. While the deal was meant to mostly refinance existing debt, around 100 million pounds was underwritten to finance the company’s acquisition of German group CineStar.

More deals were pulled the prior week when diversified manufacturer Jason Inc. became at least the fourth issuer to scrap a U.S. leveraged loan. Additionally, Perimeter Solutions also pulled its repricing attempt, Ta Chen International scrapped a $250MM term loan set to finance the company’s purchase of a rolling mill, and Algoma Steel withdrew its $300m exit financing. Global University System in November also dropped its dollar repricing....MORE
Here's the link list in November 8's "The Fed Broadsides $1.3-Trillion “Leveraged Loan” Market ":
Ha! "Wall Street Loves These Three Letters. The Rest of Us Should Be Wary."

Corrected—Next Big Short? "Warnings mount for leveraged-loan market"

“Concerned” Bank of England Raises Alarm about Growth of High-Risk Loans"

Bonds: And Then There's the ETF/ETF holdings Liquidity Mismatch

The Corporate Bond Market Is Getting Junkier

And many more, we're a wee bit concerned about this. 
Credit "Death Spiral" Accelerates As Loan ETF Sees Record Outflow, Primary Market Freezes
"Leveraged Loan Market Freezes As Prices Plunge, Four Deals Pulled"
Spurious (deceptive) Chart Correlations

Catastrophe Bonds: "Ebola deaths pass pandemic cat bond trigger, but no payout till it spreads"

From Artemis, December 14:
The number of deaths confirmed by the World Health Organisation (WHO) from the ongoing Ebola virus outbreak in the Democratic Republic of Congo have now passed the trigger point for the World Bank’s pandemic catastrophe bond, but the outbreak still needs to spread internationally before a payout becomes due.

Artemis is told that an event report published yesterday states that the payout amount remains zero for the Class B notes from the Pandemic Emergency Financing (PEF) transaction by the World Bank’s International Bank for Reconstruction and Development (IBRD) last year.

The number of deaths reported by the World Health Organisation (WHO) has now surpassed the attachment point of 250, the latest report states that there are 457 confirmed cases and 296 deaths from the Ebola outbreak.

But, under the terms of the PEF cat bond Class B notes, a Filovirus disease (which Ebola is classified as) must cause over 250 confirmed deaths and affect more than one worldwide territory before any payout is triggered.

We’ve explained this fact in each of our recent articles on this Ebola outbreak, that spread internationally across borders is required before the cat bond notes would payout and investors lose any principal.

A regional event is classified as more than one country, up to eight, while a global pandemic would involve more than 8 countries.

If the current outbreak does spread into Sudan or another neighbouring country then a payout looks likely, at first being 30% of the $95 million Class B principal, so $28.5 million.

South Sudan, Uganda and Zambia have all been on alert for cases of the Ebola virus crossing their borders and there have been some suspected cases, but none have been confirmed by the WHO meaning a payout is for now not due....MORE