Wednesday, July 31, 2019

An Antidote to Fed Day Babble and Spew: 20 French Properties as seen in Country Life

"Antidote definition - a remedy to counteract the effects of poison."

There is an awful lot of opinion masquerading as analysis regarding today's quarter-point rate cut and the comments of the Chairman.
And when said awful commentary rose to toxic levels I decided to see if there were any attractive residential properties available.
From Country Life, July 1:

20 of the most beautiful properties for sale across France, as seen in Country Life 
Calvados, France – €620,000

Built in 1731 this elegant 5 bedroom Chateau has been renovated with modern comforts. It lies close to the famouse town of Balleroy and just 15 minutes from historic Bayeau.
For sale with Leggett Prestige. See more pictures and details about this property.
You can smell the apples.

Vaucluse, France – €1,500,000

Stately 16th century, 10 bed / 7 bath château set in 27.5Ha of grounds including woodland and with substantial outbuildings. Situated in the historic Anjou region of Pays de la Loire.
For sale with Leggett Prestige. See more pictures and details about this property.

At that price, check the roof, those mansards can be a pain.

Babble & Spew, a whiff of the Dickensian eh? Not on the level of the Firm of Scrooge & Marley, of course, but definitely a cut above Dombey and Son.
"Here at Babble & Spew we believe..."

"Iran slashes four zeroes from rial currency over inflation"

Is that a lot of zeroes? That seems like a lot of zeroes.
From Deutsche-Welle:
Iran is planning to remove four zeroes from its national currency, the rial, as the country struggles with soaring inflation. The oil-rich nation's economy has been hit hard by unilateral sanctions imposed by the US.

The Iranian government has approved a plan to ax four zeroes from the rial in a bid to tackle high inflation in the country. The measure was announced by an Iranian government spokesperson, Ali Rabiei, following a Cabinet meeting on Wednesday. 

Iran's central bank presented the proposal to the government in early January.
Read more: EU mechanism for trade with Iran 'now operational'

Iran has been facing a severe currency crisis as a result of economic sanctions imposed by Washington, after President Donald Trump withdrew the US from the Iran nuclear deal.
The Iranian rial has plunged from 32,000 to $1 at the time of the 2015 deal to around 120,000 to $1 these days.

This has pushed inflation up, affecting the prices of everything in the country, including food and medicines. Many residents currently pay more than 1 million rial ($30, €27) for a simple trip to the grocery store....MORE
Also at D-W:
Mutant rat-human births approved in Japan

"Facebook is funding brain experiments to create a device that reads your mind" (FB)

From MIT's Technology Review, July 30:

Big tech firms are trying to read people’s thoughts, and no one’s ready for the consequences.
In 2017, Facebook announced that it wanted to create a headband that would let people type at a speed of 100 words per minute, just by thinking.

Now, a little over two years later, the social-media giant is revealing that it has been financing extensive university research on human volunteers.

Today, some of that research was described in a scientific paper from the University of California, San Francisco, where researchers have been developing “speech decoders” able to determine what people are trying to say by analyzing their brain signals.

The research is important because it could help show whether a wearable brain-control device is feasible and because it is an early example of a giant tech company being involved in getting hold of data directly from people’s minds.

To some neuro-ethicists, that means we are going to need some rules, and fast, about how brain data is collected, stored, and used.
In the report published today in Nature Communications, UCSF researchers led by neuroscientist Edward Chang used sheets of electrodes, called ECoG arrays, that were placed directly on the brains of volunteers.

The scientists were able to listen in in real time as three subjects heard questions read from a list and spoke simple answers. One question was “From 0 to 10, how much pain are you in?” The system was able to detect both the question and the response of 0 to 10 far better than chance. 

Another question asked was which musical instrument they preferred, and the volunteers were able to answer “piano” and “violin.” The volunteers were undergoing brain surgery for epilepsy.
Facebook says the research project is ongoing, and that is it now funding UCSF in efforts to try to restore the ability to communicate to a disabled person with a speech impairment.
Eventually, Facebook wants to create a wearable headset that lets users control music or interact in virtual reality using their thoughts.

To that end, Facebook has also been funding work on systems that listen in on the brain from outside the skull, using fiber optics or lasers to measure changes in blood flow, similar to an MRI machine.
Such blood-flow patterns represent only a small part of what’s going on in the brain, but they could be enough to distinguish between a limited set of commands.

“Being able to recognize even a handful of imagined commands, like ‘home,’ ‘select,’ and ‘delete,’ would provide entirely new ways of interacting with today's VR systems—and tomorrow's AR glasses,” Facebook wrote in a blog post....

The Customs Declaration Form Neil Armstrong Had To Fill Out After Returning From The Moon

Via Fermat's Library's Twitter feed: 

"Dire predictions of nations battling over water have not come true. The bitterest conflicts over water are closer to home"

From The Wilson Quarterly:
Beyond Water Wars
Former World Bank Vice-President Ismail Serageldin predicted in 1995 that “the wars of the next century will be about water.”
It was a bold assertion, anchored in human behaviors that have led to a growing scarcity of clean water in some of the most contentious political zones in the world.

Predictions of wars between nations over water have not come to pass. But there is no shortage of battles over this essential resource. Bitter conflicts over water at the subnational level already take a fierce toll on human life and welfare—and could grow into something more deadly.
Concern over “water wars” writ large has gained renewed traction as climate change, continued population growth, and increasingly polluted waterways pose growing risks to the world’s water. It remains a go-to concept, no matter what the facts are. 

“We’re seeing some of the same headlines we’ve been trying to knock down for going on 30 years,” says Geoff Dabelko, former director and current senior advisor to the Wilson Center’s Environmental Change & Security Program. “Despite the seemingly irresistible temptation for politicians and headline writers to proclaim otherwise, countries have not fought wars over water.”

Researchers have put the notion of "water wars" to the test. An analysis in the 1990s of 263 international water basins conducted by Aaron Wolf, Shira Yoffe, and colleagues at Oregon State University found conclusively that states are much more likely to cooperate over shared water than go to war. In fact, while water may be one of many factors influencing skirmishes between states, wars have rarely, if ever, been fought over water. To date, this finding continues to be backed up by empirical studies.

Dabelko says that the implications of clinging to the broad concept of “water wars” between nations comes at a cost. “When we focus so heavily on potential interstate wars over water,” he says, “we miss the mark on how important water is to fostering cooperation, to achieving development goals, and to managing the inevitable tensions over competing uses for water at local levels.”
This doesn’t mean that there aren’t large scale battles over water looming. Some of them are right in our own backyard. Last year, research by the European Commission’s Joint Research Centre (JRC) inspired a new spate of headlines about coming “water wars.”

The JRC researchers analyzed historical records of conflict and cooperation over transboundary water to identify the factors most relevant to “hydro-political interactions,” or transboundary conflict or cooperation over water. Then, they mapped those factors—water availability, population density, power imbalances, and climatic stressors, among others—against future climate and population projections. 

The result? The centre’s researchers identified five “hotspot” water basins where demographic and climatic conditions will increase “hydro-political risk” in already stressed basins.
Four of those hotspot basins might not come as a surprise: the Nile, the Ganges/Brahmaputra, the Indus, and the Tigris/Euphrates. But the fifth should bring a healthy dose of reality for those of us sitting in the United States: the Colorado River basin.

The Dynamics of Water Conflicts
The case of the Colorado River underscores the cross-boundary risks of a water crisis. The basin has been a source of contention for nearly 100 years, since California began lobbying for the Hoover Dam to secure the state’s water supply. While most of the water originates in the upper basin states (Wyoming, Colorado, and New Mexico), a majority of the demand is generated in the lower basin states (California, Nevada, and Arizona)—and in Mexico. In the United States, more than 40 million people and 5.5 million acres of farmland rely on the basin for water....

Throw the Mekong onto the hotspot list as well.

Strategy: "Bayer Will Settle Roundup Lawsuit for the Right Price"

From Bloomberg via AgWeb, July 30:
Bayer AG Chief Executive Officer Werner Baumann said he’d consider a “financially reasonable” settlement of litigation over the weedkiller Roundup as the caseload swells and the company’s shares slump anew.

The number of lawsuits from people in the U.S. who say the herbicide caused them to develop cancer rose by about 5,000 to 18,400, Bayer said in a statement. The company also revealed more troubles at its crop-science division on Tuesday after bad weather curbed demand from farmers.

Quarterly sales and earnings missed estimates and the German company questioned its ability to meet its full-year forecast. The shares fell 3.4 percent in Frankfurt.

Baumann has staked his credibility on last year’s $63 billion takeover of Monsanto Co., claiming the company is better off balancing its portfolio between agriculture and health care. But the surge in U.S. lawsuits alleging that Roundup -- which Bayer inherited from Monsanto -- causes cancer suggest settling the claims will become more expensive than previously thought, heaping more pressure on Baumann three months after he received an unprecedented rebuke from shareholders.

“The jump in lawsuits is worrying,” said Mustaq Rahaman, a credit analyst at Bloomberg Intelligence. “This set of results will do little to stem calls for more dramatic action including a split.”
Baumann said on a conference call that he is open to a settlement as long as it resolves all Roundup litigation. He repeated that the herbicide is safe, that the cases have no merit and that the company is “constructively engaging” with court-appointed mediator Ken Feinberg....

"To feed its 1.4 billion, China bets big on genome editing of crops"

From the journal Science, July 29:
This story, the first in a series on CRISPR in China, was supported by the Pulitzer Center.
IN BEIJING AND DURHAM, NORTH CAROLINA—If Gao Caixia were a farmer, she might be spread a little thin. Down the hall from her office at a branch of the Chinese Academy of Sciences (CAS) here in Beijing, seeds from a strain of unusually soft rice and a variety of wheat with especially fat grains and resistance to a common fungus sprout in a tissue culture room. A short stroll away, wild tomato plants far hardier than domestic varieties but bearing the same sweet fruit crowd a greenhouse, along with herbicide-resistant corn and potatoes that are slow to brown when cut. In other lab rooms Gao grows new varieties of lettuce, bananas, ryegrass, and strawberries.
But Gao isn’t a farmer, and that cornucopia isn’t meant for the table—not yet, anyway. She is a plant scientist working at the leading edge of crop improvement. Every one of those diverse crops has been a target for conventional plant breeders, who have slowly and painstakingly worked to endow them with traits to make them more productive, nutritious, or hardy. But Gao is improving them at startling speeds by using the genome editor CRISPR.

Gao is one face of the Chinese government’s bet that CRISPR can transform the country’s food supply. A natural bacterial immune system, CRISPR was turned into a powerful genome editor just a few years ago in U.S. and European labs. Yet today, China publishes twice as many CRISPR-related agricultural papers as the second-place country, the United States. The explanation? “Because I’m here,” jokes Gao, who punctuates much of her speech with robust, giddy, infectious laughter.
In August 2013, her group modified plant DNA with CRISPR, a first, and the 50-year-old researcher has since written three dozen publications that describe using the genome editor on various crops. Daniel Voytas, a plant geneticist at the University of Minnesota in St. Paul who invented an earlier genome-editing system and who has also adopted CRISPR, says Gao is an “outstanding cell biologist [who] jumped on CRISPR early on and has just been riding the crest of the wave.”

But she is far from alone in China. Her team is one of 20 groups there seeking to use CRISPR to modify crop genes. “All the labs use CRISPR for basic research,” Gao says. “They cannot live without CRISPR.” China also expanded its efforts beyond its borders in 2017, when the state-owned company ChemChina bought Switzerland-based Syngenta—one of the world’s four largest agribusinesses, which has a large R&D team working with CRISPR—for $43 billion. That was the most China has ever spent on acquiring a foreign company, and it created an intimate relationship between government, industry, and academia—a “sort of a ménage à trois” that ultimately could funnel intellectual property from university labs into the company, says plant geneticist Zachary Lippman of Cold Spring Harbor Laboratory in New York.

Chinese leaders “want to strategically invest in genome editing, and [by that] I mean, catch up,” says Zhang Bei, who heads a team of 50 scientists at the Syngenta Beijing Innovation Center and works closely with a sister R&D facility in Durham. “And they also want to be the global leader as well in this area.”...

Tuesday, July 30, 2019

Are Amazon and Whole Foods Divorcing?

Retail grocery is hard. And then you have the whole Julian calendar thing....
From Fox Business:

Amazon, Whole Foods divorcing, or just working on their marriage?
Despite expectations that Amazon's purchase of Whole Foods would revolutionize the grocery delivery industry, the corporate marriage has been subject to consumer criticism and, according to a published report, the consumer giants are searching for new ways to make their partnership work -- either that or just undoing the union. 

In fact, the New York Times reported Monday that Amazon is quietly exploring new grocery options, probably separate from Whole Foods, that would be built for in-store shopping as well as pickup and delivery.

Amazon spokeswoman, Rachel Hass, said the company “doesn’t comment on rumors or speculation.”
Before the marriage of the pair in 2017 for a whopping $13.4 billion, Amazon and Whole Foods were struggling – Amazon as an afterthought for food consumers and Whole Foods as an elitist specialty grocer. Their union put Amazon in the $700 billion grocery market and traditional grocery stocks fell as investors feared their industry would undergo the same kind of upheaval that other ones have experienced once Amazon grabs market share. Since their collaboration, Whole Foods has subtly rebranded with more national producers.

Whole Foods employees who observed the transition reported assembly-line style changes that were unlike the Austin-based company’s original brand promise. In an investigation by the Miami Herald, employees reported that managers conducted pop quizzes and completed spot checks with scorecards....

"A brief history of human filth"

From the BBC's HistoryExtra, July 23:
How did people through history keep clean? How did they deal with dirt, sweat and other bodily odours, and did they take baths?

Amanda Vickery explores the history of personal hygiene and human filth…
In the words of the anthropologist Mary Douglas, “Dirt is simply matter out of place.”
The human history of dirt is the saga of our battle to control environmental filth and channel human waste out of sight, out of mind. Not that ‘dirtiness’ or ‘cleanliness’ are unchanging across time, space and cultures.
Filth undoubtedly has a fascinating past: from the godly cleanliness of 17th‑century Delft, to the triumphant introduction of carbolic acid as surgical antiseptic in 1860s Glasgow, the co-opting of hygiene to promote Nazi ideas of ‘racial cleansing’, to the slums of contemporary New Delhi. The definition and management of dirt determines civilisation.

Dirtiness is in the eye of the beholder. In Japanese homes, for example, visitors are asked to exchange their shoes for slippers at the threshold. Traipsing outdoor mud across clean floors is offensive. Moreover, the toilet is always separated from the bathroom. The western habit of combining the two is disgusting to Japanese sensibility.

The English have been harping on about cleanliness since the early modern period, but cleanliness now and cleanliness then mean different things. We moderns wage war on domestic ‘germs’ armed with chemical weapons, but a practical understanding of bacteria is comparatively recent. The Victorians blamed cholera on airborne miasma. A star exhibit in the 2011 Wellcome Collection exhibition ‘Dirt’ was the ghost map produced by a heretical doctor John Snow – plotting cholera deaths around contaminated water pumps in 1854.

For centuries, the only easily available disinfectant for splashing around was vinegar. It was ordering, tidying, dusting, polishing, rooting out bad smells, scenting, weekly laundry of linens and washing of hands and face that maintained the wholesome house and person....MUCH MORE

EIA: "Summer U.S. Natural Gas Prices On Track To Be the Lowest in More Than 20 Years" (pity the poor drillers)

A twofer. First up, the U.S. Energy Information Administration, July 18:
(before the last heatwave but lower today than it was then, 2.118 vs 2.263)

monthly Henry Hub natural gas spot prices
Source: U.S. Energy Information Administration, Natural Gas Spot and Futures Prices and Short-Term Energy Outlook

In its July 2019 Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecasts Henry Hub natural gas spot prices for June, July, and August this year will average $2.37 per million British thermal units (MMBtu). If realized, this price would be the lowest summer average Henry Hub natural gas price since 1998. EIA expects Henry Hub natural gas prices will be 55 cents/MMBtu, about 19%, lower than last summer’s average.

In the July STEO, EIA revised its forecast for 2019 Henry Hub natural gas prices down from the June STEO following three consecutive months of price declines. Prices in June averaged $2.40/MMBtu and have declined by 19% since March.

Spot prices at key trading hubs across the country have traded close to the Henry Hub basis. Prices at the Transcontinental Pipeline Zone 6 trading point for New York City and the Chicago Citygate were both at $2.12/MMBtu, the lowest June average price and a decrease of 25% and 23%, respectively, from June 2018. The PG&E Citygate near San Francisco had the highest June average price at $2.59/MMBtu, a 14% decrease from last June. 
daily Henry Hub natural gas spot prices and STEO forecast
Source: U.S. Energy Information Administration, Natural Gas Spot and Futures Prices and Short-Term Energy Outlook

The recent natural gas price declines reflect relatively mild weather for the start of summer that led to lower than expected natural gas-fired electricity generation, which allowed natural gas inventory injections to outpace the previous five-year average rate. Between April and June, cumulative net injections into underground storage fields have exceeded the five-year average by 41%, reducing the current five-year average deficit by more than 300 billion cubic feet (Bcf). In addition to the recent price declines, the lower price forecast reflects EIA’s updated assessment of U.S. drilling activity and average well productivity, both of which are higher than previously assumed...MORE
And from OilPrice, July 28:

Natural Gas Glut Is Crushing US Drillers
The outlook for natural gas producers is not great. They are getting clobbered by low prices today, amid a glut. But the medium- and long-term looks even worse, with renewable energy increasingly taking market share.

The gas industry has drilled itself into this predicament. Gas production continues to ratchet higher, rapidly replenishing inventories, which had plunged to a 15-year low heading into this past winter season. Inventories are still below the five-year average, but have climbed quickly in recent months.
(Click to enlarge)
If the natural gas industry had hoped that a stunning heat wave sweeping over a large swathe of the East Coast would rescue prices, they are surely now disappointed. Natural gas prices continue to fall, despite the heat, and there is little prospect of a rebound. On Friday, spot natural gas prices fell by another 3 percent, dipping below $2.20/MMBtu.

Record production from the Marcellus is one of the main reasons. But oil drillers are also to blame. The frenzied pace of drilling in the Permian – which, to be sure, has been slowing as of late – has produced a wave of natural gas so large that the industry is flaring enormous volumes of gas because of the lack of pipelines. Texas regulators seem unwilling to regulate the rate of flaring over fear of hurting the industry, so the flaring continues.

Still, record levels of associated gas production from the Permian are dragging down prices. New midstream capacity later this year from the Gulf Coast Express pipeline will bring more gas to market, adding to supply woes. More pipelines are in the offing for 2020 and 2021.

Even the increasing volumes of gas exported overseas is not enough to tighten up the market. “We expect the current oversupply to persist as production growth, mainly associated gas from oil basins, matches LNG export growth over the next year,” Bank of America Merrill Lynch wrote in a note....MORE

More Than You Might Want To Know About Elon Musk's Neuralink

A couple week's ago Neuralink did a little presentation, here's ZD Net's take on it:
Elon Musk’s Neuralink uses tiny ‘brain threads’ to try and read your mind
The startup has come out of stealth with lofty claims concerning the future of brain implants.
Which reminded me of the big daddy of all Neuralink expositions, but unfortunately did not remind me to re-post it.
Without further ado, from WaitButWhy, first linked in April 2017:

A Deep Dive Into What Elon Musk Is Up To With His Neuralink Company

From WaitButWhy:

Neuralink and the Brain’s Magical Future
Last month, I got a phone call.
Okay maybe that’s not exactly how it happened, and maybe those weren’t his exact words. But after learning about the new company Elon Musk was starting, I’ve come to realize that that’s exactly what he’s trying to do.

When I wrote about Tesla and SpaceX, I learned that you can only fully wrap your head around certain companies by zooming both way, way in and way, way out. In, on the technical challenges facing the engineers, out on the existential challenges facing our species. In on a snapshot of the world right now, out on the big story of how we got to this moment and what our far future could look like.

Not only is Elon’s new venture—Neuralink—the same type of deal, but six weeks after first learning about the company, I’m convinced that it somehow manages to eclipse Tesla and SpaceX in both the boldness of its engineering undertaking and the grandeur of its mission. The other two companies aim to redefine what future humans will do—Neuralink wants to redefine what future humans will be.
The mind-bending bigness of Neuralink’s mission, combined with the labyrinth of impossible complexity that is the human brain, made this the hardest set of concepts yet to fully wrap my head around—but it also made it the most exhilarating when, with enough time spent zoomed on both ends, it all finally clicked. I feel like I took a time machine to the future, and I’m here to tell you that it’s even weirder than we expect.

But before I can bring you in the time machine to show you what I found, we need to get in our zoom machine—because as I learned the hard way, Elon’s wizard hat plans cannot be properly understood until your head’s in the right place.

So wipe your brain clean of what it thinks it knows about itself and its future, put on soft clothes, and let’s jump into the vortex.
Part 1: The Human Colossus
Part 2: The Brain
Part 3: Brain-Machine Interfaces
Part 4: Neuralink’s Challenge
Part 5: The Wizard Era
Part 6: The Great Merger
Notes key: Type 1 are fun notes for fun facts, extra thoughts, or further explanation. Type 2 are boring notes for sources and citations.

Part 1: The Human Colossus
600 million years ago, no one really did anything, ever.
The problem is that no one had any nerves. Without nerves, you can’t move, or think, or process information of any kind. So you just had to kind of exist and wait there until you died.
But then came the jellyfish.
The jellyfish was the first animal to figure out that nerves were an obvious thing to make sure you had, and it had the world’s first nervous system—a nerve net.
The jellyfish’s nerve net allowed it to collect important information from the world around it—like where there were objects, predators, or food—and pass that information along, through a big game of telephone, to all parts of its body. Being able to receive and process information meant that the jellyfish could actually react to changes in its environment in order to increase the odds of life going well, rather than just floating aimlessly and hoping for the best.

A little later, a new animal came around who had an even cooler idea.
The flatworm figured out that you could get a lot more done if there was someone in the nervous system who was in charge of everything—a nervous system boss. The boss lived in the flatworm’s head and had a rule that all nerves in the body had to report any new information directly to him. So instead of arranging themselves in a net shape, the flatworm’s nervous system all revolved around a central highway of messenger nerves that would pass messages back and forth between the boss and everyone else:
The flatworm’s boss-highway system was the world’s first central nervous system, and the boss in the flatworm’s head was the world’s first brain.

The idea of a nervous system boss quickly caught on with others, and soon, there were thousands of species on Earth with brains.

As time passed and Earth’s animals started inventing intricate new body systems, the bosses got busier.
You won't believe how much more

And at IEEE Spectrum. July 26:
What the Media Missed About Elon Musk's $150 Million Augmented Brain Project

Get Woke, Go Broke: "P&G's Gillette razor business is not for sale even after $8 billion write-down" (PG)

From Yahoo Finance:
Procter & Gamble Co. (PG) remains committed to the shaving category via its well-known Gillette brand.

The consumer products giant said Tuesday it took an $8 billion write-down on the carrying value of Gillette’s goodwill in the most recent quarter. P&G pinned the blame on currency devaluations since it bought Gillette for $57 billion back in 2005. The company also cited ongoing tough competition in the razor blade category.

P&G has no plans to sell off the Gillette shaving care business, Chief Financial Officer Jon Moeller tells Yahoo Finance. Moeller highlighted the brand’s strong earnings and cash flow generation profile as one reason. The veteran P&G executive also said Gillette fits the company’s current focus on innovating around daily-use consumer product categories.

P&G has been challenged in the shaving care space for some time. Upstart razor blade companies such as Dollar Shave Club and Harry’s have made considerable inroads with consumers via cheap razors housed in slick packaging. P&G has sought to stem market share losses by lowering prices on its razors and highlighting product quality in TV commercials....MORE
Speaking of commercials... 
March 2019 
As pundits pointed out, woke Gillette wasn't woker than woke Harry's which was way woker....

...MUCH MORE wokeness

"Beyond Meat acts rationally, upsets investors" (BYND)

A few days ago, in "In Pre-Market Trade, Beyond Meat Is Approaching Escape Velocity (BYND)" I mentioned Wall Street titan Daniel Drew:

"He who sells what isn't his'n, Must buy it back or go to prison."
-Daniel Drew
Wall Street speculator*
In addition to his comment on short-selling he applied the term "watered stock" to finance.
In 1867 the owner of the New York Central Railroad, Cornelius Vanderbilt, decided to buy the Erie Railroad out from under Uncle Dan'l.
Drew responded by the tripling the outstanding stock with illegally issued shares.
Good times....
They want stock? Give 'em stock!
Some things never change.

After closing down in yesterday's regular session,  -$12.77 (-5.44%) at $222.13, the stock is off a further $28.70 (12.92%) to $193.43 with an hour to go before the open.

From FT Alphaville:
Say you found a company which aims to sell a new type processed food. You toil for just under a decade, perfecting your product, and eventually you begin to bring in revenue. In 2016, the business does $16m of sales, and then growth begins to accelerate. Just two years later, that figure has quintupled to $88m.

Even though you’re still a small company, losses are limited, and the innate operating leverage of scaling a packaged product means that profitability is within sight.

So, of course, you decide to list your shares on the market. The date chosen is May 2. Your early investors have backed you, and they deserve a reward for their perseverance. Under the terms of the offering, they, and you, can sell your holdings 180 days after the listing, on October 29.
Through no fault of your own, your business turns out to be one of the only publicly traded companies offering a product which feeds into the zeitgeist of passive eco-activism. That product is plant-based protein. And your business is called Beyond Meat.

Investors go gaga for your stock. The shares are priced at $25, but they open on the first day of trading in April at $46. Three months later, they touch $230.

It’s now mid summer, and just 90 days ago you sold 8.75m shares to raise $240.6m. Money has clearly been left on the table: the number of shares you could sell now for the same amount of cash is just over 1 million.

To boot, the company’s valuation, by any rational measure, is now extreme. A $13bn market capitalisation means the company trades at 54 times 2019’s estimated revenues. Your peers are valued at between 1 to 2 times sales, albeit with far lower growth expectations.
The situation presents a dilemma: your 5 per cent stake is now worth just over half a billion dollars, but you can’t sell any shares until late October. Plus, an exuberant valuation means that issuing equity to add to the IPO proceeds is a no-brainer, even if it dilutes new shareholders hoping to ride the equity to riches....MUCH MORE

Capital Markets: "Sterling Pounded"

From Marc to Market:
Overview: The prospect of a no-deal Brexit continues to pound sterling lower. A little more than two months ago, it was testing $1.32. Two weeks ago it was around $1.25. Today it traded near $1.2120 before stabilizing. On the other hand, the 10-year Gilt yield is below 65 bp, a new multiyear low, while the international-laden FTSE 100 is holding its own in the face of heavier equity prices in Europe. The major equity markets in the Asia Pacific region rose except for Taiwan, which some linked to the anticipation of Apple's earnings later today. Led by financials, utilities, and industrials, the Dow Jones Stoxx 600 is off around 0.5% near midday. US shares are little changed. Benchmark 10-year yields are edging lower today, though the yields in the periphery of Europe are a little firmer. The US dollar is narrowly mixed. While Brexit is a drag on sterling, disappointing Swedish GDP figures (-0.1% vs. expectations of +0.3%) have weighed on the krona. The Turkish lira continues to recover and is leading the emerging market currencies higher. The dollar has fallen below TRY5.60 and is at its lowest level in nearly four months. The next important chart area is seen closer to TRY5.40.

Asia Pacific
Japan reported disappointing industrial output figures and an unexpected decline in unemployment before the BOJ met
and left policy unchanged. Industrial production slumped 3.6% in June, which was twice what the median forecast anticipated in the Bloomberg survey and the third-largest decline since the natural disasters in 2011. The year-over-year contraction deepened to 4.1% from 2.1% in May. On the other hand, the unemployment rate edged down to 2.3% (from 2.4%), and the job-to-applicant ratio slipped.

The BOJ was unimpressed. It shaved its GDP forecast for the fiscal year to 0.7% from 0.8%. The government had cut its forecast in recent days as well. It stands at 0.9% now down from 1.3%. The BOJ has all but given up on its inflation target, now forecasting CPI to be at 1.6% at the end of FY21. The BOJ acknowledged that risks to growth and inflation remain on the downside. The window of opportunity for the BOJ to take new measures is seen later this year after the sales tax hike (from 8% to 10%). Although the BOJ does not target the yen, the strengthening of the yen would likely be seen as a risk to both inflation and growth.

Australia's building approval slump deepened in June and although the central bank is not expected to cut rates next week (August 6), after reducing them at the previous two meetings, a rate cut in Sept-Oct is anticipated. Economists had been looking for a small uptick as building approvals were to stabilize after dropping a sharp 13.1% in March and 3.2% in April. Instead, May's 0.7% gain was more than halved to 0.3%, and June dropped 1.2%. Tomorrow, Australia reports Q2 CPI figures. The small increase that is expected (1.5% year-over-year from 1.3%) will not stand in the way of expectations for lower rates.

US Trade Representative Lighthizer stepped up the pressure on Vietnam.
He warned that Vietnam to reduce its bilateral surplus with the US, which is growing in part as companies move production and/or shipping out of China. Lighthizer wants Vietnam to open its markets more to US goods and services. Much of the Trump Administration's regional trade efforts appear to be still playing catch-up after pulling out of the Trans-Pacific Partnership. Vietnam, like signatories, has reduced trade barriers, but US companies do not benefit...

Yesterday Mr Chandler also led with the pound:
Prospects of a No-Deal Brexit Weigh on Sterling

Monday, July 29, 2019

Meanwhile, at Tesco, The Julian Calendar Lives!

From the Twitter feed of Mathew Stock:
...MORE (thread)

HT: a friend who sent the Independent's version of the story.

New York Fed: When Berlin Was an Emerging Market (and today: tokenized real estate bonds open to retail investors)

First up, a repost from February 2014.
From the Federal Reserve Bank of New York's Liberty Street Economics blog:

 "Crisis Chronicles: The Commercial Credit Crisis of 1763 and Today’s Tri-Party Repo Market"
During the economic boom and credit expansion that followed the Seven Years’ War (1756-63), Berlin was the equivalent of an emerging market, Amsterdam’s merchant bankers were the primary sources of credit, and the Hamburg banking houses served as intermediaries between the two. But some Amsterdam merchant bankers were leveraged far beyond their capacity. When a speculative grain deal went bad, the banks discovered that there were limits to how much risk could be effectively hedged. In this issue of Crisis Chronicles, we review how “fire sales” drove systemic risk in funding markets some 250 years ago and explain why this could still happen in today’s tri-party repo market.

Early Credit Wrappers
One of the primary financial credit instruments of the 1760s was the bill of exchange—essentially a written order to pay a fixed sum of money at a future date. Early forms of bills of exchange date back to eighth-century China; the instrument was later adopted by Arab merchants to facilitate trade, and then spread throughout Europe. Bills of exchange were originally designed as short-term contracts but gradually became heavily used for long-term borrowing. They were typically rolled over and became de facto short-term loans to finance longer-term projects, creating a classic balance sheet maturity mismatch. At that time, bills of exchange could be re-sold, with each seller serving as a signatory to the bill and, by implication, insuring the buyer of the bill against default. This practice prevented the circulation of low-credit-quality bills among market participants and created a kind of “credit wrapper”—a guarantee for the specific loan—by making all signatories jointly liable for a particular bill. In addition, low acceptance fees—the fees paid to market participants for taking on the obligation to pay the bill of exchange—implied a perceived negligible risk. But the practice also resulted in binding market participants together through their balance sheets: one bank might have a receivable asset and a payable liability for the same bill of exchange, even when no goods were traded. By the end of the Seven Years’ War in 1763, high leverage and balance sheet interconnectedness left merchant bankers highly vulnerable to any slowdown in credit availability.

Tight Credit Markets Lead to Distressed Sales
Merchant bankers believed that their balance sheet growth and leverage were hedged through offsetting claims and liabilities. And while some of the more conservative Dutch bankers were cautious in growing their wartime business, others expanded quickly. One of the faster growing merchant banks belonged to the de Neufville brothers, who speculated in depreciating currencies and endorsed a large number of bills of exchange. Noting their success (if only in the short term), other merchant bankers followed suit. The crisis was triggered when the brothers entered into a speculative deal to buy grain from the Russian army as it left Poland. But with the war’s end, previously elevated grain prices collapsed by more than 75 percent, and the price decline began to depress other prices. As asset prices fell, it became increasingly difficult to get new loans to roll over existing debt. Tight credit markets led to distressed sales and further price declines. As credit markets dried up, merchant bankers began to suffer direct losses when their counterparties went bankrupt....MORE
Headquarters of the trading house Berenberg from 1755 in the Gröningerstraße, Hamburg
The bank survived and is now second only to Monte dei Paschi di Siena as the oldest bank in continuous existence 

And from CoinDesk, July 23:

German Regulators Approve $280 Million Ethereum Token Sale
Fundament, a blockchain startup coming out of stealth mode, has received the green light to issue the first tokenized real-estate backed bond that can be widely offered to individual investors.

Announced Tuesday, the Berlin-based firm has obtained approval from Germany’s financial regulator, BaFIN, for the 250 million euro ($280 million) offering. By virtue of being regulated, the token will be open to any retail investor anywhere with no minimum investment restriction. 
In other words, someone in, say, Indonesia will be able to buy 100 euros worth of ethereum tokens and thereby indirectly invest in German commercial property.

A BaFin representative told Coindesk:
“We can confirm that we granted approval for a Fundament Group prospectus. It has indeed been the first time we have approved a prospectus regarding blockchain-based real estate bonds, but not the first time in respect to blockchain technology as such.”

Russia Is Ordering Two More Icebreakers

These are the big ones, not the "little guys" that LNG major, Novatek, is buying "four for a billion".
This is starting to add up to real money.
From The Barents Observer, July 23, 2019:

Rosatomflot announces tender for additional two nuclear-powered icebreakers
The fourth and fifth icebreakers of the LK-60Ya type have a price tag of 50 billion Rubles (€710 million) each.
Arctic sea ice is melting, but Moscow bids on increased need for powerful icebreakers.
The tender with a total value of 100 billion Rubles (€1,42 billion) is announced on the Russian official site for procurement information. Contracter is Atomflot, the state enterprise operating the fleet of nuclear-powered icebreakers based in Murmansk.

The two new icebreakers are similar in design as the “Arktika”, “Sibir” and “Ural” that currently are at different stages of construction and testing at the Baltic Yard in St. Petersburg. First one to sail north next year is “Arktika” to be followed by “Sibir” in 2021 and “Ural” in 2022. Uranium fuel elements where loaded into the two reactors of “Arktika” in May this year and testing will now continue for some months at the yard.

The two additional icebreakers of the class have to be ready by December 20th 2024 and December 20th 2026 the tender details read.

With the formal announcement of the tender, it is now clear that Russia will get five of LK-60Ya nuclear-powered icebreakers. The icebreakers are the world’s most powerful civilian ships ever built. With an overall power of 175 MW the turbine-generators delivers 81,000 hp to the propellers....

"Uber Pushes The Edge On Subscription Commerce"

Uber has already set many of the high standards for payments that are basically becoming table stakes — that is, the expectation among consumers that transactions can happen seamlessly without payment cards being pulled out (to say nothing of the lack of cash). Now the ride-sharing pioneer is moving into subscription eCommerce.

According to reports, including this one from Engadget, Uber “is testing a subscription option that offers all-inclusive or discounted access to all its services.” The report adds that the company, which recently completed its initial public offering, “is  trialing a few variants of the plan in Chicago and San Francisco. All of them include trips on Jump e-bikes and scooters at no extra cost, free Uber Eats deliveries and a fixed discount on Uber rides for $24.99/month. In other locales, Uber is testing cheaper passes that include free Uber Eats deliveries above a certain order threshold as well as discounted rides.”

Uber End Game
As Karen Webster has pointed out in PYMNTS, for Uber, transportation is a platform feature that is central to its business, but is not its end game.

Today, the Uber app offers choices ranging from black car service, UberX, Black and UberPool to the metered Taxi service, Uber Bus and car rentals. Other modes of transportation like bikes, scooters and rickshaws are also available, depending on where one happens to be in the world. According to its S-1, Uber has 91 million consumer users on its platform and 3.9 million drivers in 700 cities worldwide to service them. And like many of the largest players in the platform economy today — Facebook, Airbnb, Google, Amazon — Uber is leveraging its platform assets, and its critical mass of drivers and consumer users, to find new sources of value for its platform and the stakeholders who are part of it....

"Why the 'obsession of advertisers to make their advertising perfectly individualized and perfectly personalized may be perfectly wrong'"

From The Ad Contrarian, January 07, 2019:

Why Online Ads Haven't Built Brands
This post is adopted from a podcast I did last year.
One of the questions I’ve been wrestling with for years is why online advertising seems to be incapable of building major consumer-facing brands.

We’ve had 20 years of phenomenal growth of online advertising and yet I have trouble coming up with one example of a major consumer-facing physical brand that was built by online advertising. I can think of no examples of major brands of beer, soda, cars, toothpaste, paper towels, candy bars, soap, fast food, peanut butter — you get the picture — that were built by online advertising.

After 20 years of existence radio and TV had built hundreds - if not thousands - of consumer brands.

There are some who would argue that there are very big web-native brands that have been built by online advertising - e.g., Amazon, Google, and Facebook. I’m not so sure that advertising played a major role in the building of any of those brands, but let’s leave that argument for another day and just focus on brands that are physical and not web-native, which probably constitute somewhere around 95% of the products we buy every day.

What’s the issue with online advertising that has rendered it ineffective at advertising’s most important job — building a major brand?

For years I fumbled around trying to answer this question but I’ve never really understood it. I have blamed an absence of creativity. I have blamed the fact that it’s mostly direct response style advertising, but I’ve never really evolved a comprehensive theory of what the problem is....MUCH MORE
HT: Richard Shotton's Twitter feed:

Private Equity, Asset Stripping and Dermatology

On Saturday the Financial Times had an article by Jonathan Ford entitled: 
Elizabeth Warren is right to worry about private equity looting
Sensible society would not allow these groups to rig odds as they gamble with economy
Which begins:
The US Democratic politician Elizabeth Warren recently published a piece of draft legislation with the eye-catching title of the “Stop Wall Street Looting Act”. Sounds a touch light-hearted? Well, actually it is deadly serious. 
The “looters” in the title are private equity funds; specialist investors that buy companies using large amounts of debt. Once a minority activity, private equity has grown mightily over the past four decades on both sides of the Atlantic. As of 2017, there were around 8,000 private-equity owned businesses in the US. That is nearly twice as many as there were listed firms. Quite how this expansion has been accomplished lies at the heart of the story. 

Private equity executives insist their practices have spread because they run these companies better. That may be true in some cases — perhaps many. But there is a more questionable side to the buyout industry’s astonishing, Triffid-like growth. It stems from the way that private equity deals are structured. When buyout firms acquire a business, they fund the transaction primarily with borrowed money. This is then pushed down on to the portfolio company, which has to service those heavy debts....MUCH MORE
A serious piece of reporting that garnered over 100 comments and which echoes some of our thinking on the efficacy of the Private Equity model.
From June 2019's The Hidden Risks In Shorting Dogs:
One of the scariest concerns when shorting non-frauds in a bull market is that the very things that make a company a laggard and seemingly offer a tempting short—or the short leg of a pair trade—are things that attract the private equity vultures. This is why, for 2 1/2 years when talking about the mess that American packaged foods had become, we would obliquely, and sometimes not so obliquely warn:
March 7, 2017
M&A In European Food
I'm not sure that consumer packaged goods is the area to be in, at least not in the U.S. and not based on names like Kellogg or General Mills.
For a quarter-century those manufacturers ratcheted prices as though they were tobacco companies but people find it easier to give up their Cheerios than their cigarettes.
The managements milked that approach for pretty much all it was worth so, as operating entities, they aren't all that attractive but someone will decide the only thing left to do is to asset strip or dividend recap the life out of the former cash cows.
Top o'the market to ya.... 
And dozens of other posts with the same general tone.
However, the latest wrinkle is even more frightening than PE messing with the economy.
From The Hustle:
What’s with the rash of private equity in dermatology practices these days?
According to a new op-ed from Joshua Sharfstein, former FDA deputy commissioner, more than 700 dermatology practices are now owned by private equity — a 12x increase from 2012 to 2017.
Per Axios, private equity providers have always gravitated toward more urgent health care — like ambulances — but skincare is wildly lucrative in its own right, and health care experts fear the PE derma-blitz could lance the growth of the industry in the long term.

Private equity: warts and all
The rise of these investments raises a lot of eyebrows over what a private equity firm’s grow-at-all-cost mentality will do to the dermatology industry  — and the crater-sized blemishes that PE takeovers often form for companies once they sell.

Many financial observers tracked the Toys ‘R’ Us saga, and, ultimately, its demise, to the 2005 takeover of private equity firms — which generated large fees for the new owners while they slashed staff and reduced employee benefits.

Then there’s the unnecessary growth 
According to Sharfstein, private equity firms generally aim for a lofty 20% return rate each year, which often involves a stop-at-nothing effort to increase revenues....MORE
Speaking of the Private Equity model, here is sheer genius from William Banzai, last seen in

"...Since 2006, Private Equity Has Produced Only S&P 500 Returns While Reaping $400+ Billion in Fees"
The discussion of hydraulic models of the economy in this morning's "If The FT's Izabella Kaminska Doesn't Start Posting To Alphaville...." reminded me of William Banzai's take on the Phillips model but with bonus receptacles and fee siphons:

Genius squared.from a post on GE's Mark I nuclear reactor at ZeroHedge!
Compare/contrast with the original:
"The computer model that once explained the British economy (and the new one that explains the world)"
From the New York Times:

Two weeks ago, while visiting Cambridge University, I arranged to have lunch with my friend Allan McRobie. He’s a professor of engineering, so it seemed a bit strange that he kept insisting we meet at the department of applied economics. “There’s something there you’ve really got to see,” he said in his Liverpudlian lilt. “It’s utterly fab. Just brilliant. The Phillips machine — it uses water to predict the economy.”...MORE
Schematic diagram 
Schematic diagram of the Phillips machine. (Click to enlarge.)

"China's soybean crushers in no rush to buy from U.S. despite Beijing tariff offer: sources"

From Reuters, July 24:
Despite the carrot of a potential exemption from import tariffs, Chinese soybean crushers are unlikely to buy in bulk from the United States any time soon as they grapple with poor margins and longer-term doubts about Sino-U.S. trade relations, people familiar with the matter said.

China imposed a 25% tariff on U.S. soy imports last year as Washington-Beijing trade disagreements boiled over into tit-for-tat levies on each other’s goods. That blow was felt on both sides of the Pacific: China was the top buyer of U.S. soybeans.
A warming of relations led to hopes in the soy trade that the situation might improve: After talks last month, U.S. President Donald Trump said he had agreed not to impose new tariffs on Chinese goods - if China purchased more U.S. agricultural products.

There have been no signs of U.S. soybean sales to China in recent weeks, but in an apparent goodwill gesture Chinese officials briefed private importers last Friday on a plan to boost them, according to three people familiar with the matter. These and other people interviewed by Reuters on the subject declined to be named due to the sensitivity of the issue.

According to one of the sources, a group of five crushers were told by China’s state planner that they could apply for exemptions from the 25% tariffs on some U.S. soybean cargoes arriving before the end of December.

The source said the group included Yihai Kerry, owned by Singapore-based Wilmar International, state-owned Jiusan Group, and privately owned Shandong Bohi Industry Co, Hopefull Grain & Oil, and China Sea Grains & Oils Industry.

But even without the extra tariffs, U.S. soybeans could not compete with Brazilian supplies on price until at least October, based on current premiums and margins, according to six traders and analysts surveyed by Reuters, making immediate orders unlikely....

If interested see also:
Questions China Is Asking: "Is China’s buying of US soybeans justified after Brazil imports, swine fever?"
US soybean imports plummet under trade war

Banking: "UniCredit Weighs Thousands of Job Cuts in Mustier's New Plan"

Although this piece is a week old we're linking.*
From Bloomberg:
UniCredit SpA is considering thousands of job cuts and slashing operating costs as part of a new strategic plan to be unveiled in December, according to people familiar with the matter.

The Italian lender is weighing as many as 10,000 cuts, though final numbers are still under review and may be much lower, the people said, asking not to be identified as the matter is private. The dismissals will involve staff in Italy -- where the company has the largest number of employees -- as well as in other countries, they said. UniCredit may also reduce other operating expenses by as much as 10% in the plan, the people said.

Chief Executive officer Jean Pierre Mustier is preparing his next set of targets after exceeding cost-cutting and asset quality goals in the previous three-year plan. Mustier, who spent the first part of his tenure cleaning up bad loans, reducing jobs and strengthening the balance sheet, has already said that he expects to accelerate the run down of non-essential business, reduce its holdings of Italian sovereign debt and improve the capital buffer.

“Job cuts of such a size would be ambitious and exceed analysts expectations,” said Nicola Maino, who helps manage 1 billion euros ($1.1 billion) at Swiss investment firm Carthesio SA. “This move shows the CEO’s commitment to reduce the cost-to-income ratio to a level that will put the bank among the best in Europe.”...

*They are the corporate successors to Creditanstalt.
I kid you not. They should have been strangled at birth.
See Feb. 2009's "Creditanstalt Redux?: Failure to save East Europe will lead to worldwide meltdown":
Creditanstalt failed in May 1931. From Kindleberger's "World in Depression: 1929-1939":
In 1929, the Bodenkreditanstalt was fused overnight with the Creditanstalt. The Bodenkreditanstalt brought to the Creditanstalt large loans to industrial concerns which could be maintained only by the device of ignoring market values...
Hmmm, sounds familiar.
Unicredit now owns Creditanstalt. 
After the rescue of the bankrupt corpus and a couple mergers CA became part of Italy's Unicredit in 2006.
When Creditanstalt collapsed  it brought on the second, nastier phase of the Great Depression.
I always think of that when I see UniCredit's name.

Probably related:
"Deutsche Bank job cuts are tip of the iceberg for the finance industry"

Sunday, July 28, 2019

Norway Looks For Bigger Role In European Gas Markets

From OilPrice:
Norway’s oil and gas major Equinor—which provides around 25 percent of the European Union’s (EU) natural gas demand—aims to play a more active role in selling its natural gas on the European market and take advantage of spot market prices where profitable.

That’s the message which Equinor’s top management conveyed to the market and analysts regarding natural gas sales on the conference call on the Q2 financials this week. 
Most Norwegian gas sold on the European market is delivered to Germany, the UK, Belgium, and France, where Norwegian gas accounts for between 20 and 40 percent of total gas consumption.
Despite plans for more exposure to the spot market, Equinor saw in Q2 and will continue to see in Q3 benefits from forward sales of its gas, the managers said on the call.

“We have sold and are benefiting then from the long-term gas sales as of this quarter,” Svein Skeie, Equinor’s Senior Vice President for Performance Management and Analysis, said.

Equinor sold its natural gas at US$5.49 per million British thermal units (MMBtu) in Q2, compared to an average price of US$4.09 for the UK National Balancing Point (NBP) benchmark price. Equinor’s gas price realizations will still be above the NBP price in Q3, Skeie said.

According to Lars Christian Bacher, Equinor’s Executive Vice President and chief financial officer, “the shift that we’re doing is that we want to expose more to the spot market...."

Exposure to spot rather than contracting longer term eh?

See also the outro from "Unstable Gases: Market Shocks and Qatari LNG" and that from "Facebook Is Dying, Libra Won’t Save It, & Wall Street Is Clueless" (FB) as well.