Thursday, February 25, 2021

UPDATED—"Coinbase’s offering docs have just dropped"

Update: Known toddler hodler (HT: Elon via Izzy) Izabella Kaminska has weighed in with a few comments.
Original post

As mentioned a couple days ago the crypto crowd would like to have the opportunity to exchange their stock for fiat and this is one of the big ones.

From FT Alphaville:

Ceci n'est pas an ICO. Or an IPO. It's a direct listing.

Just when you thought you’d seen it all in SEC filings, along comes the Coinbase prospectus.

Which is really a direct listing. But who can tell during these days of ICOs and ITOs what a public offering even is. The cryptocurrency platform which aims to “create an open financial system” is planning to go public via a Direct Listing on the Nasdaq in the near future. The docs dropped an hour ago.

While we dig through the paperwork, we thought we’d just share this gem from the “Definitions” page....

....MORE, including links

"The Top 10 Takeaways From JPMorgan's Conference Call On Asset Bubbles"

 From ZeroHedge:

On Tuesday, we pointed out something which we hoped was only unintentionally ironic: at the same time as the first day of Jay Powell's highly anticipated Congressional Testimony (which, to loosely paraphrase Gabriel Garcia Marquez was titled "inflation love in a time of Treasury cholera") was set to begin, JPMorgan was holding a conference call "on potential asset bubbles" - all of which have been sparked by the abovementioned individual - which included the who is who of sellside JPM research, including the bank's heads of global equity and credit research, the top quants, and so on.

During the call, which had thousands of JPM clients dialing in and which was riddled with technical difficulties, JPMorgan traders and researchers discussed their outlook for global markets in the context of what virtually everyone now sees is one massive bubble...

... including the implications of growing retail participation in US equity markets, the increased acceptance and adoption of bitcoin and possible market consequences.

For those who missed it, here are the bank's own highlights of its top ten takeaways (a replay can be found here) while the accompanying presentation is at the bottom:

1. We do not see a broad equity market bubble but rather certain pockets of the market that are experiencing hyper growth such as electric vehicles and renewables. While there is a lot of talk about bubbles, it is hard to see one in the broad equity market, where a dominant group (FANGs) practically hasn’t moved for 6 months despite massive amount of stimulus and an expected economic recovery, Financials that have barely recovered 2020 losses, and Energy that is still down 25% from last year despite a commodity bull market. We do see some relatively contained market segments that appear to be in a bubble related to Electric Vehicles (EV), renewable energy and innovations stocks. These sectors only make up a small part of the market (e.g., electric vehicles make up only 2% of the S&P 500), but we do see segments that remain cheap such as energy where positioning remains heavily underweight. We believe that this is only the first inning of the market rally, and that the rotation into cyclicals could play out for the next year. The broad rotation into cyclicals has contributed to an increase in intraday volatility as realized volatility of the S&P 500 has gone down to 5. If we want to be thorough in our search for bubbles, there is another asset that is currently in a bubble—the VIX. The VIX is now disconnected to underlying short-term S&P 500 realized volatility, indicating a bubble of fear and demand from investors looking to hedge or profit from a hypothetical market selloff. Given the VIX is at a near-record premium to actual equity volatility (~400-500% above the ‘fair value’), we think selling the “VIX bubble” represents a good market opportunity.

2. We remain constructive and sanguine on the outlook for the S&P 500, and the strong rotation and outperformance to Value from Growth which should continue and taking into account client positioning.  Although the topic of reflation has been top of mind for most clients in the past few weeks, we have seen investors starting to position for higher interest rates by reducing exposure from high multiple and momentum names. However we remain positive and constructive on the market outlook. We distinguish between a positive vs. negative rise in yields and remain constructive as the Covid-19 recovery is on track, ongoing fiscal and monetary support will be forthcoming with a new stimulus bill and a possible infrastructure bill in the pipeline, and equity positioning remains low. There is strong interest for reopening names such as cruise lines, transports, casinos and hotels from both  hedge funds and real money accounts and also growing interest in financials and energy.

3. There has been a strong rebound in global gross exposures across equities, up ~11% month to date, or 9% year to date. Short gamma positions have increased, but we see that as a secular phenomenon as retail activity has increased. Despite some warning of a ‘VAR shock’ what we are seeing now is ‘VAR inflows’ with volatility targeters/risk parity funds adding (rather than reducing) ~$1.5bn in equity exposure daily and gamma hedging reducing S&P 500 volatility, and long VIX positioning (e.g. via ETPs, limiting VIX upside)....


Cognitive Science: "Martin Luther Rewired Your Brain—How mass literacy, spurred by Protestantism, reconfigured our neural pathways."

Yeah, he also had a thing with farts and didn't much care for derivatives either.

I should probably do a post about the latter.


How mass literacy, spurred by Protestantism, reconfigured our neural pathways. 

Your brain has been altered, neurologically rewired as you acquired a particular skill. This renovation has left you with a specialized area in your left ventral occipital temporal region, shifted facial recognition into your right hemisphere, reduced your inclination toward holistic visual processing, increased your verbal memory, and thickened your corpus callosum, which is the information highway that connects the left and right hemispheres of your brain.

What accounts for these neurological and psychological changes?

You are likely highly literate. As you learned to read, probably as a child, your brain reorganized itself to better accommodate your efforts, which had both functional and inadvertent consequences for your mind.

So, to account for these changes to your brain—e.g, your thicker corpus callosum and poorer facial recognition—we need to ask when and why did parents, communities, and governments come to see it as necessary for everyone to learn to read. Here, a puzzle about neuroscience and cognition turns into a historical question.

Of course, writing systems are thousands of years old, found in ancient Sumer, China, and Egypt, but in most literate societies only a small fraction of people ever learned to read, rarely more than 10 percent. So, when did people decide that everyone should learn to read? Maybe it came with the rapid economic growth of the 19th century? Or, surely, the intelligentsia of the 18-century Enlightenment, imbued with reason and rationality, figured it out?

No, it was a religious mutation in the 16th century. After bubbling up periodically in prior centuries, the belief that every person should read and interpret the Bible for themselves began to rapidly diffuse across Europe with the eruption of the Protestant Reformation, marked in 1517 by Martin Luther’s delivery of his famous 95 theses. Protestants came to believe that both boys and girls had to study the Bible for themselves to better know their God. In the wake of the spread of Protestantism, the literacy rates in the newly reforming populations in Britain, Sweden, and the Netherlands surged past more cosmopolitan places like Italy and France. Motivated by eternal salvation, parents and leaders made sure the children learned to read.

Culture tinkers with and calibrates the machinery of our minds.

The sharpest test of this idea comes from work in economics, led by Sascha Becker and Ludger Woessmann. The historical record, including Luther’s own descriptions, suggest that within the German context, Protestantism diffused out from Luther’s base in Wittenberg (Saxony). Using data on literacy and schooling rates in 19th-century Prussia, Becker and Woessmann first show that counties with more Protestants (relative to Catholics) had higher rates of both literacy and schooling. So, there’s a correlation. Then, taking advantage of the historical diffusion from Wittenberg, they show that for every 100 kilometers traveled from Wittenberg, the percentage of Protestants in a county dropped by 10 percent. Then, with a little statistical razzle-dazzle, this patterning allows them to extract the slice of the variation in Protestantism that was, in a sense, caused by the Reformation’s ripples as they spread outward from the epicenter in Wittenberg. Finally, they show that having more Protestants does indeed cause higher rates of literacy and schooling. All-Protestant counties had literacy rates nearly 20 percentage points higher than all-Catholic counties. Subsequent work focusing on the Swiss Reformation, where the epicenters were Zurich and Geneva, reveals strikingly similar patterns....


All of which led, 250 years later, to one of Fragonard's better paintings:

 A Young Girl Reading
Jean-Honoré Fragonard, 1770  
National Gallery of Art, Washington D.C.

Oh, and it led to other stuff too.

U.S. Drought Monitor: Some Improvement Over The Last Four Weeks

Although Phoenix and Las Vegas will eventually have to face the reality that they built their cities in the desert.

From the University of Nebraska - Lincoln, February 25:

Data as of February 23

Drought Monitor for conus

Data as of January 17

Drought Monitor for conus


Silicon Valley Multi-Family Office Sets Up Shop In London

From Bloomberg via the Financial Post:

Wealth Firm for Silicon Valley Billionaires Sets Up in London 

Iconiq Capital, the multifamily office that has managed money for tech billionaires including Mark Zuckerberg, has formed a European entity as buoyant valuations propel the region’s startup scene.

Iconiq Capital (UK) was set up at the end of last year, according to Companies House filings. Iconiq founder Divesh Makan, a former Goldman Sachs Group Inc. banker, is the controlling shareholder of the London-based firm.

Makan co-founded Iconiq in 2011 and quickly assembled some of Silicon Valley’s most powerful people as clients, including Facebook Inc.’s Zuckerberg and Sheryl Sandberg as well as Twitter Inc.’s Jack Dorsey and LinkedIn co-founder Reid Hoffman. The firm caters to financial and family office needs, such as arranging real estate purchases, private jets or tax planning.

The San Francisco-based firm, which now has about $54 billion in assets under management, uses its network to invest in startups globally. It has backed companies such as Snowflake Inc., Epic Games Inc., the creator of Fortnite, and online trading app Robinhood Markets. In Europe, the firm put money into fintech Adyen in 2015, scoring a huge win for its investors and has more recently backed Finnish food delivery startup Wolt.

Iconiq is now looking for a new investment partner to oversee its European investments, Business Insider reported earlier Monday, citing people familiar with the matter without identifying them. The move shows the growing appetite for European startups, which have typically commanded lower valuations than their U.S. counterparts....


Wednesday, February 24, 2021

Huzzah! Influenza Hath Been Smited In England Huzzah!

 From the Independent:

Not a single case of flu detected by Public Health 
England this year as Covid restrictions suppress virus


High Frequency Indicators That Folks Are Watching For Recovery

 From Calculated Risk, January 11 (also on blogroll at right):

These indicators are mostly for travel and entertainment.    It will interesting to watch these sectors recover as the vaccine is distributed.   

IMPORTANT: Be safe now - if all goes well, we could all be vaccinated by Q2 2021.

----- Airlines: Transportation Security Administration -----

The TSA is providing daily travel numbers.

TSA Traveler Data Click on graph for larger image.

This data shows the seven day average of daily total traveler throughput from the TSA for 2019-2020 (Blue) and 2020-2021 (Red).

The dashed line is the percent of last year for the seven day average.

This data is as of January 10th.

The seven day average is down 59.0% from last year (41.0% of last year).  (Dashed line)

There has been a slow increase from the bottom, with ups and downs due to the Thanksgiving and Christmas holidays.

----- Restaurants: OpenTable -----

The second graph shows the 7 day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities.

Move Box OfficeThanks to OpenTable for providing this restaurant data:

This data is updated through January 9, 2020.

This data is "a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year."

Note that this data is for "only the restaurants that have chosen to reopen in a given market". Since some restaurants have not reopened, the actual year-over-year decline is worse than shown.

Dining picked up during the holidays.  Note that dining is generally lower in the northern states - Illinois, Pennsylvania, and New York. Note that California dining is off sharply with the orders to close....


Norway, Sweden, and Finland Evicting Ugandan Farmers For Carbon Credits

One of the worst approaches to carbon capital there is.

The folks who, fifteen years ago, were likening carbon credits to the old skool Catholic church selling indulgences to absolve rich parishioners of their sins were not that far off. The credits basically allow you to continue doing what you were doing or, as US climate czar John Kerry said when jetting off to Iceland in his private plane to receive a climate change leadership award:

“If you offset your carbon, it’s the only choice for somebody like me
who is traveling the world to win this battle”

Roger that, only choice, over. 

And from the Oakland Institute, a group that, like Farmlandgrab keeps tabs on the land, the headline story:

August 2019

Evicted for Carbon Credits: Norway, Sweden, and Finland Displace Ugandan Farmers for Carbon Trading, brings forward irrefutable evidence that the Norwegian forestry and carbon credit company, Green Resources, forcibly evicted villagers around their plantation in Kachung, Uganda. The establishment of the plantation on land previously used by subsistence farmers precipitated an on-going food security crisis that has not been addressed by the company, its financiers, nor the Ugandan government.

Green Resources has been the subject of two reports published by the Institute in 2014 and 2017. The exposés documented the plantation’s destructive impact on the local population as well as the misleading audit commissioned in 2017 by the Swedish Energy Agency — Green Resources only carbon credit buyer. Company documents released with the briefing paper — including letters threatening the local villagers, corroborate the Institute’s previous findings.

Evicted for Carbon Credits implicates Green Resources’ new majority shareholders, the public development institutions of Norway and Finland — Norfund and Finnfund — which rescued it from bankruptcy in July 2018. These institutions are aware of the land grab, yet continue to finance the project despite Green Resources’ abuse against the communities at Kachung.

The report also exposes the complicity of three prominent international certification bodies — the Forest Stewardship Council (FSC), The United Nations’ Clean Development Mechanism (CDM), and the Climate, Community, and Biodiversity Alliance (CCBA) — that are supposed to verify the company’s compliance with environmental and social standards. Evicted for Carbon Credits analyses how several of their monitoring and assessment reports omitted or downplayed the impacts of the land grab....


 The Institute received a lot of blowback from the countries involved.

But, as of March 2020 REDD-Monitor was reporting:

The Swedish Energy Agency has stopped buying carbon credits from Green Resources’ destructive plantations in Uganda

The UN's CDM is a scammy little setup with thousands of projects around the world turning cash into credits. I was asked to invest in a project in Czechia and walked away but got the distinct impression there was a lot of money flowing this way and that. 

Ninepoint Energy Fund Oil Playbook

They seem to be on the right side of the trade for the three weeks since this piece was published.

From Ninepoint, February 5:

Step 1: Inventory Surplus Normalization

We track oil inventories very closely, both US and global as inventories are the nexus of supply and demand and are the best real-time indicator of an undersupplied/oversupplied market. Since inventories peaked ~ June 2020 from the COVID demand shock they have fallen by 57% globally to now 197MM Bbls falling at a pace of 2MM Bbl/d. This was before Saudi Arabia voluntarily decreased production by a further 1MM Bbl/d for February/March (i.e. 59MM Bbls). At the current pace we see normalized inventories by early Summer. The last time inventories were at such levels WTI was over $60WTI…hence our short-term target of $60WTI by Q3.

Step 2: OPEC Spare Capacity Exhaustion

OPEC has about 5.2MM Bbl/d of shut-in production in addition to about 1.8MM Bbl/d of Iranian production shut-in due to trade sanctions which we expect to be softened this year (note: Iran is rumored to be exporting ~1MM Bbl/d higher than their official number via pipelines in Iraq and offshore ship-to-ship transfers). OPEC’s primary goal is higher (yes still) oil prices as few of the member countries are going concerns in a sub $70 Brent world. We expect OPEC to gradually bring back shut-in production as demand normalizes in 2021. Why will demand normalize? Because it already has in much of the world! Oil demand in China, India, and Brazil are generally back to pre-COVID levels and we expect Europe and the United States to achieve this milestone by YE’21 as vaccine rollouts accelerate. You may think OPEC adding barrels to the market is a negative price signal…it is the opposite! OPEC has not been able to invest in additional capacity due to distressed revenue over the past several years due to oil’s collapse. Once shut-in production is returned OPEC will effectively be out of spare capacity…this is the most bullish scenario one can imagine...


"China Three Gorges agrees purchase of 400 MW of renewables in Spain"

Three Gorges is a Chinese government company.

From Renewables Now:

China Three Gorges (Europe) SA has reached an agreement to buy a portfolio of more than 400 MW of operating renewables in Spain, Spanish news agency Europa Press reported citing sources close to the transaction.

A consortium led by Corporacion Masaveu SA, a Spanish nearly 200-years-old family-owned business group, is said to have arranged the sale of two vehicles holding the assets for some EUR 500 million (USD 607.7m), the report states.

The portfolio contains one solar photovoltaic (PV) park and 11 wind farms, all operating under a regulated payment mechanism and collecting a premium, Spanish newspaper El Confidencial has learned.

Belgian family-owned retail corporation Colruyt Group and several Portuguese investment firms are also taking part in the transaction alongside the Masaveus, said El Confidencial. With China Three Gorges being a non-EU business, the deal will need the green light from the Spanish government -- a new rule that Spain introduced last year to prevent foreign investors from taking advantage of the COVID-19 crisis to buy large stakes in companies in strategic sectors, such as energy and defence.

The Chinese power company and the Masaveu group are both shareholders in Portuguese electric utility group EDP - Energias de Portugal SA (ELI:EDP)....


Convexity Maven: “Seeking Treasure with Convexity”

From Harley Bassman, The Convexity Maven (accept no substitutes), February 23:

Long-time readers of these Commentaries are well aware that modesty has never been my strong suit, even when my ramblings were finely vetted by the somewhat constipated legal advisors and compliance officers employed by corporate Wall Street.

And while I am being honest, let me further reveal that my membership in the 1% is mostly owed to making every effort to be long Convexityboth personally and professionally. So, I beg you not to be fearful as we traverse the topic; I promise, if you can drive a car you already appreciate the concept, even if you cannot speak a word of Greek. 

Notwithstanding that my parents believe I spent most of my career as a stockbroker, I was indeed able to explain to them the concept of Convexity. 

Imagine you are placing a bet on a coin flip, and if you win you receive $3 and if you lose, you pay $2. Assuming the odds of winning or losing are the same, this would be a Positive Convexity bet because the payoff is not linear. Conversely, again assuming a fair coin flip bet of equal odds, if you could lose $5 and only win $4, that would be a Negative Convexity bet. And for completeness, a game where you would win or lose equal amounts is a zero Convexity (linear) bet.

It is for this reason Convexity is often defined as “unbalanced leverage”. It is the unbalanced prefix that is key; the return profile is not linear. The payoff function can have a bend or kink, but more often it is curved, hence its description as ‘convex’ (or sometimes ‘concave’ for negatively convex).

Clearly, if one could make positive Convexity bets for no “cost”, this would be terrific, but usually these sorts of bets, or investments for purposes of this Commentary, are not available.

While it is bad form to engage a gambling paradigm on Wall Street, it can be helpful to use a familiar pastime for illustration. When one plays Roulette at most casinos, there are 38 numbered slots on the wheel, yet a winning $1 bet only pays out $35. As such, over the course of time, one stands to win $350 versus losing $380 (or some multiple) in exchange for free drinks and a discount ticket to the floor show.

To make this a truly “fair” endeavor, the price of a $1 bet should be 94.6 cents. Thus, I have only visited Atlantic City once, when I was kidnapped for my bachelor party 33 years ago, but that’s another story.

Similarly, on Wall Street, prices of securities adjust to make investments “fair”, or at least as fair as consensus allows. 

Hark back to mid-2018, when the FED (Federal Reserve Bank) had loosened its grip and bond prices were somewhat normalizing. Shown in the table below, the US Treasury seven-year note closed at par (100) to yield 3.00% while the most liquid MBS (Mortgage-backed Security) FNMA 4.0% bond traded at 101.11....

....MUCH MORE (11 page PDF) 

"Crime In America: Study Reveals The 10 Most Unsafe Neighborhoods"

 Although the most dangerous cities are mostly well-known: the perennial top ten of Detroit, St. Louis, Baltimore, Memphis etc. when you get more granular the results change pretty dramatically.

From Forbes, Jan 28:

While data shows that crime is actually down in the U.S. in recent years, many Americans believe that the country is becoming more violent than ever—and high-profile incidents like mobs rioting at the U.S. Capitol and the Department of Homeland Security issuing a threat bulletin to warn of ongoing potential for domestic violence only underscore those fears. So the timing of a new study from the risk assessment app Augurisk Now, revealing the country’s 10 most dangerous neighborhoods, couldn’t be better.

Augurisk Now—which launched last month—helps people track the likelihood of crime and national disasters, making it a useful tool for everyone from travelers to concerned citizens to potential homebuyers. The way it works: Whenever you enter a dangerous block in the U.S., the free app uses proprietary risk-scoring algorithms to alert of potential dangers, warning users that they have entered a predicted or observed high crime area. Similarly, the app can predict risks when it comes to floods, earthquakes, wildfires and storms.

“Many years ago, while I was searching for a new property that would be safe from floods or earthquakes, I was surprised no service provided such essential information in an intuitive form,” says founder Mohamed Mezian. “That’s where the idea for Augurisk emerged—our main mission is to help people and businesses better prepare for the future.” 

In order to zero in on the 10 most dangerous neighborhoods in the United States, Augurisk analyzed its data and issued a report on the riskiest places by looking at Census block groups, a statistical division of tracts that usually contains 600 to 3,000 residents. Augurisk then measured each Census block group by predicting violent crime occurrences and violent crime rate (per 100,000 residents). “The data underlying this crime analysis are taken from the predictions of our proprietary machine learning crime prediction algorithm,” says Augurisk’s lead scientist Simon de Bonviller. “Other contextual factors presented in this article were adapted from the American Community Survey 2014-2018 5-Year estimates.”

Surprisingly, some of the cities in the U.S. that have recently been named most-dangerous places—like Detroit and Memphis—didn't make this Augurisk list. According to de Bonviller, one explanation for this relates to the resolution considered. “We focus on block groups— i.e. neighborhoods—while such rankings consider crime statistics in the entire city (or law enforcement agency),” he says. “However, one risky neighborhood doesn’t necessarily make a whole city dangerous, and vice versa.”

Another explanation: Augurisk trained a machine learning algorithm to predict crime occurrences based on 188 predictors (including socioeconomic, demographic, climatic and law enforcement variables, among others). “This algorithm was trained using the exact location and type of crimes committed in 11 U.S. cities between 2014 and 2018, including Detroit,” says de Bonviller. “The result was used to generate this ranking. Thus, we use predictions of the crime expected by our algorithm given 188 predictors related to a place, not past crime—as in the mentioned rankings—which can explain some differences.

Nevertheless, de Bonviller says that the he and team at Augurisk were surprised by the results—especially by the high number of dangerous neighborhoods in California. “Initially, when we were exclusively focusing on crime rate, the most dangerous places in the U.S. were found to be parks, airports and other busy places with low to no population. If the population is low, then crime risk can be overestimated when using such an indicator. Subsequently, we therefore used the number of crimes committed as an additional criterion. Moreover, we were surprised to notice the high occurrence of block groups located on the West Coast in the ranking, including in Los Angeles and San Francisco.”

Read on for more details about the most dangerous neighborhoods in America. For people who are moving from one city to another, Augurisk’s public county risk assessment can provide free insights into their new county, while people acquiring a new property can use the Augurisk website to generate a free natural disaster and societal risk report, to make sure the property is not at risk.

1. Los Angeles: Block group delimited by E. 5th St., S. Los Angeles St., Boyd St., and S. San Pedro St.

Predicted violent crimes per year: 239

Predicted violent crime rate: 347 crimes per 1,000 residents

2. Los Angeles: Block group delimited by Santa Monica Fwy., Maple Ave., E. 9th / S. Los Angeles St., E. 7th St., Gladys Ave., E. Olympic Blvd., and S. Alameda St.

Predicted violent crimes per year: 407

Predicted violent crime rate: 293 crimes per 1,000 residents

3. Los Angeles: Block group delimited by E. 7th St., S. San Pedro St., E. 5th St. / S. Central Ave. / E. 4th, and S. Alameda St.

Predicted violent crimes per year: 456

Predicted violent crime rate: 291 crimes per 1000 residents

4. San Francisco: Block group delimited by Division St. / 9th / Brennan / 10th / Bryant / 11th St., Harrison St., 6th St., and Townsend St.

Predicted violent crimes per year: 296

Predicted violent crime rate: 298 crimes per 1,000 residents

5. Kansas City, Missouri: Block group delimited by E. 8th St., Prospect Ave., E. 12th St., and Cleveland Ave.

Predicted violent crimes per year: 182

Predicted violent crime rate: 304 crimes per 1,000 residents


All that being said, we should remember: 

Putin Calls On Biden To Respect Rights of American Political Dissidents

Troll Level: Autocrat of all the Russias.

That's the takeaway from the February 4, 2021 Briefing by Foreign Ministry Spokeswoman Maria Zakharova, Moscow.

I've mentioned Zakharova a few times over the years. This from 2015:

The spokeswoman for the Russian Foreign Ministry, Maria Zakharova, has become a bit of a favorite among the connoisseurs of foreign ministry spokespersons.*
Current U.S. spokesman, Admiral Kirby, is a very dim bulb in comparison.**
She can kick ass on Secretary Kerry's minion in Russian, English or Chinese. 

It was so bad that, in an attempt to help Admiral Kirby I posted the Reverso Conjugation page for the English language verb 'bullshit': 


  • I bullshit
  • you bullshit
  • he/she/it bullshits

Present continuous

  • I am bullshitting
  • you are bullshitting
  • he/she/it is bullshitting


  • I will bullshit
  • you will bullshit
  • he/she/it will bullshit

Past continuous

  • I was bullshitting
  • you were bullshitting
  • he/she/it was bullshitting

Future continuous

  • I will be bullshitting
  • you will be bullshitting
  • he/she/it will be bullshitting
  • we will be bullshitting


Very handy for foreign ministry spokefolk but I never even got a simple thankyou from the State Department.

"Stocks & Bonds Suddenly Bid On Brainard, Powell Double-Dove-Down"

Mo Money.

From ZeroHedge:

Fed Chair Powell did it yesterday... unleashing his uber dovishness to save stocks and today has done the same by reaffirming just what a shitshow the US economy is how long it will take to mend... (yeah seriously)

“There is a long way to go to maximum employment.”

Additionally, Powell says it could take more than three years to hit that 2% average inflation target.

“I’m confident that we can and that we will and we are committed to using our tools to achieving that. The three-year time frame is actually an arbitrary 3-year time frame chosen by us. And you know, we’re just being honest about the challenge.

“We live in a time where there is significant disinflationary pressures around the world and where essentially all major advanced economy’s central banks have struggled to get to 2%. We believe we can do it, we believe we will do it. It may take more than three years but we’ll update -- every quarter we update that assessment and we’ll see how that goes.”

Then Fed Governor Lael Brainard, who has become an increasingly vocal and potentially influential policy maker, has released a speech that echoes Powell in its dovishness:

“The economy remains far from our goals in terms of both employment and inflation, and it will take some time to achieve substantial further progress.”

That sent stocks soaring...

And also put a bid under bonds, with 30Y yields now down 5bps from the intraday highs...

Source: Bloomberg


Also Mo Hotta, Mo Betta. (hot sauces)

"Survey: Baby Boomers Spending Kids’ Inheritance On Adventure And Self-Discovery"

 Based on tactics I'm observing in other areas of life, the thing to do is call the thoughtless boomers Terrorists or, better yet, to get the U.N. involved, Transnational Terrorists (that's for the bucket list travel and cruise crowd).

From ValueWalk:

In the minds of some Baby Boomers’ kids, there is a fine line between enjoying retirement and spending their inheritance. Fine line or not, more and more people are using money that would have been their kids’ inheritance to partake in adventures and self-discovery.

Many of these retirees view this time in their life as a much needed and deserved reward for spending the last 40 to 50 years working. Money that was hard-earned and meticulously saved can — and should — now be used to explore the world.

Such a simple subject is also a contentious one. Shouldn’t seniors be allowed enjoyment? On the other hand, shouldn’t parents leave their children with some sort of inheritance? Is money the only thing these offspring are concerned about?....


Bitcoin Ecosystem: This Might Be Important

In mid-January FT Alphaville's Jamie Powell linked to a story on Bitcoin and Tether and the crypto exchange Bitfinex [just checked, only one explicit mention] that I thought was pretty damn important. The Bitcoin market did not see it that way.

Now Jamie's boss, Alphaville's editor Izabella Kaminska has a followup:

NY attorney lasers Bitcoin’s key funding mechanism

The NY Attorney-General’s ruling on Tether and Bitfinex stands to destabilise the way dollars flow into the bitcoin value system. But Bitcoin’s meme warriors are buffering up their defences.

It’s been a volatile and stressful week in cryptoland. 

First Elon Musk, the electric boss of eccentric car company Tesla (or was it the other way round) and one of bitcoin’s most high-profile supporters, tweeted on Saturday that the cryptocurrency’s price “seems high”. 

Then, after bitcoin hit a record high of $58,354 on Sunday, US Treasury secretary and former Fed chair Janet Yellen dismissed bitcoin as an “extremely inefficient way of conducting transactions”, as she lamented its staggering energy consumption, a comment that helped bitcoin fall more than 22 per cent from its peak. At pixel time, Bitcoin was trading around $47,500.

And then on Tuesday, the New York District Attorney’s office moved to suspend Bitfinex and Tether’s “illegal activity” in the state. The connected entities will now be prohibited from servicing New Yorkers, on the basis that they deceived the market by overstating reserves and by covering up approximately $850m in losses around the globe.

The move could be a major blow for the value of bitcoin, due to the role that Tether, a dollar-tracking crypto stablecoin, plays in supporting dollar-denominated inflows into the bitcoin ecosystem. Tether’s transparency page puts its current dollar assets at $34bn. But regulators and critics have always worried about the shape and liquidity of the underlying assets used to peg Tether’s tokens to the dollar. Many believe a huge chunk of bitcoin’s value may as a result have been synthesised by overly depending on this only partially funded asset pool....



Of Tether, Bitcoin, Fraud and HOLY HELL

Capital Markets: "Equities Try to Stabilize and Low Short-Term Rates Help Keep the Dollar on the Defensive"

 From Marc to Market:

Overview: The sharp recovery in US shares yesterday that saw the S&P 500 snap a five-day slide failed to carry into Asia Pacific trading earlier today. All the markets fell save India and Singapore. Losses were led by a 3% drop in Hong Kong as the first increase in the stamp duty (financial transaction tax) since 1993 was announced (0.13% from 0.10%). Most of the large markets in the region were off 1.5%-2.5%. Europe's Dow Jones Stoxx 600 is posting minor gains in late morning turnover. Materials and energy are the strongest sectors. US shares are firmer, but little changed. Benchmark 10-year yields are higher, with the US Treasury at 1.37%. The steep sell-off in the Australian and New Zealand bond market continues. The five basis point increase today brings the five-day increase to 21 bp and 17 bp, respectively. Among the major bond markets, the 10-year UK Gilt yield has also risen 17 bp over the past week. The US 10-year yield is up nine basis points in the same time. Sterling spiked to almost $1.4240 in early Asian trade but has steadied in the $1.4150-$1.4200 area. It is not even the strongest currency today. That honor goes to the New Zealand dollar, which is up about 0.6% to reach almost $0.7400, a new three-year high. The Japanese yen and Swiss franc are the laggards with losses of around 0.50% and 0.25%, respectively. Emerging market currencies are mixed. Russia, Mexico, and China have stronger currencies, while Turkey, South Africa, and South Korea currencies are softer. The JP Morgan Emerging Market Currency Index is posting minor gains for the second session. Gold is quiet and consolidating above $1800. Resistance is seen in the $1815-$1820 area. Oil is also moving sideways, with April WTI gravitating around the middle of yesterday's range (~$60.70-$63.00).

Asia Pacific
Australia's Q4 wage index was stronger than expected but does not appear to portend a cost-push threat to the inflation outlook
. The 0.6% increase in the index was twice what the market expected. The year-over-year rate was steady at 1.4%, the lowest on record. It appears that the lower wage bill that was a product of the lockdowns was reversed. A pay freeze in the public sector continued. The slack in the labor market, where unemployment is reported at 6.4% vs. 5.1% before the pandemic, is expected to constrain wage pressures.

The Reserve Bank of New Zealand kept rates (0.25%) on hold as widely expected. Its asset purchase program was maintained at NZ$100 bln. The economic outlook was upgraded. It now sees last year's contraction at 2.7% rather than 4%, and this year's growth forecast was tweaked up to 3.7% from 3.4%. Unemployment is expected to peak at 5.2% vs. 6.4% previously. Nevertheless, the central bank remains cautious and remained committed to its stimulus measures. It also expected price pressures to ease next year.

The stamp-duty hike proposal in Hong Kong was part of a larger fiscal announcement by Financial Secretary Chan. He unveiled HK120 bln (~$15.5 bln) support efforts and forecast growth this year between 3.5% and 5.5% after a 6.1% contraction last year. Chan proposed boosting the consumption vouchers (HK$36 bln), but economists often see cash handouts being more effective and less expensive to manage than coupons. The registration tax for private cars may rise 15%, and vehicle license fees could be hiked by 30%. Chan seeks to boost revenue.... 


Tuesday, February 23, 2021

Speaking of Mining: "Operator of World's Biggest Bitcoin Mine Planning $500 Million IPO: Report"

With analyst comment:
Ye Olde Bitcoin Smithy*

...And did the Countenance Divine,
Shine forth upon our clouded hills?
And was Jerusalem builded here,
Among these dark Satanic Mills?...

*You probably guessed the analyst is actually William Blake with his "And did those feet in ancient time" and the painting is of the Bedlam Furnaces, Coalbrookdale England and not a dark Satanic Bitcoin mining rig.

Anyhoo, Bitmain and Northern Data, along with Andreessen Horowitz-backed rypto exchange Coinbase all want to get through the possibly closing IPO window and exchange their stock for some fiat.

From Decrypt:

Bitcoin mine operator Northern Data AG is reportedly planning a US listing and could raise up to $500 million via an IPO. 

In brief

  • Northern Data is reportedly planning an IPO.
  • The company could raise $500 million in new capital.
  • Northern Data’s public listing could happen before the end of 2021.

Northern Data AG is in talks with Credit Suisse Group AG on a public listing, Bloomberg reported citing sources familiar with the matter. The Frankfurt-based firm could reportedly raise capital estimated to be as much as $500 million.

Northern Data develops and operates infrastructure solutions with the focus on high-performance computing. These include such areas as Bitcoin mining, blockchain, Internet of Things, Artificial Intelligence (AI), and big data analytics....MUCH MORE

If interested see also, January 19's: 

Top Tick: Server Farmer, Crypto Mining Rig Maker, Bitmain's IPO May Be On Again

Earlier in mining: 

"Family Office Powered by Mining Creates $6 Billion Money Machine"

"Family Office Powered by Mining Creates $6 Billion Money Machine"

From Bloomberg, February 22:

The Moreira Salles name is known throughout Brazil. But few anywhere in the world are familiar with the family office that manages its vast fortune.

Spend any time in Brazil and you’ll probably hear about — and hand money over to — the Moreira Salles family.

It co-owns the nation’s largest bank, controls 80% of the world’s supply of a critical rare-earth metal used in everything from cars to pacemakers, and holds stakes in a host of companies, including the maker of the ubiquitous Havaianas flip flops. The family name is emblazoned across museums, entrenched in culture and rooted deeply in finance. All told, the family is worth over $20 billion, according to the Bloomberg Billionaires Index.

But there’s one prized endeavor it has assiduously kept out of the public eye: The money-multiplying machine that handles the family fortune.

Few outside the country’s banking circles have ever heard of Brasil Warrant Gestao de Investimentos, or BWGI. Yet the family office, which began in its current form in 2008, now manages over $6 billion and employs about 50 people in Sao Paulo and New York trading stocks, bonds, private equity, commodities and currencies around the world, a review of regulatory filings shows. One of its main funds — required by Brazilian law to make public disclosures — provides a glimpse of just how successful it has been.

The $860 million Mantiqueira hedge fund just had its best month ever in December and has returned more than 170% over the past five years, beating almost all its peers, data compiled by Bloomberg show. That’s equal to a compound rate of roughly 22% a year.

“I joke that our single client doesn’t withdraw his money when we’re doing poorly — he withdraws the managers themselves and hires new ones,” Demosthenes Madureira de Pinho Neto, a former high-ranking central bank official who leads BWGI, said last year in a rare public appearance hosted by impact-investing firm VRB. “So, the pressure is there for better performance.”

Pinho Neto, who was poached from the family’s lending giant, Itau Unibanco Holding, declined to talk about BWGI, as did the powerful clan’s four brothers — Fernando, Pedro, Joao and Walter. Current and former employees contacted by Bloomberg News also declined to discuss the family office.

Family offices have been around for centuries, managing investments, tax affairs, as well as personal lives for the wealthy. But they’ve exploded in number in recent decades as powerful industrial, retail and real estate families like Italy’s Ferrero clan, Hong Kong’s Li Ka-Shing and the Wertheimers of the Chanel empire have built sophisticated operations to discreetly invest their burgeoning personal fortunes.

In Brazil, where inequality runs deep and many of the country’s biggest companies are family owned, none are bigger than BWGI. In the past, rich Brazilians could easily park their money in government bonds and earn a decent low-risk return because interest rates were sky high. But more recently, the central bank has pushed down rates to record lows, forcing wealthy families to get more creative....


Creighton "Rural Mainstreet Economy Expands Again: Economic Outlook Soars to Highest Level since 2011"

Is it going to come down to companies with manufacturing assets versus companies with intangibles and/or goodwill on the asset side of the balance sheet?

From Creighton University's Heider College of Business, February 18:

February Survey Results at a Glance:

  • Overall index rose to its highest reading since January 2020.
  • Business and economic outlook soared to its highest level since March 2011.
  • Bank CEOs estimated 2021 cash land rent for non-irrigated, non-pastureland at $218.
  • Rural Mainstreet retail sales remain very weak.
  • The February farmland price index climbed to its highest level since May 2013.
  • Bankers expect farm equipment sales to expand by 3.8% over the next 12 months.

OMAHA, Neb. (Feb. 18, 2021) – For the fourth time in the past five months, the Creighton University Rural Mainstreet Index (RMI) climbed above growth neutral. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the index increased to its highest level since January 2020.

Overall: The overall index for February rose to 53.8 from January’s 52.0. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“Sharp gains in grain prices, federal farm support, and the Federal Reserve’s record-low interest rates have underpinned the Rural Mainstreet Economy. Only 8% of bank CEOs indicated economic conditions worsened from the previous month. Even so, current rural economic activity remains below pre-pandemic levels,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.

Farming and ranching: For a fifth straight month, the farmland price index advanced above growth neutral. The February reading climbed to 60.0, its highest level since May 2013, and up from 56.3 in January. This is first time since 2013 that Creighton’s survey has recorded five straight months of above growth-neutral farmland prices.

Bank CEOs estimated 2021 cash land rent for non-irrigated, non-pastureland at $218.

The February farm equipment-sales index rose to 62.7, its highest reading since February 2013, and up from 54.5 in January. After 86 straight months of readings below growth neutral, farm equipment bounced into growth territory for the last three months.

“As a result of the rapidly improving farm economy, bankers expect farm equipment sales to expand by 3.8% over the next 12 months. This is up significantly from October when bank CEOs estimated that farm equipment sales would fall by an additional 3.1% over the same period,” said Goss.

Banking: Bankers once again reported anemic loan volumes. The February loan volume index increased to a weak 46.1 from January’s 33.9. The checking-deposit index soared to record high 88.5 from January’s 88.0, while the index for certificates of deposit, and other savings instruments increased to 46.2 from 46.0 in January....


"Is Google’s AI research about to implode?"

Hmmm, this might be a problem. As noted in the intro to February 15's Chips: "Baidu in talks to raise money for a stand-alone A.I. chip company"

They are a bit slow out of the gate, Google is basically betting their entire company on AI. 
And as for machine learning the GOOG announced their tensor chip in 2016, which seems an eternity ago.

From Soccermatics at Medium, February 19:

What does Timnit Gebru’s firing and the recent papers coming out of Google tell us about the state of research at the world’s biggest AI research department.

The high point for Google’s research in to Artifical Intelligence may well turn out to be the 19th of October 2017. This was the date that David Silver and his co-workers at DeepMind published a report, in the journal Nature, showing how their deep-learning algorithm AlphaGo Zero was a better Go player than not only the best human in the world, but all other Go-playing computers.

What was most remarkable about AlphaGo Zero was that it worked without human assistance. The researchers set up a neural network, let it play lots of games of Go against itself and a few days later it was the best Go player in the world. Then they showed it chess and it took only four hours to become the best chess player in the world. Unlike previous game-playing algorithms there was no rulebook built in to the algorithm or specialised search algorithm, just a machine playing game after game, from novice up to master level, all the way up to a level where nobody, computer or person, could beat it.

But there was a problem.

Maybe it wasn’t Silver and his colleagues’ problem, but it was a problem all the same. The DeepMind research program had shown what deep neural networks could do, but it had also revealed what they couldn’t do. For example, although they could train their system to win at Atari games Space Invaders and Breakout, it couldn’t play games like Montezuma Revenge where rewards could only be collected after completing a series of actions (for example, climb down ladder, get down rope, get down another ladder, jump over skull and climb up a third ladder). For these types of games, the algorithms can’t learn because they require an understanding of the concept of ladders, ropes and keys. Something us humans have built in to our cognitive model of the world. But also something that can’t be learnt by the reinforcement learning approach that DeepMind applied.

Another example of the limitations of the deep learning approach can be found in language models. One approach to getting machines to understand language, pursued at Google Brain as well as Open AI and other research institutes, is to train models to predict sequences of words and sentences in large corpuses of text. This approach goes all the way back to 1913 and the work of Andrej Markov, who used it to predict the order of vowels and consonants in Pushkin’s novel in verse Eugene Onegin. There are well defined patterns within language and by ‘learning’ those patterns an algorithm can speak that language.

The pattern detecting approach to langauge is interesting in the sense that it can reproduce paragraphs that seem to make sense, at least superficially. A nice example of this was published in The Guardian in September 2020, where an AI mused on whether computers could bring world peace. But, as Emily Bender, Timnit Gebru and co-workers point out in their recent paper ‘On the Dangers of Stochastic Parrots: Can Language Models Be Too Big?’ these techniques do not understand what we are writing. They are simply storing language in a convenient form and the outputs they produce are just parroting the data. And, as the example below shows, these ouputs can be dangerously untrue. Primed with data about QAnon, the GPT-3 language model produces lies and conspiracy theories.

Image for post
Examples of lies and conspiracy theory parotted by GPT-3 (work by Kris McGuffie and Alex Newhouse)...


Bringing to mind Microsft's Tay and the Yandex chatbot Alice: 

Russian Chatbot Goes Off The Rails, Endorses Stalin, Says "Enemies of the people must be shot" etc

"Facebook refriends Australia after last-minute changes to media code"

 From the Sydney Morning Herald, February 23:

Facebook has banned the sharing or viewing of our news articles on its platform. For independent journalism straight from the source, download our app and sign up to our newsletters.

Facebook has agreed with Seven West Media to pay for news content and has restarted negotiations with Nine Entertainment Co, after the social media giant agreed to reverse its ban on news on its Australian site.

The Morrison government agreed to last-minute changes to its proposed media bargaining code on Tuesday in order to bring Facebook back to the negotiating table with news companies. The amendments pave the way for Google and Facebook to avoid the code altogether if they can satisfy the government they have struck enough deals outside it....




"How Canadians Derailed a Train and Drove It to City Hall for Power After a Brutal Ice Storm"

From The Drive, February 22:

It tore up the roads but ultimately saved lives by providing power in a pinch.

Over the week spanning Jan. 4-10, 1998, a trio of massive ice storms wracked the northeastern United States and parts of Canada. Knocking over transmission towers, the storms deprived up to 1.35 million people of electricity, in some cases for weeks (sound familiar?). Rather than leave town, though, one Canadian mayor stepped up to bring in the biggest mobile power generators they could get their hands on: Diesel-electric freight train locomotives.

This unusual solution to a power problem, which was also covered by Gizmodo last week, unfolded in Boucherville, a Montreal suburb just northeast of famed Formula 1 racetrack Circuit Gilles Villeneuve. Having reportedly heard of locomotives being used to generate electricity during another emergency years prior, Boucherville's Mayor Francine Gadbois asked the Canadian National Railway to lend the city a couple of units. CN obliged, sending over two Montreal Locomotive Works M-420s per the 1998 issue of Trains, as recounted by members of its forum....


Reminiscent of the aircraft carrier Lexington (CV2) going to the rescue of the city of Tacoma:. From South Sound Talk

That Time the USS Lexington Saved Tacoma

Residents of Pierce County know well the key role the Army and Air Force have played in the area’s history. But there was that one time that the U.S. Navy came to Tacoma’s rescue, when it faced a power shortage that not only threatened the local economy, but put thousands of lives at risk of weathering a cold winter without electricity.

The story took place 90 years ago and changed how electricity keeps your lights on to this day. Back in those days, Tacoma generated most of its electricity from hydroelectric dams on nearby rivers, namely the Green, Nisqually and Skokomish. A small steam plant along the Foss Waterway, when it was called the City Waterway since the  Foss name didn’t come about until 1990, added to the water-powered facilities.

All was fine, relatively, for a while. But the area had outgrown the system’s capacity, particularly since it depended heavily on just enough rain and just enough snowpack to keep the turbines spinning. The summer of 1929 was a dry one, however. The fall didn’t prove much better. Water levels were low as the weather began to turn colder. Conservation efforts got stricter. Cascade Paper Co. all but halted lumber production. It laid off the bulk of its workers since it couldn’t reliably power the mill. Camp Lewis even went so far as to command that barracks go “lights out” at 4:00 p.m. to allow area residents to use the power to heat their homes.

Tacoma officials sought solutions to their power crisis wherever they could. They even pled to President Herbert Hoover to come to their aid. Out of that plea came a plan of sending the Navy to the rescue in the form of an aircraft carrier to serve as an impromptu power plant. The Navy didn’t want anything to do with the idea at first. The top brass was won over as negotiations got flowery and conditions got direr, despite protests by Puget Sound Power & Light and also Seattle City Light, saying that there was no power crisis and all was well in hand....


Monday, February 22, 2021

"Why you’ll be hearing a lot less about ‘smart cities’"


From the aptly titled City Monitor:

Growing backlash against big technology companies, combined with the pandemic, has led to diminishing enthusiasm for a term that once dominated the conversation around the future of cities.  

We’re not the first to argue that it may be time to retire the phrase “smart cities”, and the evidence of late suggests that the tech industry itself is waking up to the reality that it needs to rethink what and how it’s trying to sell to local governments.

Smart cities surfaced as a concept more than 20 years ago and served as an umbrella term to describe a large and varied set of emerging technologies that seemed destined to help metros operate more efficiently. The internet of things for municipalities has to date included everything from simple sensors that allow transportation engineers to track cycle lane usage to full-blown smart-city operations centres that brought to mind scenes from Minority Report.

By the middle of the past decade, it was common to see vast sums of grant funding made available to local governments that were keen to join the innovation bandwagon. Smart-city challenges spurred metros of all sizes to adopt new technologies, sometimes to the good but also, it now seems clear, for the sake of becoming a member of the growing global club of cutting-edge communities. Dozens if not hundreds of conferences, marketplaces and expos emerged to showcase the latest gee-whiz gadgets that cities could buy to transform themselves. To pursue a smart-city strategy was to be seen as relevant and forward-thinking, whether or not the problems a local government was aiming to solve would necessarily be best served by an expensive new monitoring system or software package.

Criticism of the culture of the smart city predates the coronavirus pandemic. Concerns around privacy, of who should own or control public data and to what extent technology is always the answer could be heard loud and clear at least a couple of years before Covid-19 changed the world. Backlash against the practices of companies like Amazon and Facebook helped spur the grassroots movement that ultimately contributed to the cancellation in May of a major Sidewalk Labs project in Toronto. That the urban-innovations unit embedded within Google’s parent company cited economic uncertainty amid the onset of the pandemic as its reason for changing course was almost beside the point – the Quayside plan had already been scaled down so significantly in the face of community pressure that its viability was no longer clear.

The pandemic took much of the remaining air out of the smart-cities bubble. Last summer, City Monitor reported that more smart-city project deployments would be delayed or scrapped in the face of budget and revenue uncertainty, and that city governments were in the midst of shifting their priorities towards economic recovery and digital equity. Since then, one of the industry’s biggest players, Cisco, announced it would pull the plug on its flagship smart-city software....


HT: Marginal Revolution

Now salt the earth the idea grew in and never mention smart cities again.
Surveillance cities? Meh, at least that's honest.