Watch Out Uber: National Labor Relations Board Interpretation Could Allow Many Taxi Drivers to Unionize

This is negative for Uber on a few different levels,

First off is the obvious connection to the charges of misclassification of employees as independent contractors and the ongoing lawsuits.

Second, this ruling opens the door for unionization of Uber's drivers.

Third and more subtlely is the change in relative power between taxi drivers and Uber drivers, see links after the jump.

From the Washington Post's Wonkblog:

A case decided last week shows that the National Labor Relations Board is looking at independent contractors very differently.

For decades, taxi drivers have been classified as independent contractors, and thus unable to join unions. But a case decided last week shows that the legal ground has shifted — potentially allowing vast swaths of the industry to organize. 

The case concerns taxi drivers in Tucson, Ariz., where the Office and Professional Employees International Union has been running an association for taxi drivers to advocate for their rights. That’s the case in many cities, where unions have organized taxi drivers as interest groups, but lack the power to collectively bargain with the companies they work for. 

Two years ago, the union petitioned the National Labor Relations Board for an election at AAA Transportation/Yellow Cab. A regional director denied it, ruling that the drivers were independent contractors. That followed precedent in dozens of previous cases. 

But the union appealed, because by that time, the full board had issued another consequential decision: FedEx Home Delivery, concerning the status of delivery drivers. In its ruling, the board laid out a new test for independent contractor status that relies more heavily on what’s called “entrepreneurial opportunity.” Rather than just theoretically being in business for themselves, the judges said, true independent contractors must have a meaningful opportunity for loss or gain. FedEx has since tweaked its business model in order to comply. 

The decision paralleled another landmark ruling earlier this year, Browning-Ferris Industries, which held that employees of a subcontracted company can bargain with their employers’ employer, if it functionally controls their wages and working conditions. 

“The upshot is that the board’s emphasis on workers’ real-world experiences makes it harder for companies to turn employees into independent contractors by creating the appearance that workers can ‘be their own bosses,' ” says Seattle University labor law professor Charlotte Garden. 

So the Board remanded the case back to the regional director. After taking another look at the facts, he decided that the Tuscon taxi drivers didn’t qualify for independent contractor status under the new test, for a host of reasons: Drivers leased cars from Yellow Cab bearing the company logo, had to undergo training, and were required to abide by a number of rules. 

Perhaps the most important factor, however, was the fact that drivers relied heavily on Yellow Cab’s dispatch system. Unlike taxis in dense urban areas, those in Tucson are rarely hailed on the street; most are sent out in response to calls. The driver rarely know anything about the nature of a job before they’re forced to accept it, the regional director found, and “few if any” drivers had been able to cultivate enough clients to survive independently....MORE

See also:

As Chicago Prepares an App For Taxis to Compete With Uber, Giant Union AFSCME is Organizing Cab Drivers

What Uber Hath Wrought: The Coming Digital Labor Movement

Signposts: Shanghai Port, World's Busiest, Shows Quarterly Profit Decline

From Reuters via gCaptain:

Shanghai International Port Group Co Ltd, the operator of the world’s busiest container port, reported its first fall in quarterly net profit in over a year, providing evidence of China’s economic slowdown.

China, the world’s second largest economy, grew 6.9 percent in the third quarter, dipping below 7 percent for the first time since the global financial crisis due to cooling trade and investments.

Shanghai Port recorded a third quarter net profit of 1.4 billion yuan ($220.29 million), down 18.3 percent from the same period a year earlier, it said in a filing on the Shanghai stock exchange. That marked the first decline since the second quarter of 2014, Eikon data based on company data showed.

In the first nine months, Shanghai Port’s net profit dropped 3.3 percent to 4.5 billion yuan.

The port’s container throughput rose 4.5 percent to 35.29 million TEUs (twenty-foot-equivalent units) in 2014, putting it ahead of global rivals such as Singapore and South Korea’s Busan, as well as Shenzhen and Tianjin in China....MORE

Yangshan is part of the Port of Shanghai. It is very big
(click here to enlarge, seriously, click through and click again)

As The UK Pivots Toward China The U.S. Threatens Sanctions If Britain Leaves The EU

Trouble in New World Order land?

At least Gordon Brown got the DVD's.

And the Queen her iPod.

From ValueWalk:

U.S. Threatens Trade Barriers If UK Leaves EU

It seems the United States is not done alienating its few remaining allies as the UK is already potentially pivoting towards China. 

According to a senior United States official, Washington would not agree a separate free trade deal with Britain if the latter leaves the European Union. 

U.S. trade representative Michael Froman spoke out on the issue, the first time that a senior U.S. official has declared the consequences of a so-called Brexit on trade between the two allies. By the end of 2017 British voters will vote on whether or not to stay in the EU, and opinion polls reveal growing support for leaving the union, according to The Guardian. 

UK-U.S. trade could suffer after potential EU exit 

Those campaigning for the UK to leave the EU argue that the country would be better off economically thanks to bilateral free trade agreements (FTAs) with trading partners. Froman’s comments undermine that argument, threatening the $54 billion worth of British goods sold to the U.S., which is Britain’s biggest export market after the EU. 

“I think it’s absolutely clear that Britain has a greater voice at the trade table being part of the EU, being part of a larger economic entity,” Froman told Reuters, He also claimed that membership of the union affords Britain a stronger position in negotiations. 

“We’re not particularly in the market for FTAs with individual countries. We’re building platforms that other countries can join over time,” Froman said....MORE

Questions America Wants Answered: "Did Purchasing Power Parity Hold in Medieval Europe?"

From  Medievalists.net, August 2014:

Did Purchasing Power Parity Hold in Medieval Europe? Adrian R. Bell, Chris Brooks, and Tony K. Moore (ICMA Centre, Henley Business School, University of Reading)
Henley Business School Discussion Paper Series, January (2014)

Abstract 

This paper employs a unique, hand-collected dataset of exchange rates for five major currencies (the lira of Barcelona, the pound sterling of England, the pond groot of Flanders, the florin of Florence and the livre tournois of France) to consider whether the law of one price and purchasing power parity held in Europe during the late fourteenth and early fifteenth centuries. Using single series and panel unit root and stationarity tests on ten real exchange rates between 1383 and 1411, we show that the parity relationship held for the pound sterling and some of the Florentine florin series individually and for almost all of the groups that we investigate. Our findings add to the weight of evidence that trading and arbitrage activities stopped currencies deviating permanently from fair values and that the medieval financial markets were well functioning. This supports the results reported in other recent studies which indicate that many elements of modern economic theories can be traced back over 700 years in Europe....

...MORE

U.S. Farmers Running Out Of Storage Space for Giant Corn Crop

Chicago corn 378-6 up 2-6.

From Reuters, Oct. 27:

Who wants my corn? US farmers grapple with another super crop

U.s, grain warehouses are filling up so fast with a bumper harvest that they are storing soybeans and corn out in the open despite the risk of damage and even refusing crops from farmers without binding contracts. 

The scramble shows that even in the third year of a global supply glut the exceptional yields and weaker than expected U.S. exports still wrong footed some farmers, storage operators and traders, meaning the outlook for farm incomes and prices might get even bleaker than now painted by official forecasts.

Growers, still hoping to wait out the downswing, want to store as much of their crops as possible, but warehouses are rejecting spot deliveries because of a lack of space, in some cases for longer than farmers can remember.

"We're out of storage," said Richard Guse, a Minnesota farmer who also co-owns a grain elevator. "Our next best option is to find a place to sell it, so you get that harvest pressure."

Minnesota, Iowa and Nebraska, which account for a third of U.S. corn and a quarter of soybean output, have produced record yields thanks to near-perfect conditions after some bad weather early in the growing season suggested yields could drop.

As a result, farmers in Southwestern Minnesota, for example, are getting paid about 15 cents less per bushel for their corn and soybeans than they would if there was enough space, estimates Ed Usset, grain marketing economist for the Center for Farm Financial Management at the University of Minnesota.

That means an even deeper dent in farm incomes given the cash price for corn in the area is about $3.25 a bushel, already well below the estimated $4 production cost, Usset said.

The squeeze caused by storage bottlenecks comes against a backdrop of South American farmers planting massive crops this fall, adding to record global soy inventories and near-record corn stocks. With the strong dollar weighing on U.S. exports and crop prices already down 50 percent from their 2012 peaks, farm incomes are under pressure, already expected to drop 36 percent this year, according to the U.S. Agriculture Department.

Poor returns could prompt farmers to idle some of their less-productive farmland next spring or devote more to crops that are cheaper to sow like sorghum. They may also cut back on fertilizer or premium seeds, which could drag down yields. 

LOST MARGINS
For now, they are struggling to make space for record harvests or trying to sell it, even if it means taking a further hit....MORE

In August 2014 the story was "'Too Much Corn With Nowhere to Go as U.S. Sees Record Crop' (Buy storage)" while in 2011 it was "Farmers Betting on Corn Storage (and how not to sell a silo)".
And in 2009: "Commodities: 'Harvest sure to overwhelm already full elevators'" wherein, being the helpful folks we are we included "Here are some handy hints for temporary storage from Corn and Soybean Digest:".

The U.S. has had great weather for the last 25 or so years.
You have to go back around 800 years to find a comparable stretch.

The futures appear to be forming a high-fructose fat bottom:

 

The Coming Battle Between The Boomers and the Millennials (yeah, I got your "kill the old" right here)

FT Alphaville's David Keohane may be a gerocidal maniac.

At first I thought his "Kill the old" mantra was a simple eccentricity, sort of like the "Eat the rich" signs I used to see stenciled on the sidewalk outside the tower, but I just did a search of the Financial Times website and it returned 43 hits for "Kill the old". All on the flagship blog.

So I tried to comfort myself with the thought that at least I'll go out with a neologism to my credit, insomuch as a quick Google search for "gerocidal" turns up only nine hits and those appear to be misspellings of genocidal.

But then I Googled the root noun, gerocide, and there are scores of uses, properly spelled.
Now I just feel like taking out a couple millennials as I go down.

Let's get ready to rumble!


Y'all ready for this?
From the Orange County Register:

The old issues of class, race and geography may still dominate coverage of our changing political landscape, but perhaps a more compelling divide relates to generations. American politics are being shaped by two gigantic generations – the baby boomers and their offspring, the millennials – as well as smaller cohorts of Generation X, who preceded the millennials, and what has been known as the Silent Generation, who preceded the boomers. 

Both the boomers and the Silents gradually have moved to the right as they have aged. Other factors underpin this trend, such as the fact that boomers are overwhelmingly white – well over 70 percent compared with roughly 58 percent for millennials. People in their 50s and 60s have seen their incomes and net worth rise while millennials have done far worse, at this stage of their lives, than previous generations. 

Although millennials are more numerous than boomers, the elderly are a growing portion of the population, and they tend to vote in bigger numbers. Voters over age 65 turn out at a rate above 70 percent, while barely 40 percent of those under 25 cast ballots. That may be one factor in why this presidential campaign is dominated not by youth, but by aging figures like Donald Trump (69), Hillary Clinton (67) and Bernie Sanders (74). 

The Silent GenerationLeading generational analysts – Neil Howe, Morley Winograd, Mike Hais – have suggested that the experiences people have growing up shape political beliefs throughout their lives. This does not mean that people do not change as they age, but where they started remains a key factor in determining how far these changes spread within a generation. 

The now-passing Greatest Generation – the group that survived the Depression and the Second World War – were largely shaped by the experiences of the New Deal and the boom of the postwar era. This has made them consistently less conservative than successor generations, and they have retained their Democratic affiliations. 

In contrast, the Silents – many of whom grew up under President Dwight Eisenhower and during the Cold War – have gradually moved toward the Republican column. After generally supporting the Democrats in 2006, they have backed GOP candidates but remain surprisingly balanced in their affiliations; Pew estimates Silents who at least lean Republican constitute 47 percent, versus 44 percent Democratic. 

Surprisingly, Silent Generation Democrats are not much more socially conservative on issues – such as gay marriage, abortion and climate change – than the younger generation. But Silent Generation Republicans are far more socially conservative than their younger counterparts, particularly on immigration. This may be one factor that keeps the Donald Trump energizer bunny animated....MORE

 

UBS' Global Real Estate Bubble Index

But what about Luanda?*
From FT Alphaville:

This is nuts. When’s the crash?

Congratulations London, your housing market is indeed the most nuts.
UBS wealth management have you right at the top:

And: 

Average real dwelling prices have soared by almost 40% since the beginning of 2013, more than offsetting all losses triggered by the financial crisis. The increase has made London one of the most expensive cities in the world based on price-to-income and price-to-rent ratios that have surged to all-time highs. It takes a skilled service-sector worker approximately 14 years of average earnings to be able to buy a 60m2 dwelling; the expense of buying a flat is comparable to renting it for 30 years. 

London house prices, in real terms, are 6% above their previous 2007 peak despite nationwide prices having declined by 18%. The decoupling of the London real estate market from the rest of the UK is even more drastic considering that, in the same period, real average earnings fell by 7% both in London and UK-wide....MORE

*From October 2013, "Real Estate: It's Not Just London- Luanda and Juba Getting Pricey Too".

But it really depends on how you look at it: "Fun With Stats: Big Cities Are Actually Cheaper Than Elsewhere!".

And taking the long view, "London Property Will Always Be Affordable":

"The money is always there, it's only the pockets that change"

-Gertrude Stein,

Also attributed to Coco Channel as:

"Money is money is money, it's only the pockets that change".

...MORE
 

House for sale in Carlton House Terrace in London, with a reported asking price of £250m ©Getty

Today's Fun Fact: The Bank of Japan Has Accumulated an ETF Stash that Accounted for 52 Percent of the Entire Japanese ETF Market

That's from Bloomberg's "Owning Half of Japan's ETF Market Might Not Be Enough for Kuroda".
If unfamiliar with the Bank of Japan may I direct your attention to:

No, The World's Oddest Central Bank Is NOT The SNB, It's the Bank Of Japan

and to:

"Unconventional Measures: "Japan plans 'nationalisation' of factories to save industry":

Remember when, in my naïveté, I would write about, gasp, Central Banks buying equities?
Here's an example from Feb. 2008 (i.e. pre-LEH et al):

Doom and Gloom: What Can the Federal Reserve Do?

...I was reminded of a Financial Times story from March 25, 2002:
Fed Considered Emergency Measures To Save Economy

Minutes which summarized the meeting were released last week. A full transcript will not be available for five years but a senior Fed official who attended the meeting said the reference to "unconventional means" was "commonly understood by academics."  

The official, who asked not to be named, would not elaborate but mentioned "buying US equities" as an example of such possible measures, and later said the Fed "could theoretically buy anything to pump money into the system" including "state and local debt, real estate and gold mines – any asset"....

...The question arises "Can the fed intervene in the Equities Markets?"
Again, two answers. 1) It's definitely something Central Bankers have thought about. 2) The Fed may need some enabling legislation which they would probably get if they requested it. 

The FT reported February 21, 2002 "Japan Suspected of Stock Market Intervention".
A Google search finds 700 references to the "Stock Buying Body". 

Here's a pungent one:

"We must halt this fall in shares. It's like diarrhea, we must stop it. The stock-buying body was set up precisely to absorb such selling (offloading of cross-shareholdings by banks). If February is such a month, there is no excuse for not functioning at that crucial time" 

Finance Minister Masajuro Shiokaw – Feb 7

More relevant to the American markets are a couple Fed papers, the first of which is astounding for its frankness...MORE

Art Defacement In France (criticism never sleeps)

From Art History News:

Fragonard vandalised in France

Some eejit has vandalised a number of paintings by Fragonard and others at the Musée Fragonard in Grasse, France. Reports Artnet News:

a painting by Jean-Honoré Fragonard, a respected Rococo master, reproductions of his work, and additional artworks by François Gérard and François-André Vincent have all been defaced using felt tip and ballpoint pen. 

Circular scribbles, long lines of felt pen, and ill-executed moustaches can clearly be seen on the canvases. Moreover, one painting now has a large hole right at its center. 

The perpetrator struck on more than one occasion, starting on September 25. On October 19, further damage was noticed. Despite the repeated incidents, nothing was mentioned publicly, until the Mayor of Grasse confirmed the puzzling acts on October 25 via a public statement.

Apparently never off the art critique clock: the mustache is "ill-executed".

And Artnet is correct:

China's Crude Storage Facilities Appear to Be Full, At Least For the Moment

December WTI $46.05 up 11 cents after today's heart stopping exuberance. 

From ZeroHedge:

It was just two days ago when we reported that according to Goldman calculations, the world was dangerously close to an almost unprecedented event (with two exceptions: 1998 and 2009): running out of space to store crude distillate products. 

As a reminder, this is what Goldman said: "the build in Atlantic distillate inventories this year has been large, following near-record refinery utilization in both the US and Europe, only modest demand growth, especially relative to gasoline, and increased imports from the East on refinery expansion and rising Chinese exports."

As a result, and despite a cold winter in both Europe and the US last year, European and US distillate storage utilization is reaching historically elevated levels, driving a sharp weakening in heating oil and gasoil time spreads.

Such high distillate storage utilization has two precedents, leading in both cases to storage capacity running out in the springs of 1998 and 2009, pushing runs and crude oil prices and timespreads sharply lower. This raises the question of whether today’s oil market oversupply can rebalance simply through financial stress – prices remaining near their current low level through 2016 – or if operational stress – breaching storage capacity constraints and forcing prices below cash costs like in 1998 and 2009 – is ineluctable.

Then moments ago the EIA reported that despite Goldman's concerns, and despite yet another inventory build in the U.S., which rose by a further 3.4 million barrels,  as US production rose once again, Cushing inventories actually declined further, dropping by 785K, following a -78K decline a week earlier.The DOE update, together with the algo trade documented earlier, led to a massive surge in oil.

This data was fitting with what we have seen outside the US. Earlier this month, we reported that supertanker day-rates has soared to over $100,000 for the first time since 2008 even as Saudi Arabia was slashing its price (to a $3.20 discount to the benchmark with the largest price cut since 2012) which suggested that in an effort to shore up its reserves and capture more market share amid dwindling demand (and excess supply) - a price war has begun led by US ally Saudi Arabia, and China is hoarding crude at these low-low prices.

* * *

And then something very unexpected happened: the world quietly hit a tipping point when,according to Reuters, China ran out of space to store oil. 

In a report explaining why "oil cargoes bought for state reserve stranded at China port" Reuters notes that "about 4 million barrels of crude oil bought by a Chinese state trader for the country's strategic reserves have been stranded in two tankers off an eastern port for nearly two months due to a lack of storage, two trade sources said." 

One tanker, the Ocean Lily, loaded oil from the Omani port of Mina Al Fahal, Reuters' shipping data on Eikon showed. It is unclear what crude Plata Glory is carrying. 

The oil was part of a total of at least 6 million barrels of crude bought by Sinochem for government stockpiles, but destined for a commercial tank farm in the city of Weifang, connected with Huangdao with a pipeline, the trader and port source said. 

The tank farm, with total storage of about 25 million barrels, is mainly owned by Shandong Hongrun Petrochemical Co, an independent refinery partly owned by Sinochem. 

The delays will cost millions of dollars and indicate how China is struggling to import record amounts of crude if storage and port capacity at Qingdao, its largest oil import terminal, are unable to keep pace. 

Ocean Lily and Plata Glory, two very large crude carriers carrying oil for Sinochem Corp, arrived at Huangdao, Qingdao's main oil terminal, in early September, and both were still at anchor this week, waiting to unload, according to Reuters' shipping data, and trade and port sources....MORE

Federal Appeals Court Says Laws Favoring Narrow Economic Interests Are Legal Politics

From Reason:

SCOTUS Asked to Decide Whether Special-Interest 'Economic Favoritism' Counts as Legitimate Government Interest

In July the U.S. Court of Appeals for the 2nd Circuit upheld a Connecticut regulation "whose sole purpose is to shield a particular group from intrastate economic competition." Last week the Institute for Justice, a public interest law firm, petitioned the U.S. Supreme Court to review that questionable ruling. The Supreme Court should take the case. 

At issue in Sensational Smiles, LLC v. Mullen is a regulatory rule promulgated by the Connecticut Dental Commission forbidding non-dentists from shining low-powered LED lights into the mouths of paying customers during the course of teeth-whitening services. Violation of this rule is a felony punishable by up to five years in jail or $25,000 in fines. 

The state claims that its rule is essential to protecting the health and safety of the public. But that rationale falls apart under scrutiny. Why? Because it's legal in Connecticut to buy teeth-whitening kits and LED lights (the equivalent of household flashlights), and then to use those two products together in the hopes of achieving a brighter smile. Sensational Smiles (and other businesses like it) basically replicated that legal activity in their shops. The only "crime" was that non-dentists happened to help some customers place the LED lights in front of the customers' mouths. In short, the state's overreaching actions served no conceivable public health or safety purpose. The 2nd Circuit got it wrong. 

In its July ruling, the 2nd Circuit came close to admitting the flimsiness of the state's public-health stance. But then the court upheld the regulation anyway. 

"Even if the only conceivable reason for the LED restriction was to shield licensed dentists from competition," the 2nd Circuit declared, "economic favoritism" is a sufficient justification all by itself. "Much of what states do is to favor certain groups over others on economic grounds," the court said. "We call this politics." 

That judgment is in direct conflict with comparable rulings by the 5th Circuit, the 6th Circuit, and the 9th Circuit, all of which have flatly rejected the dangerous notion that naked economic protectionism is a legitimate government interest....MORE

See also Queen Elizabeth I on granting monopolies.

"The beginning of the end for European industry?"--Wood MacKenzie

We're thinking bet on the Poles, Czechs and the Baltic states, for the rest of Europe, stay the hell away from Sweden, negative on most of Northern Europe and maybe some hope for Ireland.
From WoodMac:

With industrial production languishing 9% below its pre-crisis peak, is this beginning of the end for European industry? 

It is tempting to blame the Great Recession for the poor state of European industry. Certainly it has contributed to weak demand for goods, resulting in lost capacity, but there are other factors at play. International competitiveness has declined -  in part due to the increasing costs of regulatory compliance - and industries that add little value, such as textiles, have all but disappeared. 

However, there are some positives to be found. First, Germany – Europe's powerhouse, accounting for a quarter of total industrial production – is poised for growth having increased competitiveness through economic reform. 

Second, despite stagnation at an aggregate level, industrial growth is strong in a number of smaller European economies. EU expansion, cheaper labour, and integrated supply chains with Germany are supporting high growth in central and eastern countries. 

Finally, large sectors that are less energy intensive, such as machinery and transport, have benefitted from demand outside the EU.

So what does the future look like for European industry?

Germany will remain critical as it continues to focus on high value sectors, targeting exports to emerging Asian markets. Links to the country's industrial heartland will be important for growth in central and eastern economies such as Poland, the Czech Republic and Hungary, where manufacturing processes are interconnected....MORE

Paging Mr. Hogarth: "There may be a gin shortage after a deadly disease hit Scotland's juniper population"

You may remember us from such hits as: "drunk for a penny, dead drunk for two pence, clean straw for nothing"*

From City AM:

There's no easy way to say this, but there's a chance the UK is about to be gripped by a gin shortage. 

A new report has shown a deadly disease - as well as threats from human traffic - is sweeping Scotland's population of juniper trees, which grow the berries gin is based on.  

A survey by Plantlife found 79 per cent of juniper plants in Scotland are either "old, mature, or dead", up from 69 per cent 10 years ago. 

That's partly thanks to the threat from human traffic, partly because of a burgeoning rabbit and mole population - and partly because of Phytophthora Austrocedri, a fungus-like disease which kills juniper trees. 

Trade magazine The Drinks Business reported in June that the majority of juniper used in gin production now comes from Eastern Europe, with the likes of Sipsmith, one of the UK's best-known gin producers, using berries from Macedonia.  

The Plantlife report suggested Phytophthora Austrocedri is spread by damp conditions. So
"The surveys that have been analysed in this report show that juniper is in decline both in terms of the numbers of bushes, the age range of populations and the health of bushes," said Murdo Fraser, MP for Mid-Scotland and Fife. 

"As juniper bushes age and regeneration is limited, populations are dying of old age. More recently, we have discovered a new disease, first noted in Argentina, that has been confirmed at a number of sites across Scotland and which is having a severe impact.  

"This... is a call to action for us all to do what we can for juniper and to ensure that future generations get to smell crushed juniper berries and delight in the assorted shape and sizes of juniper in our woodlands and on our mountains."

Yeah, that's it, frolic and delight amongst the assorted shapes and sizes. Sheesh.
Here's how they did it back in the day:

The motto is inscribed above the arch, bottom left-click to enlarge.

Last seen in "Inflation, Taxes and Gin, Also Known as Mothers Ruin"

As far as we know Thames Distillery near Clapham is the last Gin Distillery which both distills and bottles gin in London.

"Oil rises 5% after EIA data shows gasoline stock draw"

The earliest known usage of the "It will fluctuate" punchline is not by J.P. Morgan but by John D. Rockefeller as recounted by Henry Poor, post mortem, in the Wall Street Journal, Oct. 1922.

Today shorts got fluctuated.

From Reuters via CNBC:

Oil prices extended gains on Wednesday after the U.S. government reported crude stocks rose last week, but gasoline and distillate inventories fell. 

The Energy Information Administration said U.S. commercial crude inventories rose by 3.4 million barrels to a total of 480 million barrels in the previous week. 

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 785,000 barrels, EIA said.
Gasoline stocks fell by 1.1 million barrels, compared with analysts' expectations in a Reuters poll for a 817,000 barrels drop. 

Distillate stockpiles, which include diesel and heating oil, fell by 3 million barrels, versus expectations for a 1.7 million barrels drop, the EIA data showed....MORE

Failed Investment Guy Lenny Dykstra Did Show Flashes Of Creativity

To get a true picture of Mr. Dykstra you must skim Bess Levin's headlines at DealBreaker:

Legendary Investor Lenny Dykstra Is Somehow Running Low On Cash 

Legendary Investor Lenny Dykstra Will Sign “Anything” You Want This Weekend (And He Does Mean “Anything”) 

Lenny Dykstra Officially Out Of Prison, Could Really Use That Financial Consulting Gig 

Prosecutors Want Jim Cramer-Endorsed Investor Lenny Dykstra To Do Thirty Months In Jail 

Lenny Dykstra Takes Page From Jim Cramer’s Playabook, Endorses Charlie Sheen As A “F*cking Genius” 

Lenny Dykstra Drops Case Against JPMorgan 

Lenny Dykstra Denies Bouncing Check To Hooker

and dozens more.

Anyway, here's the latest from The Volokh Conspiracy at the Washington Post:

Disgraced former baseball player Lenny Dykstra, who played center field for the Philadelphia Phillies and the New York Mets, apparently developed an innovative way to get on base: Blackmail umpires. From Philly.com: 

Dykstra admitted while being interviewed, with no provocation, that he used half a million dollars to hire a private investigation team to get dirt on umpires, including extramarital affairs and gambling, that he would then use to shrink his personal strike zone. 

“It wasn’t a coincidence I led the league in walks the next few years, was it?”

As I said, flashes of creativity. But enough of that, back to DealBreaker:
Lenny Dykstra Scoffs At Accusations He Sexually Assaulted His Housekeeper, Maintains Good Luck Streak
LENNY DYKSTRA ‘ABSOLUTELY’ DOING A REALITY TV SHOW

"U.S. wildfire insured losses could exceed $1.75bn..."

As we mentioned in July 15's "Risk: Tornado Count Remains Below Average, Wildfire Burned Acreage Jumps" this years fires in Alaska, totaling over 5 million acres, muddy the picture of the activity in the lower 48 states which was also up but not nearly as dramatically.

From Artemis:

Global reinsurance broker Guy Carpenter has estimated that, based on preliminary data, insurance industry losses from U.S. wildfire activity in 2015 are likely to reach and may even exceed $1.75 billion. 

“Wildfire is a significant peril impacting insurers in the United States each year. Preliminary data indicates that 2015 insured losses from wildfires may approach or exceed USD 1.75 billion,” commented Tim Gardner, CEO of U.S. Operations at Guy Carpenter. 

The 2015 U.S. wildfire season has seen a number of large fires, particularly in California, where insurance industry losses were said to have hit $1.15 billion in September, with an economic loss of $2 billion. 

Guy Carpenter explains: 

The wildfire threat in the summer of 2015 was amplified by a strong ridge of high pressure that created very hot and dry conditions in the western U.S. More than 9.27 million acres were burned by wildfires through October 8, as compared to the 10-year average of around 6.3 million, according to data from the National Interagency Fire Center. 

“Wildfires are a complex peril due to a number of varying prediction factors such as temperature, rainfall deficit and wind conditions,” said James Waller, PhD, Research Meteorologist for Guy Carpenter. “As winter approaches, a strong El Niño should bring much needed rainfall to most of California and the Southwest, However, the Northwest will likely continue to experience dry conditions through the winter.” 

At this stage of the year we are really only just entering the peak of the U.S. wildfire season, meaning that further losses are likely and the insurance, reinsurance and perhaps insurance-linked securities (ILS) exposure could rise further....MORE

And the year-to-date (actually to Oct. 23) statistics from the NIFC:

Year-to-date statistics
2015 (1/1/15 - 10/23/15) Fires: 52,785 Acres: 9,391,601
2014 (1/1/14 - 10/23/14) Fires: 42,639 Acres: 3,256,120
2013 (1/1/13 - 10/23/13) Fires: 40,566 Acres: 4,154,680
2012 (1/1/12 - 10/23/12) Fires: 50,785 Acres: 8,912,187
2011 (1/1/11 - 10/23/11) Fires: 64,187 Acres: 8,222,531
2010 (1/1/10 - 10/23/10) Fires: 62,555 Acres: 3,064,433
2009 (1/1/09 - 10/23/09) Fires: 73,124 Acres: 5,713,002
2008 (1/1/08 - 10/23/08) Fires: 71,767 Acres: 5,006,786
2007 (1/1/07 - 10/23/07) Fires: 76,415 Acres: 8,283,285
2006 (1/1/06 - 10/23/06) Fires: 86,158 Acres: 9,394,639
2005 (1/1/05 - 10/23/05) Fires: 56,092 Acres: 8,245,350

Annual average prior 10 years
2005-2014 Fires: 62,357 Acres: 6,425,606

...MORE 

Previously:

Wildfires: After Three Years Of Steady Declines The Current Season Will Rank As One Of The Worst On Record

We looked at this year's fire season a couple times, links below.
Up until the last couple weeks the big news had been the 5.1 million acres burned in Alaska this spring and early summer, far and away the most acreage affected up there in recent decades since the 2004 record, 6.6 million acres.

Since July the situation has changed with 2 million acres burned in the lower 48 states but no fires currently burning in Alaska.
To put that in perspective, here's the intro to our March look at the fire season:

The incidence and size of U.S. wildfires has fallen dramatically over the last three years, facts I've not seen rigorously examined either by academics or journalists. Considering the encroachment of the human population on what had been wilderness and the ridiculous resistance to prophylactic burns this table is quite amazing...

...Further, even the 2006 and 2010 seasons pale compared to the bad years.
The 1910 fire season resulted in 1736 fires in Idaho and western Montana alone which burned more than 3 million acres. Nationwide, over 5 million acres burned.

A single fire, Wisconsin's Great Peshtigo Fire of 1871 burned 1.5 million acres and killed between 1200 and 2500 people.
Because it started on the same night as the Great Chicago Fire, which killed 250, it was relegated to the history books....

September 2014

California: The Last 200 Years Were The Happy Time For Weather, Get Ready For A Return to The West Without Water

March 2015 

Risk: "Why forest managers want to set fires but can’t" 

Pirate, Samurai & French Queen: Bulgarian Election Candidates Are......Different

From RT:

A pirate stabbing a huge octopus with a sword, a cool and confident samurai ready to face his enemies and the French queen Marie Antoinette. These people haven’t dressed up for Halloween; they are candidates in Bulgaria’s local elections... 

Stoyan Tonchev is apparently a huge fan of pirate movies, like Pirates of the Caribbean. Evidently his favorite scene was Captain Jack Sparrow facing off with the legendary sea monster Kraken. In his pre-election campaign poster, Tonchev is doing almost the same, except with an octopus, which is holding a pile of €500 banknotes with its tentacles. The spoils of the heroic deed are apparently supposed to go to helping the poor....MORE

Kinder Morgan's New Preferred Stock Pays 9.75%, Trades Down (KMI)

A bit above the risk-free rate, eh what?

I've been at the market pretty much my entire adult life but, except for the death spiral stuff the pink sheet guys were doing in the 90's this is one of the more inexplicable offerings I can recall.*

The issue is a mandatory convertible preferred, here are the details in the pricing term sheet filed with the federales.

Usually you risk the dilution of a convertible because the market will allow you to pay a lower dividend than it would otherwise require. But in this case...well here's BloombergView:

Kinder Morgan's Uncertainty Principle

It is hard to be in suspense for long, but Kinder Morgan’s shareholders may wish they could have stayed there. 

Recall that last week, while releasing quarterly results and cutting its dividend target for 2016, the pipeline giant dangled the prospect of “alternative” financing to fund growth through the first half of next year. Regulatory constraints kept Kinder Morgan tight-lipped on what form this financing would take, though some speculated -- correctly, as it happened -- that it would be convertible preferred stock. This much was confirmed on Monday when the offer went out. 

On Tuesday, investors awoke to the cost: a 9.75 percent coupon with an effective yield nudging double digits. 

Which is a bit of a head-scratcher. Kinder Morgan’s reasoning behind going the alternative route was that it was preferable to issuing common stock after its dividend yield had soared to around 7 percent. That now looks cheap in comparison. 

When it partly lifted the veil on the preferred issue last week, Kinder Morgan’s chief executive officer said the move was aimed at “breaking the cycle” of broader fears around falling energy prices weighing on the common stock.
Thus far, anyway, it isn’t working: Since that call, Kinder Morgan’s stock has slumped another 12 percent or so, lagging the S&P 500 and pipeline peers badly. The dividend yield, at 7.4 percent, is almost back to its late September peak, which was the reason for casting a wider financing net in the first place....MORE

And kudos to Barron's Income Investing who have been dogging this story:

 Kinder Morgan’s New Convertible Stock Trading Below Offering Price

Today the common closed down a bit over 1% at $27.28 and was off another nickel in after-hours trading.

*Just so we (and the KMI attorneys) are clear on this, the Kinder Morgan issue is not an example of a death spiral financing, it's just the first thing I thought of going through the red herring and term sheet.

In a death spiral or Toxic Convertible financing a preferred was issued that converted into a stated dollar amount of common. The lower the price of the common the more shares the convertible holders received which led to bear raids on the stock by naked (why convert until you need to) shorts who knew their potential losses were capped by the convertible and who could profit mightily if the common went to zero, as it often did.

The SEC attempted to solve the problem of unregistered offshore sales of floating convertibles in 1990 with Reg. S and release 33-7505 but the scammers found loopholes that basically allowed them to sell stock offshore that immediately found its way back into the U.S. markets, directly contravening both the letter and spirit of the '33 and '34 Acts.

And then there was the interplay with the short selling stuff that the SEC sought to address with 2005's reg SHO on shorts but that's a story for another post.

To this day the SEC maintains a page on convertibles which warns:

...If the company has engaged in convertible security financings, be sure to ascertain the nature of the convertible financing arrangement - fixed versus market price based conversion ratios. Be sure you fully understand the terms of the convertible security financing arrangement, including the circumstances of its issuance and how the conversion formula works. You should also understand the risks and the possible effects on the company and its outstanding securities arising from the below market price conversions and potentially significant additional share issuances and sales, including dilution to shareholders. You should be aware of the risks arising from the effects of the purchasers and other parties trading strategies, such as short selling activities, on the market price for the company's securities, which may affect the amount of shares issued on future conversions. 

Companies should also understand the terms and risks of convertible security arrangements so that they can appropriately evaluate the issues that arise. Companies entering into these types of convertible securities transactions should understand fully the effects that the market price based conversion ratio may have on the company and the market for its securities. Companies should also consider the effect that significant share issuances and below market conversions have on a company's ability to obtain other financing....

Anyhoo, we'll probably have more on Kinder Morgan later this week.

Recently:
"Kinder Morgan Funding Plan Gets Thumbs Down from Market" (KMI)
"Kinder Morgan's Mysterious Ways" (KMI)
Kinder Morgan Warns On Dividend Growth, Investors Saddened, Stock Drops 7% (KMI)
Why Kinder Morgan May Need to Lower Its Dividend Guidance
Chasing Yield: September Was the Worst Month In History For Master Limited Partnerships

See also:
The "Kinder Morgan Is a House of Cards" Theory and the Pros and Cons of Going Short (KMI)
There's Hatin' On Kinder Morgan and Then There's Calling For An Additional 24% Drop From Here (KMI)

And many more, use the 'search blog' box if interested.