"We could fund a universal basic income with the data we give away to Facebook and Google"

This is quite a bit more redistributionist than I fancy as a policy prescription but it is an interesting idea and would definitely help establish a valuation on the information currently being harvested without financial recompense.
Of course this would also wreak havoc on certain "...then you are the product" business models but what the hell, let's start the bidding at, say, three trillion p.a.; do I hear three trillion?

Ah, one trillion from Mountain View, do I hear two trillion? And a two trillion phone-in bid from Cupertino, do I hear three?
We have 2.5 trillion from Menlo Park, do I hear three...

From The Next Web:

Robots are going to take your job and there’s nothing you can do about it. You need look no further than the trucking industry to find the writing on the wall, but what do we do when robots are better at the jobs we need? One solution is to give them the work and us the paychecks.

A universal basic income (UBI), wherein government provides a monthly stipend so citizens can afford a home and basic necessities, is something experts believe would directly address the issue of unemployment and poverty, and possibly even eliminate hundreds of other welfare programs. It may also be the only real solution to the impending automation bonanza.

There are, of course, detractors. AI expert Steve Fuller last month told Futurism:

Universal basic income, at the end of the day, is an idea that made sense in an older era, one where we imagined a strong state that would actually take control of the population and feel responsible for it, as a result of increasing productivity and so forth.

Yet experiments going on in Canada and Finland with UBI actually seem to be paying off, so what gives?
According to Fuller the problem is, giving people money when they lose jobs won’t fix the issue, it’s a temporary solution and we need permanent ones. Sounds fair, and he even has some ideas on how to accomplish this end:

We could hold Google and Facebook and all those big multinationals accountable; we could make sure that people, like those who are currently ‘voluntarily’ contributing their data to pump up companies’ profits, are given something that is adequate to support their livelihoods in exchange.

It’s an interesting idea, but difficult to imagine it’s implementation. If the government isn’t assigning a specific stipend value, we’ll have to be compensated individually by companies.

One way to do this, is by emulating the old coal mining company scrip scams of early last century. Employees working for companies would be paid in currency only redeemable at the company store. This basically created a system where a company could tax its own workers for profit.

Google, for example, could use a system like that and say “opt-in for $10 worth of Google Play music for free,” if they wanted to. Which doesn’t help pay the bills when machines replace you at work, but at least you’ll be able to voice search for your favorite songs.

Another idea is to charge companies an automation tax, but again there’s concerns as to how this would be implemented....MORE 

Earlier today:
A Quick Look at Universal Basic Income Experiments

Companies Buying Their Way Into Forbes, Mashable, Fast Company and HuffPo Stories

Apparently Business Insider and Entrepreneur as well.
It's a fine state of affairs when you can't trust Mashable for you corporate and financial news.*

From The Outline:

Bribes For Blogs:
An Outline investigation found that contributors to prominent publications have taken payments in exchange for positive coverage.

In late October, TechCrunch editor-at-large John Biggs noticed a Facebook Messenger request from someone he didn’t know, a man named Varun Satyam. When Biggs accepted the request, Satyam introduced himself as a marketer for technology startups. He was looking for coverage of some clients, he said, and he was willing to pay Biggs to write about them.

It was a bold opening move, and an unethical proposition for any journalist who wants to retain their credibility. But Biggs wasn’t surprised. He estimates that he receives two or three similar offers each month, and he doesn’t take them seriously.
“They’re stupid,” said Biggs. “Organic press is far more effective and anyone with a brain can see through them.”

But solicitations like Satyam’s may be more successful than Biggs is aware. Interviews with more than two dozen marketers, journalists, and others familiar with similar pay-for-play offers revealed a dubious corner of online publishing in which publicists, ranging from individuals like Satyam to medium-sized “digital marketing firms” that blur traditional lines between advertising and public relations, quietly pay off journalists to promote their clients in articles that make no mention of the financial arrangement.
People involved with the payoffs are extremely reluctant to discuss them, but four contributing writers to prominent publications including Mashable, Inc, Business Insider, and Entrepreneur told me they have personally accepted payments in exchange for weaving promotional references to brands into their work on those sites. Two of the writers acknowledged they have taken part in the scheme for years, on behalf of many brands. Mario Ruiz, a spokesperson for Business Insider, said in an email that “Business Insider has a strict policy that prohibits any of our writers, whether full-time staffers or contributors, from accepting payment of any kind in exchange for coverage.”

One of them, a contributor to Fast Company and other outlets who asked not to be identified by name, described how he had inserted references to a well-known startup that offers email marketing software into multiple online articles, in Fast Company and elsewhere, on behalf of a marketing agency he declined to name. To make the references seem natural, he said, he often links to case studies and how-to guides published by the startup on its own site. Other times, he’ll just praise a certain aspect of the company’s business to support a point in an otherwise unrelated story.

Robert Safian, editor of Fast Company, sent a statement: “No editors or other leadership at Fast Company were ever contacted in regard to this story. We were unaware of this practice happening at Fast Company, and no proof has been provided by The Outline of specific instances of paid mentions in our editorial content.” The Outline reached out to Fast Company’s PR email address the day before publication with a detailed email inquiry. After publication, The Outline described to Safian specific examples of brand placements that appeared on Fast Company’s website between 2013 and 2016, which we are not publishing in order to protect the identity of sources. Safian’s statement continued,

“It is a violation of our editorial policy and our rigorous journalistic standards. If we found any writer or contributor engaging in this practice, they would be terminated and their stories taken down. Any editor who might condone this practice would be fired.”

The Fast Company writer also defended the practice by arguing that it’s enabled by editors who are hungry for cheap or unpaid blog content. Many high-volume sites, including the Huffington Post, Entrepreneur, and Forbes, maintain networks of unpaid contributors who publish large amounts of material. Forbes, for instance, marks articles by contributors with a small disclaimer, but the Columbia Journalism Review has pointed out that those dubiously sourced articles are often cited as though they were normal stories written by Forbes staff. In reality, the editorial process that leads to those articles being published is opaque — a Forbes spokesperson declined to answer questions about how many contributors the site has, whether they’re ever paid, or whether an editor reviews their work before publication. One former Forbes contributor, Josh Steimle, has even offered a “masterclass” on how to get published on the site, an accomplishment he described as “rewarding for both my personal brand and my digital marketing agency.”...MORE

*Somehow related: 2010's "That's the Last Time I Look to 'Rolling Stone' for Climate; Investing Advice: "The Climate Killers: #1 Warren Buffett" (BRK.A; BRK.B)".

And a random sampling of posts based on a lifetime of observing and using the product of journalists in the furtherance of personal goals e.g. an urbane, witty presence, world domination, etc.:

How the Hell Will Journalists Survive If Journalism Is Broken?

Journalist as Personal Brand: The Economics

Every Journalist a Personal Brand
Adventure Capital: Ebay Founder Omidyar And NSA Nightmare Glenn Greenwald Team Up in a $250 Million Journalism Venture
Google Goes Longform: In-Depth Articles to Accompany Topical Search Results (GOOG)
Journalism: Henry Blodget and Business Insider Investing in Longform Writing

Content Appears To Be King (Again) 

Today in OccupyWallStreet News: "I'm a F***ing Journalist, You Motherf***er!"
 Columbia Journalism Review: The extraordinary promise of the new Greenwald-Omidyar venture
"The Journalist’s New Escape Plan: Start-Ups" (and Bloomberg goes VC)
"Why Aren’t Top Journalists Rich?"
 Media: It's the Talent, Stupid!
"Journalism: Go Longform or Go Home"
"How Will the End of Print Journalism Affect Old Loons Who Hoard Newspapers?"

A Quick Look at Universal Basic Income Experiments

From McKinsey Global Institute, November 2017:

MGI—"What the future of work will mean for jobs, skills, and wages"

HT: Pethokoukis at the AEI

OECD: "People, trust and government: Getting the measure"

From OECD Insights:

Is trust between people and their governments crumbling? What the great philosopher Jean-Jacques Rousseau called the social contract, whereby free citizens voluntarily agree to concede authority to the state in their own interest, could be in question. The OECD’s How’s Life? 2017 report finds that only 38% of people in OECD countries say they trust their government. In 2006, this figure was around 42%. Why is there such a “disconnect” between citizens and their elected representatives? 

The 2008 crisis is often blamed and could well be a factor. Indeed, trust has fallen by more than 15 percentage points in Greece, Portugal, and Spain–some of the OECD countries hardest hit by the crisis. They have also have seen the largest falls (or smallest growth) in household income and earnings since 2005, as well as some of the largest increases in long-term unemployment. By contrast, in Germany, Poland, and Slovak Republic, which are some of the countries where trust has increased the most, the average resident is generally better off than they were in 2005. 

Click to enlarge

Nevertheless, the trust issue goes beyond the Great Recession and there is more to it than simple economics. In the US, where opinion polls measuring confidence in federal government go back to the late 1950s, trust has been consistently falling over the long term. 

There may be other sources for the disconnect between citizens and their government.How’s Life? shows that the political class does not always reflect the people it serves. In the 11 OECD countries for which data is available, manual, agricultural and service workers make up 44% of the working population, but only 13% of legislators. Politicians are much more likely to have had a professional or senior management career. Not surprisingly, people might feel politicians are out of touch with their daily lives and unable to understand their basic struggles, from the cost of living to their need for quality public services. Additionally, How’s Life? finds that more than half of OECD residents consider corruption to be widespread in their government....MORE

A Roundup of Government Comments On Bitcoin

This can be read as a reason to own or a reason to sell, your call.

From ZeroHedge:

Bitcoin Jumps To New Record High As Governments, Regulators, Bankers Panic

Another dip to be bought as the weekend's pump'n'dump in Bitcoin has led to yet another new record high this morning at $11,850....Bitcoin's market cap is now $200 billion... 

...This resurgence comes after a week of considerably more active propagandizing from the establishment. 

As we noted previously, this week has seen a new group of establishmentarians jump on to the offensive against anti-decentralization, de-control, pro-freedom cryptocurrencies - urging bans, crackdowns, fatwas, taxation, creating their own cryptocurrencies, demanding citizens sell, and outright confiscation (this group includes governments world wide and their mainstream media mouthpieces)... 

India 

India's finance minister, Arun Jaitley, has clarified that the government does not recognize bitcoin as legal tender. According to the Economic Times, when asked about the government's plans to regulate the cryptocurrency, Jaitley told reporters, "recommendations are being worked at." He continued:

"The government's position is clear, we don't recognize this as legal currency as of now."Concerned over bitcoin's anonymity and its potential illicit uses, justices issued a notice to the central bank and other agencies asking them to answer a petition on the matter, reports indicated. 

Turkey 

Turkey has claimed Bitcoin is in fact “not compatible” with Islam due to its government being unable to control it.In a statement from a meeting of the state Directorate of Religious Affairs (Diyanet), lawmakers said that Bitcoin’s “speculative” nature meant that buying and selling it was inappropriate for Muslims.

“Buying and selling virtual currencies is not compatible with religion at this time because of the fact that their valuation is open to speculation. They can be easily used in illegal activities like money laundering, and they are not under the state’s audit and surveillance,” Euronewstranslates the statement republished by local news outlet Enson Haber. 

Diyanet added that the same principles of “unsuitability” in particular applied to Ethereum. 

South Korea 

Kim Dong-yeon, South Korea’s deputy prime minister and the minister of strategy and finance, revealed earlier this week that the government is investigating various methods to better regulate the local Bitcoin market and tax Bitcoin users accordingly. 

While the South Korean government and its local financial authorities are actively discussing the possibility of enforcing a policy on Bitcoin taxation, at a press conference, Deputy Prime Minister Kim stated that the government does not intend to include any Bitcoin taxation policy in 2018’s amendment of the tax law. 

Holland 

A Dutch news paper urges its citizens to sell their bitcoins patriotically because cryptocurrencies can undermine government and destabilize the economy.A bitcoin world can destabilize the real economy, a euro is also solidified trust.First, the bitcoin undermines the government because a lot of transactions are about money laundering and tax avoidance. Another problem is that the profits of new bitcoins that come with it do not benefit the government (as with normal money creation), but are absorbed in heavily environmentally harmful computer power. 

Central banks also have less influence on keeping the economy stable. In times of crisis, central banks can, through their influence on ordinary banks, ease credit conditions and encourage people to consume. The bank has no control over the bitcoin economy and an economic crisis can become deeper.The investor has air in his hands when the bitcoin crashes, but also when the company turns out to produce baked air. 

France 

Putting money in an empty type of asset is “very, very worrying,” Robert Ophele, chairman of France’s market regulator. Bitcoin has no link to the real economy, Ophele says in a panel discussion at the Paris Europlace Financial Forum, warning that cryptocurrencies are a way to commit cybercrimes, allowing access to illicit goods and services. 

If bitcoin was a currency, "it would be a bad one," Ophel exclaimed, as it poses major challenge for central banks and regulators....MORE

For some reason the hubristic sounding "...As Governments, Regulators, Bankers Panic" reminds me of a prior note on General Custer's comment as he rode into the valley of the Little Big Horn, variously reported.

Here's's one version: 

They've fallen into my trap, We've got them where we want them. 

And another:

"Hurrah, boys,we've got them!,  We'll finish them up and then go home."

Unfortunately we've already use the headline "The Battle of Little Bitcoin", it would fit this ramble nicely.

Tesla Stock Downgraded to Sell By Someone I've Never Heard Of (TSLA)

Not that there's anything wrong with that.
Or is it "of whom I've never heard?"
The stock is down a buck at $304.20 after hitting $301.00. The $300 line is holding but being tested:

Finviz

From MarketWatch:

Tesla Inc. shares TSLA, -0.32% were downgraded to sell from hold by analyst Eric Ross at Cascend on Tuesday, who said his measurement of customer demand is beginning to flag. New customers who have not already preordered can't get new vehicles until 2019, he said, and are beginning to go elsewhere. "Additionally, all the known issues of capital burn/raises, Model 3 production issues, and increased competition," Ross wrote in a note....MORE

Recently:
The Short Argument Against Tesla
$300 Looks Like an Important Line For Tesla's Stock (TSLA)

It's not that $300 is some magical round number, rather looking at the chart if the stock moves decisively through that line there is a lot of air down to the $240 base where the run began.

Nestle and Campbell Soup Co. to Leave the Grocery Manufacturer’s Association "The food lobby is splintering as companies disagree about how to respond to changing consumer tastes"

From Politico, Nov. 26: 

The big Washington food fight

Nestlé, the world’s largest food company, rocked food circles in late October with the news that it was leaving the industry’s most powerful lobbying group in Washington, the Grocery Manufacturers Association, amid disagreements about how to respond to changing consumer tastes.

The departure of a conglomerate that owns thousands of brands — from Hot Pockets to Deer Park water — was the most visible sign yet that the food industry’s reign in Washington is faltering as some companies scramble to adapt to rapidly evolving consumer demands while others are slower to embrace the trends. Long the attack group for large companies like Kraft and General Mills on legislative and regulatory issues, GMA now has members like Nestlé opposing some of its positions.

The splintering of the food lobby has been driven in part by an upheaval at the grocery store, where iconic brands are stagnating as millennials and moms seek healthier and more transparent products. But complacency and a lack of leadership at GMA are also to blame, according to interviews with more than a dozen current and former member companies, former staff and other industry leaders in Washington.

In the past year, the trickle of news about member companies deciding to leave GMA appear to be not one-offs, but part of a burgeoning trend.

Six months before Nestlé's decision, Campbell Soup Co., maker of Goldfish crackers and V8 juices, announced it was leaving GMA, in part because the association fought bitterly against mandatory labeling for foods with genetically modified ingredients, or GMOs. In what may have been a contrarian view, Campbell decided to stop fighting and instead embrace GMO labeling early last year, believing that consumers want more information about what's in their food and where it comes from — not less. Both Nestlé and Campbell are leaving the group at the end of the year.

Other major food companies are also eyeing the door: Dean Foods, the largest dairy company in the country, has quietly decided to leave the association. Several others, including Mars — one of the largest private food companies, which owns swaths of globally recognized brands, from candy to pet food — are considering it.
"Some of these companies are realizing that being more progressive is a good place to be, from a marketing perspective,” said Melissa Musiker, vice president and director of food and nutrition policy at APCO Worldwide, a public relations and consultancy firm. “They get kudos for it."

"In the past, there was protection in numbers — you kind of hunkered down, and to the extent that these companies stuck together, they could win," said Musiker, who worked at GMA as a director on science and nutrition policy from 2009 to 2011.

Nestlé and Mars declined to comment for this story. Campbell Soup Co. also declined to comment on why it publicly split with GMA last summer. A spokesperson for Dean Foods told POLITICO the company was leaving GMA “so we can prioritize and allocate our limited time and resources elsewhere,” and declined to comment further. Some in Washington speculate that Dean Foods left for fiscal reasons amid well-documented financial troubles, and not over an ideological division with GMA.

A permanent shift in consumer tastes...

 ...MUCH MORE

"This Is Why Jeff Bezos Is Spending Millions on an Indoor Farming Startup"

From Architectural Digest, November 3:

The results could very well change the way you eat fruits and vegetables

With the amount of farmable acreage seemingly shrinking all the time, access to fresh fruits and vegetables can be hard to come by. Small-scale produce can be prohibitively expensive, and cheaper options from far-flung corners of the globe carry a hidden environmental cost. But one well-funded startup called Plenty believes that its technology harbors the secret to bringing “backyard quality” produce to the masses, and hopes that its newest indoor growing facility in Kent, Washington, will prove it.At just 100,000 square feet, Plenty’s new facility will be 99 percent smaller than a typical American farm. But Plenty’s goal is to optimize every inch of that available space for ideal cultivation. Fruits and vegetables grow on 20-foot-tall towers, bathed in LED lights and connected to a wealth of data-collecting microsensors.....MORE

...While the concept of eating produce grown inside on a tower might strike the farmer’s market crowd as puzzling, a recent $226 million funding round from Bezos Expeditions (whose founder is Jeff Bezos, current CEO of Amazon and among the richest people in the U.S.) and other VC firms suggests that there might just be a future in internet of things-driven agriculture. How ’bout them apples indeed....

That introductory sentence, "With the amount of farmable acreage seemingly shrinking all the time", is not quite accurate: We'll be back later with the story this line comes from:

"...The map establishes there are 1.87 billion hectares (4.62 billion acres) of cropland in the world, which is 15% to 20%—or 700 to 900 million acres—more than former assessments. The change is due to more detailed understanding of large areas never mapped before or inaccurately mapped as non-croplands...."

USDA's November Farm Income Forecast

Expanding on yesterday's "Be Prepared For the ‘Winter’ of The Farm Economy (DE; AGCO; POT; MOO)".
From the University of Illinois' FarmDoc Daily:

Introduction

On November 29, 2017, the USDA's Economic Research Service released an updated projection of 2017 net farm income. The forecast of $63.2 billion is $200 million (0.3%) lower than the forecast released in August. The updated forecast suggests that net farm income will exceed the 2016 estimate ($61.5 billion) by $1.7 billion (2.8%). This post shows that the November net farm income forecast is expected to be a good predictor of realized net farm income for 2017, based on historic forecast data.

Net Farm Income

Net farm income is the official U.S. Government estimate of farming's contribution to the national economy. The USDA defines net farm income as "the residual income leftover after all the factors of production are paid. It represents the returns for operator labor, management, and equity, as well as any other unpaid resources used for farm production instead of elsewhere." For more information on USDA's net farm income forecasts, see our previous farmdoc daily articles from August 25, 2017 and August 31, 2017.

November Forecast History

As previously stated, the November forecast revision is slightly more pessimistic than the previous revision released on August 30, 2017 ($63.2 billion compared to $63.4 billion). This is not uncommon. Between 1975 and 2016, the November forecast was less than the August forecast nearly half (46.5%) of the time. However, the change between the August and November forecasts in 2017 was much more modest than we typically observe. In recent years, the change between the August and November forecasts ranged between -14.4% (2014) and +8.6% (2013).

The figure below plots the USDA's November net farm income forecast from 1975 - 2016, along with the official estimates and their associated (percentage) errors. The figure shows that the USDA's November forecast is as likely to under-predict or over-predict net farm income, with both occurring 50 percent of the time.

The forecast errors for the November forecast are typically quite small. Between 1975 and 2016, the forecast error averaged -2.4%, but this difference is not statistically significant. In other words, the difference between the November forecast values and realized net farm income could reasonably be explained by chance occurrence. Thus, an economist would say that the November forecast is "an unbiased predictor" of realized net farm income. However, the November forecast drastically under-predicted realized values in a few years: 1984 (-30.6%), 1991 (-32.1%), and 2015 (-31.0%), and the November forecast drastically over-predicted realized values in 1983 (50.0%).

Conclusions

The USDA's November 29, 2017 forecast of 2017 net farm income, at $63.2 billion, showed little change from the August projection. Based on the historic performance of the November forecast revisions, this projection is expected to be a good predictor of realized net farm incomes. The USDA will release one more revision of the 2017 net farm income forecast in February 2018, and the 2017 official estimates will be released in August 2018....

Also at FarmDoc:
Weekly Outlook: Acreage Prospects for 2018
Expectations for Corn and Soybean Prices over the Next Five Years

Elon Musk's "The Boring Company has published its tunnel map of Los Angeles"

This kind of stuff is sometimes pointed at as a distraction for Musk that could take down Tesla. It is to the contrary probably keeping him sane during the Model 3 production ramp. What could take down Tesla is good 'ol sales and earnings and cash flow, or lack thereof.
From Teslarati:

Tesla CEO Elon Musk and visionary for The Boring Company has published the first images of a proposed tunnel map for Los Angeles. Two routes, color-coded in red and blue, reveal a “Phase 1” 6.5-mile tunnel that aims to connect an area of Los Angeles by SpaceX’s headquarters in Hawthorne with nearby Culver City, and “Phase 2” expansion routes that extend to the greater Los Angeles region.

The first route, outlined in red on the Boring Company’s tunnel map, is intended to be a proof-of-concept and will not be used for public transportation, says the company.

“The Boring Company has filed an excavation permit application. Phase 1 would include the construction of a 6.5-mile proof-of-concept tunnel through Los Angeles and Culver City” reads the tunnel map description on the company’s website. The tunnel will initially be used for construction logistics verification, system testing, safety testing, operating procedure verification, and line-switching demonstrations.

Only upon successful tests of the company’s first route by government officials would The Boring Company make it available for public use. Musk’s first demonstration of a car elevator in-action, lowering a Tesla Model S into a tunnel entrance, was a first look at his vision for a cost effective, underground transportation system coming to life. The serial entrepreneur intends to build a multi-layer transportation system that would facilitate high-speed travel by using electric skates....MORE

Also at Teslarati:

Elon Musk’s Boring Co. hat just became a limited edition, cut-off at $1M sold

 

To preserve the transcendent majesty & specialness of The Boring Company cap, we are capping cap orders at 50,000 caps. Almost there ... https://t.co/YqjEQAfy3u

— Elon Musk (@elonmusk) December 3, 2017

 The Musk obsessives among us will note the route of the first tunnel runs from  SpaceX headquarters near LAX to the five houses Mr Musk owns in Bel Air a couple miles from The Getty and overlooking the Country Club:

Variety

Kittens On the Blockchain Is NOT the Future I Was Promised

From Next Big Future, Dec. 2:

Kittens on the blockchain is the future nobody asked for

Cryptocurrency has an uncertain future, but the digital ledger powering most of their transactions is here to stay. Granted, cryptocurrency probably is too, but this isn’t meant to be a rant about dot com-era bubbles — we can argue about it on Twitter thought, come at me.

The benefits offered by blockchain are numerous, and each passing day brings an ever-more-creative way to use it. I’ll leave it to you to decide if CryptoKitties is one of them.

CryptoKitties are basically 2017’s version of Neopets, only with a traceable lineage. Using the same ledger technology that verifies Ether and Bitcoin transactions, collectors can buy, sell, trade, and breed their digital kittens. Each kitten has a unique lineage and characteristics, such as Kitty #25493, which looks like the bastard spawn of a Matthew Inman illustration.

If you can live the rest of your life knowing this is the kitten you chose to spend your hard earned cash on, you can purchase the little fuzzball for 0.2571 ETH ($118.46 as of this writing), that’s Ether in case you haven’t been paying attention.

According to the website, each cat is one-of-a-kind, and solely owned by you — unless you decide to trade or sell it to another CryptoKitties enthusiast. Each offspring two paired cats produce is also unique, there will never be another just like it. Which, judging by the looks of a few of these creations, we’re sure is a good thing....MORE

Meanwhile last I saw $1.2 $1.3 million has been spent with one trade highlighted at Mashable:

...And on Saturday, a unique cat called the "genesis cat" was sold for 246.9 ETH, or roughly $117,000....

—CryptoKitties is Ethereum's hit game, but it's threatening the entire network

Activist Investors: Third Point's Dan Loeb Takes On Santa Claus

This is a few years old but ages well.
Via ZeroHedge:

The following Third Point letter may or may not have been actually sent, although if indeed shareholder activists - more aggressive now than ever thanks to the brilliant idea of forcing management teams to lever themselves up to the gills with what for now appears to be cheap credit - do get some original ideas thanks to this particular Vanity Fair lampoon, then children around the world will have a fabricated Dan Loeb to thank for having their Christmas presents delivered by an army of highly efficient and profit-maximizing Amazon drones.

Source: a rather humorous Vanity Fair

Related: Found! Hedge Funder Dan Loeb’s Scathing Letter to the Girl Scouts of the U.S.A.

The Short Argument Against Tesla

Mr. Chanos was taken to the cleaners by Mr. Musk on SolarCity, had Tesla not bought it, SCTY was on its way to bankruptcy court. We have quite a few posts on the bad blood between the two, use the 'Search Blog' box search term SCTY if interested.

Following up on Friday's "$300 Looks Like an Important Line For Tesla's Stock (TSLA)".
TSLA $302.87 Down $3.66, last (1.19%)

From ZeroHedge, November 14:

Jim Chanos Adds To Tesla Short, Sees Musk Stepping Down

The ongoing vendetta between the scourge of Enron, Jim Chanos, and Elon Musk escalated when the Kynikos Associates founder said he has been adding to his Tesla short position throughout the year even as the company’s shares soared to record highs. Speaking at the Reuters Global Investment 2018 Outlook Summit, Chanos - who first disclosed his TSLA short last May - said that he expected Elon Musk to step down from his position by 2020 to focus on his private rocketship company SpaceX as competitors such as BMW and Porsche expand their lines of luxury electric vehicles.

“Obviously this is not being valued as a car company, it’s being valued on Musk ... he’s the reason people own the stock,” Chanos said.

“Put it this way. If you wouldn’t be short a multi-billion-dollar loss-making enterprise in a cyclical business, with a leveraged balance sheet, questionable accounting, every executive leaving, run by a CEO with a questionable relationship with the truth, what would you be short? It sort of ticks all the boxes.”

He said the company is burning more than $1 billion in cash each quarter and will have a harder time tapping the capital markets if and when Musk leaves

Still, while Chanos may have had a large enough balance sheet to avoid a short squeeze, others have been less fortunate, and as a result Tesla shares are up 44% for the year to date, briefly rising above General Motors in market cap, as countless shorts have been margined out despite Tesla's chronic - and often shocking - cash burn, and despite increasingly louder concerns that Tesla will be unable to deliver on its aggressive Model 3 timetable. Just last week, Tesla reported its largest-ever quarterly loss, unveiled it had burned a record $16 million per day...

 ....and pushed back its target of volume production of its new Model 3 sedan by three months. The company said it now expects to build 5,000 Model 3s per week by late in the first quarter of 2018 from its original target date of December. And yet, despite the production delays or perhaps due to them, the company has been a veritable widowmaker for shorts, with losses among funds that bet on its decline totaling more than $4 billion this year, according to S3 Partners and Reuters.
To be sure, Chanos is not alone in shorting TSLA, and some other notable skeptics who have likewise bet on Tesla's demise include:

• Mark Yusko, founder and CIO at Morgan Creek Capital Management.
• Mark Spiegel of Stanphyl Capital Management.
• David Rocker, formerly of Rocker Partners.
• Anton Wahlman, former stock analyst who now writes about the auto industry (he said he currently holds no position on Tesla)

Their short thesis is roughly captured by the following 7 points:

1. Negative Cash Flows
“If you can’t make money selling a $100,000 car to rich people, how are you going to make money selling a $45,000 car to normal people?” Rocker told The Times. He was referring to the upcoming mass-market Model 3. “I’m saying they’re going to lose money on every Model 3 they build and sell,” Spiegel said. Based on Tesla’s Q4 2016 earnings report, he figured the combined average selling price for non-leased Model S and X is about $104,000 and the combined average cost of building them about $82,000.

2. Competition from the Big Guys
Electric vehicles are still only a tiny fraction of total new vehicle sales in the US. Tesla sold about half of them. In March, according to Autodata, Tesla sold 4,050 vehicles in the US, similar to Porsche. All automakers combined sold 1.56 million new vehicles. This gave Tesla a market share of 0.26%. "Tesla faces a formidable set of competitors, and they’re coming in with guns blazing,” Wahlman told The Times. “Once the market is flooded with electric vehicles from manufacturers who can cross-subsidize them with profits from their conventional cars, somewhere around 2020 or 2021, Tesla will be driven into bankruptcy,” Spiegel said.

3. Tesla’s vanishing tax credits
The federal tax credit of $7,500 that EV buyers currently get is limited to 200,000 vehicles for each automaker. Once that automaker hits that point, tax credits are reduced and then phased out. Of all automakers, Tesla is closest to the 200,000 mark. Under its current production goals, the tax credits for its cars could start declining in 2018. This would give competitors, whose customers still get the full tax credit, a major advantage. About 370,000 folks put down a refundable $1,000 deposit on Tesla’s Model 3, perhaps figuring they’d get the $7,500 tax credit. But as it stands, many won’t. Rocker thinks that this is going to be an issue. The refundable deposit “commits them to nothing,” he said. Those that don’t get the tax credit may just ask for their money back and buy an EV that is still eligible for the credit....MORE

We also have a couple hundred posts on Tesla going back to the pre-IPO days if interested.

Be Prepared For the ‘Winter’ of The Farm Economy (DE; AGCO; POT; MOO)

There are a lot of folks seeing green shoots, especially in agriculture equities, Deere being a standout.
The argument against the enthusiasm are the prices received by the farmer, prices which are not showing much get-up-and-go.
And crop prices are the very base of the pyramid on which the whole farm country economy rests.

Here's the press release for the most recent Creighton University's Rural Mainstreet Index monthly report:

Rural Mainstreet Index Indicates Economic Weakness:|
More Than One-Half of Bankers Boosted Farm Loan Collateral Requirements
November Survey Results at a Glance:

* The overall index slipped from October’s weak reading and remained below growth neutral.
* The farmland price index fell below growth neutral for the 48th straight month.
* Approximately 22.5 percent of bankers increased farm loan rejection rates with the fall in farm income.
* More than one-half of bank CEOs boosted farm loan collateral requirements as farm income has weakened.
* The percentage of bankers projecting next year livestock revenues greater than costs fell to 9.2 percent from 18.9 percent reported last year at this time.

OMAHA, Neb. (Nov. 16, 2017) – The Creighton University Rural Mainstreet Index dipped from October’s weak reading and remained below growth neutral, according to the November monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.  

Overall: The index, like all indices in the survey, ranges between 0 and 100, slipped to 44.7 from 45.3 in October. 

“Since peaking in 2013, farm commodity prices have declined by approximately 17 percent and U.S. farm income has fallen for four straight years. Not surprisingly, Creighton’s overall Rural Mainstreet Index has risen above growth neutral only three times in the past three years,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business. 

Jeff Bonnett, president of Havana. National Bank in Havana, Illinois, “Many of our farm customers experienced record yields with this year's harvest. Like them, we are all hoping that this is enough to offset the yet again low commodity prices that challenge the Ag economy today.”

Bankers were asked this month how their bank has responded to the downturn in farm income. More than half, or 53.1 percent, reported increasing collateral requirements for farm loans. More than one in five, or 22.5 percent, indicated their bank had rejected a higher percent of farm loan applications. However, approximately one-third, or 34.7 percent, reported no change in farm loan terms and requirements....MUCH MORE

And here's the headline story from AgWeb, Nov. 28:

It’s no secret the farm economy is in a downturn. Have you ever compared the cycles in the farm economy to the seasons of the year? Ag Economist Dr. David Kohl does.
“That period from 2006 to 2012, she was the summer,” he explains. “High commodity prices in every major commodity.”

He then says the period from 2013 to today is what he considers to be the Fall season.
“In other words, commodity prices are in an elongated kind of reset,” he says. “People have been pretty resilient because they had built up working capital and of course land values who were strong, so we had some equity on the balance sheet.”

Unfortunately, Kohl says 2018 to 2021 is going to be like a cold winter.

“What I'm starting to observe in this winter period is that I've got a certain group of producers that have made adjustments and they're making a little money,” he explains. “I've got another group, I call them kind of the bridge, and they’re looking for a refinance. Then I've got another 30 percent of producers out there at the end of the pier and those people burning through land equity etc.”

Fortunately, spring is coming.  He anticipates it to be somewhere from 2021 to 2025.

“I call it the spring of the year because what will happen is we'll weed out the some of the inefficient, some of the less progressive type of managers,” he says adding those businesses will be purchased by the other 40% of producers....MORE

We think 2021 is too pessimistic for the turn, it might be a year or two earlier and yes equities are forward looking instruments but they tend not to look that far ahead. 

"How Reuters’s Revolutionary AI System Gathers Global News"

From MIT's Technology Review, Nov. 27:

Reuters is scooping its rivals using intelligent machines that mine Twitter for news stories.

“The advent of the internet and the subsequent information explosion has made it increasingly challenging for journalists to produce news accurately and swiftly.” So begin the research and development team at the global news agency Reuters in a paper on the arXiv this week.

For Reuters, the problem has been made more acute by the emergence of fake news as an important factor in distorting the perception of events.

Nevertheless, news agencies such as the Associated Press have moved ahead with automated news writing services. These report standard announcements such as financial news and certain sports results by pasting the data into pre-written templates: “X reported profit of Y million in Q3, in results that beat Wall Street forecasts ... ”

So there is significant pressure on other news agencies to automate news production. And today, Reuters outlines how it has almost entirely automated the identification of breaking news stories. Xiaomo Liu and pals at Reuters Research and Development and Alibaba say the new system performs well. Indeed, it has the potential to revolutionize the news business. But it also raises concerns about how such a system could be gamed by malicious actors.

The new system is called Reuters Tracer. It uses Twitter as a kind of global sensor that records news events as they are happening. The system then uses various kinds of data mining and machine learning to pick out the most relevant events, determine their topic, rank their priority, and write a headline and a summary. The news is then distributed around the company’s global news wire.

The first step in the process is to siphon the Twitter data stream. Tracer examines about 12 million tweets a day, 2 percent of the total. Half of these are sampled at random; the other half come from a list of Twitter accounts curated by Reuters’s human journalists. They include the accounts of other news organizations, significant companies, influential individuals, and so on....MUCH MORE

Now, if we can combine that with the AI from Primer...

Artificial Intelligence: "We build machines that read and write"

"“The Ultimate Trading Machine” from Penguin Computing sets Record for Low Latency"

From Inside HPC, Nov. 1 (I know, that's a lot of latency):

The world of High Frequency Trading is all about reducing latency to make money. At the recent STAC Summit in Chicago, a Penguin Computing device called The Ultimate Trading Machine achieved a record-low 98 nanosecond tick-to-trade latency, some 18% faster than the previous world record.

“The time interval between receiving a market tick and sending a buy or sell order is the tick-to-trade latency. Decreasing the tick-to-trade latency improves the queue positions of trades. This results in higher probabilities for trades to be executed, and, thus, delivers a competitive advantage.”

The Ultimate Trading Machine was evaluated using the STAC-T0 benchmark suite. This benchmark simulates the time for the Chicago Mercantile Exchange to emit a trade data packet and for the Exchange to receive a market order packet. This is the minimum, possible trade execution time. STAC-T0 is designed to isolate the tick-to-trade network I/O latency and to measure this latency with high precision (an uncertainty of just ±2 nanoseconds is incorporated into reported results).

The solution achieves ultra low processing latencies through optimal design choices and select components. It is built on a solid performer, the Penguin Computing Relion XE1112 server. This 1U, 19″ EIA form-factor server features dual Intel Xeon Scalable processors and optimized memory, bus, and storage options (including low-latency, Intel Optane data center storage). The interconnect is powered by the Solarflare XtremeScale 8722 software-defined network interface, delivering ultra-low latency and onload kernel bypass with offload to a Xilinx Kintex UltraScale FPGA running the LDA Technologies’ Lightspeed TCP core software stack....MORE

Infobesity—"The regulatory case against tech giants (continued): Why concerns about information overload could cripple the platform-monopoly model."

I believe I shall purloin the portmanteau 'infobesity'. And I'm starting to like 13D Research. They highlight this bit from Mr. Wheeler's Berlin speech:

...Wheeler pinpoints the launch of CNN in 1980 as the beginning of today’s destabilizing shift:

“Immediately after the switch was thrown, I was in the CNN control room. What I saw was the opening salvo of the information world in which we find ourselves today. There, on the monitor, was a live feed from a beach in Florida where nothing was happening. The correspondent was reporting that the anticipated hurricane had not yet hit. At that moment, the nature of news changed. Traditional TV would have waited for the hurricane to hit landfall. But with 24 hours of airtime to fill, CNN had just redefined news to include what wasn’t happening…

The abundance of video capacity on cable TV enabled the installation of multiple curators who differentiated their product through editorial decisions. The proliferation of cable news channels demonstrated how it was profitable to target opinionated programming to specific population segments. Today’s social media news and information follows the same model.”...

From XIIID Research, Nov. 23: 

This epidemic “infobesity” has degraded truth and trust.

The stats tell the bewildering story. In a single year, Americans now consume more than 1.3 trillion hours of information outside of work, or roughly 12 hours per person per day, according to a University of California, San Diego study. An average person taps his or her phone roughly 2,600 times every day. And the average human attention span has fallen from 12 seconds in 2000, to eight seconds in 2015, according to a Microsoft-sponsored study.

In these pages, we have sought to dissect the events, economic dynamics, and potential regulatory approaches that will shape the lawmaker response to tech-giant power. Writing for the Brookings Institute last week, former FCC Chairman Tom Wheeler makes a vital case for why controlling the internet’s information firehose should top the list of ambitions.

According to estimates, humans today consume roughly the same amount of information in a day as consumed in a week just thirty years ago. This epidemic “infobesity” lies at the heart of the global degradation of truth and trust. In turn, the business models of platforms like Facebook and Google — which “prioritize advertising velocity over factual veracity,” as Wheeler puts it — pose an existential threat to the global democratic order.

The escalation of global information consumption may not be reversible or even a pure ill. However, only by addressing information overload head-on can regulators arrest the destabilizing spiral to information anarchy.

We excerpt from Wheeler’s article, entitled “Did Technology Kill the Truth”:

“We carry in our pockets and purses the greatest democratizing tool ever developed. Never before has civilization possessed such an instrument of free expression…Yet, that unparalleled technology has also become a tool to undermine truth and trust. The glue that holds institutions and governments together has been thinned and weakened by the unrestrained capabilities of technology exploited for commercial gain. The result has been to de- democratize the internet.

We have seen this new reality gnaw at our political processes. The agents that formerly curated fact-based debates have been cast off in favor of algorithms whose first loyalty is not veracity…We exist in a time when technological capabilities and economic incentives have combined to attack truth and weaken trust. It is not an act of pre-planned perdition. Unchecked, however, it will have the same effect.

Thus far, our response has been to address this 21st-century challenge in 20th-century terms and propose 19th-century solutions. We need to do better. We must determine how to harness the new technology to protect against the very problems it has created.”

The tug-of-war between horizontal (i.e. peer-to-peer) and vertical (i.e. gatekeeper controlled) information exchange has been ongoing since Roman times. For a millennium, the Roman Catholic Church and landed nobility controlled the flow of information. Then Gutenberg’s printing press emerged, giving distributable voice to the previously silent. The 19th and 20th centuries saw two significant shifts: first the telegraph and telephone decentralized and then the radio and television centralized. And as author Tom Standage documents in his book, “Writing on the Wall,” each major shift in information exchange both instigated rapid progress as well as war-torn instability.

Wheeler pinpoints the launch of CNN in 1980 as the beginning of today’s destabilizing shift:

“Immediately after the switch was thrown, I was in the CNN control room. What I saw was the opening salvo of the information world in which we find ourselves today. There, on the monitor, was a live feed from a beach in Florida where nothing was happening. The correspondent was reporting that the anticipated hurricane had not yet hit. At that moment, the nature of news changed. Traditional TV would have waited for the hurricane to hit landfall. But with 24 hours of airtime to fill, CNN had just redefined news to include what wasn’t happening…

The abundance of video capacity on cable TV enabled the installation of multiple curators who differentiated their product through editorial decisions. The proliferation of cable news channels demonstrated how it was profitable to target opinionated programming to specific population segments. Today’s social media news and information follows the same model.”

From cable television to personal computers and smartphones, digital technologies transformed the information ecosystem by decreasing the cost of producing and distributing content while simultaneously enabling anytime, anywhere discoverability and consumption. Information gatekeepers — nightly-news broadcasters, national and local newspapers, even pop stars — have seen their cultural and political influence fade as cable news talking heads, bloggers, vloggers, podcasters, and most of all, peer-to-peer communication has risen in power. As revered tech columnist Walt Mossberg told Bob Schieffer for his new book, “Overload: Finding Truth in Today’s Deluge of News”: “The point is, we have much more at our fingertips. But we have much worse curations.”

The downsides of this unprecedented information abundance and access have grown ever-ubiquitous and undeniable. To name just three: Information siloing has intensified social and ideological divides. Confirmation bias has devalued fact in favor of self-affirming opinion. And negativity bias has drowned out positive global developments, exacerbating pessimism and in turn, populist anger (WILTW November 13, 2016). As study after study has found, from digital infobesity has come increased stress rates, political polarization, cratering faith in institutions, and the devastation of consensus truth (WILTW February 23, 2017)....MORE

Previously from XIIID:
"Walmart’s late-mover advantage" (WMT)
The End Of Pure E-commerce (AMZN; WMT)