"Bitcoin (BTC) Declared Sharia-Compliant By Islamic Scholar"

From World Coin Index:

An Indonesian-based startup known as Blossom Finance has launched a report authored by the firm’s internal advisor on Sharia laws which concludes that the virtual currency Bitcoin (BTC) is compliant with Islamic law. The declaration by the Islamic scholar could make the cryptocurrency more attractive to Muslim investors as they has previously been no clarity on whether digital coins qualify as money as. Currently Muslims are more than a fifth of the global population.

Since Bitcoin came into being there has been debate among Islamic scholars over whether trading in the digital currency constituted a form of usury since it was highly volatile and thus offered opportunities of making huge gains as well as large losses. Under Islamic Canonical Law, usury or lending of money at high-interest rates is prohibited.

There exists confusion among Muslims over whether Bitcoin is haram (non-compliant with Islamic laws) or halal (compliant with Islamic laws). Partly this is because the answer is open to interpretation since bitcoin serves not just as a currency but also a payment and a transaction network. Per Martin bitcoin meets the definition of Islamic money since it acts as a store of value, unit of account and a medium of exchange. It also qualifies as customary money since it has gained wide acceptance in society.

The report further argues that the rulings that have been issued by Islamic scholars and which say that the virtual currency is not Sharia-compliant due to the wild volatility it is associated with as well as the fact that it is popular with illegal activities are not legitimate reasons....MORE

I don't know if the Ummah is going ahead with the gold dinar plan we first noted back in 2007, at Le Journal RIBH:

RIBH est un média en ligne dédié à la finance islamique et à la banque participative, ainsi qu'aux nouveaux moyens de paiement et à la transformation digitale. RIBH s'adresse à une audience professionnelle et grand public intéressée par les sujets suivants : Finance participative, banque islamique, crowdfunding, Fintech ...

Andrew Gelman on the Economics Profession.

Professor Gelman is the Director of the Applied Statistics Center at Columbia University.
From his Statistical Modeling, Causal Inference and Social Science blog (bolded bits, our emphasis):

A quick rule of thumb is that when someone seems to be acting like a jerk, an economist will defend the behavior as being the essence of morality, but when someone seems to be doing something nice, an economist will raise the bar and argue that he’s not being nice at all.

Posted by Andrew on 26 April 2018, 9:21 am

Like Pee Wee Herman, act like a jerk
And get on the dance floor let your body work

I wanted to follow up on a remark from a few years ago about the two modes of pop-economics reasoning:

You take some fact (or stylized fact) about the world, and then you either (1) use people-are-rational-and-who-are-we-to-judge-others reasoning to explain why some weird-looking behavior is in fact rational, or (2) use technocratic reasoning to argue that some seemingly reasonable behavior is, in fact, inefficient.

The context, as reported by Felix Salmon, was a Chicago restaurant whose owner, Grant Achatz, was selling tickets “at a fixed price and are then free to be resold at an enormous markup on the secondary market.” Economists Justin Wolfers and Betsey Stevenson objected. They wanted Achatz to increase his prices. By keeping prices low, he was, apparently, violating the principles of democracy: “‘It’s democratic in theory, but not in practice,’ said Wolfers . . . Bloomberg’s Mark Whitehouse concludes that Next should ‘consider selling tickets to the highest bidder and giving the extra money to charity.'”

I summarized as follows:

In this case, Wolfers and Whitehouse are going through some contortions to argue (2). In a different mood, however, they might go for (1). I don’t fully understand the rules for when people go with argument 1 and when they go with 2, but a quick rule of thumb is that when someone seems to be acting like a jerk, an economist will defend the behavior as being the essence of morality, but when someone seems to be doing something nice, an economist will raise the bar and argue that he’s not being nice at all.
I’m guessing that if Grant Achatz were to implement the very same pricing policy but talk about how he’s doing it solely out of greed, that a bunch of economists would show up and explain how this was actually the most moral and democratic option.

In comments, Alex wrote:

(1) and (2) are typically distinguished in economics textbooks as examples of positive and normative reasoning, respectively. The former aims at describing the observed behavior in terms of a specific model (e.g. rationality), seemingly without any attempt at subjective judgement. The latter takes the former as given and applies a subjective social welfare function to the outcomes in order to judge, whether the result could be improved upon with, say, different institutional arrangement or a policy intervention.

To which I replied:

Yup, and the usual rule seems to be to use positive reasoning when someone seems to be acting like a jerk, and normative reasoning when someone seems to be doing something nice. This seems odd to me. Why assume that, just because someone is acting like a jerk, that he is acting so efficiently that his decisions can’t be improved, only understood? And why assume that, just because someone seems to be doing something nice, that “unintended consequences” etc. ensure he’s not doing a good job of it. To me, this is contrarianism run wild. I’m not saying that Wolfers is a knee-jerk contrarian; rather I’m guessing that he’s following default behaviors without thinking much about it.

This is an awkward topic to write about. I’m not saying I think economists are mean people; they just seem to have a default mode of thought which is a little perverse.

In the traditional view of Freudian psychiatrists, which no behavior can be taken at face value, and it takes a Freudian analyst to decode the true meaning. Similarly, in the world of pop economics, or neoclassical economics, any behavior that might seem good, or generous (for example, not maxing out your prices at a popular restaurant) is seen to be damaging of the public good—“unintended consequences” and all that—, while any behavior that might seem mean, or selfish, is actually for the greater good.

Let’s unpack this in five directions, from the perspective of the philosophy of science, the sociology of scientific professions, politics, the logic of rhetoric, and the logic of statistics.

From the standpoint of the philosophy of science, pop economics or neoclassical economics is, like Freudian theory, unfalsifiable. Any behavior can be explained as rational (motivating economists’ mode 1 above) or as being open to improvement (motivating economists’ mode 2 of reasoning). Economists can play two roles: (1) to reassure people that the current practices are just fine and to use economic theory to explain the hidden benefits arising from seemingly irrational or unkind decisions; or (2) to improve people’s lives through rational and cold but effective reasoning (the famous “thinking like an economist”). For flexible Freudians, just about any behavior can be explained by just about any childhood trauma; and for modern economists, just about any behavior can be interpreted as a rational adaptation—or not. In either case, specific applications of the method can be falsified—after all, Freudians and neoclassical economists alike are free to make empirically testable predictions—but the larger edifice is unfalsifiable, as any erroneous prediction can simply be explained as an inappropriate application of the theory.

From a sociological perspective, the flexibility of pop-economics reasoning, like the flexibility of Freudian theory, can be seen as a plus, in that it implies a need for trained specialists, priests who can know which childhood trauma to use as an explanation, or who can decide whether to use economics’s explanation 1 or 2. Again, recall economists’ claims that they think in a different, more piercing, way than other scholars, an attitude that is reminiscent of old-school Freudians’ claim to look squarely at the cold truths of human nature that others can’t handle....MORE

Previously from the SMCISS blog:
Taking on the Nobel Prize Winner: An Update On That "Middle Class White Guys Are Dying" Report
"Big Oregano Strikes Again"
Elon Musk Frenemy Peter Thiel is writing another book!
 
See also our posts:

Modelling vs. Science

A subject near and dear to our jaded hearts, some links below.
If an experiment is not reproducible it is not science.
If an hypothesis is not falsifiable it is not science.  

"Scientists Can’t Replicate AI Studies. That’s Bad News"

We're with Popper and Feynman on the overarching premise: If what you're doing isn't falsifiable, if what you're doing isn't replicable, what you're doing isn't science.
And if what you're doing was funded by the public in any way the law should consider the resulting code to be owned by the public.
There, three different concerns dispensed with in two sentences.
Next!

The Next Time Someone Tells You Economics is a Science Remind Them of Mendeleev

From the Royal Society of Chemistry:

What is a mark of a great scientist? Good scientists discover new information and make sense of it, linking it to other data. They may go further by giving an explanation of this linked data which, maybe not immediately, other scientists accept as a correct explanation. However the outstanding scientist goes further in predicting consequences of his ideas which can be tested. This boldness identifies the great scientist if the predictions are later found to be accurate. One such person was Russian chemist Dmitri Mendeleev.....

Nitrogen Upgraded, Potash Target Lowered; Ununquadium Decayed (AGU, CF; TRA; POT)

To my mind one of the goals of science or investing should be enough mastery and understanding to enable prediction. The greatest example in science was probably Dmitri Mendeleev's creation of the periodic table and his insight that he should leave spaces for elements not yet discovered.
His prediction of the properties of gallium, germanium and scandium contrasts with pseudo-science in that it is testable.

If you ever want to piss an economist off, tell them that just because they use a tool of science (mathematics), that alone doesn't make economics a science. Science is falsifiable. Mendeleev had a swing-and-a-miss on the atomic weight of tellurium, the prediction was falsified, showing that this is a true science.
Ununquadium is element 114, discovered in 1998. We're now up to 118, ununoctium, with a gap at 117. The prediction of the properties of the undiscovered element includes a half-life of 3 nanoseconds.

This ramble was triggered by a discussion last night on alternatives to gallium (in CIGS) and tellurium in CdTe thin films. It was the first time I realized an argument could be made that Mendeleev is the father of thin-film solar. Continuing our trip through the periodic table, on to the nitrogen story...
 And many more, use the "search blog" box, upper left if interested.

"Dollar Puts Finishing Touches on Best Week Since November 2016"

From Marc to Market:

The US dollar's recent gains have been extended, and it is having one of its best weeks since November 2016. The Dollar Index is up 1.7% for the week, as US session is about to start. Though it took this week's gains to change market's narrative, the fact of the matter, as we have pointed out is that April is the third consecutive month in which the Dollar Index fell in only one week. That translates into rising 10 of the past 13 weeks.

A combination of market positioning, such as the speculative record net long euro position in the futures market as of April 17, rising US interest rates, and diverging economic performances (data surprises indices) seemed to have spurred the move. Although in some circles, the dollar's "exorbitant privilege" may still be discussed, the US interest rate premium over Germany has never been higher. The interest rate premium over JGBs is sufficient to begin enticing Japanese asset managers to boost their unhedged allocation.

There are three drivers of the rise in US rates: Federal Reserve rate hike intentions, rising inflation expectations, and supply considerations. Suffice it is here to share three observations. First, next week there is a reasonably good chance that the core PCE deflator, the Fed's preferred measure, will reach the 2% target for the first time in around five years. Second, Treasury announces the quarterly refunding details next week. The size of each offering may increase, including the TIPS (unlike the previous quarter). Third, the market is confident of a June Fed hike and a statement next week that is more confident (hawkish hold).

The large euro option strike yesterday at $1.22 proved useful in navigating the price action. We suspect euro's sell-off provided the lens to understand Draghi rather than something Draghi said the spurred the price action. He acknowledged some disappointing data throughout the area and suggested this rather than monetary policy per se was the subject of the council's discussion. This should not have been surprising. Monetary policy is on auto-pilot until September. There is no external urgency to announce the post-September strategy, which the market has come around to expect further tapering.

Draghi stressed that the expansion remained solid and broad-based. Today's data will not disappoint. Spain and Austria reported a 0.7% expansion in Q1 ( 0.7% and 0.9% in Q4 18 respectively). France was on the low side with a mild 0.3% rise, which is probably more aligned with the trend growth than the 0.7% pace seen in Q4 17. Germany reported another decline in unemployment in April, though by the least since last June.

The UK disappointed. Most had been looking for 0.3% expansion in Q1. The risk was understood to be on the downside, but today's 0.1% report, on the back of a contraction in services in February. Over the past week, the odds of a BOE rate hike at the May 10 meeting has been scaled back, and it has now been largely pushed back into Q3. This has weighed on sterling. Since falling below $1.40 at the start of the week, it has been unable to resurface it, including the last test yesterday. It is now testing $1.38. A break of $1.37 could signal the completion of a double top pattern that would project toward $1.30, which is where sterling carved a base last October and November....MORE

"The Next Threat Stalking American Farmers Is the End of Cheap Money"

From Bloomberg, April 24:

• Highest interest rates in five years signal more spending cuts
• Fed moves are new blow to agriculture after years of crop glut

American farmers have managed to stay afloat despite years of shrinking crop values, the lowest incomes since the recession and a budding trade war with China. Now, they’re feeling a new squeeze -- borrowing money is getting more expensive as interest rates rise. For some, it may be fatal.
“Commodity prices stink, and they’re set to stink for a long time,” said Jason Barnes, 50, who has 400 head of cattle and farms 1,300 acres of corn, wheat and sunflowers about 35 miles (56 kilometers) north of Pierre, South Dakota. “We’ve been able to survive because of cheap money. You raise rates high enough, it will have a huge impact on people’s ability to continue farming."

The Federal Reserve is tightening credit as the economy shows signs of strength, ending a prolonged period of low interest rates in the wake of the financial crisis. As a result, banks pushed the fixed rate on U.S. farm loans to a five-year high of 5.6 percent in the fourth quarter, up from 5.3 percent a year earlier, Fed data show. With more increases expected through 2019, farmers may see their thin profit margins evaporate.

For Barnes, a former banker who took over his father’s farm in 2012, the increase means he is spending $3,000 more than last year on his $350,000 operating loan. That’s money he won’t spend on hiring local workers to handle maintenance or repairs on things like watering systems, fences and cattle pens, as he normally would. If rates keep rising, he could be paying an additional $5,000 in interest by 2020.

“It’s going to get difficult as the Fed keeps raising rates,” said Jerry Catlett, president and chief operating officer of Bruning State Bank in Bruning, Nebraska, about 100 miles southwest of Omaha. Catlett already is factoring in higher debt burdens this year for farmers when assessing their creditworthiness, which means some will get smaller loans or none at all, he said.

Income Slides
Net farm income will drop in 2018 for the fourth time in five years, to $59.5 billion, down from a record $123.8 billion in 2013 and the lowest since 2006, according to the U.S. Department of Agriculture. If higher debt costs force farmers to sell land or quit, that could hurt rural communities that rely on those businesses for jobs and tax revenue.

“It’s people who aren’t buying tractors or pickups, or working on their house or going to a restaurant," said Mike Yackley, who manages the BankWest Inc. branches in Selby and Onida, South Dakota, separated by 60 miles on Highway 83. The towns, in the north-central part of the state, have a combined population of 1,300....MUCH MORE

HT ZeroHedge

Over the years we've pointed out how the situation would probably play out. Here are a couple posts from June 2011:

"Farm Debt and the Farm Real Estate Bubble"
Taking on debt for productive assets is bondage.
Taking on debt for purposes that don't produce a return is slavery.
In the farm biz the K.C. Fed is already warning member banks not to loan against inflated land values.
They should also beware of loans against top-tick cash flows.

Betting the Farm: Debt Brings Risk of Losing it All
The risk for farmers is the same as that faced by the U.S. government.
It's not the debt per se, it is the cost of servicing it. Low interest rates seduce borrowers into taking on more debt than they should because the current interest cost is manageable. Should rates increase the proportion of cash flow that must go to debt service can crowd out any other use....

The numbers can get into eight figures, here's one at $7 million and it's far from the largest:
Big farm insolvency plays out in state court

And another:
Juggernaut McM Inc. farm ends in epic fail

...Agweek reported that on Feb. 10, 2017, McM Inc. filed for Chapter 7 bankruptcy: not reorganization, but total liquidation. On March 10, 2017, McM Inc. listed debts of $49.7 million against assets of just $10.2 million. One "secured" creditor is BMO Harris Bank of the Chicago, Ill. BMO is a subsidiary of the Bank of Montreal in Canada....

Pepe Escobar — Why Europe is afraid of the New Silk Roads

The author of this piece, Pepe Escobar, brings some pro-level analytical chops to the geopol/geo-econ biz.
For example when the Western press was borderline giddy at the prospect of a people's revolt in Iran last December and January, Escobar was writing this at the Asia Times:

Why there won’t be a revolution in Iran

To date his analysis seems the more accurate as the Mullahs have remained in power.
One serious critique is his tendency to see conspiracy theories where simpler explanations of events might suffice.

However, that being said, the U.S. and EU did finance the Maidan Revolution that did overthrow the duly elected government of  Viktor Yanukovych and U.S. 'diplomat' Victoria Nuland did indeed say "Fuck the EU" when Europe's enthusiasm for the project faltered so in the case of Ukraine 2014 there was an actual conspiracy, but not every event is the result of some behind-the-scenes machinations.

On the other hand, if that Washington D,C. politician is right and the Jews do control the weather, it might explain the ongoing drought in Iran and the haboob that hit Yazd earlier this month:

This probably means notheing anyway:
'If Iran hits Tel Aviv, we'll hit Tehran' defense minister tells Saudi paper

On to China!

From the Asia Times:

Many EU countries are concerned about one-way traffic along the new trade routes Beijing is trying to set up to Europe

It came out as a sort of minor scandal – considering the ’24/7 post-truth news cycle.’ Of the 28 EU ambassadors in Beijing, 27, with the exception of Hungary’s, signed an internal report criticizing the New Silk Roads as a non-transparent threat to free trade, allegedly favoring unfair competition by Chinese conglomerates.

The report was first leaked to respected German business newspaper Handelsblatt. EU diplomats in Brussels confirmed its existence to Asia Times. Then the Chinese Foreign Ministry calmed the turbulence, saying that Brussels had explained what this was all about.

It came out as a sort of minor scandal – considering the ’24/7 post-truth news cycle.’ Of the 28 EU ambassadors in Beijing, 27, with the exception of Hungary’s, signed an internal report criticizing the New Silk Roads as a non-transparent threat to free trade, allegedly favoring unfair competition by Chinese conglomerates.

The report was first leaked to respected German business newspaper Handelsblatt. EU diplomats in Brussels confirmed its existence to Asia Times. Then the Chinese Foreign Ministry calmed the turbulence, saying that Brussels had explained what this was all about.

In fact, it’s all about nuances. Anyone familiar with how dysfunctional Eurocrat Brussels is knows there’s no EU common policy towards China – or Russia for that matter.

The internal report does mention how China, via the New Silk Roads, or Belt and Road Initiative (BRI), is “pursuing domestic political goals like the reduction of surplus capacity, the creation of new export markets and safeguarding access to raw materials.”

That’s a self-evident Chinese rationale inbuilt in BRI from the start – and Beijing never denied it. After all, the concept itself was first floated inside the Ministry of Commerce, way before the official announcements by President Xi Jinping in Astana and Jakarta in 2013.

Perceptions of the BRI vary across myriad latitudes. Central and Eastern Europe are mostly enthusiastic – as BRI is synonymous with badly needed infrastructure projects. So are Greece and Italy, as Asia Times reported. Northern ports such as Hamburg and Rotterdam are actually configured as BRI terminals. Spain is very much interested in the days when the Yiwu to Madrid cargo train will move to high-speed rail.

Essentially, it all boils down to companies from specific EU nations deciding their degree of integration with what Raymond Yeung, ANZ’s chief economist for greater China, describes as “the biggest economic experiment in modern history.”

Watch those Chinese engineers
The case of France is emblematic. President Emmanuel Macron – now on a massive geopolitical PR offensive to crown himself the unofficial King of Europe – actually praised the BRI when he visited China earlier this year.

But nuance, once again, applies: “After all, the ancient Silk Roads were never only Chinese,” Macron said in Xian at the Daming Palace, the residence of the Ancient Silk Road stalwart Tang dynasty for more than two centuries. “These roads”, added Macron, “cannot be those of a new hegemony, which would transform those that they cross into vassals.”

So Macron was already prepositioning himself to steer EU-China relations away and beyond the number one EU grievance; how the Chinese play the foreign trade/investment game.
Macron has been very vocal in prodding the European Commission bureaucracy to toughen anti-dumping rules against Chinese steel imports and forcing EU-wide screening of takeovers in strategic sectors, especially from China.

In parallel, virtually every EU nation – not only France – wants more access to the Chinese market. As much as Macron has touted an optimistic mantra – “Europe is back” – in terms of EU competitiveness, that barely masks the primordial European fear; the fact that it’s China that may be getting too competitive.

The BRI, for Beijing, is all about geopolitical but most of all geo-economic projection – including the promotion of new global standards and norms that may not be exactly those practiced by the EU. And that brings us to the heart of the matter, not enounced [sic] by the leaked internal report; the intersection between BRI and Made in China: 2025....MORE

From Stalin to Putin, the Kremlin's mutually beneficial ties to Russian gangsters go way back.

From The Moscow Times:

The Tragedy of the Age-Old Kremlin-Vor Alliance (Op-ed)

The current geopolitical tussle between Russia and the West has impoverished our debate. Too often, it replaces nuanced understanding with snappy and snarky sound bites.

One example is the description of Russia as a “mafia state.” As if that can encapsulate the complex, sometimes hostile or cooperative relationship between Russia’s rulers, spooks, population and gangsters. Nonetheless, since 2014, the ties between mafia and state have certainly become closer.

For generations, there has been an unusually close connection between the underworld and "upperworld" powers. Stalin carried out bank robberies and piracy with mobsters such as the infamous Simon Ter-Petrossian — or “Kamo,” as he went by in criminal and revolutionary circles — in part to raise funds for the Bolshevik revolution.

The Cheka political police recruited bandits, and later Stalin would coopt vory — “thieves,” members of the professional criminal subculture — to be the enforcers, foremen and even guards of the Gulag slave-labour camps.

In the twilight years of the Soviet Union, organized crime was part of the connective tissue holding corrupt Party officials and the barons of the black market together. And in the anarchy of the 1990s, the distinctions between mobsters, entrepreneurs and officials were often more theoretical than real.

Of course, when the little-known Vladimir Putin was campaigning for the presidency in 1999-2000, he promised law and order, and many believed him. I spoke to one vor who took to keeping a packed suitcase under his bed in case he had suddenly to head to the airport ahead of an arrest warrant.
But he never had to.

In hindsight, given Putin’s crucial role in the St. Petersburg mayor’s office as its ambassador to the city’s underworld, and the powerful Tambovskaya crime group in particular, we should not have expected him necessarily to take on the gangsters.

Instead, he domesticated them. The word went out, routinely communicated through earnest conversations between criminals and the police officers meant to arrest them, that there was a new social contract.

Criminals could continue to be criminals; the police would continue to police them. But if at any point the vory looked as if they were posing any challenge to the state, then they would be treated as enemies, and life would get very hard. The criminals adjusted very quickly to this new world, one in which the state had reaffirmed its status as the biggest gang in town.

During the Second Chechen War, the Chechen gangs across Russia largely abandoned Chechnya to its fate. And more generally, the indiscriminate car bombings and drive-by shootings, such a feature of the wild 90s, and symbols of a state unable to control its streets, ended....MORE

"US Reprieve for Rusal Does Not Relieve President Putin of Fatal Choice for Oleg Deripaska"

From Dances With Bears:

There are two reasons why  the aluminium metal markets are not making long-term bets on the price of the metal, the alumina required to make it, and the share prices of the metal producers, including Russia’s aluminium monopoly United Company Rusal. The first reason is that the US Treasury Secretary Stephen Mnuchin (lead image, right) has decided to eliminate Rusal’s controlling shareholder, Oleg Deripaska (left), but leave Rusal to carry on its business without him.  The second reason is that President Vladimir Putin cannot make up his mind on whether to sacrifice Deripaska for the good of the company and Russia’s metal industry.  If Putin refuses Mnuchin’s deal, the US sanctions to put the company out of business, announced on April 6, will be enforced in full.  Pricing the consequences now of then is next to impossible.

According to Mnuchin’s statement on Monday, “RUSAL has felt the impact of U.S. sanctions because of its entanglement with Oleg Deripaska, but the U.S. government is not targeting the hardworking people who depend on RUSAL and its subsidiaries. RUSAL has approached us to petition for delisting.  Given the impact on our partners and allies, we are issuing a general license extending the maintenance and wind-down period while we consider RUSAL’s petition.”

On Tuesday Putin responded  through his spokesman  Dmitry Peskov. “so far it is difficult to say how consistent our American counterparts are in their approach. We still consider these sanctions to be illegal. We believe that in relation to a single company such actions are akin to asset grabbing.” 

That is Deripaska himself doing the talking. The only man in Russia who thinks that state recovery of a heavily indebted asset from an oligarch is an asset grab is Deripaska. Putin has yet to disagree.

Mnuchin has given Putin six months until October 23 to make up his mind.


The President has been masking his indecision by spending an unusual amount of time away from the Kremlin, at the official dacha at Novo-Ogaryovo. He’s been there now since April 15.  In April a year ago, Putin spent just one day at the dacha. Starting with his choice of a new prime minister and government, due after Putin’s inauguration on May 7, there is much more for the president to decide this year than last year; he wants to do so without as many eavesdroppers as there are in the Kremlin.
This month too, the Kremlin website has been publishing unusually little of Putin’s daily schedule....MUCH MORE

Armenia is having a 'color revolution.' So why is Russia so calm?

From the Christian Science Monitor:

Unlike post-Soviet revolutions in Ukraine, Georgia, and elsewhere, the current protests in Armenia have not alarmed the Kremlin, even though they look set to bring greater democracy. That is likely due to the lack of geopolitical stakes involved.

April 26, 2018 Moscow—It looks like the typical “color revolution.”
Pro-democracy crowds take to the streets in the capital of some post-Soviet republic to peacefully protest the political manipulations of their Moscow-friendly ruling elite and demand sweeping reforms to the corrupt, oligarchic economic system they've grown to despise.

That's what's happening right now in Armenia. For over two weeks, huge, mostly youthful crowds have been holding rolling demonstrations in the center of Yerevan and other Armenian cities, reacting to an attempt by two-term President Serzh Sargsyan to extend his grip on power. Most previous “color revolutions” in the former Soviet Union have been similarly triggered by fraudulent elections or other duplicitous abuses of power.

But unlike those previous cases, the massive popular upsurge in Armenia went almost unnoticed in Western capitals for 10 days, until Mr. Sargsyan suddenly bowed to the street and stepped aside last Monday. Moreover, Russia, which is home to more than 2 million Armenians and has been obsessed with the supposedly dire threat of “color revolutions” for years, was more alert but surprisingly calm.

Things are still up in the air on the streets of Yerevan, and the tense drama may well end up striking a major blow for democracy and the power of civil society. But there are few, if any, geopolitical stakes in Armenia. While the government might become more democratic, Armenia's reliance on Russia for trade and security will not change. And that is the main reason for the almost disinterested shrugs on all sides.

“We may await wide-scale changes in domestic policies. New people may come to the top, with a whole new attitude,” says Alexander Iskandaryan, director of the independent Caucasus Institute in Yerevan. “But this revolution has an entirely internal genesis. Foreign policy isn't even a subject for discussion.”

'Russia will not intervene'
The tiny, landlocked republic of Armenia is a traditional Russian ally, a member of the Moscow-led Eurasian Economic Union and military Collective Security Treaty Organization, and wedged between its long-standing enemies Turkey and Azerbaijan. So, it depends heavily on Russia for its national security.

Though chronically poor by Western standards, over half of Armenians have post-secondary education. Large numbers go abroad for permanent or temporary employment. There are huge Armenian diasporas in Russia, North America, and Europe, and contacts are intense. The country of around 3 million people has enjoyed about 7 percent annual growth in recent years, but its GDP of around 11 billion is modest and heavily dependent on around $500 million in annual remittances from Armenians working abroad, mostly in Russia.

The recent street revolt came in response to Sargsyan's attempt to “pull a Putin” by changing the constitution to vest the lion's share of authority in the parliament, then getting his ruling Republican party to name him prime minister. Though his party did appoint him prime minister, he only lasted six days before resigning under popular pressure.

The largely spontaneous eruption ended up with Nikol Pashinyan, whose Civil Contract party holds just 8 percent of the seats in the parliament, as its leading symbol and most likely beneficiary. He is demanding that the parliament choose a “people's candidate” who is not from the ruling Republican Party when it meets to decide on a new prime minister on May 1. Beyond that, he demands new elections and sweeping political reforms.....MORE

He's demanding a bit more than that:
Nikol Pashinyan - Either I'm Elected Prime Minister of Armenia or No One Is

Seattle hits 18 months as nation’s hottest housing market with no signs of slowing down

Following up on the quick hit factoid on Seattle's construction crane population here's another effect of having Amazon in the 'hood.
(reinvigorated Microsoft doesn't hurt either)

From GeekWire:

Seattle has held the title of the nation’s hottest housing market for 18 months and counting, as continued population growth powered by the region’s tech boom and few available homes keep prices soaring.

According to the latest update from the Case-Shiller national home price report, Seattle home prices in February rose 12.7 percent over the same period a year ago. The report calls out Las Vegas and San Francisco as the second and third fastest-rising housing markets and the only other markets with double digit annual gains.

The report follows data released by the Northwest Multiple Listing Service earlier this month showing the median price for a home in Seattle jumped to $819,500 in March, gaining nearly $43,000 in value over last month’s record numbers. Should this pace continue, the median sale price could creep up close to $1 million toward the end of the year.

According to GeekWire contributor Tim Ellis’ Seattle Bubble, home prices are up close to 24 percent over the 2007 peak, prior to the recession. The Seattle Times reports that home prices have risen 85 percent since the local housing market bottomed out in 2012.

Nationwide, home prices rose 6.8 percent in the last year. Prices nationally are up for the past 70 months, dating back to May 2012.

“The kind of sustained, rapid home price growth we’ve been seeing in Case-Shiller and other indices for the past few years is enough to give home buyers of all stripes a headache,” Zillow Chief Economist Dr. Svenja Gudell said in response to the report. “But that pain is especially acute for first-time and lower-income buyers at the bottom end of the market in search of entry-level homes that are appreciating the fastest, in large part because they are in the most demand.”...MORE

Related at California Sunday, March 29:
“Seattle real estate is so expensive, even the houses are moving out!”

Why is “The Bond King” Gundlach Telling Me to Short $FB?

In early pre-market trade the stock is up  $10.93 (6.84%) at $170.62. The Fly wrote the piece below prior to FB's earnings release.
Have I ever mentioned how dangerous it is to short anything other than frauds in a bull market?
(why yes, yes I have)
  Let's check in with the Fly at iBankCoin: 

FUCK — THE ANIMALS HAVE ESCAPED AND CRASHED THE MARKET

Oops, wrong link. He can get a bit emotional. Here he is after calming down a bit

Last year Gundlach told everyone at the Sohn conference to go long emerging markets, short SPY. I could deal with that rec and accept it, even from a disgusting, filthy, bond guy — such as himself. But this year he’s gone too far.

At the Sohn conference this afternoon he told people to short Facebook and to get long oil stocks.

The details are as you would expect — Facebook is a public relations nightmare, an evil corporation spawned on earth to spy on and control the populous. I love how FUCKED FACES like Gundlach are just learning about this now in 2018. We all knew Facebook was doing this and those of us who were keen to their schemes avoided the platform altogether.

All of the socials are honey pots to fetter out dissidents....MORE

Which was followed by: 

TIME TO GET BACK INTO SHITCOINS — BRITAIN IS A CLOWNISH POLICE STATE

As I said, emotional.

"Shipping's Baltic Exchange turns to grains, gas and even air freight"

Action baby, action!
From Reuters:

The Baltic Exchange, owned by Singapore Exchange, plans to launch new indexes for grains, gas and potentially air freight in its biggest shake-up for more than a decade, according to executives and two sources familiar with the matter. 

The London-run company operates the world’s leading shipping freight index, which tracks rates for vessels transporting dry bulk commodities including iron ore and coal. It is looking to diversify its business after a near decade-long shipping downturn hit trading volumes and profitability.

“We are only going to make real money through volume, so we have got to increase our reach,” said Baltic Exchange Chief Executive Mark Jackson. “Everything we are doing now is about increasing our reach.”

For its listed owner, the far larger Singapore Exchange (SGX), the new products are part of a drive to expand its own global presence and increase its market share, particularly in Asia.
The centuries-old Baltic told Reuters it was developing two new grain freight indexes as well as a liquefied petroleum gas (LPG) index.

The grain indexes, which the company aims to launch this year, will be tradable instruments, allowing investors to take a position on freight rates at a point in the future, known as forward freight agreements or FFAs.

The new products will target users including gas and grains players, moving the company beyond its traditional shipping base, which it hopes will help counter future market shocks.

Some of the biggest grains traders such as U.S. groups Cargill [CARG.UL], Archer Daniels Midland, Bunge and China’s COFCO International have been consulted on the development of the new grains indexes, according to the two sources, who declined to be named, citing market sensitivity....MORE

Société Générale's Albert Edwards Says "My Reputation For Calling Stocks Is In Tatters"

Well duh. He's been stubbornly fighting the central banks for a decade, a trait he shared with fellow bear David Rosenberg until Rosie flipped a few years ago and caught the last 35% or so of the up move.
But it isn't for the equity calls that Albert gets paid, and they're not why pros still listen to him:

The House Fed has thwarted his House Stark at every turn.
Now he's getting ready to roll but it may be too late for him.

"I fought. I lost. Now I rest. But you, Lord Snow… you'll be fighting their battles forever."

Albert addressing another standing room only investment conference crowd

Last seen in "Société Générale's Albert Edwards: Winter Is Coming".

Albert's twenty-year bullishness on bonds and what declining yields tell us about the underlying economy is why SocGen keeps him around.

Here he is via ZeroHedge:

SocGen's permabear skeptic Albert Edwards is best known for one thing: predicting that the financial world will end in a deflationary singularity, one which will send yields in the US deep in the negative, and which he first dubbed two decades ago as the "Ice Age." He is also known for casually and periodically forecasting - as he did a few weeks ago in an interview with Barrons - that the S&P will suffer a historic crash, one which will send it back under the March 2009 low of 666.
In this context, a couple of recent events caught Edwards' attention.

First, speaking of the abovementioned Barron's interview, Edwards was taken aback by one commentator who took the SocGen strategist to task for his relentless bearishness. Indirectly responding to the reader, in his latest letter to clients Edwards writes that "it’s good to have a little humility in this business because it’s so darn humiliating when forecasts are proved wrong. And the bolder the forecast, the more humiliating it is!" He continues:

That is one reason why most commentators on the sell-side never stray too far from consensus. When I was an avid consumer of sell-side research some 30 years ago, there was one  thing about the macro sell-side that I truly marvelled at – namely the analysts’ ability to totally reverse a view and pretend that had been their view all along! In the days before the internet and email, I had to rifle through our storage cupboards to find the evidence of what were often 180 degree handbrake turns. In the internet age, there is no hiding any more. 

One of the most levelling experiences at the end of an article or interview about my thoughts is to scroll down and read some of the readers’ comments. In my case, they often marvel that I am still in any sort of employment at all! Some are witty and make me smile -– like the one below in response to a recent interview I did with Barron’s.

Edwards refers to the comment titled "‘Prescient as a Broken Clock?" authored by one Gordon Gould from Boulder, Colorado who writes:

“Barron’s notes that Société Générale’s Albert Edwards is a permabear (“S&P 500 Could Still Test 2009 Lows,” Interview, April 7). However, your readers would surely like to know how some of his previous calls have turned out. A quick Google search revealed that nearly five years ago, Edwards called for the Standard & Poor’s 500 index to hit 450 and gold to exceed $10,000. While even a broken clock is correct twice a day, perhaps in Edwards’ case, we’re talking about a broken calendar on Saturn, which takes about 29 years to orbit the sun.”

Albert summarizes his response to this comment eloquently, using just one word: "ouch." Hit to his pride aside, Albert asks rhetorically "Where did it all go so wrong?" and explains that in the Barron’s interview, "I explain why in my Ice Age thesis I still expect US equity prices to fall to new lows in the next recession." To be sure, this is familiar to ZH readers, as we highlight every incremental piece from Edwards, because no matter if one agrees or disagrees, he always provides the factual backing to justify his outlook, gloomy as it may be....MUCH MORE 

Over the years we've had some fun at Albert's expense. As noted in a 2017 post:

Every time I am asked why we post on Mr. Edwards "when he's been wrong so often" I debate whether to explain or just give a glib answer.
The flippant rationale would be we get to go with headlines such as:

Société Générale's Albert Edwards Descends Into A Nightmare World of Dream Demons and Market Depravity
Société Générale's Albert Edwards: "Many Think I am Mad..."  
Société Générale's Albert Edwards Sees Blue Skies, Sunshine, the Lame Shall Walk Again
Of course it's possible I have misinterpreted the meaning of 

"the US economy is on crutches, and they are about to be kicked away"

Société Générale's Albert Edwards Has Some Troubling News He Reluctantly Shares
Société Générale's Albert Edwards Not His Usual Jolly Self (II)
Société Générale's Albert Edwards: "I Have Been Wrong – I’ve Been Too Bullish"
It May Be Time To Put Société Générale's Albert Edwards On Suicide Watch
Société Générale's Albert Edwards: Cry Havoc and Let Slip the...Ah Screw it

And many, many more.
The straight-up answer is: I can't think of anyone else who nailed the deflationary bias in credit markets as well as he has for as long as he has, pretty much the last 15-20 years.
And as far as equities go, absent the extraordinary measures of the world's central banks the landscape would look very, very different.

The biggest criticism you can lay on the guy is he didn't realize what he was up against re: the powers that be.
Plus that whole Albert-in-the-bathtub period was just stupid.
You do have to be careful you don't personally get into a David Koresh/Jim Jones-Drink-the-Kool-Aid frame of mind when gazing upon the dark side, whether Albert or Ambrose Evans-Pritchard or Jim Chanos. I mean it's okay to play around with melancholy:

Music For Albert Edwards. On A Cold Day. In February
In F flat minor.* 
And it's raining.
Season's Greetings From Société Générale's Albert Edwards (Nov. 14, 2012)
 Expect the New Year to bring nothing but disappointment....

But be attuned to when to take Mr. Edwards with utmost seriousness. 
From:
UPDATED *****Alert***** Société Générale's Albert Edwards Bearish *****Alert***** (Sept. 6, 2011)
We passed a three year anniversary yesterday.
On September 5, 2008 we posted "Meltdown"-Société Générale" which linked to Albert's research note of a couple days earlier:

***Alert****Economic and equity market meltdown imminent****Alert***

A good call.

On September 7, 2008 Fannie Mae and Freddie Mac were placed into conservatorship.
On September 14, 2008 Merrill Lynch agreed to be acquired by Bank of America to avoid a Reg. T shut-down when markets re-opened.
On September 15 Lehman filed their bankruptcy petition.
On September 16 AIG became a 79.9% subsidiary of the U.S. Treasury.

Within 10 more days the Nation's largest thrift, WaMu was seized and five days later Wachovia gobbled up.

Good times, good times.

So take what you can use and make dumb headlines with the rest

"Fraud police quiz Bollore for second day over Africa graft allegations"

We've looked at M. Bolloré a few times, the last being in December 2016's "Follow ‘Buffett of France’ for a Three-Year Double (BOL.France) (BOIVF)" with the stock in his namesake company (BOL:Paris) at €3.29.
Things were looking to be on track, with the shares hitting €4.75 in late January of this year, up 44% with 23 (now 20) months to go.
Until the recent unpleasantness. €4.10 last.

Bolloré was also chair of media giant Vivendi but we were more interested in his forays into Bolivian lithium, links below.

From Reuters:

French fraud police questioned tycoon Vincent Bollore for a second day on Wednesday, a judicial source said, over allegations his company undercharged for work on behalf of presidential candidates in Africa in return for port contracts.

Bollore, whose logistics empire is a powerhouse in former French colonies across West Africa, is suspected of corrupting foreign public officials and complicity in corruption.
His lawyer has denied any wrongdoing by Bollore.

Shares in Bollore fell as much as 3 percent on Wednesday after shedding 6 percent in the previous trading session.

The probe involves two separate cases, one in Guinea and the other in Togo.
Groupe Bollore confirmed on Tuesday its African business interests were under investigation over the billing for work carried out in Guinea and Togo between 2009 and 2010 by its communications business Havas Worldwide.

The group also denied any wrongdoing.

Bollore, 66, is being quizzed alongside Groupe Bollore Chief Executive Gilles Alix, head of the international division at advertising group Havas Jean-Philippe Dorent, and Francis Perez, the head of Spanish hotel and casino firm Pefaco, a judicial source said.
“The four are still in custody,” the judicial source said....MUCH MORE

We first took an interest in Monsieur Bolloré when he was making a Bolivian lithium play back in 2009:

France's Bollore opens talks over Bolivia's lithium (BOLL: Paris)

That didn't pan out but there were other endeavors that rose above the mundane:

Lithium: "French billionaire launches $1.5B EV battery play" (BOLL: Paris)

and:
French Billionaire Bolloré Making a Move in London Electric Car Sharing (BOLL.Paris)

Lithium for 4.8 Billion Electric Cars Lets Bolivia Upset Market (SQM; BOLL: Paris)

Short Seller Muddy Waters Goes Long a Battery and Electric Vehicle Play

"The World’s Longest Multi-Asset Momentum Investing Backtest!"

Two quick points:

1) When implementing momentum as a strategy always, always keep in mind the little "Trend, Friend, Bend, End" rhyme. If the momo mamas start moving toward the exits the resulting countermoves can be disastrous for folks still on the dance floor.

2) Those equity databases going back 200 years have a whole lot of problems starting with survivorship bias, small sample sizes, reliance on financials (banks), i.e. no wooden turnpike companies, failed canals... etc. etc.
In his monumental “COMMON-STOCK INDEXES 1871-1937″ Mr. Cowles is quite explicit as to the reasons he and the Commission didn’t go further back than 1871. (pg. 4) 506 page PDF hosted at Yale.
I've mentioned "Common Stock Indexes..." and the Cowles Commission a few times, usually when referring to one of the industrial companies, New York Guano but also because of the Cowles Foundation's connection to some Nobelists:

Robert Shiller
Tjalling Koopmans
Kenneth Arrow
Gerard Debreu
James Tobin
 Franco Modigliani
Herbert Simon
Lawrence Klein
Trygve Haavelmo
Harry Markowitz

Not as prolific as Cambridge's Cavendish Lab, 29 Laureates, mainly in physics, at last count but then the econ version isn't one of the original Nobels and hasn't been around as long.

From Alpha Architect:

As evidenced by the image below, interest in momentum research has taken off since the original 1993 Jegadeesh and Titman paper:

 

Source: “Two Centuries of Multi-Asset Momentum (Equities, Bonds, Currencies, Commodities, Sectors and Stocks)” https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2607730

Most of the research on momentum is repetitive and reaks of data torture, but Geczy and Samanov have been conducting some fascinating out of sample research on the topic.

We have discussed prior research by Gezcy and Samonov here on U.S. equity momentum over 200 years of data. The evidence is similar to the academic finding that, on average, intermediate-term winning stocks continue winning, while intermediate-term losing stocks continue losing–otherwise known as a continuation of momentum for stocks.⁽¹⁾

But studying 200+ years of equity data was not enough for Gezcy and Samanov — they have a new paper titled, “Two Centuries of Multi-Asset Momentum (Equities, Bonds, Currencies, Commodities, Sectors, and Stocks).”

This paper builds on the original paper (mentioned here), but adds (1) other asset classes and (2) examines time-series momentum. The paper also looks at how momentum performs in other asset classes and international equities. (similar to what Asness, Moskowitz, and Pedersen show in, “Value and Momentum Everywhere:” the momentum premia exists in international equities as well as other asset classes.

To follow-up on the “Value and Momentum Everywhere” study, this paper digs into how momentum works both within and across asset classes, over a longer time-period. The image below gives a graphical depiction of the number of asset classes studied in the paper across time.

 

Source: “Two Centuries of Multi-Asset Momentum (Equities, Bonds, Currencies, Commodities, Sectors and Stocks)” https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2607730

Below we dig into the results from the paper.

The Results

First, the paper examines how momentum works within (and across) each asset class. This is done by sorting securities into a relative “winner” and a relative “loser” portfolio by using the classic 12_2 momentum screen — this is the twelve-month momentum of each security excluding the last two months (so 10 months of returns). Within each universe, the top third are deemed “winners” and the bottom third are deemed “losers.”

The table below examines the returns for each asset class to the Winner, Loser, and Winner minus Loser portfolios....MORE

Machine Learning Guru Pedro Domingos on the Arms Race in Artificial Intelligence

From Der Spiegel: 

April 16, 2018:
The Power of the Algorithms
In an interview, best-selling author and machine-learning expert Pedro Domingos discusses the global competition to take the lead in artificial intelligence, the advance of autocrats and the threats modern technology presents to Western democracies.

It's a quiet hallway in the computer science department at the University of Washington in Seattle. To the right, young software engineers sit in front of their laptops in the windowless, artificially lit rooms. To the left, computer science professor Pedro Domingos opens the door to his office, which has a view of the massive trees on campus.

Domingos' book "The Master Algorithm," about the technology of artificial intelligence (AI), made him famous and is also considered a standard reference work. The best-selling book, published in 2015, describes how machines that can learn are changing our everyday lives -- from the social networks and science to business and politics and right up to the way modern wars are waged. The book drew praise from Microsoft founder Bill Gates and Google CEO Eric Schmidt.

Recently, a third prominent figure noted that he'd read the book: Chinese President Xi Jinping. When state television broadcast his new year's speech this year, viewers discovered that next to Marx's "Capital" and "Selected Works" by Mao Zedong, he also has a copy of "The Master Algorithm" on his bookshelf.

"The book is much read in China," says Domingos. "That's probably why Xi and his people became aware of it. It's possible that it has now become even more popular." The book has also been published in Russian, Japanese, Korean and in many other languages, but not yet in German.
DER SPIEGEL recently sat down with Domingos in his Seattle office for an interview.

---

DER SPIEGEL: Mr. Domingos, Russian President Vladimir Putin says that he who leads in artificial intelligence will rule the world. Is that true?
Domingos: I agree with him, realistically. Artificial intelligence is a very powerful technology, and there is an arms race going on. Fast forward 20 years into the future and one of the players could have won the race. China is more likely to win than Russia is, although Russia has a lot going on. So, we could end up in a world that China may not formally control, but they effectively do because they rule the cyberworld.

DER SPIEGEL: Why is this tantamount to world domination?
Domingos: AI lowers the cost of knowledge by orders of magnitude. One good, effective machine learning system can do the work of a million people, whether it's for commercial purposes or for cyberespionage. Imagine a country that produces a thousand times more knowledge than another. This is the challenge we are facing.

DER SPIEGEL: Chinese President Xi Jinping is very interested in artificial intelligence. Did you know before his new year's speech that your book was on his shelf?
Domingos: I didn't know before, but I found out pretty quickly. This is something that Xi Jinping regularly does. These books are on his shelf to send a message, and the message that I think he is sending by having my book is, "We really believe in artificial intelligence." So, when I found out about it I was not extremely surprised given that the Chinese government had announced before that it wants to dominate in AI.

DER SPIEGEL: Which sentiment prevailed when you saw your book there -- a sense of recognition or one of concern?
Domingos: It was both exciting and scary. Exciting because China is developing rapidly, and there are all sorts of ways the Chinese and the rest of the world can benefit from AI. Scary because this is an authoritarian government, going full tilt on using AI to control their population. In fact, what we are seeing now is just the beginning. Like any technology, AI gives you the power to do good and evil. So far, we have been focusing on the power to do good, and I think it is enormous. But the power to do evil is there, too.

DER SPIEGEL: Is it by coincidence that two autocrats like Xi and Putin take such an interest in AI?
Domingos: When I travel around America, Europe and Asia, it is interesting to see how differently people feel about this technology. The picture coming out of Silicon Valley is a very optimistic one, informed by libertarian ideas. The very opposite is true for Europe: I just came back from a conference in Berlin where I was struck by the sheer pessimism. Every other session was about: "Oh, we have to fear this. Who knows what may be going on here?" Until someone made a point that was really on the mark -- as the conference was called "Humanity disrupted." He asked: "Why don't we call the conference 'Humanity Enhanced'?" Sure, AI brings disruption -- but we are being much more enhanced than disrupted.

DER SPIEGEL: And China and Russia?
Domingos: They unfortunately see the authoritarian and less the libertarian potential. Xi Jinping and Vladimir Putin ask themselves: "What could we do with this technology?"

DER SPIEGEL: Are we Europeans losing out to the autocrats?
Domingos: There are many AI applications being used in the U.S. and China, be it on the local or the national level, in medical research or traffic management. Less so in Europe. So, yes, Europe is missing out to an extent, unfortunately.

DER SPIEGEL: Your book has been translated into Russian and Chinese, but not into German or French.
Domingos: My literary agent told me: "You are going to sell this book all over the world, but not in France and Germany." And that's what happened. "The Master Algorithm" was sold to Japan, China, Taiwan, South Korea. There are Polish and Russian translations. But my agent was right when he said: "The Germans and the French don't like these things."

DER SPIEGEL: Your book warns of the limitations, even dangers of this technology if it ends up in the wrong hands. Aren't we worried for good reasons?
Domingos: There are dangers, and in terms of regulating AI, Europe is ahead of the U.S. Unfortunately, there is too much regulation without understanding the technology that is being regulated.

DER SPIEGEL: What do you mean by that?
Domingos: The European Union's General Data Protection Regulation (GDPR) is putting too much value on the factor of explainability -- meaning why an algorithm decides this way rather than that way. Let's take the example of cancer research, where machine learning already plays an important role. Would I rather be diagnosed by a system that is 90 percent accurate but doesn't explain anything, or a system that is 80 percent accurate and explains things? I'd rather go for the 90 percent accurate system.

DER SPIEGEL: Why can't we have both -- accuracy and explainability?
Domingos: The best learning algorithms are these neural network-based ones inspired by what we find in humans and animals. These algorithms are very accurate as they can understand the world based on a lot of data at a much more complex level than we can. But they are completely opaque. Even we, the experts, don't understand exactly how they work. We only know that they do. So, we should not allow only algorithms which are fully explainable. It is hard to capture the whole complexity of reality and keep things at the same time accurate and simple....MUCH MORE