Thursday, January 29, 2015

London’s FTSE 100: Battling 15 year Resistance Level

Thursday close: 6810.60 down 15.34.
But that was before today's big reversal in the U.S. markets,
From See It Market:
With London’s FTSE 100 Index, the current price area has stood as particularly durable resistance for more than a decade. We are watching to see whether the index can leave a lower high at the start of 2015.
The FTSE includes the top 100 stocks on the London Stock Exchange based on market capitalization. Together, the 100 companies represent more than 80% of the market capitalization of the entire exchange. Thus it has a role similar to those of the S&P 500 Index.
Market bulls have been unable to push the index above the two sets of prior highs — the most recent in 2007 at 6754.10 and the all-time high in late 1999. If the resistance area holds again, the index could start a new retracement process that lasts several months or even persists for years, taking price back to the lower edge of the 15-year range.
FTSE 100 Index Monthly Chart
FTSE resistance levels_ftse 100 index monthly chart
The weekly chart below shows how frequently the index has probed the resistance line during the last two years. Also, since last autumn, price has spent a considerable amount of time below the lower boundary of the weekly channel. This is not something one should see if there is still much appetite for buying.
FTSE 100 Index Weekly Chart
FTSE resistance levels_ftse 100 index weekly chart
The silver lining of a downward forecast is that a retest of the lower price areas around 4,300 or 3,650 could become the platform from which another advance is built — one lasting several years or even a decade....MORE

Shipping: "Baltic Dry Index Death Spirals to Near 30-Year Low"

From Reuters via gCaptain:
The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, spiralled downwards to its lowest level in nearly three decades as rates for all the four vessel types continued to flounder.

The overall index, which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertiliser, was down 34 points, or 5.11 percent, at 632 points, the lowest since August 1986. The index is also seen by investors as an indicator of global industrial activity.

Brokers said the dry bulk market was expected remain in the doldrums due to weak commodity demand at present especially from top global importer China.

“Dry bulk remains under pressure across all segments on the back of very thin spot demand,” Omar Nokta of Clarkson Capital Markets, said.

Weak demand for commodities, such as iron ore, has put pressure on smaller, higher-cost producers and this has taken its toll on the dry freight market.

“We believe that despite softer prices/margins, low cost Australian producers will continue to meet targeted production with negative implications for dry bulk tonne-mile demand,” Wells Fargo Securities analyst Michael Webber said, referring to producers such as Rio Tinto and BHP Billiton....MORE

Venture Capital: "Investors Think Business Insider Doubled Its Value in Less Than a Year"

From re/code:
Last March, Jeff Bezos and other investors who put money into Business Insider thought the news site was worth $100 million.

Now they think it’s twice as valuable. Sources say Business Insider’s newest funding round, led by German publisher Axel Springer, pegs the company’s value at $200 million*. Business Insider’s backers invested $25 million in this round, which means the company has raised more than $55 million since 2007.

The company won’t comment on its valuation or financials, but a person familiar with Business Insider said it generated $30 million in revenue last year, up from around $18 million in 2013.

For context: Lots of digital publishers are raising lots of money! Last summer Vice raised $500 million in a round that valued the company at $2.5 billion, and BuzzFeed raised $50 million at an $850 million valuation. Last fall Vox Media raised $46.5 million in a round that valued that company at $380 million. Oh! And Mashable just raised $17 million as well. No word on that valuation.

Business Insider says it will use the new money to grow in the U.S. and internationally. Last year, the company launched a U.K. edition, and people familiar with the company expect it to look at a German version, likely in conjunction with Axel Springer. The German publisher is already in a joint venture with Washington, D.C.-based Politico and plans to launch a European version of Politico this spring....MORE

It's The Internet, Stupid: "The Real Problem with Public Discourse"

For readers too young to remember, "It's the economy, stupid" was a variant of the line Bill Clinton's #1 strategist for the '92 campaign, James Carville, came up with to motivate and focus the campaign's workers.

From Drexel University's The Smart Set:

"the stamp act sux thanks obama"
From Humphrey Ploughjogger to plowjag666
I distinctly remember when I stopped reading online comments about my essays. For some time I had been reading them on a website of a magazine that published me and allowed unedited comments. To my disappointment, no knowledgeable critic had pointed out errors in my work that I could correct, or made informed arguments that forced me to rethink my position. The commenters seemed more interested in insulting one another. 

Mrpoophispants, for example. The avatar that went with the name showed a wailing baby in diapers. (I have changed the name and image slightly, to protect the guilty). In the comments section under my essay, Mrpoophispants accused the Incredible Hulk (again, I have slightly changed the name) of being like Hitler. No, the green and musclebound Hulk told the baby in diapers, you are like Hitler. It went downhill from there.
I remember thinking: Really, who insults people online while hiding behind the screen name of Mrpoophispants? Around that time I had read about the case of a well-respected dentist who was outed as a notorious online troll. (And you wonder what your doctors are doing, while they keep you waiting — they are writing snarky comments about newspaper columnists and TV anchors). I had also read that online commenters are disproportionately middle-aged and elderly men. This information helped me to imagine my online commenter’s alter ego, his Clark Kent or Bruce Wayne:
Bob Anderson, 64, chuckled to himself, as he settled down in his Snuggies behind his computer, having returned from picking up his arthritis meds at the drugstore. A whole afternoon of anonymous online vituperation against famous authors and other online commentators awaited him. And the best thing about it was, nobody in his life — not his parents, his adult children, his grandchildren, not his neighbors nor the members of his church congregation—knew that Bob Anderson, retired accountant, family man, churchgoer and pillar of his suburban community, was really the infamous scourge of the Internet, that dreaded and admired titan among trolls, Mrpoophispants.
I thought of Mrpoophispants when I read Jonathan Chait’s widely-discussed essay for New York magazine, “Not a Very P.C. Thing to Say,” and Glenn Greenwald’s response, “The Petulant Entitlement Syndrome of Journalists.” For what is worth, I think both get a lot right — but they also get some things wrong.
Unlike Chait, I think that public discourse is threatened less by a resurgence of 1990s-style political correctness than by Internet-enabled anonymity (yes, Mrpoophispants, I’m talking about you). Wearing a mask tends to liberate repressed impulses; that was the whole point of Venetian costume ball masks and the white robes and hoods of the Ku Klux Klan. Allowed to hide their identities, progressives, conservatives, and centrists alike are liable to abandon self-restraint and hoot and shriek from the safety of anonymity in an online mob. Anonymity turns the Internet into the Id Net....MORE

A moral case for bank money

From Magic, Maths and Money:
Finance is a skeleton that supports the development of a healthy society, not a utility that plumbs the economy together. The justification for this observation is historical. Richard Seaford has argued that the culture that emerged in Greece some two and a half thousand years ago, creating a unique approach to science and democratic politics, was a consequence of a peculiar Greek invention; money, a token that signifies trust between citizens. The flowering of European culture, and the genesis of modern science, in thirteenth century Europe followed, and some argue was a consequence of, a period of rapid monetisation of society that initiated the end of feudalism. Similarly, western Europe’s development accelerated ahead of the rest of the world in the seventeenth century powered by financial innovations in the Netherlands and Britain.

Charles Mackay in his classic comparison of England’s South Sea Bubble and France’s, almost simultaneous, Mississippi Bubble, emphasises the different reactions in France and Britain to the credit bubbles. In the aftermath of the crises, the French inhibited the development of private banks but maintained the autocratic political system, whereas the British reformed the political system and enabled the development of finance. The results of Britain’s Financial Revolution were Agricultural and Industrial Revolutions along with the eclipse of France as a global power. For France, dependent on taxation to fund the state, there was the ultimate collapse of the political system in bloody revolution.

Getting the structure of our financial system right is not a trivial matter.

One argument gaining support is that the root of recent problems in finance is the private creation of money by banks, and so the solution is to strip banks of this ability. What this would entail is not clear but a core theme is that transactions would involve minted cash (physical or electronic), not paper money. We can visualise the practical consequence of this in little brown envelopes on pay-day containing coins and Bank of England notes. No bank transfers, certainly not in the foreseeable future, meaning no debit cards at the supermarket checkout and the replacement of cyber-crime by good old-fashioned robbery. This makes concrete part of the problem  Martin Wolf identifies when he makes the observation that "The transition to a system in which money creation is separated from financial intermediation would be feasible, albeit complex."   It might prove impossible to get through the Christmas binge, when there is widespread short-term demand for cash.  Could a computer system cope with the funds transfers associated with Black Fridays and Cyber Mondays without the ability to create money? Banks, in this environment, would come to resemble peer-to-peer lending facilitators and the consequence would be that people who have wealth, or are connected to wealthy networks, could buy expensive things, but for the majority it would be harder to get a mortgage.  While this might sound a bit draconian to the British, Germans still have a preference for cash and traditionally live in rented accommodation, having long connected debts (schulden) and guilt (schuld) and, after all, they have done well economically.

Unfortunately it is not certain that German economic success rests on the German preference for cash. An equally plausible explanation is the structure of the German banking system, which, unlike the British and U.S. systems, is not dominated by private profit seeking banks but has a significant sector of not-for-profit, regional, financial institutions. An IMF paper highlights how countries with this type of financial system, including France and Spain, did not require the massive government bailouts that British and U.S. banks did in 2008-2009. Mutuals and public banks create money in the same way as privately owned banks and so preventing banks from creating money seems to be a rather extreme solution when the problem might be elsewhere.

Calls to prevent banks from creating money to ensure financial stability resemble calls to ban the internal combustion engine to prevent climate change. It would clearly go a long way to solving the problem, in theory, but is totally impractical. One group who would like to see the debate on banking reform focus in on money creation are the banks themselves, because they can be confident that if this is where the debate is centred, nothing will change. Most voters need bank credit just as they need cars....MORE

Fed Tells Markets It Will Be A Patient and Gentle Lover, Markets Puke a Little

From Real Time Economics:

7 Takeaways From the January Fed Statement: ‘The Committee Judges That It Can Be Patient’ 
What caught our eye in the Federal Reserve’s January policy statement released Wednesday.

No Rate Hikes Until at Least June as Fed ‘Patient’
Fed officials have reaffirmed their assurance they are likely to remain patient in considering the timing of the first interest rate increase since 2006. That, according to Yellen, means no lifting rates from zero for at least another two policy meetings.—Pedro Nicolaci da Costa

Fed Upgrades its Assessment of Job Gains, Economic Growth
The Fed is feeling a little better about the state of the job market and economic growth more broadly. The statement says economic activity has been expanding at a “solid pace,” versus December’s description of a “moderate pace.” The statement calls recent job gains “strong,” an upgrade from last month’s “solid” job gains. But the Fed also added language about inflation heading lower due to falling energy prices. —Ben Leubsdorf

Fed a Bit More Worried About Inflation Outlook
Fed policy makers still believe U.S. inflation will return to the central bank’s 2% target after dipping further in the near term due to oil’s slump. But their confidence is showing signs of fraying. In particular, the Fed today flags a substantial decline in market-based inflation compensation. In December, they had described those expectations as having fallen “somewhat further.”—Pedro Nicolaci da Costa
...MORE
 
You can probably figure out the time the release came out:

Looking for a Replacement for SkyMall?: Oh Wow Tao Bao

From Tao Bao via the OhWowTaoBao tumblr (once seen, it can't be unseen):




HT: I think it was Mark Andreessen

Smart Talk On Oil Stocks

I'm getting bored with saying "It's Too Early" to mess with oil stocks but if you must have exposure...
From Barron's Stocks to watch:

Chevron & ExxonMobil: Time For Plan B?
Citigroup’s Alastair Syme and team worry that big-oil companies like Chevron (CVX), ExxonMobil (XOM), and ConocoPhillips (COP) might betting too much on a return to higher oil prices. They explain:
Until now the industry’s Plan A to restoring profitability has been to rely on a return to higher oil prices. The industry now looks to be adopting a variant – Plan A-star – which emphasises some capex cuts and cost-control but still with a fundamental view that higher oil prices will come to the rescue. We think investor’s interests will only be achieved if the industry commits to full self-help action – a Plan B – where the underlying principle is that oil prices may not recover any time soon…
Within this context we think the equity market’s focus on Big Oil dividend yield as a valuation tool is an unhealthy obsession. The truth is that dividend cover for the group remains poor (the marginal income investor – the bond investor – we think continues to shy away due to the lack of security) and cutting capex will not pay dividends forever. Getting return-on-equity back above cost-of-equity is paramount. If spot oil prices persist then we think the group needs to push through a minimum of 20% cost-reduction in the E&P business to achieve this....MORE

The Astonishingly Clever Ways the Chinese Launder Money and Move Assets

As long time readers know, I have a morbid fascination with the underbelly of the markets, in all its permutations.
Following up on (and linking to) yesterday's "China Cracks Down on Using Art for Corruption" David Keohane spots the larger story.

And no, we didn't link simply because he gave us the HT, this is quite amazing stuff and if one can figure out how to interposition one's self in the flow, there is money to be made.

As it is, I'll have to wait a couple hours before my ace translator can tell me the Mandarin for "Would you like to come up and see mein Klimt?"

From FT Alphaville:
Remember Roubini going off about the art market in Davos? About how “Whether we like it or not, art is used for tax avoidance and evasion” and “While art looks as if it is all about beauty, as a business it is full of shady stuff”?
Well here are two bits of related Chinese art market shenanigans for you.
The first, from the Epoch Times, is about corrupt officials who peddle their works of calligraphy to disguise bribes (via Climateer and The Art Market Monitor)....

... The second is part of a motley assortment of ways in which dodgy money in China gets moved about. Check out “Hard-to-value assets” about half way down and then realise how art is just a small part of this.
From the ever reliable Anne Stevenson-Yang of JCapital:
In a series of meetings with the anti-money-laundering offices of banks, brokerages, and insurance companies a couple of weeks ago, I learned about the channels through which the big money passes. The business is enormous. Banks and insurers typically flag roughly half of large transactions, over RMB 10 mln, for eyeball review, after which around 10% of all large transactions are reported to the PBOC as potential laundering. Channels for moving the money are astonishingly varied, and household-level transactions, under 10 million RMB, would have a similarly eclectic list. Major takeaways:
  • Insurers: Insurance companies are the biggest channels for money laundering. This is because settlements do not match premium income and therefore become virtually impossible to audit. Likewise, insurance payouts are often directed to inheritors, companies, or other parties who are not the premium payer. Recent liberalization of insurance company capital investment rules abets their participation in large money transfers of all sorts....
...MUCH MORE 

Speaking of Klimts, Here's the one Ronald (Thanks Mom)  Lauder dropped $135 mil. on (NYT), #5 on the world's most expensive paintings list.

Portrait of Adele Bloch-Bauer I (1907)

Wednesday, January 28, 2015

"DoubleLine’s Gundlach is Bullish on Gold"

This is not making me happy.
We know that by the year 2160 gold will be trading hands for pennies, but between now and then...
$1284.60 last.

From Barron's Focus on Funds:
The King of Bonds is buying gold.

Jeffrey Gundlach told attendees at the Inside ETFs conference on Tuesday that he added to his position in the yellow metal in recent weeks amid a “cyclone of major events” unfurling across the globe. Gundlach also said that Treasury bond yields could fall farther in 2015 and that oil prices are likely to remain stubbornly low for the rest of this year.

Gundlach, chief investment officer at $64 billion investment firm DoubleLine Capital, voiced optimism for gold in a sprawling presentation punctuated with nursery-rhyme analogies (pat-a-cake, pat-a-cake = European Central Bank monetary easing).
“Gold remains a safe haven in times of turmoil,” Gundlach said. “People have given up because [it was] boring and painful.”
He added that gold price gains typically are reasonably good at predicting market volatility and quipped gold’s yield (zero) is higher than that of Swiss bonds. Payouts on Swiss government bills recently turned negative.

Gundlach said that the Federal Reserve is likely to raise interest rates this year, but also that uncertainty about the future of the European monetary union will drive demand and suppress yields. That’s a reiteration of what Gundlach told Barron’s in an interview last month. Gundlach was among the only market forecasters to predict that yields would fall in 2014. Still, he cautioned against flip-flopping this late into the bond price move:
“Buying bonds now, when you hated them last year, can only be called performance chasing.”
Fallout from tumbling crude oil prices likely hasn’t manifested everywhere in the U.S. economy yet, Gundlach said, keeping him leery about junk debt in spite of recent price declines...MORE 
See also:
"The Price of Gold in the Year 2160"
Chartology: Silver Just Crossed A Very Important Level (SLV)

We changed direction with the Swisscapades of Jan. 15 in:
Chartology: A Possible Trend Change as Gold Rises Above Its 200-Day Moving Average (GLD)
Following up on my earlier reasoned analysis, "*#$ @! Swiss".
Feb. gold $1262.10 up $27.10....
Here's the recent action via FinViz:

Chartology: Oil Support at $40, $35, $32.50, $27...

This is the Line of Death.


This is the new Line of Death.

From Dragonfly Capital:

The Longer Outlook in ….. Crude Oil
Crude Oil had a log flume like ride lower over the last 7 months. Except that the water at teh bottom has not splashed yet. This has many experts talking about the sustainable price of drilling via fracking and oil sands, as well as the break even cost for many Middle Eastern countries. There are discussions about how the drop is somewhat intentional to stick to Putin and Russia, or how the Saudi’s are trying to reassert themselves on the global energy scene following the US becoming energy independent. Lot of talk. And with every move lower in the black liquid come lower price targets from those same professionals and analysts. Nothing new here.

But for technical analysts talk is cheap. Oh, now all the narratives out there can have some value, but stories do not come with a timestamp and price move. The actual price data has a whole lot more to offer and then chart of Crude Oil below has a lot to say.
crude oil
The first thing that stands out in this chart is the weighted volume at price bars on the left hand side. There was a lot of price history to work through between 85 and 105, and then still large history all the way down to 65/barrel. But since then the price history has hit a pot hole and that pot hole gets deeper until the price reaches 32.50/barrel.

The second thing to notice is that the price has broken the rising 16 year price trend support line, and unless it rises back over 48/barrel by month end (3 trading days as I write, I will revise this section Saturday) will close under it. That would be a major breakdown....MORE

Oxford's Bodleian and the University of Michigan Libraries Release 25,000 Early English (1473-1700) Books to the Internet

Via MetaFilter: 
January 28, 2015 7:12 AM   Subscribe
The University of Michigan Library, the University of Oxford's Bodleian Libraries and ProQuest have made public more than 25,000 manually transcribed texts from 1473-1700 — the first 200 years of the printed book. Full text access. Multiple format downloads, including ePUB. Or just download the entire corpus.

The texts represent a significant portion of the estimated total output of English-language work published during the first two centuries of printing in England.

The release via Creative Commons Public Domain Dedication marks the completion of the first phase in the Early English Books Online-Text Creation Partnership (EEBO-TCP). An anticipated 40,000 additional texts are planned for release into the public domain by the end of the decade.
posted by Bobby Rijndael (17 comments total) 21 users marked this as a favorite
 
Great stuff there! A few nuggets for fans of Sam Pepys.
posted by beagle at 7:23 AM on January 28 [2 favorites
...MORE

Oil Collapse: Build In Inventories Double Estimate; Goldman Says Sell

March WTI $45.25 down 98 cents after trading down to $44.52.
We're going lower.
From ZeroHedge:

Crude Supplies Surge To Highest Since At Least 1982
EIA Inventory build was double expectations at 8.87 million barrels...

With Total Crude Supply at its highest since at least 1982...

*  *  *
Remember how exuberant yesterday's small gains in Crude Oil were perceived to be? Yeah - that's all over, with WTI back near a $44 handle - following a large 12.7 million barrel inventory build according to API (EIA reports the 'main event' at 1030ET today - which Saxo Bank warns "a bigger-than-expected build would likely push the mkt over the cliff edge.") Additional weakness overnight is also likely due to Goldman's shift to a 'sell' for the next 3 months.
...MORE

"As Big Data and AI Take Hold, What Will It Take to Be an Effective Executive?" or Keeping the C-suite With Algos at the Gate

From Irving Wladawsky-Berger:
Big data, powerful analytics and AI are everywhere.  After years of promise and hype, technology is now being applied to activities that not long ago were viewed as the exclusive domain of humans.  Our digital revolution had led to amazing applications, but also to considerable pain for many workers who’ve been experiencing declining employment and wages.  Mid-skill jobs have been particularly threatened.  Many of these jobs, - which include blue-collar production activities as well as information-based white-collar ones, - are based on well understood procedures that can be described by a set of rules that machines can then follow. 

But, what will be the impact of our increasingly intelligent machines on senior management positions?  In principle, such jobs deal with non-routine, cognitive tasks requiring high human skills, including expert problem solving, complex decision-making and sophisticated communications for which there are no rule-based solutions.  “As artificial intelligence takes hold, what will it take to be an effective executive?” asks a recent McKinsey article - Manager and Machine: The new leadership equation.  “What would it take for algorithms to take over the C-suite?  And what will be senior leaders’ most important contributions if they do?” 

After asking these questions to senior managers across a broad range of industries, McKinsey  concluded that two key things need to happen for technology to more deeply transform their jobs.  First, much still needs to be done to create the proper data sets that would enable intelligent computers to assist in decision-making.  Garbage in, garbage out applies as much to data analysis today as it has to computing in general since its early years.  Organizations must have a data-analytics strategy that cuts across internal informational silos and properly incorporates external information sources like social media. 

And most important, senior managers must learn to let go, something which is quite difficult because it runs counter to decades of organizational practices.  Given our rapidly rising oceans of data, the command-and-control approach to management, where information flows up the organization and decisions are made at high levels, would sink the senior executive teams.  As data science and AI permeate the organization, it’s important to delegate more autonomy to the business units that hopefully have the proper skills, the advanced tools and the necessary information to make better decisions on their own.

While difficult, these changes will eventually happen, providing leading-edge companies with a competitive advantage that others will emulate.  But, if top managers do their job, - enabling data-driven decision-making and devolving decision-making authority across the organization, - what will be left for them to do?  “A great deal,” notes the article, suggesting that “ironically enough, executives in the era of brilliant machines will be able to make the biggest difference through the human touch,” including:
Asking questions.  “Asking the right questions of the right people at the right times is a skill set computers lack and may never acquire…  In fact, there’s a case for using an executive’s domain expertise to frame the upfront questions that need asking and then turning the machines loose to answer those questions.  That’s a role for the people with an organization’s strongest judgment: the senior leaders.”
Attacking exceptions.  “An increasingly important element of each leader’s management tool kit is likely to be the ability to attack problematic exceptions vigorously.  Smart machines should get better and better at telling managers when they have a problem…  Executives can therefore spend less time on day-to-day management issues, but when the exception report signals a difficulty, the ability to spring into action will help executives differentiate themselves and the health of their organizations."...
...MORE

"China Cracks Down on Using Art for Corruption"

From Art Market Monitor:
http://1uyxqn3lzdsa2ytyzj1asxmmmpt.wpengine.netdna-cdn.com/wp-content/uploads/2015/01/BN-GN089_maowri_G_20150120030303.jpg
China is getting serious about cracking down on abuses in the art market. One of the government’s official outlets has this story railing against corrupt officials who peddle their works of calligraphy to disguise bribes:

Hu Zhangqing, former deputy governor of southeast Jiangxi Province, was executed in March 2000 on a charge of corruption. In 1998, Hu’s works of calligraphy were sold in the price range between 3,000 yuan and 6,000 yuan (about US$480 to US$961). One of his calligraphy works even had a price tag of 90,000 yuan (about US$14,425), reported state-run People’s Daily on October 2014.

In 2010, during the trial of Wen Qiang, former deputy chief of police in Chongqing in the southwest, one of the biggest debates was over the authenticity of one of the paintings in his possession—said to be the work of Zhang Daqian, considered one of the extraordinary Chinese artists of the twentieth century. If it were authentic, the painting would fetch a market price of 3.64 million yuan (about US$583 thousand)...MORE

"A Warren Buffett Utility Looks to Beat Tax Expiration"

With the new congress in place it's time to start watching for "Political Capitalism" 2015-style.
President Obama has been the best friend Wall Street-and Silicon Valley- ever had. How this trend plays out against the backdrop of a Republican Senate and House should bring us some significant opportunities.

From Roll Call:
Berkshire Hathaway’s Nevada utility company NV Energy is doubling down on efforts to boost its renewable generation resources in order to ensure that projects qualify for tax incentives.

The company announced this week that it would be seeking bids for 200 megawatts of renewable projects within a month, following an order from the Nevada Public Utilities Commission that urged the company to move faster because of uncertainty over incentives like the investment tax credit which will be reduced at the end of 2016. The company originally had requested bids for half that capacity this year with the expectation it would ask for an additional 100 megawatts for next year.

To comply with Nevada’s requirement for utilities to rely on 25 percent renewable energy resources, NV Energy touts 1 gigawatt of capacity from geothermal, solar, hydro facilities and wind facilities as well as biomass, methane and waste-heat recovery projects.

Spanish company Abengoa said last week it could not move forward with a solar project in California without greater certainty about the investment tax credit.
And remember, There was a reason for the choice of the first winner of the Climateer "Our Hero" award back in April 2007:
The 26th Secretary of War, the Democrat and Republican (!) Senator from Pennsylvania, Simon Cameron:
Our Hero
Simon Cameron
"The honest politician is one who 
when he is bought, will stay bought."

Robbing ATM's The British Way

From Bloomberg:
Boom
No American ATM has ever been robbed with explosive gas. The same was true in Britain — until 2013. Now there have been more than 90. Inside the birth of a bomb spree.
Along the western coast of England, under a half-moon hidden by clouds, a dark Audi sports car with fabricated plates followed an empty road toward a Barclays bank. Inside were five men, dressed all in black, and their gear: crowbars, power tools, coils of flexible tubing, and two large tanks of explosive gas. It was 1:51 a.m. The job would take just under seven minutes.

This particular Barclays was just waiting to be robbed. Located at the rear of a shopping mall in a town called Birchwood, it was secluded from the street by 300 feet of parking lot and faced a creek, a railway, and acres of cropland. Early on this Friday in September 2013, the area was deserted, and the walk-up ATM glowing Barclays blue onto the brick forecourt was likely filled with cash for the weekend crowds. For six months, the gang had been targeting cash machines across a 150-mile swath of the country, from Oxford to Liverpool, with a technique never before used in the U.K.
Two men exited the Audi, balaclavas covering their faces, and with professional calm attacked the face of the machine. One pried open the cash slot with a 3-foot gorilla bar, then worked it like a lever, hopping up and down with a two-handed grip. A third man knelt to assist, a fourth stood watch, and the fifth remained behind the wheel of the car, idling at a short distance behind a perimeter of security bollards. After several minutes one of the team walked up trailing a wire and two lengths of hose, which he fed a short distance into the ATM, as a doctor might intubate a patient’s mouth. The hoses carried oxygen and acetylene, and the men took cover as the gases began to mix in the pit of the machine.

The strongbox inside an ATM has two essential holes: a small slot in front that spits out bills to customers and a big door in back through which employees load reams of cash in large cassettes. Criminals have learned to see this simple enclosure as a physics problem. Gas is pumped in, and when it’s detonated, the weakest part—the large hinged door—is forced open. After an ATM blast, thieves force their way into the bank itself, where the now gaping rear of the cash machine is either exposed in the lobby or inside a trivially secured room. Set off with skill, the shock wave leaves the money neatly stacked, sometimes with a whiff of the distinctive acetylene odor of garlic.

In Birchwood, the oxyacetylene bomb exploded immaculately at 1:57 a.m.—a single concussive thunderclap that sent a minimum of dust and debris raining onto the sidewalk. Only now did the men hustle. Smashing a low window to the left of the ruined ATM, they crawled inside with more tools, shoved the cash into a black duffel, and exited on their hands and knees. One gently helped another to his feet, and the Audi made a neat three-point turn to begin their getaway. Details of the heist, and other events in this story, come from security camera footage, police files, court records, and interviews with investigators, prosecutors, bank representatives, security experts, and defense lawyers.

The ATM bombers were getting better, bolder, and bigger. The Birchwood heist was their 28th in the U.K.—and No. 27 had gone down just minutes earlier in Wirral, 40 miles west, carried out by a second team of five. The combined take of almost £250,000, or about $375,000, was the group’s biggest score in a single night yet. Their MO, using cheap, common, and legal gas, was nearly impossible to trace, and they left precious little forensic evidence for the police. To stop the rampage, there was little Britain’s banks could do....MUCH MORE

Tuesday, January 27, 2015

What It Takes to Make the Top 1% of Incomes In Each State

From Vox:
This is how much you need to earn to join your state's top 1 percent
It takes around $385,000 of annual income to get into the US's top 1 percent. But if you really want to count yourself among the 1 percent in some way, you could always move to Arkansas. There, it takes only $228,000.

new report from the left-leaning Economic Policy Institute illustrates what inequality looks like from state to state. Perhaps not surprisingly, it takes a lot to get into the top 1 percent in the area near Wall Street — Connecticut has the highest bar to getting into the top, at $678,000. New York and New Jersey are close behind. 

Here's what it takes to be in the top 1 percent in your state:
Inequality by state
(Economic Policy Institute)

...MORE

Polish Swiss-Franc Mortgages May Sink Austrian Bank

Following up on "Poland To Help Holders Of Swiss Franc Denominated Mortgages".

From ZeroHedge:

The Bonds Of The Third Largest Austrian Bank Are Crashing
Last year Austria's largest bank, Erste Bank, sent shudders of Credit Anstalt through the European Banking System. This year it is Austria's 3rd largest bank that is scaring investors senseless. On the heels of the Swiss National Bank's decision to un-peg from the Euro, Raiffeisen Bank's Swiss-Franc-Denominated mortgage worries have resurfaced (along with Russian/Ukraine writedowns) and nowhere is that more evident than the total collapse of the bank's bonds (from over 95c to 65c today). Even after the ECB Q€ (and some apparent intervention to weaken the Swissy) bonds kept free-falling. Perhaps, The Freedom Party's demands for a bailout will grow louder as the contagion concerns across Europe's banking system explode...
RAFI bonds are collapsing...

As Bloomberg reports, Raiffeisen had a total of 4.3 billion euros of Swiss franc loans outstanding as of September 2014, according to estimates by Moody’s Investors Service.
The largest part of these are in Poland, where the franc has appreciated 17 percent against the zloty since Jan. 14, threatening to push up defaults on the bank’s 2.9 billion euros of mortgages in the Swiss currency.

“There’s a lot of people worried about the bank’s Swiss-franc mortgages in eastern Europe,” said Gregory Turnbull Schwartz, who helps oversee the equivalent of about $82 billion at Kames Capital in Edinburgh and doesn’t hold Raiffeisen bonds....
...MORE

The collapse of Credit Anstaldt  brought on the second, nastier, phase of the Great Depression. From a pre-bull market post:
Feb. 16, 2009:
Creditanstalt Redux?: Failure to save East Europe will lead to worldwide meltdown

I've been feeling far too chipper so I decided to check in with Ambrose Evans-Pritchard. Yikes.
From the Telegraph:
The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point.
If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung....
Well, other than that Generalfeldmarschall Paulus, how's the weather?
Creditanstalt
failed in May 1931. From Kindleberger's "World in Depression: 1929-1939":
In 1929, the Bodenkreditanstalt was fused overnight with the Creditanstalt. The Bodenkreditanstalt brought to the Creditanstalt large loans to industrial concerns which could be maintained only by the device of ignoring market values...
Hmmm, sounds familiar.
Unicredit now owns Creditanstalt.
After the rescue of the bankrupt corpus and a couple mergers CA became part of Italy's Unicredit in 2006....

Online Food Delivery Is A Thing (sorry Webvan): China Co. Raises $350 Million from CITIC PE, Tencent, JD.com, Others

From PE Hub:
Chinese online food delivery service Ele.me said on Tuesday it has raised $350 million from investors including CITIC Private Equity, Tencent Holdings Ltd (0700.HK), JD.com Inc (JD.O), Dianping and Sequoia Capital.

The delivery firm, whose name roughly translates as ‘Hungry Now?’, is part of a trend in China for what is known as online-to-offline (O2O) services. These include taxi hailing and restaurant review apps that link smartphone users with offline businesses.

Ele.me said it would continue to operate independently after the fundraising round. It declined to disclose its current valuation.

As more Chinese use their phones for everything from shopping to booking restaurants, China’s internet giants Alibaba (BABA.N), Tencent and Baidu Inc (BIDU.O) are increasingly investing these services to attract more users to their own platforms....MORE
Previously:
Grocery Delivery Service Instacart Raises $220 Million
"The Biggest European Venture Capital Rounds Ever" (we just saw one)
Where does the $350 million raised by Berlin-based online food-delivery company Delivery Hero rank among the top venture deals ever for a Europe-based company?
As it turns out, it was the biggest in years....

Indiana Sets Up State-run, Taxpayer Funded News Outlet

From the Indianapolis Star:

Gov. Mike Pence's state-run news outlet will compete with media
Gov. Mike Pence is starting a state-run taxpayer-funded news outlet that will make pre-written news stories available to Indiana media, as well as sometimes break news about his administration, according to documents obtained by The Indianapolis Star.

Pence is planning in late February to launch "Just IN," a website and news outlet that will feature stories and news releases written by state press secretaries and is being overseen by a former Indianapolis Star reporter, Bill McCleery.

"At times, Just IN will break news — publishing information ahead of any other news outlet. Strategies for determining how and when to give priority to such 'exclusive' coverage remain under discussion," according to a question-and-answer sheet distributed last week to communications directors for state agencies.

The Pence news outlet will take stories written by state communications directors and publish them on its website. Stories will "range from straightforward news to lighter features, including personality profiles."...MORE

Headline du Jour: "Stocks Falling Faster Than Snow, Dow Down 345 Points"

That's at Barron's Stocks to Watch:
Stocks Falling Faster Than Snow, Dow Down 345 Points

DJIA 17,322 down 356; S&P 2014 off 33.

Chartology: Watching For a Top In The Market

We don't have a lot of faith in long term chart patterns* but Kimble does and here's what he's looking at.
For what it's worth we think the markets, U.S. and MSCI, can chug forward for a couple more years.
Albeit with more variance than we saw over the first 5 1/2 years of the big bull.

From Kimble Charting Solutions:

http://blog.kimblechartingsolutions.com/wp-content/uploads/2015/01/nysebreakingsupportspydojijan27.jpg
Is the NYSE creating a "Giant Topping" pattern? Rising wedge patterns lead to lower prices around two-thirds of the time. At this moment, a top is not proven! For sure I do respect the potential that a rising wedge pattern could have some impact in the near future on this key broad market.

The upper left chart line (1) is based upon monthly closing prices starting with the 1987 lows. Notice that several key lows took place along this line and 2011's highs touched this line as well.

The apex of the rising wedge is narrowing, meaning this pattern should end fairly soon. The NYSE is a fraction below this line as of last night close, as the index has traded sideways for the past 6 months.

Last month SPY may have created a Doji Star topping pattern (lower right chart) at the 161% Fibonacci extension level based upon the monthly closing high in 2007 and monthly closing low in 2009....MORE
*First and most importantly is the "market memory" that price charts represent. If the goes too far back no one remembers that stocks petered out at this price resistance level or that support level.

Secondly, the markets under study have on average sample size of n=1, so the error bars have to be pretty widely spaced.

Oil Drillers Among Most Profitable-To-Lend To Shorts

From Securities Finance Monitor, Jan. 22, 2015:

Securities Lending Top 10 Earning Equities – January 19, 2014
DataLend presents its top 10 earnings equities for January 19, 2015. This list is built on DataLend¹s universe of more than 42,000 securities on loan.
center Methodology: We scan our universe of more than 42,000 securities on loan to find those securities with the most expensive financing positions in the U.S., U.K., Europe and Asia. Financing costs are determined by taking the total on-loan value of a security and multiplying it by the volume-weighted average fees to borrow that security, then converting the product of those numbers to a dollar value. We then sort the most expensive securities to finance in the securities lending market in descending order.

US

Utilization

1     DIAMOND OFFSHORE DRILLING 90.20%
2     GAMESTOP CL A 89.56%
3     TRANSOCEAN 89.61%
4     MYRIAD GENETICS 90.58%
5     MOBILEYE 96.33%
6     INVENSENSE 83.89%
7     GOPRO CL A 96.43%
8    ULTRA PETROLEUM 89.30%
9     MANNKIND 95.67%
10   LINDSAY 80.57%

UK

Utilization

1     SAINSBURYJ 75.16%
2     QUINDELL 85.01%
...MORE

&*^%$# Robots: Human Investment Managers at Risk

The woman being interviewed runs more money any any other person with xx chromosomes, excluding the odd BMW heiress, Walton or Bettencourt.

From the Financial Times:

Human investment managers risk obsolescence

Illustration for 'Automated algorithms offer greater choice, but risks remain'
Human investment managers are at risk of being rendered obsolete by rapid advances in algorithmic trading technology, according to the brains behind one of the world’s leading computer-driven hedge funds.

Leda Braga, who runs the $8.9bn BlueTrend hedge fund, said traditional investment approaches might soon struggle to keep ahead of so-called “systematic” computer models, as human fund managers are undercut by cheaper and more efficient technology.

“Right now there is a place for both approaches,” she said. “That is the present. But then we have the future. Does the future hold a world where the systematic approach dominates? I suspect yes.”

She compared it to the world of Swiss watchmaking. “There is still a place for artisanal watches. But if you really want to know the time in an efficient way then you buy a quartz watch.”

Ms Braga, a Brazilian-born engineer, is one of a handful of women to have risen to the top of the hedge fund world. Her comments come as many traditional fund managers have struggled to make money for clients in the past year, with computer-driven hedge funds outpacing most of their human rivals in 2014.

Late last year Ms Braga, who created the systematic computer trading business at hedge fund BlueCrest, spun off her funds into a new separate hedge fund called Systematica Investments....MORE

See also:

Auschwitz Liberation Day

I think the Jews mean it when they say "Never Again".

File:IAF F-15 over Auschwitz extermination camp.jpg

Those are a couple Israeli Air Force F-15's the Polish government invited to do a flyover of Auschwitz-Birkenau on September 4, 2003.

Monday, January 26, 2015

"In the mood to trade? Weather may influence institutional investors' stock decisions"

From ScienceDaily:
Date:
January 15, 2015
Source:
Case Western Reserve University
Summary:
Weather changes may affect how institutional investors decide on stock plays, according to a new study. Their findings suggest sunny skies put professional investors more in a mood to buy, while cloudy conditions tend to discourage stock purchases.
Weather changes may affect how institutional investors decide on stock plays, according to a new study by a team of finance researchers. Their findings suggest sunny skies put professional investors more in a mood to buy, while cloudy conditions tend to discourage stock purchases.

The researchers conclude that cloudier days increase the perception that individual stocks and the Dow Jones Industrials are overpriced, increasing the inclination for institutions to sell.

The research paper, "Weather-Induced Mood, Institutional Investors, and Stock Returns," has been published in the January 2015 issue of The Review of Financial Studies. The research was collaborated by Case Western Reserve University's Dasol Kim and three other finance professors (William Goetzmann of Yale University, Alok Kumar of University of Miami and Qin Wang of University of Michigan-Dearborn).
Institutional investors represent large organizations, such as banks, mutual funds, labor union funds and finance or insurance companies that make substantial investments in stocks. Kim said the results of the study are surprising, given that professional investors are well regarded for their financial sophistication....MORE
Possibly related:
"Cascading effects of mental accounting by traders in the natural gas markets."
World's Oldest Weather Report Found in Egypt: It Was Raining, People Were Crabby
Previous Climate Change Created a Race of Angry Runts
"Weather Related Markets"
From the Points and Figures blog:
Snow has shut down Heathrow Airport in London.  It’s become a roach motel.  No one gets in, no one gets out. Snow has also shut down “The City” too.  The lower volume holiday markets already were here.  This snow has made it tougher for everyone to get to work in London.  Meanwhile, the weather hasn’t been outstanding in NYC or Chicago.  Volumes are light.

This week is a holiday shortened week.  I would expect the trends of the year to continue.  Bull markets in commodities and in stocks should continue. Keep in your back pocket that on the last trading day of the year, the funds will buy to paint the tape. Then on the first trading day of January, they buy again as fresh cash gets put to work. There is data this week, but action should be muted.

Weather is not given enough credit for its influence on markets.  Weather affects business tremendously....
Mood of the Market: "Rainy and gray, then colder and darker"
Sun Photo/Algerina Perna 2005

Natural gas futures drop 3% despite Northeast blizzard

Most active, March's, $2.838 down 12.0 cents.
From Investing.com:
Investing.com - U.S. natural gas prices fell sharply on Monday, despite forecasts for heavy snowfall in the heavily populated Northeast region over the next two days.

On the New York Mercantile Exchange, natural gas for delivery in March tumbled 6.8 cents, or 2.3%, to trade at $2.890 per million British thermal units during U.S. morning hours, after hitting a daily low of $2.821.

On Friday, natural gas surged 13.1 cents, or 4.63%, to settle at $2.958.

Futures were likely to find support at $2.762 per million British thermal units, the low from January 22, and resistance at $2.967, the high from January 23.

The National Weather Service said that the storm would bring heavy snow, powerful winds and widespread coastal flooding through Tuesday....MORE
The recent action via FinViz:

Poland To Help Holders Of Swiss Franc Denominated Mortgages

Speaking of borrowing in a currency other than the one you earn your income in.*
From Reuters:

REFILE-Poland may help CHF loan holders at banks' expense -PM Kopacz
(Removes extraneous word from headline)
* Polish PM is considering help for CHF mortgage holders
* Details to be presented later this week
* Poland faces presidential and general elections this year
By Marcin Goclowski
WARSAW, Jan 26 (Reuters) - Poland may help financially troubled holders of Swiss franc-denominated mortgages at the expense of the banks and will present specific proposals by the end of the week, Prime Minister Ewa Kopacz said on Monday.

Kopacz, who faces an election this year, did not spell out what form such help might take. She was speaking after hundreds of people staged protests in several Polish cities at the weekend demanding the government's help in repaying Swiss franc-denominated mortgages following the currency's sharp rise....MORE

Oil: U.S. Well Count To Fall By 26% in 2015, Wood Mackenzie

From Rigzone:
Wood Mac: US Onshore Well Count to Fall by 26% in 2015 
The U.S. onshore well count will decline by 26 percent, from more than 37,000 in 2014 to an estimated 27,000 in 2015, as the decline in oil prices prompted many operators to cut their 2015 spending plans, according to a recent estimate by Wood Mackenzie.

North American drilling and completion expenditures exceeded $140 billion in 2014, but Wood Mackenzie expects operators to commit less than $90 billion to upstream development over the next 12 months.

“Such sizeable cuts will have serious implications across the oilfield services sector,” said Wood Mackenzie in a statement.

Using its North America Supply Chain Analysis Tool, Wood Mackenzie forecasts that rig day rates will decline by 30 percent, while the rig count will drop from an annual average of nearly 1,800 in 2014 to under 1,300 in 2015. This decline will curtail demand in other services sector markets, including tubulars, drilling services, frac proppant and pressure pumping....MORE

"Alternatives to Stocks in Deflationary Environments..."

From Victor Niederhoffer's Daily Speculations:
What are the alternatives to stocks in a deflationary environment?
1. playbook of scenario of Japan since 1990 : )

2. Year book 2012 by Prof. Dimson/ Marsh/ Staunton (or fondly called the optimist trio) has a thorough investigation of historical deflationary events...MORE
See also both "The Enigma Inside The Credit Suisse Global Investment Returns Yearbook 2014" and 2013's "Credit Suisse Investment Returns Yearbook 2013":
Last year I referred to the authors of the Credit Suisse Global Investment Returns Yearbooks as "the hot new boy band Dimson, Marsh and Staunton" while looking at a picture of Professor Dimson.

Cracks me up but hasn't gained much traction in the academy.*

"The Swiss franc appreciation and the sorry saga of FX lending"

From our Dec. 7 post: Evans-Pritchard: "Dollar surge endangers global debt edifice, warns BIS":

Two quick points*:
1) This is the second BIS warning in under six months.
2) It is very dangerous to borrow in a currency other than the one in which you earn your income.

True at retail, true at wholesale....
Reprised in "'Russian ruble's fall: A classic 'currency collapse'" and Why It's Such a Big Deal".

From A Fistful of Euros:
Back in the 1980s Australians, many of them farmers, were offered low-interest loans, appealing in a high-interest environment. With changes in currency rates the loans in Swiss francs and Japanese yen quickly became much beyond the means of the borrowers to service with ensuing pain and suffering. Icelanders felt the pain of FX loans as the Icelandic króna depreciated in 2008 as did many Eastern-European countries. – The same story has played out in country after country with the obvious lesson reiterated: for people with income only in their domestic currency FX borrowing is far too risky. All these loans, often the result of predatory lending, follow the same pattern and it is no coincidence where they hit. There is now ample case for countries to take action: banks should be forbidden to lend in FX to private individuals with no FX income. 

Australia in the 1980s, New Zealand in the 1990s, Iceland and a whole raft of other European countries in the 2000s saw liberalised markets but inflation was high and so were interest rates. By taking an FX loan or even just a loan pegged to FX the high domestic interest rates could be avoided – it seemed too good to be true.

Sadly it was indeed too good to be true: currency fluctuations changed the circumstances and servicing FX loans for those with income in the domestic currency became unsustainable. For loans running over many years this was, statistically seen, almost unavoidable. FX loans have turned into a huge problem in countries such Croatia, Bosnia, Bulgaria, Montenegro, Poland and Ukraine but politicians and banks have ignored the problem.

These cases were spelled out at a conference on CHF/FX loans in Cyprus in December. Organised by Katherine Alexander-Theodotou president of the UK Anglo-Hellenic and Cypriot Law Association and various representatives of organisations fighting FX loans, the organisers have recently set up European Legal Committee for Consumer Rights to co-ordinate their work in the various countries marred by FX loans....MUCH MORE
HT: The Big Picture

Andreessen Horowitz On Insurance: "Software rewrites insurance" (nudge, nudge)

From Andreessen Horowitz:
Insurance is all about distributing risk. With dramatic advances in software and data, shouldn’t the way we buy and experience our insurance products change dramatically? Software will rewrite the entire way we buy and experience our insurance products — medical, home, auto, and life. Here’s how:
By changing the way insurance companies price risk
So many more signals are available for insurance companies to better price the premiums we should pay. Drivers that drive carefully in safe neighborhoods vs. recklessly through accident-prone intersections ought to pay different amounts to insure the same car — but all that data isn’t reflected in an annual odometer reading. Water damage is one of the top sources of claims for home insurance customers: Why don’t we charge customers with water sensors less, since if they know water is leaking, they can stop it before the damage gets expensive to repair.

New data sources, better data, ongoing data reporting — all are possible now with mobile phones and inexpensive Internet of Things devices.

By empowering an ongoing relationship between an insurer and insured
Today, our relationship with an insurer revolves mostly around a monthly billing statement sent to us from a mainframe application. You can tell because big chunks of the billing statement are printed in ALL CAPS IN A FIXED WIDTH FONT … the only fonts that existed at the time the applications were written.

How about an insurance company that empowers you to make smart lifestyle decisions? Examples: the car insurance company that routes you around dangerous intersections; the home insurance company that automatically summons a plumber when it detects water on the floor near the water heater; or the health insurance company that connects you with friends that are also trying to lose weight?

By encouraging us to keep safe, insurance companies can keep their payouts low. And we all bask in the glow of an insurance company that has our best interests at heart — because even though our interests are really aligned, it doesn’t always feel that way.

By changing the way insurance companies pool capital
Historically, we’ve seen mutual insurance companies (insurance companies owned by policyholders) and stock insurance companies (insurance companies owned by shareholders). We expect to see more crowdsourced insurance companies, just as we’ve seen in other parts of the financial system. Crowdsourcing works great for personal loans, student loans, small business loans — why not for insurance? From the investor’s point of view, it’s great to diversify by investing in an asset class that should move independently of the stock or bond markets. From the insurance company’s point of view, it should be a cheaper way to pool capital....MORE

"It Don’t Come Easy – Low Crude Prices, Producer Breakevens And Drilling Economics – Part 3"

From RBN Energy:
On Friday (January 23, 2015) West Texas Intermediate (WTI) futures prices closed under $46/Bbl for the second time this year. RBN’s analysis of producer internal rates of return (IRRs) for typical oil wells indicates that Bakken IRRs have fallen from 39% in the fall of 2014 to just 1% today. IRRs for typical Permian wells are down to 3% and typical Eagle Ford wells are at breakeven. Everything is underwater or close to it except for the sweet spot wells with higher production. Today we present highlights from RBN’s IRR and breakeven analysis – published in full today in our latest Drill Down Report.
In Episode 1 of this series we reviewed recent price carnage in crude, natural gas and natural gas liquids (NGL) markets that have crushed the IRRs producers enjoyed in the summer of 2014 and resulted in much speculation about the impact on current and future production. We noted that existing wells currently flowing will continue to produce – there is no value to shutting in output because of falling prices.  That is because even at today’s prices, the per-unit revenues of existing wells are significantly above operating costs. In fact, production is likely to increase in the near term. Our expectations of production increases in 2015 are reinforced by recent investor presentations (see Rig Cuts Deep Output High). In Episode 2 we ran through the inputs and model assumptions behind our IRR and breakeven sensitivity analysis using RBN’s Production Economics model. Coming up with representative input variables for the model is as much art as science but the main goal is to understand how the numbers relate to each other.  Most analysts make you guess what the input variables are, so you really don’t know what you are looking at.  We lay it out for you so you can make your own judgments about whether or not our data is truly representative. In this final episode in the series we present highlights of our analysis results. The full results are available exclusively to RBN Backstage Pass subscribers in our latest Drill Down report (for more details see the Ad below).

The primary goal of our analysis was to identify typical IRRs in different crude oil and natural gas price scenarios for major shale plays across the U.S. at various crude and natural gas price levels. We analyzed data from a range of wells for each of the basins in Table #1 and aggregated the results to provide values for representative wells in oil, liquids (NGLs) and natural gas categories.  From the set of representative wells for each play we then extracted a super set of “sweet spot” wells having the highest IP rates that produce the highest IRRs. We used these wells to identify sweet spot well characteristics.
Table #1 Source: RBN Energy (Click to Enlarge)
Then and Now
The following snapshots provide a summary of our results for typical IRRs seen in oil, wet gas (NGLs) and dry gas plays under different price scenarios during the fall of 2014 and in January of 2015. The complete results along with summarized input data that generated these outputs are available in the Drill Down Report....MORE
https://rbnenergy.com/sites/default/files/styles/extra_large/public/field/image/figure2_111.png?itok=SljOXDGQ

"Technical hurdles have been overcome for the first human head transplant"

That's old news, July 1, 2013 to be precise. Here's our post from that day.
This more recent (Dec. 2014) item is from Slate:

We Might Be Able to 3-D-Print an Artificial Mind One Day
I’m an artificial-intelligence skeptic. My problem isn’t with the software, but the hardware. Current computer technologies may give us faster, lighter laptops, but AI needs more than the PC equivalent of go-faster stripes—it needs a revolution in how we build processors. Such a revolution may be just around the corner though. As I discuss in a new article in the journal Nature Nanotechnology, the convergence of technologies such as 3-D printing, advanced processor architectures, and nanotechnology are opening up radical new possibilities in how we might construct brain-inspired computers in the future.

If what we think of as the human mind is the product of a biological machine (albeit a complex one), there is little to suggest that we won’t one day have the ability to emulate it. This is what’s driving artificial intelligence research and the emergence of computers like IBM’s Watson that are getting close to thinking like a person. Yet powerful as Watson is, current manufacturing techniques will never enable such technologies to become ubiquitous.
It’s a problem of dimensions.

Imagine drawing five points on a piece of paper and trying to join each point to every other, without any of the interconnecting lines touching. You can’t do it. A second piece of paper layered over the first helps make the connections. But the more points you add and the more connections there are, the harder it gets to connect every point to every other one.

It’s a simple illustration of how hard it is to replicate the physical structure of the human brain—a 3-D matrix of billions of neurons tied together by hundreds of trillions of synaptic connections. Conventional manufacturing techniques can get us partway there. For instance, companies like IBM are pushing the limits of conventional approaches using to create brain-like processing architectures. But like the points on the paper, the technology is still inherently two-dimensional, meaning that additional complexity comes with a massive price tag.
If brain-inspired processors are to become an everyday reality, we’ll need radically different manufacturing processes....MORE