Friday, September 4, 2015

Inductive Reasoning, New York City Edition

From the New Yorker's Daily Intelligencer column:
..."it was determined [Carrasquillo] didn't take the wallet because she was only wearing a thong and had nowhere to put it."...
-"Two Topless Women Are Assaulted, Another Is Arrested in Times Square"
And for more info you won't get from just any old blog:
BiFrost Farms: Helping Others Earn Cheese Credentials in a Homey Place. 
..Donate to earn goat-themed swag, a wine-and-cheese tour, or have a goat kid named after you this coming spring.-Modern Farmer, Help Crowdfund These 4 New Farm-Related Projects
Goat themed swag is a thing. Now you know.

German Death Crosses

Well there's a Rorschach headline for ya.
One could project most anything one's little psyche comes up with into those three words.
I'll go with Hermann Göring and FT Alphaville.

From the latter:

Dax death cross
Here on Alphaville we love charts. We’re not quite so keen on chartism, even under its respectable name, “technical analysis”. 
Still, you’ve got to admire the ability of chartists to come up with great names. Today it’s the turn of the death cross again, our second-favourite technical indicator (after the Ichimoku Cloud). 
The death cross being hyped is in the Dax, which has had a terrible time since its peak in April (the headline index, which includes dividends, is down from above 12,000 to 10,000). 
If you’re not scared merely by the mention of a death cross, consider this from Bloomberg: 
The last time the DAX formed a death cross, the index dropped 12 percent in five weeks to a one-year low. It then surged 44 percent to a peak in April. 
Another 12 per cent? That would be properly painful for those already down more than a fifth before the recent bounce....
...MORE

And the last time lines were crossing, Sept. 2014:
Equities: "All Death Crosses Are Not the Same"
Please note: we did not bother gentle reader with Death Cross posts last week. 
No, we went with "You Can Read about the Fed or You Can Read 'Randy Eurasians Surprise Scientists With Ancient Sex Romp'" and "Oh Dear God: The IMF's Christine Lagarde Will Belly-dance to Achieve Her Goals" and "Things I Cannot Do, Part ∞, Sound like a distorted electric guitar playing Led Zeppelin's Whole Lotta Love". 
Now it's time for Death Crosses....
Which post linked to "Look Past the Current Crises and See.... An S&P Death Cross":
...So how good a sell signal has an iron cross been on a historical basis?....MORE 
To answer that question here's Herr Göring wearing a few of his crosses, including the one-and-only Grand Cross of the Iron Cross:


Definitely a short.

The Grand Cross was one-of-a-kind in more ways than one. 
Besides being twice as big as the Knights Cross of the Iron Cross (on boobie) the cross Hitler gave fat Hermann was silver but der Größe didn't think that was spiffy enough so he had this one made with platinum edging for public wear.

The Germans planned an even higher honor, The Star of the Grand Cross of the Iron Cross that they were going to award to the most successful German General of the Second World War, when Germany achieved victory.

Didn't happen.

"The August Jobs Report in 10 Charts" (and a couple thousand words)

A twofer from the Dow Jones empire.
First up, MoneyBeat:

August Jobs Report: Everything You Need to Know
Welcome to “Jobs Friday,” that ever-so-brief moment when the interests of Wall Street, Washington and Main Street are all aligned on one thing: jobs. 
Friday’s report was even more significant than usual, since it’s the last one officials from the Federal Reserve will see before they meet later this month to debate a potential interest-rate hike. A rate increase, if and when it comes, would be the first for the U.S. since 2006. 
When the numbers came in at 8:30 a.m. New York time, they potentially muddied the waters instead of providing clarity. The Bureau of Labor Statistics  said nonfarm payrolls rose a seasonally adjusted 173,000, well short of the 220,000 predicted by economists surveyed by The Wall Street Journal. But the unemployment rate fell to 5.1% from 5.3%, and some of the other underlying numbers painted a rosier picture. 
Here at MoneyBeat HQ, we’re crunching the data, tracking the markets and compiling the commentary in real time. 
9:28 am Another upward GDP growth revisionMacroeconomic Advisers joins Barclays in upping its Q3 GDP growth view by a tenth of a percent following the August jobs report. Macroeconomic Advisers now sees Q3 expansion of 2.3% from its prior 2.2% forecast. 
“State and local employment rose sharply in August following upward revisions to June and July, implying more growth of gov’t comp in Q3,” said Ben Herzon, senior economist at Macroeconomic Advisers. 
9:23 am September liftoff a 'very close call'Economists at Credit Suisse think the August jobs report meets the Fed’s threshold for “some further improvement” in the labor market. Still, it isn’t sold on a September rate rise.
“We are inclined to stick with our December Fed lift-off call as a central case, with Sept remaining a very close call – likely more contingent on financial markets than assessment of these data,” said Jay Feldman, director of U.S. economics at Credit Suisse. “If the domestic data alone were the issue, we’d probably be inclined to expect lift-off in September.”
9:19 am Fed will get more aggressive than the market expects 
“Full employment” has arrived, even if it’s the kind of full employment that doesn’t spark much growth and leaves plenty of  people still worried about the state of the economy.
With the official unemployment rate dropping to 5.1%, it has fallen into a range that the Fed defines as full employment, Capital Economics’ Paul Ashworth wrote in a note. “But the doves on the FOMC would point out that other measures, such as the still elevated proportion of involuntary part-time workers and the low participation rate, suggest that there is still slack left in the labor market.” 
It’s a good point. The labor force participation rate is still milling about near 40-year lows. There are millions of people who not only are not working, but simply aren’t even counted as part of the labor force so they can be categorized as unemployed. It’s one reason the economy has been so sluggish throughout the recovery. 
That said, the Fed can’t maintain that the economy is running at or even near full employment, and make a case against raising rates. “If the Fed doesn’t hike rates in September because of concerns about global economic growth and financial market fragility, it will have some explaining to do, because economic growth has been faster than it projected back in June and the unemployment rate has fallen much more rapidly.” 
That means the central bank is going to have to start raising rates, whether the first increase comes in September or October or December. “Regardless of which meeting this year the Fed begins to raise rates, next year we expect core inflation to surprise on the upside, forcing the Fed into tightening policy more aggressively than the markets currently anticipate.”...
...MUCH MORE

And from Real Time Economics:
The U.S. economy added 173,000 jobs in August, a bit of a slowdown from prior months but still a sign of steady expansion. Friday’s report from the Labor Department offered a few changes from the prior month on a range of measures, including the unemployment rate falling to 5.1% and an 8 cent rise in average hourly earnings. 
The economy has added around 2.9 million jobs over the past 12 months. That’s down slightly from earlier this year, when the 12-month pace surpassed three million, but it is still well ahead of the 2.5 million jobs added for the year ended July 2014.
Job growth over the past three months has taken a small step down, with an average of 221,000 added per month.
Meanwhile, the unemployment rate fell to its lowest level since April 2008. A broader gauge of underemployment, which includes workers who have part-time positions but say they would like full-time jobs, ticked down to 10.3%....
 ...A big drop in oil prices has squeezed the industry, which is shedding jobs.
 
...MORE

Thursday, September 3, 2015

Questions America Is Asking This Labor Day Weekend: "Has Carl Icahn Timed His FCX Investment Correctly?"

Following up on "Copper: New Icahn Favorite, Freeport-McMoRan Looks Like Junk (FCX)"

From StockCharts:
One week ago activist investor Carl Icahn disclosed that a group he belongs to owns nearly an 8.5% stake in Freeport-McMoran (FCX).  Rumors suggest Icahn may seek representation on FCX' board of directors and is calling for changes in some of the Company's business practices.   
FCX saw a pop in its stock price last week, but has since retreated well below its key 20 week EMA.  Has Icahn timed this correctly?  Well, it's much too early to tell and the chart below shows the direction of FCX is tied in large part to the direction of copper prices ($COPPER), which is LOWER.  One intriguing aspect here is that copper prices have fallen approximately 20% since late April while the FCX stock price has cratered, dropping an eye-popping 60% over the same time frame.   
Obviously, Icahn is searching for value here and he may eventually find it.  But technically, there's much work to be done here.  A bounce in FCX, though, could take the shares back to the prior lows near 16.50 or so....MORE

"What could derail the wearables revolution?"

From the journal Nature:

Electronic gadgets on — and in — our bodies are multiplying fast, but transmitting all their data safely will be a challenge.
Headsets that offer augmented-reality and virtual-reality experiences will add huge amounts of data traffic to already strained mobile networks.
Tom is late for his train and doesn't know the way to the station. Racing around a corner, he runs into a plaza full of tourists snapping and uploading photos to Instagram and Facebook. Which way should he go? He tells his Internet-connected contact lenses to load a map, meanwhile tapping at his smartwatch to pull up his ticket and platform information. An alarm flashes in his peripheral vision, only 15 minutes until the train departs, but the map is not loading. He looks around in dismay, frantically yelling “refresh” to his lenses against the clamour of the street. An alert scrolls across his vision: “You're feeling stressed. Take a breath. Have a hug!” But with all the tourists accessing the Internet, Tom has no hope of getting his much-needed map.

Welcome to the chaotic future of wearable electronics: devices that promise to connect real to digital lives seamlessly. These gadgets are rapidly multiplying, and within five years there could be half a billion devices strapped onto, or even embedded in, human bodies. Today, the most familiar gadgets are fitness trackers and smart watches, which monitor health and provide ready access to online services. But there are already devices that claim to do more than monitor, such as headbands that alert wearers when they become distracted or wristbands that administer electric shocks to smokers who want help quitting. Electronics companies promise to transform medicine with wearables that can treat symptoms or manage care. Devices are emerging that alert people with epilepsy to incipient seizures, help prevent anxiety attacks, and enable blind people to navigate.

But the potential of wearables crucially depends on the large amounts of data they access and generate. And that leads to two problems that researchers and technology developers are struggling to solve: finding improved ways to transmit data to and from wearables, and keeping all that information safe. With everything from toasters to cars now connecting wirelessly to the Internet, demands on a finite bandwidth are rapidly straining the system. Nearly half a billion new devices started chattering over mobile broadband last year alone, pushing mobile traffic to 25 times what it was just 5 years ago. And wearables are leading to new security concerns, from the use of highly personal data to track people's activity to maliciously attacking their online presence.

“It's a cliché that whenever there's a new technology we start talking about Huxley and A Brave New World, but with wearables — and what's loosely termed the Internet of Things — we truly are entering into a new era, and we have to start thinking of these issues,” says Anupam Joshi, head of the Center for Cybersecurity at the University of Maryland, Baltimore County....MUCH MORE
 

Lawyer in Uber Class Action Says They Want to Take the Case National

From Motherboard:
Neither party wants to back down in the newly-certified class action lawsuit against Uber. While Uber’s attorneys are talking about appealing the most recent decision, the other side is talking about taking the case national. 
The employment lawsuit against Uber, which will decide whether Uber’s drivers are independent contractors or actually employees, was certified as a class action on Tuesday, with a potential class of 160,000 drivers. Uber put out a press release earlier this week claiming that due to restrictions placed on the class by Judge Edward Chen, only 15,000 actual drivers out of the larger total of 160,000 that is cited in legal filings would be eligible as plaintiffs in the lawsuit. 
“We don’t have the actual numbers, but that sounds low,” said Adelaide Pagano, an attorney at Boston-based firm Lichten & Liss-Riordan, which is representing the plaintiffs in this case as well as plaintiffs in a number of other sharing-economy cases, including lawsuits against Lyft, Postmates, Caviar, and Homejoy. 
The decision on Tuesday only certified drivers who aren’t bound by arbitration clauses—in other words, bound by contracts that signed away the right to sue Uber. Although arbitration clauses before May 2014 have been ruled invalid, many drivers have started working for Uber since, or have accepted the new arbitration clause. Drivers that never contracted directly with Uber, instead working through a middleman company, are not eligible either. 
These limitations might change as the case progresses, but for now, Lichten & Liss-Riordan’s response has been to sweep up as many drivers into their case as possible, even if they don’t fall into the certified class. “[D]rivers who have driven for Uber any time since May 2014 who want to participate in the case will need to contact our firm, so that we can bring this challenge for them individually,” they said in an official statement. According to the firm, approximately 2,000 drivers all over the country have already contacted them....MORE.
In the FedEx case a couple years ago Liss-Riordan got the judge to totally reject FDX's argument: that the defendent
 ...manages a "sophisticated information and distribution network" but doesn't directly provide delivery services...
FedEx settled for $228 million and had to give the new employees a hearty "Welcome aboard".

California Lawmakers Vote To Have CalPERS; CalSTRS Divest From Coal

Following up on yesterday's "The 17 Foundations Yanking Their Assets From The Fossil Fuel Industry And The Folly Of Divestment".

It's nice that California absorbed as much of the loss as they did, the Coal ETF is down more than 80% in the last 4 1/2 years:

KOL Market Vectors Coal ETF monthly Stock Chart
Here's an idea.

The market cap of Peabody, the world's largest private sector coal company is down to $595 million, with around $6 Billion in debt.

Why not ask George Soros to cover the whole enterprise value of BTU? With less than a quarter of his net worth he could buy it and just shut the whole thing down. Coincidentally, the cost almost exactly equals the back taxes he owes.

With 7.5 billion tons of proven and probable reserves-and grabbing the trusty TRS-80-multiply by 2.86-that's 21.45 billion tons of avoided CO2 at a cost of-wait for it-less than 31 cents per ton.

Huh.
Take that European Emissions Trading Scheme.

BTU $2.12 down 2 cents.
KOL $9.00 down 2 cents.

From Reuters:
UPDATE 2-Coal divestment bill passes California state legislature
Adds quotes from bill author, opponent and asset management company) 
By Rory Carroll
(Reuters) - A bill requiring California's state pension funds Calpers and CalSTRS to sell their investments in coal companies passed the Assembly on Wednesday, a major step for legislation that backers hope will inspire other funds to address climate change. 
The bill, which passed by a vote of 43 to 27, would require CalPers and CalSTRS - public employee pension funds that manage a combined $476 billion in assets - to liquidate holdings in companies that generate at least half of their revenue from coal mining by July 2017. 
CalPers invests in about 20 to 30 thermal coal mining companies valued at approximately $100 million to $200 million, a spokesman said. Coal companies it invests in include Peabody Energy and Arch Coal, according to its latest investment report. Neither company was immediately available for comment. 
CalSTRS has holdings of around $40 million, a spokesman said. Both Calpers and CalSTRS did not take a formal position on the legislation and both declined comment after the vote. 
"Coal is losing value quickly and investing in coal is a losing proposition for our retirees," said Senate President pro Tempore Kevin de León, the bill's author....MORE
Meaning it may finally be time to implement Plan VICE!
Bwahaha
Bwaa-ha-ha-ha

From April 2007 (hey, we're nothing if not patient):

Moral Judgment On 'Sin Stocks' Means Higher Returns For Vice-Friendly Investors

That's the headline of a press release from the University of British Columbia's Sauder School of Business announcing the release of a draft paper by the school's Prof. Marcin Kacperczyk and Princeton Economics Prof. Harrison Hong.

Prof. Hong lists his research interests as:
 "Asset pricing with less-than-fully-rational investors; differences of opinion, short-sales constraints and asset prices; social interaction and financial markets; career concerns, biased forecasts and security analysts; organization, performance and mutual funds; asset pricing with asymmetric information and other market imperfections."
Hey! Mine too!

A quote from page 4 (of 50):
"In contrast to institutional investors, individual investors can keep their stock positions out of the view of enforcers of societal norms, and therefore we expect individual investors to be more willing than institutional investors to hold sin stocks."
The fact that an individual investor (or hedgie) won't be elbowed away from the trough by CALPERS means your entry price into a name won't carry a societal approval premium. On the other hand your exit price will be lower to the extent your universe of buyers is limited to vice-savvy investors (hedgies).

And what does this have to do with global warming investments?

One-as social pressure builds to be perceived as green, see Yahoo yesterday ("Our numbers suck but we're carbon neutral!) we should see an expanding green premium.

Two-as the dirtiest, filthiest, vilest, Hitlerian energy sources are shunned (at least in polite company) their risk premia will shrink. At least until I join my brother Greenshirts in a Night of the Long knives at BTU headquarters, 701 Market St., St. Louis, MO 63101.

Ahem. Excuse me. Got carried away.

See you at the face-painting booth Sunday, Earth Day!

Here's the Kacperczyk/Hong paper, "The Price of Sin: The Effects of Social Norms on Markets".

Today In History: Swedish Chimpanzee, Ola, Wraps Up Investing Career

From the Los Angeles Times, Sept. 9, 1993:
STOCKHOLM, Sweden — A newspaper gave five stock analysts and a chimpanzee the equivalent of $1,250 each to make as much money as they could on the stock market. The chimp won. 
After one month, the chimpanzee, Ola, saw the value of his stocks rise $190, the newspaper Expressen reported this week. 
Runner-up was Mats Jonnerhag, publisher of the newsletter Bourse Insight. His stocks rose $130 from Aug. 3 to Sept. 3. 
While the stock experts carefully considered their portfolios, Ola made his choice by throwing darts at names of companies listed on the Stockholm stock exchange. 
One dart hit Forsheda, a small diversified company whose stock rose 44% over the month. That compared to the average 5% rise for all stocks listed on the exchange.
Despite persistent rumors, it was never proven that the "chimp" was actually Burton Malkiel in a monkey* suit.
*(yes, yes taxonomy, my bad)

Possibly also of interest:

What Monkey Pornography and Celebrity Worship Tells Us About Human Nature  
Commodity traders superior to chimpanzees, research shows 
Jim Cramer beats Monkey in Stock Picking Contest!
UPDATE-Jim Cramer Beats Monkey in Stock Picking Contest
What Jim Cramer Does After Beating the Monkey 

The Shortest Oil Post Ever

From SafeHaven:
"Trading position (short-term; our opinion): No speculative positions are justified from the risk/reward perspective."
Alrighty then.

October WTI $46.10 down 15 cents.
I lifted the headline format from one of the links at Alphaville's Further Reading post.

Wednesday, September 2, 2015

"All Aboard the Bloomberg Career Express"

Now is the time we juxtapose!
First up, from the Bloomberg blog:

All aboard the Bloomberg Career Express
This year marks Bloomberg 25th years in Singapore and as part of our anniversary celebrations; we are launching a one-of-a kind recruitment drive targeted at students in local educational institutions. 
On September 7th, the Bloomberg Career Express — a specially outfitted vehicle — will hit the roads for the first time, kicking off a month long mobile recruitment outreach that will bring Bloomberg’s state of the art fintech experience to students in over 10 campuses across Singapore. 
Designed specifically to educate and inspire students to careers in business and finance, the bus replicates signature elements of our culture with the latest technology employed at Bloomberg. 
For the first time, students will get a taste of the inner workings of one of the world’s largest providers of financial data, information and news, and gain access to the same platform used by top financial professionals worldwide....MORE
And from Wired:

Bloomberg’s Future Is the Future of News for Everyone
BLOOMBERG NEWS IS going through some big changes. 
The company laid off dozens of journalists yesterday. And in a leaked internal memo, the business news behemoth outlined how it will be reorganizing in an effort to both capitalize on its strengths and further adapt to the continually changing media landscape. 
“This is not about downsizing; it is about refocusing our considerable resources,” editor-in-chief John Micklethwait wrote in the memo. “Our purpose is to be the definitive ‘chronicle of capitalism’—to capture everything that matters in global business and finance.” 
The lengthy memo goes on to describe how the editorial and research arms of the company, to which founder Michael Bloomberg notably returned in September of last year, plan to refocus. Micklethwait says the company will stick with reporting on its key areas of interest—business, finance, markets, economics, technology, and power (namely, government and politics)—while staying ever mindful of its core audience (“the clever customer who is short of time”). 
In essence, Bloomberg will follow what seems like the paradoxical imperatives for any media company, especially those that aren’t flush with venture capital cash: become more niche but also more global; and get leaner while also spreading to as many platforms as possible. 
The Broad Niche
In reorganizing, Bloomberg will eschew general interest reporting on topics like sports and education in favor of a stricter focus on business and markets. To stay competitive, Bloomberg seems to feel it must resist the broad industry trend of homogenization in favor of becoming more like itself—the essential source, especially for paying Bloomberg terminal users, for business, markets, and financial news. 
This isn’t so different from The New York Times‘ recent efforts to remind its audience of its signature investigative reporting in recent months via  news alerts highlighting its biggest stories. Bloomberg bearing down on business is also somewhat like BuzzFeed expanding its video offerings. By focusing on its strengths, all three hope to differentiate to reach the broadest possible audience. 
Micklethwait‘s call to remember who Bloomberg News’ audience is—the kind of people for whom, quite literally, time is money—also doesn’t sound all that different from BuzzFeed honing in on young people and then reaching them where they want to be reached, like, say, Snapchat, or from The New York Times using its NYT Now app to offer daily digests of the news of record that readers look to the Times to provide....MORE

Why Did A Chinese Gent Buy 705,700 Hectares of Northern Australia?

The Hurun Rich List pegs Ma Xingfa's net worth at $1.5 billion but the Forbes China 400, with a $700 million cutoff. does not have him listed.

The property has 80 kilometers of coastline.
And 40,000 cows.

From The Australian Financial Review:

Wollogorang cattle station is on the shores of the Gulf of Carpentaria in Queensland and the Northern Territory.

Wollogorang cattle station is on the shores of the Gulf of Carpentaria in Queensland and the Northern Territory.
In the reception area of an unassuming six-storey office block on the outskirts of the eastern Chinese city of Hangzhou, a small woman is wedged between a large freezer and a pair of scales.  
Surrounded by cabinets displaying a variety of ball bearings, she is weighing, pricing and labelling chunks of beef before placing the parcels neatly back into the freezer.  
The parcels are labelled "Austeak," the only hint this is the headquarters of Australia's newest cattle baron.  
Five floors up, Ma Xingfa, the founder and chairman of Tianma Bearings Group, is tapping away at his Apple computer, which sits atop a desk made of intricately carved wood.  
His office is sparsely furnished and there is no receptionist. A month ago, Ma bought two cattle stations on the Northern Territory and Queensland border for $47 million, an investment he describes as an "experiment" in his first interview since the purchase.  
While Ma is looking to diversify his business operationally and geographically, and Tianma's latest annual report clearly earmarks agriculture as a "growth engine", the chairman still has reservations about Australia. And that's after building up an agricultural portfolio over five years that includes three other cattle stations and two wineries.  
He explains almost as soon as we start talking that his main concerns are local opposition to foreign investment and a lack of adequate infrastructure.  
"I've been to Australia more than a dozen times but I still don't think I have a good understanding of the country so I'm not comfortable making very big investments," he says.  
"All of our investments are relatively small-scale, pilot projects. We are still trying to lay the groundwork for where we go. There are big differences between the two countries, legally and culturally, and while the bilateral trade is a large number overall, there are some unsmooth parts. 
We are taking a cautious approach."  
Ma is a cautious person.  
While he agreed to be interviewed about his recent and widely reported purchase of the Wollogorang and Wentworth stations, a total of 705,700 hectares, he declined to be photographed and was reluctant to give too many details about his background.  
The son of rice paddy farmers from Hangzhou, Ma set up his first ball bearings factory in 1986. By the end of the 1990s, he began pushing his way up the country's rich list as a two-decades long construction and manufacturing boom boosted demand for high speed trains, planes and heavy equipment, all of which needed ball bearings. 
The business peaked in 2009, after China embarked on an infrastructure spending frenzy to shield the local economy from the global financial crisis. At that time, Ma was ranked the country's 123rd richest man, with a fortune estimated at 6.8 billion yuan ($1.5 billion), according to research group Hurun. 
But since then, Ma's fortune has declined in line with the country's manufacturing sector, which has been hit by slowing growth and the shift toward a consumption-led, services-based economy. Ma's last showing on the rich list was in 2012, when he was ranked 628th with a fortune of 2.8 billion yuan....MORE

"What If Stalin Had Computers?"

So there I was, trying to remember if Russia was actually going to develop nuclear train locomotives [emphasis on loco] when I was pointed toward this little bit of weirdness.

From The New Republic:
When will capitalism end? It’s not a new idea, and even the capitalists suspect it will happen. After all, every other mode of production has fallen, and capitalism isn’t a steady-state system. It simply isn’t built to stay the same. As firms incorporate new technologies, capacity increases per-capita, and jobs change, so too does the nature of commodities and consumption. It happened with the assembly line, and it’s happening again with information technology. In 1930, John Maynard Keynes famously predicted these trends would reduce everyone’s daily toil to part-time by now, while Karl Marx thought the same developments would compel workers to seize the whole system and abolish wage-labor in general. But the system still lives.
If the history of postcapitalism so far is a repeating chorus asking “Are we there yet?”, then the new book from Channel 4 economics editor Paul Mason, Postcapitalism: A Guide to Our Future, is a reassuring “Almost!” from the front seat. Like a good co-pilot, Mason keeps his eyes on his indicators, and he has the end in sight. Or at least on his graphs. How the transition might occur is less important than that it must.

Marxist economics is not a vibrant field within the anglophone academy or public sphere. Even Thomas Piketty’s best selling import, Capital in the Twenty-First Century, didn’t take much more than a good title from the communists. Mason is an oddity, as an economics commentator of some stature (at least in the UK, where he has been an economics/business editor since 2001) who believes that labor is the source of all value. He spends much of the first half of Postcapitalism redeeming the work of heterodox Soviet economist Nikolai Kondtratieff, whose model of 50-year four-phase market cycles is Mason’s preferred historical gauge.
The Kondtratieff wave explanation is an intuitive way to look at 200 years of economic history: In Mason’s telling, industrial capitalism has completed four cycles since 1790, driven by the interrelated processes of technological innovation, global expansion, capital investment, and not least by labor struggles. The story a cycle goes more or less like this: Capitalists incorporate new productive technology, sharing the proceeds with workers; profits slow and workers fight with their bosses as firms try to depress labor costs; when capitalists can’t find any more savings, they’re forced to incorporate new technology and start the cycle over. Despite its Soviet origins, mainstream British and American economists have found the model useful for describing how capitalism manages to persist. 
The problem is we seem to have broken the cycle. Where workers should have been able to leverage their power for higher living standards, capital instead outsourced production, smashed unions, captured the regulators, and expanded money supply by unpegging the dollar from gold. Mason calls this counter-cyclical move “neoliberalism,” and it’s a helpful definition for a term sometimes used carelessly to refer to anything bad and capitalist. Kondratieff described a dance between capital and labor that was theoretically sustainable—a heresy that did not go over well with Stalin, who felt that the proletariat was only days from halting the waltz.
As it turned out, Stalin was wrong and capital broke up with labor, not the other way around. Mason calls our current situation the “long, disrupted wave”: The lights are on, and Kondratieff’s dance is over. This isn’t the only relationship that’s broken; capitalist economics is incompatible with information technology, Mason claims. As the supply of some commodities (like music files) becomes infinite, price-setting becomes arbitrary and unsustainable. How do you measure the amount of labor in replicable file? The adaptable system of production that Kondratieff saw from the other side is sinking. “The most highly educated generation in the history of the human race, and the best connected,” Mason writes, “will not accept a future of high inequality and stagnant growth.” 
Postcapitalism really begins here, at the bargaining table with capital and labor looking for a plan that will settle their differences once and for all. If the world is headed for imminent ecological collapse, then to continue on with our current capitalist mode of production is suicide. Maximizing actors don’t kill themselves, so the operative question is what to do next. How can we maintain people’s standards of living while socializing production, reducing labor, saving the environment, and making the best use of new technology? Mason has some ideas. 
The book really comes into its own when Mason addresses the possibilities of contemporary planning. He does not go as far as to endorse “cyber Stalinism” but at the very least poses its thesis: What if the problem with the Soviet Union was that it was too early? What if our computer processing power and behavioral data are developed enough now that central planning could outperform the market when it comes to the distribution of goods and services?...MORE
Yes, that's the problem, the Soviet Union was simply too early.

"The Automated Future and Past of Fast Food" With Cameos By Levkovich and Hitler

Searchable feedreaders are cool.
So is serendipity.

Since the recent unpleasantness (what is it ~40% declines for Shanghai and Shenzhen?) began, FT Alphaville's David Keohane has had some of the best China commentary around but in the last couple days he's gotten more philosophical, using the passing parade as an opportunity to juxtapose and as a jumping off point for deeper commentary.

Yesterday it was Of pampered Indian unicorns and today, riffing and attributing in Fair and repeated warning: Humans, your purpose is at risk:
To nick an opening from Climateer… at some point the labour-capital pendulum may not swing back. 
Not sure we’re there yet but an automated restaurant in San Francisco is surely a signpost on the road to some sort of hell, albeit potentially just one made up of shoddy dining experiences.
Hell is… soylent served to you by an automaton in a room of people pretending they’re having a good time.
 
Anyway. That aside, we may as well keep an eye on that pendulum.
From Citi’s Tobias M Levkovich, with our emphasis:
 
But, policy reactions to any change tend to be somewhat populist and politically expedient, especially since louder, strident and often extreme voices are heard over the apathy of the silent majority. For example, lifting the minimum wage, which affects a small proportion of the working population, while well intentioned, may perversely hasten the introduction of robots into fast food restaurants and these machines never need a bathroom break. While most of us consider robots to be more of a factory phenomenon and industrial robot sales have been on a steady ascent (depicted in Figure 3), the broadening out of their uses due to further advances in sensors and monitoring systems, suggests that factors like artificial intelligence could make their adoption expand into many other areas. 
New machines are being used at various companies to move product in warehouses to the shipping docks. Supermarkets are testing machines that arrange products on shelves (one already can do self-checkout and payment) and various companies are studying self-driving vehicles....MUCH MORE
The Nazis show up in the comments, I don't think Mr. Keohane would gratuitously invoke the Berchtesgaden bunch.

Anyhoo... as I was about to ask if we had anything further on the fast food biz, thinking along the lines of last year's 360-burgers-per-hour "The Robot DESIGNED to Eliminate Fast Food Workers", this dropped out of one of the readers. From the academic journal storage folks at JSTOR:

"Bamn Automat" by User:Nricardo - Own work. Licensed under Public Domain via Commons - https://commons.wikimedia.org/wiki/File:Bamn_Automat.png#/media/File:Bamn_Automat.png
The “Fight for Fifteen” campaign to raise the wages of workers in fast food and other low-wage industries has prompted much speculation about the automation of restaurant work. But the mechanized delivery of meals isn’t just the possible future of fast food—it’s also the way the industry got its start. 
In a 2000 paper for New York History, Nicholas Bromell recounts the way automats created a bridge between early-twentieth century cafeterias and the opening of the first McDonalds and Burger King restaurants in the 1950s. 
Bromell wrote that cafeterias were, themselves, the fast food joints of turn-of-the-century America, criticized for the “hasty, gulping style of eating” they promoted. Their food was cheaper and healthier than offerings from street vendors and diners, and they let urban workers grab a quick lunch and get right back to the job. 
The first automat in New York City opened in 1912. Diners chose a selection from a “wall of tiny glass windows displaying a high-rise of culinary delights,” Bromell writes. They dropped some nickels in a slot, turned a knob, and took their food. The kitchen ran just like any other cafeteria operation, replacing the food as it was sold, but the automated vending kept lines from getting too long and reduced the opportunities for unhygienic food handling. 
Automat owners emphasized the “scientific” dining experience with art-deco furnishings. The clean, streamlined feel helped convince the public that they were appropriate places for women as well as men. 
Prefiguring McDonalds, automat chain owner Horn & Hardart standardized their food in new ways. The corporation set recipes and preparation methods down to the size of the bacon square to be placed on top of a serving of baked beans. 
Still, aspects of the experience would be strange to a modern fast-food customer. There was no take-out, let alone a drive-through window. People sat family-style, side by side with strangers at a table, and they ate on hand-painted crockery with real flatware....MORE
Here's the paper, "The Automat: Preparing the Way for Fast Food".

The 17 Foundations Yanking Their Assets From The Fossil Fuel Industry And The Folly Of Divestment

Usually the argument is "Do you have more activist effect being a shareholder or by being seen to not be a shareholder" but that kind of thinking is the equivalent of playing checkers at the kiddie table, see second link below.

Even The Guardian newspaper knows better than to divest (although they call for others to do so). See third link below.

First up, from Inside Philanthropy the headline story:
Can a foundation with a mission to fight climate change do so in good faith when it has millions in assets invested in oil, gas and coal companies? That’s a big question that’s been kicking around the philanthropy world in recent years, and 17 foundations just answered it by committing to divest their trusts from fossil fuel stocks. 
Announced this week, Divest-Invest Philanthropy is an initiative in which foundations with more than $2 billion in combined assets have publicly committed to pulling all investments from fossil fuel companies, and investing at least 5 percent of their funds in clean energy companies. The foundations are joining what’s become known as the Divest Movement, a growing campaign to convince universities, churches, municipalities and now philanthropies that holding investments in fossil fuel companies is immoral and financially unwise. The tactic has been used in the past in opposition to apartheid, genocide and the tobacco industry. College activists and Bill McKibben’s nonprofit 350.org have spearheaded the movement, although a limited number of schools have actually agreed to divest. 
Divest-Invest represents a sizable chunk of money, but it also makes a statement, calling out foundations as standing on shaky moral ground. The group doesn’t have any titans such as Ford, Hewlett or MacArthur, but it does have some pretty sizable signatories. The largest is the Park Foundation, the upstate-New York-based funder that supports environmental work, including protecting water supplies from fracking. The foundation boasts a $335 million trust. Social justice funder Wallace Global Fund is also on board with its $155 million endowment. As is the Educational Foundation of America, which leverages its $141 million in assets toward arts, the environment and reproductive health and justice....MORE
And from the Social Science Research Network, August 19, 2015, emphasis mine:

Abstract:    
Large divestment campaigns are undertaken in part to depress share prices of firms that investors see as engaged in harmful activities. We show that, if successful, investors who divest earn lower and riskier returns than those that do not, leading them to control a decreasing share of wealth over time. Divestment therefore has only a temporary price impact. Further, we show that, for standard managerial compensation schemes, divestment campaigns actually provide an incentive for executives to increase, not reduce, the harm that they create. Therefore, divestment is both counter-productive in the short run, and self-defeating in the long run. 
Number of Pages in PDF File: 29 
Keywords: Divestment, Exclusionary Investment, Socially Responsible Investment
1 Introduction
On May 6, 2014, Stanford University announced that it would no longer invest funds in coal mining 
firms and would divest its existing holdings. According to university President John Hennessy:
“Stanford has a responsibility as a global citizen to promote sustainability for our
planet...The university’s review has concluded that coal is one of the most carbonintensive
methods of energy generation and that other sources can be readily substituted
for it. Moving away from coal in the investment context is a small, but constructive, step
while work continues, at Stanford and elsewhere, to develop broadly viable sustainable
energy solutions for the future.” 
In part, divestment campaigns like Stanford’s allow groups to credibly signal their displeasure
with a company, industry, or country’s actions, but larger divestment campaigns also aspire to
affect the prices and profitability of offending firms. Most campaigns are too small to have much
effect but, in this paper, we ask what would happen if a divestment campaign were large enough to have a meaningful effect on share prices. Would this yield the benefits that divestment proponents seek? 
We show that large-scale divestment campaigns feature two serious flaws. If divestment is
effective in reducing prices, then the investors willing to purchase the lower-priced shares will earn higher returns. Over time, these amoral investors will see their share of the economy’s assets grow, relative to the share held by moral investors. This means that the price discount due to divestment will shrink over time. Divestment campaigns are inherently self-defeating, in the sense that, even if they are successful at first, this very success will cause them to fail in the long run. 
As noted by Keynes (1923), in the long run, we are all dead. What is the effect of a largescale
divestment campaign in the short run? Some targets of divestment campaigns, like fossil fuel
firms, cannot mitigate the harm that campaigners dislike. For these firms, the short-run effect of
divestment will be just as lousy as the long-run effect. Other targets, like firms employing sweatshop labor, can mitigate the harm, and we ask whether a low share price will cause them to do so.
We show that the answer depends upon how the firm’s manager is compensated. If she is rewarded for high near-term share prices, then a divestment campaign could incent her to satisfy campaigners. 
If she has mostly long-term incentives, however, or if the divestment campaign is small, she will
not adjust her behavior.... 
...MUCH MORE (29 page PDF)

Piketty smiles.

And finally, a repost from April 2015:

The Guardian Newspaper Is Not A Contrary Indicator On Hydrocarbon Divestment Timing
The Guardian has gone into full "Do as I say" mode. 
On Monday FT Alphaville (very) bravely dipped a toe into the muck that is the 2°/stranded asset/divestment argument in the run up to the Paris climate shindig later this year. One of these days I'll get around to the story of how was 2° chosen. And maybe tell the tale of what happened when the pressure groups went to the SEC. 
From FT Alphaville: 
The Guardian as contrarian indicator 
You’ve got to hand it to Alan Rusbridger: he’s a great contrarian indicator. The editor of The Guardian launched his valedictory campaign to demand divestment from fossil fuels with a wrap-around promotion and the paper’s full moral force. 
This was terribly nice of Mr Rusbridger. Investors, he explained, should sell their shares in oil, coal and others digging up nasty carbon-based fuels, because they weren’t really worth as much as everyone thought; they would never be allowed to use all their reserves, because it would cause the end of the world (or serious global warming, anyway). 
The usually left-wing Guardian was going out of its way to help the plutocrats make money, a job usually reserved for us here at the FT. 
By supporting these companies, investors not only continue to fund unsustainable business models that are bound to make climate change worse, but they also risk their financial assets becoming worthless if international agreements on climate change are met. 
Investors should have listened, thanked Mr Rusbridger, and done the exact opposite. It turned out he was a perfect contrarian indicator. He picked a six-year bottom in the US benchmark oil price, West Texas Intermediate. He lit a carbon-based bonfire under crude prices: WTI’s now up 30 per cent, the biggest rally over such a short period since 2009 (and before that, 2002)....MUCH MORE 

As it turns out, The  Guardian itself has not divested any hydrocarbons from its pension plans and has in all probability been adding to the position (as a function of re-balancing). Here's a Guardian podcast transcript via MyTranscriptBox:... 
...People: Alex Breuer: Creative Director, the Guardian
Aleks Krotoski: Broadcaster, presenter of Guardian podcast Tech Weekly
Bill McKibben: Environmentalist, author and journalist
Amanda Michel: Open editor, the Guardian US
James Randerson: Assistant national news edior, the Guardian
Alan Rusbridger: Editor-in-chief, the Guardian
Adam Vaughan: Editor, the Guardian environment site 
"...Amanda Michel: You know, there are big questions about asking people to do something that we ourselves have not done.  
Aleks Krotoski: What Amanda is talking about is sorting out the Guardian's own pots of money, their investments.  
Amanda Michel: It will seem like hypocrisy.  
Alan Rusbridger: We have about £600 million invested at the moment, and I don't think our fund managers could say exactly how much was invested in fossil fuel. But it is there, we haven't said that it shouldn't be, so we have got money invested. And so, if we're going to be calling on people to divest, people are bound to ask "Well, is that what the Guardian's going to do?"..." 
The above is good for a tee-hee but that's about all. 
Whether or not any of this makes any difference to the earth is the question, and the question that should be asked to separate out actions that will actually make a difference from those that are just posturing is: 
"How much will this policy prescription lower the temperature of the planet?" 
In degrees, please.

Tuesday, September 1, 2015

Uber: Judge Certifies Class Action Status For California Drivers

From the San Jose Mercury-News:

Uber loses round in legal battle with drivers
A federal judge Tuesday dealt a blow to Uber's efforts to neutralize a major legal challenge to its business model, finding that a lawsuit against the growing ride-booking company can proceed as a class action on behalf of most California drivers who have worked for the Bay Area outfit since 2009. 
In a 68-page ruling, U.S. District Judge Edward Chen rejected Uber's argument that the case should not proceed as a class action -- an argument that would have made it far more difficult to successfully press legal claims that Uber drivers should be treated as employees instead of independent contractors. 
While the judge carved out some exceptions, for the most part he allowed the case to move forward in a way that could cover the claims of as many as 160,000 or more Uber drivers. A similar case is unfolding in federal court in San Francisco against Lyft, and Chen's ruling could be used as fodder to back arguments for class-action status for those drivers....MORE
Previously:
Meet the Lawyer Taking on Uber and the Rest Of the On-demand Economy 
California Labor Commission Rules Uber Drivers Are Employees, NOT Independent Contractors

See also:
"Why Uber's $50 Billion Valuation Could Burst the Tech Bubble"
The California Uber Ruling Means NOTHING To Sharing Economy Valuations
Smart Talk On Uber and the Sharing Economy

“Is Father Christmas real?” (quick, get the kids out of the room)

FT Alphaville relays “Is Father Christmas real?” and other musings by UBS.

Which query we can answer with a resounding "Yes, Virginia, He exists as certainly as love and generosity and receivership exist..."

From the earlier-mentioned Barents Observer, Aug.21:




Santa Claus declared bankrupt
Russian visitors to Rovaniemi were big business. Not that much anymore. 
Everyone has to pay taxes, even Santa Claus. This week, the district court of Lapland in Finland declared Dianordia, the company that runs Santa’s office on the Arctic Circle bankrupt. 
The company has an outstanding tax debt of €206,000, reports Lapin Kansa. 
Rovaniemi has over the last decades built big business by promoting itself as the hometown of Santa Claus. In Christmas seasons, charter planes from all over Europe crowd the local airport. Loads of tourists from Asia are flying in to make a selfie with Santa. And no secret, thousands of Russians from neighboring Kola Peninsula, Karelia and St. Petersburg region have boosted the Santa Claus businesses. 
In the last two years, the numbers of Russian tourists have dropped dramatically, especially last winter due to the collapse of the Russian ruble....MORE
Previously in the Yes Virginia series:

Yes Virginia, Crocodiles Can Grow as Big as Trucks (and eat cows)
Yes Virginia There is a Santa Claus Rally
Yes Virginia, ETF's Are Where True Price Discovery Happens, Not in the Underlying (There IS a Santa Claus, there IS)
Yes Virginia Currency wars can be quite effective (at least for a while)

And many more.
Okay, it's probably safe to bring the kids back.
Show them the picture of the croc while making an offhand naughty/nice comment and...

Oh! Canada: "Canadian economy in recession, GDP figures confirm"

From the Toronto Star:

Statistics Canada reports GDP fell in second quarter, indicating economy was in recession in first half of 2015.
GDP statistics data released by Statistics Canada today indicate that the Canadian economy is officially in recession.
It’s official: Canada’s economy fell into recession in the first half of the year for the first time since the Great Recession of 2009. 
Canada’s real gross domestic product shrank 0.5 per cent between April and June, following a revised downward decline of 0.8 per cent for the first three months of the year, Statistics Canada said Tuesday....MORE

Luncheon With The Economists

Our little meal consists of only two courses and you have to grab your own apéritif but I think you might like it.

L'Entrée
Montgolfières à la Lars P. Syll
airship800
A balloonist, lost, sees someone walking down a country lane. The balloonist lowers the balloon and shouts down to the the walker: 
— Where am I? 
— About 20 feet above the ground, comes the reply. 
After a moment’s pondering, the balloonist says: 
— You must be an economist. 
— How did you know? 
— Your information is perfectly correct — and totally useless.
Le Plat Principal
Critique Économique par Noah Smith
Economics Has a Math Problem
A lot of people complain about the math in economics. Economists tend to quietly dismiss such complaints as the sour-grapes protests of literary types who lack the talent or training to hack their way through systems of equations. But it isn't just the mathematically illiterate who grouse. New York University economist Paul Romer -- hardly a lightweight when it comes to equations -- recently complained about how economists use math as a tool of rhetoric instead of a tool to understand the world.  
Personally, I think that what’s odd about econ isn’t that it uses lots of math -- it’s the way it uses math. In most applied math disciplines -- computational biology, fluid dynamics, quantitative finance -- mathematical theories are always tied to the evidence. If a theory hasn’t been tested, it’s treated as pure conjecture.  
Not so in econ. Traditionally, economists have put the facts in a subordinate role and theory in the driver’s seat. Plausible-sounding theories are believed to be true unless proven false, while empirical facts are often dismissed if they don’t make sense in the context of leading theories. This isn’t a problem with math -- it was just as true back when economics theories were written out in long literary volumes. Econ developed as a form of philosophy and then added math later, becoming basically a form of mathematical philosophy.  
In other words, econ is now a rogue branch of applied math. Developed without access to good data, it evolved different scientific values and conventions. But this is changing fast, as information technology and the computer revolution have furnished economists with mountains of data. As a result, empirical analysis is coming to dominate econ.  
One sign of this is the sudden burst of interest in machine learning in the economics field. Machine learning is a broad term for a collection of statistical data analysis techniques that identify key features of the data without committing to a theory. To use an old adage, machine learning “lets the data speak.” In the age of Big Data, machine learning is a hot field in the technology business, and is a key tool of the rapidly expanding field of data science. Now, econ is catching the bug.  
Two economists who have been pushing for the adoption of machine learning techniques in economics are Susan Athey and Guido Imbens of Stanford University. The two economists explained machine learning techniques to an interested crowd at a recent meeting of the National Bureau of Economic Research. Their overview stated that machine learning techniques emphasized causality less than traditional economic statistical techniques, or what's usually known as econometrics. In other words, machine learning is more about forecasting than about understanding the effects of policy.  
That would make the techniques less interesting to many economists, who are usually more concerned about giving policy recommendations than in making forecasts....MORE
Bravo!

Vitol, World's Largest Oil Trader, Sees $40-60 Prices Next Year

Brent 50.52 -3.63; WTI $45.74 -3.46.
From Bloomberg via gCaptain:

World’s Top Oil Trader Sees $40-$60 a Barrel in 2016
Oil prices will remain at $40 to $60 a barrel into 2016 as rising crude supplies overwhelm demand, according to the world’s largest independent oil trader. 
The oil-production surplus means stockpiles will keep expanding for “the next few quarters” and excess inventories won’t clear until 2017 at the earliest, Vitol Group BV Chief Executive Officer Ian Taylor said in an interview. 
The forecast, if realized, would mean oil-producing countries and the energy industry would need to weather a longer downturn than occurred after the financial crisis of 2008-2009, when prices fell as low as $36 a barrel, but recovered to almost $80 within a year. 
“Oil prices will be stuck between $40 and $60 a barrel this year and in 2016,” Taylor said. “I don’t see much reason to go higher and we can go lower” because the physical crude oil market is “quite weak” right now. 
Vitol is the world’s largest independent oil trading house, handling more than five million barrels a day of crude and refined products — enough to cover the needs of Germany, France and Spain together. 
Brent crude, the global benchmark, dropped to a six-year low of $42.23 a barrel on Aug. 24, down from more than $100 a barrel a year ago. While prices subsequently rebounded to trade at $52.72 at 12:19 p.m. on the London-based ICE Futures Europe exchange Tuesday, they remain 49 percent lower than a year- earlier. 
Crude plunged after the Organization of Petroleum Exporting Countries in November diverged from its traditional policy of adjusting supply to manage prices, announcing it would maintain output to defend its position in the market. After an almost 40 percent drop in prices, the group ratified that decision in June. It is scheduled to meet again Dec. 4. 
OPEC effectively began a price war against higher-cost producers including U.S. shale operations, the North Sea and ultra-deep-water discoveries in Brazil and Angola. So far, however, “non-OPEC production is proving more resilient than expected,” Taylor said.
Daily oil production outside OPEC will grow this year by 1.1 million barrels, compared with an expansion of 2.4 million in 2014, the International Energy Agency said Aug. 12. Non-OPEC supply is set to contract by 200,000 barrels per day in 2016, the first drop since 2008, it said. 
Chinese DemandTaylor, a 59-year-old trader-cum-executive who started his career at Royal Dutch Shell Plc in the late 1970s, said oil demand growth was the only bullish factor in the market. Global daily consumption will increase this year and next by about 1.5 million barrels and “we are not seeing any dramatic drop in demand in China,” he said. 
While the prices slump has hurt oil producers, independent traders such as Vitol and its competitors Trafigura Beheer BV, Glencore Plc, Gunvor Group Ltd. and Mercuria Energy Group Ltd. are profiting from the increase in volatility. The Chicago Board Options Exchange Crude Oil Volatility Index, a measure of fluctuations in prices, averaged 44.28 so far this year, more than double the level in 2014. 
These companies also benefit from a market structure called contango — where forward prices are higher than current costs. This allows traders to buy oil, store it in tanks and lock in a higher selling price for a later date using derivatives. 
Contango Trade“Contango opportunities are emerging, particularly in products,” Taylor said. Onshore inventories are currently expanding at a rate of 1.5 million barrels a day, although the price incentive is not strong enough to store fuel offshore in tankers, he said....MORE
See Aug. 23's "Oil Price Decline May Be Due For a (Brief) Pause" for one of the signs that spooked the bears and got us on the right side of the upmove before yesterday's "Oil: Stephen Schork on the Change in the Market":
Sorry about the paucity of posts, reality keeps intruding.All things being equal, and of course they never are, $50 would be a bit pricey for the immediate supply/demand picture and a dandy spot to get short again. Maybe even a lower entry but see second piece below.October WTI $48.86 up $3.64.
It top-ticked at $49.33 before turning.

Nomura's Bob Janjuah Is Not Dead, In Fact He's Relatively Chipper

S&P 1,933.63 Down 38.55 (1.95%)
From CNBC:

S&P 500 may fall further 10-15%: Nomura's Janjuah
Nomura's widely-watched strategist, Bob Janjuah, believes that the S&P 500 is likely to fall another 10 to 15 percent in the near term, causing the U.S. Federal Reserve to unleash more stimulus policies in 2016. 
"When we were up at (21,000 points)[sic] I thought we would see 1,700 (points) at some point in late (third quarter), early (fourth quarter)," Janjuah, a senior independent client adviser at the investment bank, told CNBC Tuesday. "We made some progress towards that target, I think there's a bit more to go." 
The S&P 500, a broad measure of U.S. stocks, closed on Monday at 1,972 points, a key level some analysts are watching for support. The index has just suffered its worst month since May 2012 on the back of Chinese growth concerns and jitters that the Fed is about to raise interest rates....MUCH MORE
Back when he was at Royal Bank of Scotland and again in 2011 Mr. Janjuah was calling for 550 on the S&P so this is damn near euphoric.
Previously:
"Eat your heart out Albert Edwards": Royal Bank of Scotland Calls for 550 S&P (and: "South Sea Bubble Redux")
2011
Nomura's Bob Janjuah: QE2 Has Run It's Course, "Time to Fade Jackson Hole"
July 2011 
***Alert*** Bob "the Bear" Janjuah is About to Become Bullish ***Alert*** (before returning to his ursine lair)
July 2011 
Coming into the Far Turn Russell Napier and Albert Edwards Lead the Gloomster Stakes But Felix Zulauf is Making a Move With an S&P at 500 Prediction
Napier is at 400
Albert says 450
Bob Janjuah trails at 550.
See "Take That Albert Edwards: "The Bear Market Bottom Will Be S&P 400"--Russell Napier

"China's slowdown is good news for the U.S."

Professor Morici hangs his hat at the University of Maryland.
From the Baltimore Sun, August 31:
U.S. stocks have endured a lot of turmoil, but recent shocks have made apparent important facts about China and the shifting global economy long ignored by many analysts and investors. Those bode well for America and the bull market should soon resume. 
Faulty accounting standards make it dicey to assess the true profitability of most publicly traded Chinese companies. Bond ratings, often a good first indicator of business health, are outright frauds in the Middle Kingdom — 97 percent of Chinese companies score AA or AAA, as compared to 1.4 percent for U.S. businesses. 
Only 39 percent of Chinese shares are actively traded, with the balance held by government entities or company founders, whereas 94 percent of U.S. shares are in the active marketplace.
As of June 8, the Shanghai composite index was up 250 percent over the prior 12 months, then it plummeted 37 percent before stabilizing somewhat at the end of last week. However, that respite was accomplished after Beijing again flooded markets with liquidity. 
Recently, Beijing opened the Shanghai and Hang Seng markets to selected foreign investors, but they have remained shy about jumping in and for good reason. Chinese company reports and stock market valuations are as fraudulent as China's GDP statistics. 
The flood of cheap imports at Walmart and size of China's official U.S. dollar holdings testify to the heft of its economy, but official measures of GDP and growth are inflated and don't jive with indicators economists use to measure economies with dodgy statistics — for example, freight shipments, passenger travel, electricity use and property development. 
Beijing reported 7 percent growth for the second quarter, but actual growth appears to have been about half that. If China's money losing zombie factories, propped up by government bank loans, were shuttered, the pace would be even lower....MORE