Tuesday, May 24, 2016

Chinese Straddle Bus Will Allow Cars To Pass Underneath It

From Next Big Future:

Full scale Straddle bus has been built and will undergo tested in July and August
A Beijing-based company Transit Explore Bus is currently building a life-size model of the Straddle bus in Changzhou and they plan to test it in July or August.

Different versions will carry up to 1,200 passengers, with the larger versions being articulated to facilitate going around curves.

The bus will run along a fixed route, and its passenger compartment spans the width of two traffic lanes. Its undercarriage rides along the edges of the two lanes it straddles and the overall height is 4 to 4.5 m (13.1 to 14.8 ft). Vehicles lower than 2 m (6.6 ft) high will be able to pass underneath the bus, reducing the number of traffic jams caused by ordinary buses loading and unloading at bus stops.

Passengers on board the bus are expected to experience a ride comparable to riding in the upper level of a double decker bus. They will board and alight at stations at the side of the road with platforms at the bus floor height similar to stations of an elevated railway, or via stairs descending through the roof of the bus from a station similar to a pedestrian overpass. The bus will be electrically powered using overhead lines or other roof electrical contact systems designed for it, supplemented with photovoltaic panels, batteries or supercapacitors on board. It will travel at up to 60 km/h (37 mph)
A proposed trial project was to cost about 500 million yuan (~US$74.5 million) to build the bus with a 40 km (25 mi) guideway. This is claimed to be at 10% of the cost of building an equivalent subway, and is estimated to reduce traffic congestion by 20–30%. The Chairman of the company has said that it would only take a year for one to be built. 115 mi (185 km) of track was set for construction in the Mentougou District of Beijing for late 2010. The cities of Shijiazhuang, in Hebei Province, and Wuhu, in Anhui Province, were applying for financing....MORE 

"Gold Hits 4-Week Low; Firming U.S. Dollar Index Bearish"

Following up on yesterday's "This could send gold tumbling below $1,000 again, Citi says".
June futures $1234.7  down $16.80, Kitco spot $1233.30 down $14.90.

From Kitco:
Gold prices are lower and scored a four-week low in early U.S. trading Tuesday. The recent rally in the U.S. dollar index remains a bearish outside market force for the precious metals markets. June Comex gold futures were last down $10.30 an ounce at $1,241.00. July Comex silver was last down $0.103 at $16.325 an ounce.

World stock markets were mixed and choppy overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Global equity traders continue to closely watch crude oil prices, which are firmer in early U.S. trading Tuesday. Trading days on which oil prices are lower have tended to limit buying interest in stocks. Notions of an ongoing world oil glut are keeping crude gains in check. Oil traders are awaiting the June 2 OPEC meeting in Vienna, Austria.

The other key “outside market” finds the U.S. dollar index higher Tuesday and hitting a seven-week high. The greenback has been trending higher for the past three weeks....MORE
Also at Kitco:

Gold Prices Fall To 4-Week Low With Market Missing Key Asian Pillar
Gold remains on the defensive Tuesday, with prices falling to a four-week low, and there are some concerns that the lack of Asian demand could lead to lower prices in the near term....MORE
 Live 24 hour Gold Chart

"Is Stock Shorting Smart If You Aren’t Jim Chanos?"

From Barron's Read This, Spike That column:

Here is some food for thought for anyone contemplating the idea of profiting from stocks that may fall.
A hedge-fund manager named Mohnish Pabrai once told me that he doesn’t short stock for a variety of reasons.

As he put it in a Barrons.com interview in 2005, corporate managers have both the incentive and the means -- through share buybacks, putting the company up for sale, or employing other financial tools -- to get the price up.

Those managers lack the will to make their stocks go down, added Pabrai, a Warren-Buffett styled investor.

To be sure, all the management tricks in the world can’t save a stock from cratering if the company has fundamental problems, such as mounting debt that it can’t cover with cash.

But finding those true losers ahead of the investing crowd is harder than finding winning stocks ahead of the pack. After all, stocks have an upward bias that any long-term stock chart spells out as plain as day.

Barron’s is aware of that positive tilt which is one of the reasons why the percentage of stocks we pan is dwarfed by the number we write favorably about.

I was reminded of Pabrai’s comments as I read a piece that ran Monday on the CNNMoney Website that discussed how large short positions taken by U.S. hedge funds were faring.

The piece, based on analysis of first quarter activity by Goldman Sachs, shows results that are hardly surprising: Some of the shorted stocks indeed have fallen in value while others would have performed well in a long-only portfolio....MORE
“One other problem people aren’t paying enough attention to — and that is the asset-liability mismatch,” he said. “And if we learned anything ... during our crisis, it was you shouldn’t finance hard-to-value long-term esoteric real-estate-related derivatives or securities with overnight money, which is what a lot of the investment banks ended up doing by ‘07/’08. They couldn’t move a bunch of the gunk on their balance sheet and increasingly they were financing themselves in the repo market.”
See also:
There's A Transcript For The "Jim Chanos: The Art Of Short Selling" Podcast

Mid-May El Nino-Southern Oscillation Model Forecasts

The average of the dynamical models should dip below the -0.5°C sea surface temperature anomaly threshold for La Niña conditions* next month with the average of the statistical models following close behind.

From IRI/Columbia U.:

2016 May Quick Look

Published: May 19, 2016
A monthly summary of the status of El Niño, La Niña, and the Southern Oscillation, or ENSO, based on the NINO3.4 index (120-170W, 5S-5N)Use the navigation menu on the right to navigate to the different forecast sections 
During mid-May 2016 the positive tropical Pacific SST anomaly was quickly weakening, now indicating only a weak El Niño. The atmospheric variables continue to support the El Niño pattern, but at much reduced strength. This includes only a mildly weakened Walker circulation and excess rainfall in the central tropical Pacific, failing to extend eastward as it did in previous months. 
Most ENSO prediction models indicate a return to neutral by the end of May, with likely development of La Niña (of unknown strength) by fall.
*"Conditions" become a full blown La Niña after three 3-month rolling periods (five months total) below the threshold.

"The number of new businesses in the US is falling off a cliff"

This is very bad for the economy and for the country.

1) New (not small, new) businesses are the engine of job creation and

2) Democracy works best in a population of Jefferson's yeoman farmers or Barère de Vieuzac's "nation of shopkeepers"
(he meant it as an insult to the British but he stole the idea from a Scotsman*)

From Quartz:
We’re supposedly living in the age of startups when people can create new businesses, enrich themselves, and employ their fellow Americans. That narrative, like much economic optimism these days, is now mostly a tale for coastal cities, and a tenuous one at best.

Fewer new businesses were created in the last five years in the US than any period since at least 1980, according to a new analysis (pdf) by the Economic Innovation Group (EIU), a bipartisan advocacy group founded by the Silicon Valley entrepreneur Sean Parker and others. Businesses that did form are also far more concentrated than ever before: just 20 counties accounted for half of the country’s total new businesses. All of them were in large metro areas.

“It’s hard to put into scale the collapse of new business formation. We have no precedent for that rapid and steep of a collapse,” said John Lettieri, co-author of the report and co-founder of EIU, in an interview. “It will have a ripple effect in the economy. You‘re going to feel that impact five, 10, and 15 years in the future.”

The analysis of census data revealed two grim economic stories playing out in America. The first is that prosperity (at least in terms of new businesses) is consolidating in a few predominately urban places, mostly around large cities such as Los Angeles, Miami, Chicago, Dallas, New York, and San Francisco. Just 20 countries accounted for 50% of the new firms created during the post-recession recovery—a sharp break from previous years when new company creation was far more distributed.
Particularly hard hit were sparsely populated, rural areas. In the last post-recession recovery, counties with 100,000 or fewer people generated one-third of the country’s new firms (net) between 1992-96. By comparison, those counties lost 1.2% of their businesses between 2010-2014.

The second story is that the majority of new companies look more like tech companies than the construction firms and restaurants that have typically anchored middle-class prosperity. New business formation over the past five years tracked very closely with access to capital, particularly venture and other forms of risk capital, says the report. Of the top 20 counties, 13 were in just three states (California, New York, and Texas) with ample access to such money....MORE
*"To found a great empire for the sole purpose of raising up a people of customers may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shopkeepers."
— Adam Smith, The Wealth of Nations
See also:
One More Time: It's Not Small Businesses that Create Jobs...
The Slow-Motion Collapse of American Entrepreneurship
A Puzzling Fall In Start-up Jobs
As our smart, loyal (and good-looking) readers know, it's not small businesses that create jobs it's small new businesses that do so...

U.S. Oil and Gas Breakevens By Play

From Oil & Gas 360:

Median Breakeven Price for Oil is $55 per Barrel; Gas is $3.50 per Mcfe – KLR 
Highest oil breakeven is in Williston Basin; for gas it’s the Fayetteville

Lowest oil breakeven is the Midland Basin; lowest for gas is the southwest Marcellus
A report from KLR Group today has pegged the breakeven costs for various oil and gas plays around the United States. The report looked at capital performance of E&P companies, and found that the highest breakeven for oil among the basins in the U.S. is NYMEX $67 per barrel for oil, while the highest breakeven for gas is NYMEX $3.70 per Mcfe.
Breakeven by basin for oil
Data: KLR, Map: EIA, Compiled by EnerCom
The report found low end for U.S. supply is in the Midland Basin (about $51 per barrel) while the most expensive production is in the Williston Basin Bakken/TFS (about $67 per barrel). On the gas side, supply is bracketed by the southwest Marcellus (about $3.25 per Mcfe) and the Fayetteville (about $3.70 per Mcfe).
Breakeven by basin for gas
Data: KLR, Map: EIA, Compiled by EnerCom
KLR’s research found that oil-dominated E&Ps (those whose production was at least 60% oil) had a median capital intensity of about $30 per BOE and operating overhead of about $14 per BOE, equating to a cash cost structure of about $44 per BOE. Given an approximately $11 per BOE median liquids (oil/natural gas liquids) price discount to NYMEX, said KLR, the current NYMEX-normalized oil-dominated E&P cost structure is about $55 per BOE.

The capital intensity for the median gas-dominated (less than 20% of the company’s production coming from oil) E&P is about $1.85 per Mcfe, while operating and overhead expenses is about $1.25 per Mcfe, equating to a cash cost structure of around $3.10 per Mcfe. Given a $0.40 median gas price discount to NYMEX, the current NYMEX-normalized gas-dominated E&P cost structure is about $3.50 per Mcfe, KLR said.

In order to generate 10% unleveraged rates of return, U.S. basins need $104 oil and $5.50 gas

Oil’s steady climb back from the low-30s has given some hope that prices may again reach the breakeven prices mentioned in the KLR report, but there will be much further to go before producers realize 10% rates of return on their production, the energy analyst group said.

In the Midland Basin/Eagle Ford East, where the breakeven is the lowest in the U.S., it would still require a NYMEX oil price of $80-$85 to generate a 10% unleveraged return, said KLR. The low capital intensity, and higher oil composition and oil price realization drive the region’s strong metrics.
KLR NYMEX Oil Breakevens
The SCOOP/STACK has the second-highest price requirement for a 10% return despite its relatively low breakeven due to its low oil composition, the report said. Despite capital intensity of about $22 per BOE, NYMEX oil prices would still need to reach about $101 per BOE before operators in the region saw a 10% return....MORE

"The Ideal Investment: Companies That Don’t Invest"

From James Mackintosh at the Wall Street Journal:
From my desk I can count 44 construction cranes, as London’s boom in office and apartment towers transforms the city.

Building surges tend to end badly, and London’s grimy air already contains more than a whiff of concern about the number of new luxury flats coming to the market.

This is not only about London. Investors should study the city’s premium property market to learn once again a lesson all too often ignored: High prices eventually lead to supply, which leads to lower prices. London has among the highest prices for residential real estate in the world, but the lesson applies to any company, in any sector, when it gets its moment in the market spotlight.

The pattern is evident in markets time after time, yet investors repeatedly make the same mistake, arguing that this time is different, because this time demand is running ahead of the surge in supply. Mining and oil companies are suffering the effects of the biggest of these capital cycles, with holes in the ground still being dug years after commodity prices plunged. But even in these most cyclical of sectors, investors still got carried away with their projections of demand in the good times, ignoring the solid evidence of increasing supply.

In London, house prices have been rising for so long that it is treated as normal. In the 18 years since I bought a home in the city, the rise in the value of it and its successors have made me more money than my total after-tax pay. Many other London homeowners have done even better from soaring prices, thanks to bigger mortgages. This is, of course, an illusion: unless I sell up and leave London, I’ll never see that “value.”

Londoners occasionally need reminding that higher prices are not inevitable. It’s true that London has changed for the better, justifying higher prices as more people want to live here. But in recent years something else has changed too: restrictions on tower blocks were loosened, so construction could finally respond to those high prices. More than 35,000 new luxury homes are planned over the next decade, according to consultancy Arcadis, a 40% rise in less than two years.

Investors looking for the next bust should pay close attention to the capital cycle of corporate-investment surges followed by retrenchment. Edward Chancellor, an author and former fund manager, sets it out nicely in Capital Returns, a collection of essays by Marathon Asset Management LLP. “All too often,” he writes, “high returns attract capital, breeding excessive competition and overinvestment.”

The ideal management—from a shareholder perspective—would invest the absolute minimum, operate in an uncompetitive industry and return its fat profits to the owners....MORE
...Eugene Fama, winner of the economics Nobel, and his colleague Ken French, have expanded their famous “three-factor” model to include corporate investment as a driver of returns, alongside value, momentum and size (they also added profitability). Broadly speaking, companies which invest more tend to underperform those which spend little. But, as with the other factors, it may take years to profit from such an approach....

"Dollar Regains Momentum, Sterling Resists"

From Marc to Market:
The US dollar lost momentum yesterday but has regained it today.  The euro has been pushed through last week's lows near $1.1180.  The next immediate target is  $1.1145, which corresponds to the lower Bollinger Band today, though the intraday technical readings suggest some modest upticks are likely first.  The $1.1200-$1.1220 area may cap upticks.  
The greenback held above JPY109 and bounced to recoup 38.2% of its decline since the pre-weekend high near JPY110.60.  A move above this retracement (~JPY109.70) may yield minor gains and still struggle to sustain gains above JPY110.  
The dollar-bloc currencies have been led lower by the Australian dollar.  When the US dollar momentum faltered yesterday, the Australian dollar resurfaced above $0.7200.  Unable to get above $0.7230 today, RBA Governor Stevens comments helped push it new lows since early March (~$0.7155).  Stevens noted that the Australian dollar, which has been falling since late-April, was moving in the right direction.  His observation that inflation was low and below target encourages speculation of an additional rate cut in the coming months.  
Sterling is recouping nearly everything it lost in the past two sessions and is back knocking on last week's high above $1.46.  It appears to have been helped by a poll out late yesterday that found that not only are the undecideds in the UK referendum breaking toward the remain camp but that some of those that had favored leaving and reversing.  
However, we are not fully satisfied with that explanationAfter all, sterling has been trending higher against the US dollar like many currencies did in the first part of the year.  Sterling rallied 6.7% from the late-February low through the May 3 high.  The polls only showed a shift in the last two weeks or so.   
Also, the options market is still reflecting anxiety, and given that the referendum poses contingent risk, the options market is where it ought to be expressed.  The referendum is within a month now so one-month volatility should be the focus.   It is firm today at around 11.2%.  This is the upper end of where it has traded since early-March.    It finished last week near 10.4%.  
The increase in implied volatility suggests options are being bought.  The spread between the pricing of puts and calls equidistant out of the money (25 delta) can help determine what options are being bought.  The premium for puts over calls is the largest since last May.   This suggests that despite sterling's gains in the spot market, some participants are still seeking protection in the options market by buying one-month sterling puts. 
The broader dollar gains have been driven by the shift in expectations of Fed policy.  For medium-term investors, it does not make much of a difference whether the Fed hikes in June or July.  The August Fed funds futures contract implies a yield of 54 bp.  We know that currently Fed funds have been averaging 37 bp.  If the Fed were to raise rates 25 bp at either the June or July meetings, fair value for the August contract is 62 bp.  The market is pricing in a 68% chance of a hike at one of the next two meetings ( (54-37)/25)....MORE

Monday, May 23, 2016

"You Don’t Actually Own Your Data and Devices"

From IEEE Spectrum:

Companies go to great lengths to lock us out from our own stuff
One of the contradictions of our age is that while the Internet increasingly makes all kinds of information available, many devices and services are increasingly including less accessibility as a feature. For every Wikipedia that you can edit, there are a thousand devices and appliances that are manufactured to discourage tampering. We like to think the world is becoming an open access and open content nirvana with information available to all, but the reality is that more and more knowledge is hiding behind paywalls and similar closed access barriers (and even super closed access channels, which make info available only through limited or hidden outlets). 
We live in a renter society where we prefer to pay a monthly fee to use something for a short while and then move on when a new version comes along. Even the stuff we think we own is really not ours, the best example being all those ostensibly purchased e-books that it turns out you actually only rent and that can be undownloaded (that is, yanked from your e-reader) without warning. If this sounds fanciful, note that a few years back Amazon famously deleted George Orwell’s books from customers’ Kindles due to a digital rights management kerfuffle. 
Even the things we do own don’t last very long because we also live in throwaway society. When something breaks, we’d rather toss it in the trash than get it fixed. The philosopher Albert Borgmann calls this disposable reality, one of the characteristics of which is the emphasis on consumption of things rather than engagement with things....MORE

Motherboard Does Uber

From Motherboard:

Rarely does a startup enter the collective consciousness as rapidly as Uber. In 2010, it was humbly introduced to the world as UberCab, which sounded a lot like just another app. “UberCab Takes The Hassle Out Of Booking A Car Service,” wrote TechCrunch. 
Just a few years later, Uber is now a common verb. It’s a major employer. It’s raised over $10 billion in venture capital. It’s upended the taxi industry. It’s facing off against Google in the race to develop a self-driving car. It’s launched a thousand trend stories, changing the way we date, the way we work, the way we sell drugs, and the way we think about distance. 
At Motherboard, we’re devoting our May theme week to Uber. How has this company changed the planet, and how will it continue to do so in the future? How has it changed our culture? How much of their disposable income do people spend on Uber? We know Uber has had an impact in major cities around the world, but can it make it in the heartland? 
We’ll be tackling these questions and more this week. Follow along here, and share your thoughts with letters@motherboard.tv.
And the first few posts at the link page:

Why Everyone Hates UberPOOL

"Tinder wants to take down 3nder, the dating app for threesomes"

File under:
21st century headlines

Futures: "Hedge funds' spree of bullish bets on ags spurs fears of sell-off"


From Agrimoney:
Hedge funds raised bets on rising agricultural commodity prices to the highest in nearly two years, provoking concerns of a sell-off in the offing – particularly in sugar, in which bullish betting hit a record high.
Managed money, a proxy for speculators, lifted its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by nearly 65,000 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows. 
The buying took the net long - the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall - nearly to 680,000 contracts, the highest since June 2014, and supporting talk around in the market of funds moving cash into ags. 
As Agrimoney.com noted last week, many brokers have reported that the prospect of US interest rate rises, and potentially higher inflation, has prompted many investors to switch out of equities into commodities. 
'General supply concerns'However, the extent of the hedge fund net long, in raising questions over how much appetite funds have left for betting on ag price rises, raised market concerns on Monday of profit-taking by investors, in anticipation of a potential wave of position-closing by speculators.
Speculators' net longs in New York softs, May 12 (change on week)

Raw sugar: 215,954, (+22,614)

Cocoa: 32,823, (-9,402)

Cotton: 23,175, (-3,314)

Arabica coffee: 17,603, (+14,485)

Sources: Agrimoney.com, CFTC
This dynamic was seen as a factor in a weak performance by ag commodities in early deals on Monday, but appeared a particular debate in the sugar market, in which managed money raised its net long to 215,954 contracts, the highest on readily available records. 
Morgan Stanley, highlighting that "poor weather conditions in Brazil could slow" the cane harvest in the top sugar-producing country, said on Monday that "general supply concerns have led net non-commercial positioning to rise to the highest levels in more than 20 years". 
A series of reports last week flagged that - with Indian output set to fall strongly, and Chinese output in structural decline – the world appears poised for a second successive season of production deficit in 2017-18. 
On Friday, the US Department of Agriculture warned that world sugar stocks "are approaching what appear to be historically low levels", giving estimates implying that – on a stocks-to-use basis – supplies will become tighter than in 2010-11, when New York raw sugar futures topped 36 cents a pound. 
'Funds don't eat sugar'However, raw sugar futures - which on Friday hit 17 cents a pound for the first time since October 2014 - showed small losses in early deals on Monday, amid concerns that the extent of fund buying already in sugar made for a top-heavy position....

Also at Agrimoney:
AM markets: ag markets bow under weight of hedge fund cash

"This could send gold tumbling below $1,000 again, Citi says"

$1246.30 down $6.60 last.

From MarketWatch:

Watch for the Dollar Index to rise above 100
Investors could be forgiven for not being able to recall the last time gold prices traded below $1,000-an-ounce, considering they’d have to scroll back to September 2009 before running into that level.

But don’t think gold is so far removed from that sub-$1,000 level that it can’t revisit that nadir in short order, warned analysts at Citigroup in a note on Monday. And they said it’s all about the dollar.

“We see no reason why gold should not once more trade at $1,050/oz if US$-DXY rises back to the 100-level (now 95.3). Nor do we see anything to prevent gold falling below $1,000/oz if US$-DXY rises above the 100-level,” said the analysts.
US$-DXY refers to the ICE Dollar Index DXY, +0.09% which tracks the greenback against a basket of rival currencies.
Gold hasn’t settled under $1,000 an ounce since September 29, 2009, according to FactSet. Gold GCM6, -0.57%  has risen about 18% so far in 2016, one of the best gains for any asset this year. A drop below the $1,000 handle would mean a 20% slump in gold prices from Monday’s $1,250 price tag.

Prices have already seen some pressure this month owing to rising expectations that the U.S. Federal Reserve could raise interest rates at its June meeting. Last week, gold futures posted a second straight weekly loss, setting them on track for a 3% slide in May. Meanwhile, the ICE Dollar Index DXY, +0.07% is down 3.5% year-to-date, but up 2.4% in May so far.

The below chart from Citi shows how the Dollar Index, has “long-term momentum behind it,” the analysts said. Another hint that the Dollar Index could bust past 100 is its strongly rising moving average, they said.
Back to 100? Maybe, says Citi

As we've said in the past, if you are betting on Armageddon, go buy some junk silver coins.
It's easier to make change when you buy your hundredweight of survival flour.

Gold And Real Interest Rates: "Fed’s Dudley: June is Definitely a Live Meeting"
"Gold Tanks After Fed Minutes"

Huh, This NVIDIA Company May Be On To Something (NVDA)

After a series of all-time highs last week the stock looks set to open up a couple pennies at $44.35.
From the Wall Street Journal:

New Chips Propel Machine Learning 
Nvidia microchips are helping in detection of anomalies on CT scans 
Computer users have long relied on Nvidia Corp. ’s technology to paint virtual worlds on the screen as they gunned down videogame enemies. Now some researchers are betting it can also help save lives—of real people.

Massachusetts General Hospital recently established a center in Boston that plans to use Nvidia chips to help an artificial-intelligence system spot anomalies on CT scans and other medical images, jobs now carried out by human radiologists. The project, drawing on a database of 10 billion existing images, is designed to to “train” systems to help doctors detect cancer, Alzheimer’s and other diseases earlier and more accurately.

“Computers don’t get tired,” said Keith Dreyer, the center’s executive director and vice chairman of radiology at Mass General. “There is no doubt that this will change the way we practice health care, and it will clearly change it for the better.”

The effort is one of many examples illustrating how advances in microchips—particularly the graphics-processing units pioneered by Nvidia—are fueling explosive growth in machine learning, a programming approach in which computers teach themselves without explicit instructions and then make decisions based on what they’ve learned.

Internet giants such as Google Inc., Facebook Inc., Microsoft Corp. , Twitter Inc. and Baidu Inc. are among the most active, using the chips called GPUs to let servers study vast quantities of photos, videos, audio files and posts on social media to improve functions such as search or automated photo tagging. Some auto makers are exploiting the technology to develop self-driving cars that sense their surroundings and avoid hazards.

Some companies are betting that GPUs will be overtaken for such purposes by more specialized chips. Google, in a surprise move, last Wednesday disclosed that, in addition to Nvidia’s GPUs, it has been using an internally developed processor for machine learning. Others advocating special-purpose processors include Movidius, a Silicon Valley startup selling chips it calls vision processing units, and Nervana Systems, a machine learning service that plans to move from GPUs to chips of its own design. 
“There is no way that existing [chip] architectures will be right in the long term,” said Jeff Hawkins, co-founder of Numenta, a company started 11 years ago to work on brain-like forms of computing. 
For now, Nvidia has a substantial lead in the field, one of several factors that have doubled the company’s share price in 12 months and pushed its market value above $24 billion. The company, which continues to benefit from strong growth in videogames, reported this month that its business selling GPUs for data centers, rose 62% from a year earlier.

CEO Jen-Hsun Huang, a Taiwan-born executive known for a trademark leather jacket and a fondness for Tesla electric cars, has emerged as a kind of Pied Piper for the machine-learning technique known as deep learning. He attributes Nvidia’s data center growth to the big cloud-computing vendors moving deep learning from testing into their core services.

“It is now clear that hyperscale companies all around the world are moving into production,” he said. 
The research firm Tractica LLC estimates spending on GPUs as a result of deep learning projects will grow from $43.6 million in 2015 to $4.1 billion by 2024, and related software spending by enterprises will increase from $109 million to $10.4 billion over the same period.

GPUs, also produced by Nvidia rival Advanced Micro Devices Inc., are especially suited for this work because they can perform many calculations simultaneously. Where conventional processors are designed to execute sequences of varied types of instructions, GPUs excel at performing a single type of calculation many times at once—like applying a color to each pixel on a computer display to generate an image. To accomplish this, Nvidia’s latest GPU has 3,584 relatively simple processor cores working in parallel, compared with one to 22 more complex calculating engines on general-purpose processors from Intel Corp.

"Florida Farmland Becoming Big Deal for Institutional Investors"

From Growing Produce:
The 2016 Lay Of The Land Conference drew a large crowd of land owners and others to Champions Gate recently to learn the latest values of properties across the state. The take-home message from the event was Florida is a hot property where people want to be because of the things that make the state great — sun, water, climate, and a business-friendly environment.

And, for agricultural properties, institutional capital continues to look for investment opportunities in the state. Dean Saunders, owner of Coldwell Banker Saunders Real Estate and host of the Conference, told attendees that agricultural lands have proven to be a safe and stable place to put money.

“There is a lot of capital looking for a place to go,” Saunders said. “And, the number the investors have to beat is 1.75% (Treasury Bill rate). They believe the safe place to be is in land. The game they are in is not necessarily to make money, but not to lose money.”

Saunders noted that with commodity prices down, institutional investors who had been investing in land in the Midwest are turning their attention to places like Florida.
2016 Florida farmland price value infographic
The Big Deals
Many believed the 380,000-acre St. Joe Paper Company sale in 2014 was the high-water mark for big land deals. But, Saunders reported the Foley Timber and Land Company transaction in 2015 raised the bar even higher. The deal consisted of nearly 563,000 acres of timberland valued $712 million.
In 2015, Premier Citrus sold to International Farming Corporation. Saunders said the deal was complicated, multilayered, and included nearly 26,000 acres valued at $155 million. The third large transaction of the year was Sunbreak Farms purchase of more than 20,500 acres for just less than $71 million.

Saunders noted the timber market has been good and accounts for less transition of timberland into farmland.

“Looking at timberland, it has been driven primarily by institutional investors,” he said. “And there are two types — those seeking to establish greater returns and those seeking wealth preservation.”
With Florida’s economy rebounding and the state back adding 1,000 people per day, it bodes well for timber.

“We are building houses,” he says. “They are going to need wood and that will impact timber prices.”

The Latin America Effect
Saunders said he has seen a considerable uptick of interest in Florida property from buyers in Latin America. Political turmoil in parts of the region are encouraging people who have money to move it....MORE
HT: Farmlandgrab

See also:
Rate Of Farmland Price Decline Moderates (FPI; LAND)

"How Technology Hijacks People’s Minds..."

The 'About the author' reads:
Ex-Design Ethicist & Product Philosopher @ Google, former CEO of Apture (acquired by Google), dabbler in Behavioral Economics, Design and Persuasion.
Product philosopher. Who knew?
From Medium:
I’m an expert on how technology hijacks our psychological vulnerabilities. That’s why I spent the last three years as Google’s Design Ethicist caring about how to design things in a way that defends a billion people’s minds from getting hijacked.

When using technology, we often focus optimistically on all the things it does for us. But I want you to show you where it might do the opposite.

Where does technology exploit our minds’ weaknesses?

I learned to think this way when I was a magician. Magicians start by looking for blind spots, edges, vulnerabilities and limits of people’s perception, so they can influence what people do without them even realizing it. Once you know how to push people’s buttons, you can play them like a piano.
And this is exactly what product designers do to your mind. They play your psychological vulnerabilities (consciously and unconsciously) against you in the race to grab your attention.

I want to show you how they do it.

Hijack #1: If You Control the Menu, You Control the Choices

Western Culture is built around ideals of individual choice and freedom. Millions of us fiercely defend our right to make “free” choices, while we ignore how we’re manipulated upstream by limited menus we didn’t choose.

This is exactly what magicians do. They give people the illusion of free choice while architecting the menu so that they win, no matter what you choose. I can’t emphasize how deep this insight is.
When people are given a menu of choices, they rarely ask:
  • “what’s not on the menu?”
  • “why am I being given these options and not others?”
  • “do I know the menu provider’s goals?”
  • “is this menu empowering for my original need, or are the choices actually a distraction?” (e.g. an overwhelmingly array of toothpastes)
How empowering is this menu of choices for the need, “I ran out of toothpaste”?
For example, imagine you’re out with friends on a Tuesday night and want to keep the conversation going. You open Yelp to find nearby recommendations and see a list of bars. The group turns into a huddle of faces staring down at their phones comparing bars. They scrutinize the photos of each, comparing cocktail drinks. Is this menu still relevant to the original desire of the group?

It’s not that bars aren’t a good choice, it’s that Yelp substituted the group’s original question (“where can we go to keep talking?”) with a different question (“what’s a bar with good photos of cocktails?”) all by shaping the menu.

Moreover, the group falls for the illusion that Yelp’s menu represents a complete set of choices for where to go. While looking down at their phones, they don’t see the park across the street with a band playing live music. They miss the pop-up gallery on the other side of the street serving crepes and coffee. Neither of those show up on Yelp’s menu....MORE

Izabella Kaminska on Muckrakers, Monopolists and Miscreants

Over the years, simply because the blog is composed of things that caught my eye rather than some grand plan, we've from time to time mentioned some of the early 20th century journalists who got appended the term muck-rakers but when I did a quick search of the blog I was surprised how many we'd named, although usually just in passing.
Some links below.

Here, Ms. Kaminska writing for the paper rather than the flagship blog tips her cap to one of the most influential.

From the Financial Times, May 22, 2016:

Inequality and the monopolies of unfettered techno markets
Companies cut costs rather than improve process so as to grab market share, writes Izabella Kaminska
In testimony to the US Federal Commission on Industrial Relations in 1915, Ida Tarbell, a journalist known for exposing the Standard Oil monopoly of John D Rocke­feller and championing the antitrust movement of the era, made a simple but profound point about the structure of the unconstrained American marketplace.

It was the policy of business trusts, she said, to keep supply always a little less than demand to the great detriment of society. A congressman then took the stand to argue that an employer’s relationship with his employees had “turned into a feudalism grosser than English history had ever shown”.

Tarbell favoured what was then being popularised as the “scientific” approach, which elevated the role of central planners in an organisation to the supposed benefit of all concerned.

Ironically, many decades later, John Kenneth Galbraith would argue that the dependency on a thick layer of managerial planners had rendered antitrust measures ineffective at arresting the development and burgeoning power of what he described as the “technostructure”. The company, he insisted, had become an uncompetitive monstrosity.

Tarbell had seemingly only opened the door to a different type of monopoly — one focused not, like Standard Oil, on maximising profits at any cost but on maximising benefits to those it deemed technically specialist enough to be useful in serving its multi-faceted goals. In both cases inequalities resulted though, in the corporations described by Galbraith, these manifested themselves in the favouring of managers over staff.

In more recent times, Thomas Piketty has suggested that rising inequality in developed economies over the past three decades is mostly linked to the gap between the after-tax return on capital and the economic growth rate. But what if there is a simpler explanation? That old chestnut of monopoly?
In a recent article, Joseph Stiglitz, the Nobel laureate, outlined how today’s inequalities might be more plausibly linked to the tendency of unfettered markets to monopoly. The proposition is intuitively appealing. He argues that many sectors in the modern technological era — among them telecoms, cable television, social media, internet search, health insurance and pharmaceuticals — cannot realistically be classified as competitive....MORE
In 2011 we visited Ida Tarbell in "Ida M. Tarbell: 'John D. Rockefeller: A Character Study'" in part because I wanted a searchable link to the Tarbell collection at Allegheny college and partly because she described John D.'s grandfather, Godfrey as "a shiftless tippler, stunted in stature and mean in spirit".

In February 2016's "Oil Tankers and Interest Rates and Scallywags and Time" one of the Rockefeller minions, Thomas Lawson, got a mention, not for his exposé of his copper dealings with Standard Oil honcho Henry Huttleston Rogers, Frenzied Finance, but because of the ship for which Lawson was namesake.

Staying in 2016, it was Ida's buddy Lincoln Steffens in "Goldman Sachs: Death Of Capitalism Averted, Time For Working Schlubs to Partaay!", again not for the work he was most famous for, in Steffens' case his Shame of the Cities (St. Louis, Minneapolis, Pittsburgh et al) but because of his famously wrong statement about Soviet Russia in a letter dated April 3, 1919: “I have seen the future and it works.”.
It didn't.

In 2015 there was Jacob Riis because I was reminded of one of the photographs from "How the Other Half Lives: Studies among the Tenements of New York":
Jacob Riis Lives! "San Francisco Housing Bubble Goes Subterranean: $500/Month To Live In A Crawlspace"
And along the way Theodore Dreiser got a major link (possibly one of the best business novels ever) in "Switzerland Begins Two-Year Trial of Driverless Buses (plus money, art, glory and sex)"

So yes, more than wary reader might have anticipated and I've probably forgotten a couple.
Circling back to Ida, here's an online version of History of the Standard Oil Company.

Although there are quite a few critiques you can raise about her book it was pretty important and was one of the factors that led to the breakup of Standard Oil in the Supreme Court decision "Standard Oil Co. of New Jersey v. United States" seven years later. So Mr Rockefeller probably considered the book important.

It ranks #5 on NYU's Journalism school's list of the 100 best works of 20th-century American journalism. (via the NYT)

Just Your Average Russian Dashcam Video

From the Only in Russia Twitter feed

Sunday, May 22, 2016

Sentiment Towards Russian Investments Could Be Thawing, Despite International Sanctions

There are rumblings coming out of France and Germany that it is time to drop the sanctions on Russia. If the move comes to pass there would probably be a reaction in Russian markets.
From The Telegraph:
In a week when David Cameron named Vladimir Putin in the same breath as Islamic State as a danger of life outside the European Union, financiers from around the world met in London to discuss how best to get their money back into Russian assets.

VTB, the state-controlled bank that has been under international sanctions since shortly after Russia annexed Crimea in 2014, hosted its first UK banking conference for three years at the Jumeirah Carlton hotel in Knightsbridge, central London.

The event offered pronouncements from high-profile speakers such as Alexey Moiseev, the deputy finance minister, and one-to-one meetings between Russia’s biggest companies and potential investors. The two-day conference is no longer billed under its former name, Russia Calling, but as the more sober VTB Investor Day. However, the return of the event reflected some of the cautious optimism about selling Russian firms to the rest of the world.

“It’s probably a good time to be buying - but there are very few good opportunities in the market,” said Aleksey Ivanov, head of transaction advisory services for EY in Moscow. “It’s either distressed assets or bona fide companies which have a very high price.”

Putin bullets
A portrait of Russian President Vladimir Putin, made out of 5,000 cartridges 
brought from the frontline in eastern Ukraine Credit: Reuters
One reason for the scarcity of desirable assets is the sanctions regime that keeps EU-based investors from buying new debt or equity in five state-owned banks (including VTB), three energy companies and three defence firms.

While the embargoes could be lifted in July, the EU could also further extend the sanctions by six months. More assets and citizens are included in the US regime.

The sanctions, and the downward spiral of the isolated Russian economy, have taken a large chunk out of the financial markets in the past two years.

New bond issues by Russian companies have plunged by three-quarters, from $101bn from 288 issuers in 2013 to just under $27bn from 185 sellers last year, according to data from Dealogic.
Meanwhile, equity deals such as IPOs have fallen from $10bn to $1.7bn, with last year the quietest for fundraising since 2003.

So far this year, activity has fallen even lower, with debt issues down 12pc on the same period a year ago, and equity issues nearly 18pc lower.

“We are not perceived as a growth or growth potential region. You go to emerging markets for growth and we don’t have that anymore,” said Kirill Yankovskiy, director of cross-asset sales at Otkritie. “It’s helicopter money coming in. It’s not systematic money that will stay for a long time. It’s seen as an option on the oil bet. When retail investors are willing to accept the Russia risk, we will see the fund managers coming in.”

However, advisers on numerous debt and equity deals in the pipeline claim that investors want Russian exposure.

With the City’s fund managers struggling to profit from their emerging market portfolios as many global assets cleave to the uncertainty of rising US interest rates, Russia starts to seem like relatively good value, they argue....MUCH MORE

"Asking the right questions on Apple" (the risk of becoming Blackberry) AAPL

Following up on last week's "Apple, Inc: What Is Buffett Buying? (AAPL)" which looked at one set of Apple's problems, here are a couple more.

From Digitopoly:
Marco Arment had an interesting post yesterday on whether Apple is in trouble because of the investments of others, particularly, Google, in AI. He wondered if it would be disrupted in the same way BlackBerry was but Apple itself.
Amazon, Facebook, and Google — especially Google — have all invested heavily in big-data web services and AI for many years, prioritizing them highly, iterating and advancing them constantly, accumulating relevant data, developing effective algorithms, and attracting, developing, and retaining tons of specialized talent.
Saying Apple is “bad at services” in general isn’t accurate — they’re very good at services that move data around in relatively straightforward ways at a very large scale, such as iMessage, push notifications, and the majority of iCloud.
Where Apple suffers is big-data services and AI, such as search, relevance, classification, and complex natural-language queries.1 Apple can do rudimentary versions of all of those, but their competitors — again, especially Google — are far ahead of them, and the gap is only widening.
And Apple is showing worryingly few signs of meaningful improvement or investment in these areas.
Arment identifies AI as a potentially disruptive event. It is what is termed in The Disruption Dilemma as an architectural innovation. AI doesn’t develop the material for search or a different user interface but it changes how all of that stuff is put together in order to be useful for something.

Take Google’s announced Assistant. It leverages what Google already has with regard to its database of information on the web and takes advantage of its expertise in natural language processing to come up with a distinct way of getting information that is different from just querying Google as we do today. That at least is the promise: being able to have a conversation with a knowledgable but artificial thing and find out information.

Of course, we have been here before. In 2011, Apple integrated Siri into its iOS devices (but notably not its computers, not yet anyway). It was conversational. It had natural language processing. But its focus was inward on device control and on the user. It has the same elements as what Google, Facebook and others are doing but it is not the same.

Arment is correct then to focus on this divergence as a big deal. Either Google is right or it is not. The right question to ask is: if it is right, then can Apple survive it?
But if Google’s right, there’s no quick fix. It won’t be enough to buy Siri’s creators again or partner with Yelp for another few years. If Apple needs strong AI and big-data services in the next decade to remain competitive, they need to have already been developing that talent and those assets, in-house, extensively, for years. They need to be a big-data-services company. Their big-data AI services need to be far better, smarter, and more reliable than they are....