Friday, March 6, 2015

“The Vertue of the COFFEE Drink”: An Ad for London’s First Cafe Printed Circa 1652

No robots were used in the writing or printing of this advertisement.
From Open Culture:
The story of coffee goes back to the 13th century, when it came out of Ethiopia, then spread to Egypt and Yemen. It reached the Middle East, Turkey, and Persia during the 16th century, and then Europe during the early 17th, though not without controversy. In Venice, some called it the ‘bitter invention of Satan,’ but the Pope, upon tasting it, gave it his blessing. By 1652, St. Michael’s Alley, the first cafe in London opened its doors, bringing coffee to England, thanks to a Sicilian immigrant, Pasqua Rosée....MORE
Possibly also of interest:
The Men Who Brew Too Much: "Old Time Farm Crime: The Coffee Spies of the 1700s"
How to Brew the Perfect Cup of Artisanal Coffee
Questions America Wants Answered: "Which Coffee ETF Is Right For You? JO vs. CAFE"
"What Caffeine Actually Does to Your Brain"
"The Coffee Houses of Augustan London"
"The Lost World of the London Coffeehouse
...Here are the main establishments frequented by the stockjobbers and other denizens:
http://www.csun.edu/~hfgeg003/csg/maps/ngs_2000_files/slide0032_image049.jpg
...MUCH MORE

The Associated Press Is Leading the Charge to Deploy Robo-journalists

According to the AP, no journos were harmed in the making of this venture.
From the Verge:

AP will use 'robot journalists' to expand its college sports coverage 
The news organization continues to grow its automated coverage wing
The Associated Press plans to expand its collegiate sports coverage using automation technology instead of human reporters. The news organization's team of robot journalists will compile text based on game statistics provided by the NCAA. The move will expand AP's sports coverage to include Division I baseball, Division I women’s basketball, Division II and III football, and Division II and III men’s basketball.

"This will mean thousands of more stories on the AP wire, which will remain unmatched in the industry," Barry Bedlan, AP's deputy director of sports products said in a statement. "Every college sports town will have some level of coverage."

AP already uses this technology for some of its business reporting, which often involves wrangling large amounts of data into a clear and readable story. In January, AP used the robots to cover Apple's record-breaking quarterly earnings. The technology, which was developed by the language generation platform Automated Insights, is also used by Allstate, Comcast, and Yahoo....MORE
Related:
Automating the Newsroom: The AP's Robot Copy Editor
Robo-journalists: Beyond the Quakebot
Robot Writing Moves from Journalism to Wall Street
And Here Come the Robo-journalists "The CIA Invests in Narrative Science and Its Automated Writers"
Sure, MoneyBeat Says Their Posts Are Not Written by Robots But How Can We Know?
"Reuters gutting web infrastructure for 'Reuters Next,' its big online retooling"
Washington Post considered using robot sportswriters 
A Deep Dive Into the Future of RoboAnalysts (will entry level hedgies still command $353K to start?) 

Thursday, March 5, 2015

Baghdad Could Have Been a Mega-City by Frank Lloyd Wright

From Curbed:
Like most devotees of modernism, the last king of Iraq labored under the myth that vast architectural mega-projects had the alchemic power to transform any defunct city into an affluent, buzzing metropolis of the future. Spurred on by an influx of oil money and the temptation of a looming Olympic bid, in the 1950s, King Faisal II enlisted a coterie of architectural heavyweights—Frank Lloyd Wight, Walter Gropius, Le Corbusier, Josep Lluís Sert, and Alvar and Aino Aalto—to reimagine Baghdad as a bustling, cosmopolitan city.

King Faisal's monumental plans were certainly of a type: Corbusier presented his totalizing plans for Algiers in 1933, the failed fascist plans for Mussolini's Addis Ababa were drawn up in 1936, the fraught city of Chandigarth, India rose in 1951, and the entire city of Brasila was built from scratch between 1956 and 1961. Pieces of this dream for Baghdad managed to outlive Faisal II—who was assassinated in 1958, at age 23— through two decades of uneven construction, heavy edits, and many concessions. Sert's embassy was built and quickly abandoned, Corbusier's stadium was shelved (only to be built by Saddam Hussein years later), Aalto's museum was dismissed entirely, and only 15 of Gropius' 137 commissions reached completion under the new regime. Frank Lloyd Wright's unbuilt plan, which was the keystone of King Faisal's new city, paints a picture of a very different Baghdad.
· Frank Lloyd Wright, Baghdad master plan, 1956-1958.

When Faisal II asked Frank Lloyd Wright, age 90, to draw up a master plan for Baghdad, Lloyd Wright wrote back that, "to me this opportunity to assist Persia is like a story to a boy fascinated by the Arbian Night Entertainment as I was." His master plan for Baghdad one of his very last commissions....
...MORE

Uber Has A "Bodily Fluids" Cleanup Fee

First up, the New York Times Style section:

Taxi Flings Take a Back Seat to Uber
It started innocently enough: Rachel Rabbit White, a journalist in her 20s who writes about sex, was hailing a taxi with her boyfriend at the time and a female friend after a Lower East Side party.

But “as soon as we got into the cab,” Ms. White said, “it became clear that this was going to be a threesome.” Within moments, the taxi ride turned into Plato’s Retreat on wheels, a montage of hair pulling, collar tugging and bodies writhing in darkness.
Far from being an impediment to passion, the unglamorous setting was an enabler. “It was as if being in the space of the cab decided it for us,” Ms. White said.

Ah, the strange erotic power of the New York taxi. On the surface, these utilitarian urban people movers that sometimes smell like old gym socks would seem about as sexy as a Yankee Stadium bathroom. But for countless reasons, some New Yorkers long considered the taxi back seat a pay-by-the-hour love shack.

But that illicit tradition is under threat of late, as ride-hailing apps like Uber and Lyft sanitize yet another dark corner of New York night life. Unlike traditional taxis, where anonymity is the rule (and the attraction), these services know exactly who has been naughty or nice in their back seats. Not only do drivers know a passenger’s name and mobile number, but they are also asked to review a passenger’s behavior.

These customer reviews, which function like a credit score that is based on conduct rather than financial standing, have put a damper on back-seat shenanigans. Indeed, acting out under those circumstances is a bit like streaking through Grand Central Terminal with a “Hello, My Name Is ______” tag plastered to your chest.

With some users feeling motivated to limit their back-seat behavior to job-interview politeness, the raunchy back-seat hookup — immortalized in films like “Dressed to Kill” and shows like “Taxicab Confessions” — suddenly looks like a vestige of a Lost New York, doomed to go the way of peep shows, streetwalkers and Al Goldstein’s “Midnight Blue.”

“I wouldn’t have back-seat crazy fests in Uber because, hypothetically, the voyeur driver would have my name, address and a system that lets them rate me,” said Twanna A. Hines, a sex educator in New York and Washington....MORE
However:

Woman protests Uber's $100 'bodily fluids' fee
A Southern California woman says an Uber driver added a $100 "bodily fluids" cleanup fee to her $7 ride.

Annie Pho tells CBS2-TV in Los Angeles that she didn't throw up or otherwise do anything that could lead to a finding that bodily fluids had found their way into the car. The only possible explanation, she says, is that it was a stormy day and rain water had dampened the inside of the ride-for-hire car.

"I don't think I'm responsible for weather conditions," she told a CBS2 reporter.

Michael Amodeo, an Uber spokesman, says that Pho was hit with the fee when the driver thought they saw paw marks in the back seat of the car. "But again, after further review, a decision was made to fully refund the rider," he said in a note to USA TODAY....MORE
Paw marks?

"The Newest Commodity: Oil Storage Space"

According to the EIA's Today in Energy (yesterday):

U.S. crude oil storage capacity utilization now up to 60%

graph of U.S. crude oil storage capacity, as explained in the article text
Source: U.S. Energy Information Administration, Weekly Petroleum Status Report and Working and Net Available Crude Oil Storage Capacity
Note: Inventories shown in the graph do not include pipeline fill, lease stocks, or oil in transit from Alaska. PADD is the Petroleum Administration for Defense District.

Crude oil inventory data for the week ending February 20 show that total utilization of crude oil storage capacity in the United States stands at approximately 60%, compared with 48% at the same time last year. Most U.S. crude oil stocks are held in the Midwest and Gulf Coast, where storage tanks were at 69% and 56% of capacity, respectively, as of February 20. This capacity use calculation reflects only crude oil stored in tanks or underground caverns at tank farms and refineries, and excludes some crude oil that is included in commercial inventory data, such as pipeline fill and lease stocks held in production areas.

Capacity is about 67% full in Cushing, Oklahoma (the delivery point for West Texas Intermediate futures contracts), compared with 50% at this point last year. Working capacity in Cushing alone is about 71 million barrels, or more than half of all Midwest (as defined by Petroleum Administration for Defense District 2) working capacity and about 14% of the national total....MORE, including this helpful drawing:
storage capacity schematics, as explained in the article text
And the headline story from MarketBeat:
U.S. crude-oil storage tanks are filling rapidly, with inventories posting their largest gain in nearly 14 years last week.

The cost to store oil is also rising, as tank space becomes scarce in some regions. Gulf Coast storage is at an all-time high of 219.9 million barrels, the U.S . Energy Information Administration said Wednesday, which is about 77% of capacity.

Perhaps coincidentally, CME Group Inc. said Wednesday that it’s starting a new futures contract to trade – what else? – Gulf Coast crude-oil storage. CME owns the New York Mercantile Exchange.

The exchange operator says this is the first-ever oil-storage futures contract. It will work like this:

At the beginning of every month, a 30-minute online auction will be held through brokerage NEO Markets Inc. In the auction, LOOP LLC – known to many as the Louisiana Offshore Oil Port – will sell 7,000 contracts. Each contract will give the buyer the right, but not the obligation, to store 1,000 barrels of sour crude oil in LOOP’s Clovelly Hub in Louisiana for a month.

Once the contracts are sold through the auction, they can be bought and sold freely. At the end of the month, anyone holding a contract can use the storage space, which will hold the oil in either an above-ground storage tank or an underground cavern.

The storage can be used for only three types of sour crude. Conveniently, those three types of crude will be tradable using CME’s Gulf Coast sour-crude futures contract, which is being renamed the LOOP Gulf Coast Sour Crude Oil contract.

So, who will use the oil-storage futures?

Producers, transportation companies and refiners all have exposure to commercial storage rates. A storage futures contract could allow those parties to lock in those costs ahead of time or trade them for profit....MORE

CIA Backed In-Q-Tel Invests In 3D Printed Electronics Co.

From Xconomy Boston:

CIA-Backed VC Firm Invests in Voxel8’s 3D Printer for Electronics 
Startups making 3D printers have electrified the tech industry. Just ask Voxel8, a Boston-based startup that makes what it says is the first 3D printer able to print electronic devices. Or ask In-Q-Tel, the venture capital firm with links to the Central Intelligence Agency. In-Q-Tel recently made a strategic equity investment in Voxel8 and also signed a technology development agreement with the startup. Voxel8 announced the news Thursday, although it did not disclose how much the firm invested.

Voxel8 has developed a 3D printer that allows users to add embedded electronic circuits to the plastic objects they create. The machine does so by printing with a silver ink that conducts electricity. The machine also works with the conventional thermoplastics used by other 3D printers.

Harvard University professor and material scientist Jennifer Lewis developed the technology in her lab, along with other 3D-printing technology. Voxel8 was spun out last year to focus on commercializing 3D-printed electronics. Xconomy reported in January that the company has raised about $2 million in venture capital, including an investment from Braemar Energy Ventures, and $50,000 from winning the MassChallenge business plan competition....MORE

"Washington Strips New York Fed’s Power"

Benjamin Strong is rolling over in his grave.
From the Wall Street Journal:
The Federal Reserve Bank of New York, once the most feared banking regulator on Wall Street, has lost power in a behind-the-scenes reorganization at the nation’s central bank.

The Fed’s center of regulatory authority is now a little-known committee run by Fed governor Daniel Tarullo , which is calling the shots in oversight of banking titans such as Goldman Sachs Group Inc. and Citigroup Inc .

The new structure was enshrined in a previously undisclosed paper written in 2010 known as the Triangle Document. Under the new system, Washington is at the center of bank supervision, exercising control over the Fed’s 12 reserve banks, much as the State Department exerts control over embassies.

The power shift, initiated after the financial crisis and slowly put in place over the past five years, is more than a bureaucratic change. It influences how the biggest banks on Wall Street are overseen and has begun to affect regulation in unanticipated ways across the Fed system.

 During internal debates on a range of issues—including a Citigroup bid to raise its dividend a year ago and J.P. Morgan’s 2012 “London Whale” trading losses—New York Fed examiners have been challenged by Washington. At times they have been shut out of policy meetings and even openly disparaged by Mr. Tarullo for failing to stem problems at banks, according to current and former Fed officials involved the discussions.
“It was obvious that a lot in the U.S. regulatory system had not worked particularly well before the crisis,” Mr. Tarullo said in an interview. “It was equally obvious that there was going to need to be a rethink and reorganization.”

The new structure will be on display Thursday, when the Fed releases results of annual stress tests of big banks, a program run out of Washington by Mr. Tarullo’s group.

The Fed undertook the reorganization with little disclosure about what was taking place, but officials are now drawing attention to it. “The Federal Reserve is requiring more of large institutions,” Fed Chairwoman Janet Yellen said in a speech Tuesday that addressed the reorganization. “We are also requiring more of ourselves.”

The New York Fed, as it loses power, is adjusting its approach in some ways. It is pulling examiners out of offices at the banks they review and relocating them to a building near New York Fed headquarters....MORE

Mark Cuban Says This Tech Bubble Is Bigger Than The One That Made Him a Billionaire

From Mr. Cuban's Blog Maverick:

Why This Tech Bubble is Worse Than the Tech Bubble of 2000
Ah the good old days.  Stocks up $25, $50, $100 more in a single day.  Day trading was all the rage.  Anyone and everyone you talked to had a story about how they had made a ton of money on such and such a stock. In an hour.  Stock trading millionaires were being minted by the week, if not sooner.

You couldn’t go anywhere without people talking about the stock market.  Everyone was in or new someone who was in. There were hundreds of companies that were coming public and could easily be bought and sold.  You just pick a stock and buy it. Then you pray it goes up. Which most days it did.
Then it ended. Slowly by surely the air came out of the bubble and the stock markets declined and declined till the air was completely gone.  The good news was that some people were able to see it coming and get out. The bad is that others were able to get out, but at significant losses.

If we thought it was stupid to invest in public internet websites that had no chance of succeeding back then, it’s worse today.

In a bubble there is always someone with a “great” idea pitching an investor the dream of a billion dollar payout with a comparison to an existing success story.  In the tech bubble it was Broadcast.com, AOL, Netscape, etc.  Today its, Uber, Twitter, Facebook, etc.

To the investor, its the hope of a huge payout.  But there is one critical difference.  Back then the companies  the general public was investing in were public companies. They may have been horrible companies, but being public meant that investors had liquidity to sell their stocks.
The bubble today comes from private investors who are investing in apps and small tech companies.

Just like back then there were always people telling you their idea for a new website or about the public website they invested in, today people always have what essentially boils down to an app that they want you to invest in.  But unlike back then when the dream of riches was from a public company, now its from a private company.  And there in lies the rub.

People we used to call individual or small investors, are now called Angels.  Angels. Why do they call them Angels ? Maybe because they grant wishes ?

According to some data I found, there are 225k Angels in the US. Like the crazy days of the internet boom,  I wonder how many realize what they have gotten into ?

But they are not alone.

For those who can’t figure out how to be Angels. You can sign up to be part of the new excitement called Equity Crowd Funding. Equity Crowd Funding allows you to join the masses to chase investments with as little as 5k dollars.  Oh the possibilities !!...
...MORE 

"Newsonomics: The Financial Times triples its profits and swaps champagne flutes for martini glasses"

We frequently link to pink.
From the Nieman Journalism Lab, Feb. 27:

The FT is a leader in crossing over from print digital subscribers now make up 70 percent of its paying audience, a number that keeps growing.
 http://upload.wikimedia.org/wikipedia/commons/1/14/FT_125th_Balloon_(8473467462).jpg
Even as the Financial Times announces excellent bottom-line numbers, the heat it’s feeling from the diverse and growing competition in business news is palpable.

The FT may be 127 years old and roundly and rightfully respected for its journalism. But it doesn’t even break into the top 25 business news websites, as counted by comScore (see chart below). In the U.S. — which became its largest market a few years ago, surpassing the U.K. — FT.com ranks #44, with 804,000 uniques. Topping the comScore list are three big free business news sites — Yahoo Finance, Business Insider, and Forbes — and re-energized, free offerings like the new Bloomberg.com intensify the battle for readers.

Why does the FT rank so low? Understandably, it’s favored revenue and profit over audience growth. While its paywall is metered, it’s a tough one to sample. I’ve seen up to eight monthly articles offered — with registration — and then repeated log-in requests as browsers run across an FT article on Twitter or elsewhere.

Consequently, the FT is opening up — adopting a $1 (or €1 or £1) one-month trial strategy, one. (Ironically, a similar model has been tested by numerous Press+ customers, after it — now bought and merged with Piano Media — modeled its own meter on the FT’s.) Having well transitioned many of its print readers to digital and harvested a good number of new ones — 20 percent of all new FT signups now happen on smartphones, a remarkable number for a news organization — it feels the need to reach a new, wider market of readers and would-be subscribers.

“Where do we go next?” is the question that the FT is now answering anew. As one three-year plan is completes, a new plan moves forward. “You can’t stand still,” FT CEO John Ridding told me in an interview this week. “We are rethinking key elements again.” It’s a good time for the FT to renew itself. Ridding says that the FT has tripled its profits year over year — a significant achievement for a newspaper industry in today’s frosty legacy publishing climate.

“There’s been a lot of internal debate about champagne and martinis,” Ridding said. That’s as in narrowly fluted champagne glasses and wide-brimmed martini. Simply put, the FT’s paywall marketing caught too few potential customers. Widen the top of the glass — or the overused metaphorical top of the funnel of reader acquisition — and more potential subscribers can be snared....MORE 

Gawker Does the Daily Mail

And boy does it does it.

From Gawker:
My Year Ripping Off the Web with the Daily Mail Online
 My Year Ripping Off the Web With the Daily Mail Online
On July 11 of last year, the last day I arrived to work at the MailOnline newsroom in New York City and saw Keith Poole, our managing editor, standing outside smoking a cigarette. Even from a hundred yards away, it was clear that Poole—a generally pleasant Englishman who was the managing editor of the Daily Mail at the time—was agitated. It didn't take a detective to figure out why.
 
Two days earlier, MailOnline, then the name of the online arm of London's Daily Mail tabloid newspaper, had issued a rare public apology, admitting it had published a bogus article about actor George Clooney's now mother-in-law, Baria Alamuddin. The story had claimed that Alamuddin, who is Lebanese, was telling "half of Beirut" that she opposed Clooney's then-upcoming marriage to her daughter for religious reasons. It had gone further to suggest that in the Druze religion—which the Mail falsely claimed Alamuddin practiced—marriages without family approval can result in the death of the bride.

This anemic expression of regret was offered only after Clooney had written a scathing op-ed for USA Today spotlighting the inaccuracies in the Mail's piece and trashing the publication's reporting. Clooney rejected the Mail's half-hearted apology with an even harsher essay, re-published by blogs and news sites around the web, in which he called the Mail "the worst kind of tabloid" and wrote that it had constructed a "premeditated lie" in an effort to create "religious tensions where there are none."

"Rough week?" I asked Poole after he'd finished his cigarette and stepped into the elevator.
"Haha. Yeah," he responded.

"Clooney?" I asked.

"Ugh," Poole shot back. "The lying bastard." (Poole says he can recollect having a brief discussion about the Clooney complaint with someone else in an elevator, but denies speaking with me and says he never called Clooney a "lying bastard.")

And then he added: "Don't tell anyone I said that."

MailOnline—which has since changed its name to DailyMail.com in order to "mak[e] deeper inroads … with ad firms on Madison Avenue," according to the Wall Street Journal—has been widely hailed as a blueprint for the future of online journalism. It reaches hundreds of millions of readers, and it has hired former BuzzFeed COO Jon Steinberg to help turn those gargantuan traffic numbers into profit. Earlier this year, DailyMail.com acquired U.S.-based site Elite Daily, the so-called "Voice of Generation Y."

The eager paradigm-proclaimer Michael Wolff used his USA Today media column last August to praise the Mail's business model as having succeeded where other, better-funded and more prestigious publications have failed. Under the headline "Daily Mail Solves Internet Paradox," Wolff lauded the publication's "180 million unique visitors a month" and suggested that if other publications want to survive the "digital migration" they should adopt a model similar to that of the Mail's.

What Wolff failed to acknowledge: the Mail's editorial model depends on little more than dishonesty, theft of copyrighted material, and sensationalism so absurd that it crosses into fabrication.

Yes, most outlets regularly aggregate other publications' work in the quest for readership and material, and yes, papers throughout history have strived for the grabbiest headlines facts will allow. But what DailyMail.com does goes beyond anything practiced by anything else calling itself a newspaper. In a little more than a year of working in the Mail's New York newsroom, I saw basic journalism standards and ethics casually and routinely ignored. I saw other publications' work lifted wholesale. I watched editors at the most highly trafficked English-language online newspaper in the world publish information they knew to be inaccurate.

"We do things a little differently than you might be used to," U.S. editor Katherine Thomson told me, early in my time there....MORE

Oil: Growth Rate of U.S. Oil Production Decelerating

This is six days old but since all you need is two datapoints to draw a trendline, away we go.
From Platts The Barrel blog:

Oil demand, prices and decelerating US supply
Global oil supply and demand forecasts for 2015 have changed significantly recently, but these changes have largely cancelled each other out: the outlook is still one of a market roughly in balance. However, this ignores the tectonic shifts taking place under the surface. US output growth is decelerating. If futures markets pre-empt this, as they did in February, they risk reversing it, which could produce another drop in prices, as Ross McCracken, managing editor of Platts Energy Economist, explains.

The rapid descent of crude oil prices since last summer has impacted forecasts for both demand and supply in 2015. However, it is at times of rapid market change that forecasting becomes most difficult. If history is any guide, current forecasts are more likely than others to be subject to major revision as the year progresses.

In July of 2014, before crude prices collapsed, forecasts from the International Energy Agency, US Energy Information Administration and OPEC suggested that world oil demand would rise by about 1.35 million b/d in 2015 and that the global supply/demand balance would be very slightly positive.

Despite the drop in the crude price from above $100/b to below $50/b in January, current demand growth forecasts from the three agencies now average only 1.0 million b/d. The reduction is the result of the decline in expectations for global GDP growth.... MUCH MORE
 ...Yet overall, total US crude production continues to rise. The EIA estimated the four-week moving average for February 20 at 9.242 million b/d, up 116,000 b/d from the end of last year.

However, the rate of increase is slowing, showing a deceleration trend similar to that of the EIA’s forward projections for shale oil output.
ee-feb-output 
On current trends, the EIA’s projections for month-ahead shale output growth should turn negative in April or May. Actual US production should start to contract sometime in second-half 2015. But if futures markets bounce, as they did in February, in expectation of this decline, they risk reversing it, which could produce another dip in prices.

Seriously, Can Economists Ever Be Truly Funny?

Jodi Beggs at Economists Do It With Models has a precept: "Econ funny"≠"funny"which she disproves on a regular basis. However she does have a point with this bit from her latest post:
...I am also aware that the bar for economic humor is not always particularly high…for example, it turns out that jokes (and I use this term loosely) are tagged with [laughter] tags in transcripts published by the Federal Reserve, so a simple search function highlights all of the moments of supposed nerd hilarity....
With that preramble here's alpha architect:

Top 5 Geeky, Yet Funny, Economic Paper Titles
As many are aware, economists aren’t the funniest group in the crowd. Here are some sample jokes from the funniest economists out there–Yoram Bauman.
Here is a sample economist joke:
When Yorum told his dad that he wanted to use his Ph.D. in economics as the basis for a comedy career, his dad was unsure.
He didn’t think there would be enough demand.
har har har…
....But just because economists can’t tell jokes, doesn’t mean they can’t come up with some funny titles for their esoteric academic articles submitted to professional journals.

Our Top 5 Funny Titles of All-Time:
Number 5:
Star wars: The empirics strike back
Journals favor rejections of the null hypothesis. This selection upon results may distort the behavior of researchers. Using 50,000 tests published between 2005 and 2011 in the AER, JPE and QJE, we identify a residual in the distribution of tests that cannot be explained by selection. The distribution of p-values exhibits a camel shape with abundant p-values above :25, a valley between :25 and :10 and a bump slightly under :05. Missing tests are those which would have been accepted but close to being rejected (p-values between :25 and :10). We show that this pattern corresponds to a shift in the distribution of p-values: between 10% and 20% of marginally rejected tests are misallocated. Our interpretation is that researchers might be tempted to inflate the value of their tests by choosing the specification that provides the highest statistics. Note that Inflation is larger in articles where stars are used in order to highlight statistical significance and lower in articles with theoretical models.
Number 4:
An Option Value Problem from Seinfeld
In an episode of the sitcom Seinfeld (season 7, episode 9, original air date December 7, 1995), Elaine Benes uses a contraceptive sponge that gets taken off the market. She scours pharmacies in the neighborhood to stock a large supply, but it is finite. So she must “reevaluate her whole screening process.” Every time she dates a new man, which happens very frequently, she has to consider a new issue: Is he “spongeworthy”? The purpose of this article is to quantify this concept of spongeworthiness.
 ...MORE

HT: Abnormal Returns

Personally I prefer "Top 11 Funniest Papers in the History of Economics", but that's partly just because it goes to eleven.

Possibly also of interest:
Austan Goolsbee, Stand-Up Economist
2009 Fed Open Market Committee Transcripts: Big Yucks at the Big Table
Research Says Learning Economics Turns You Into A Liar

"Will Dividend Cuts Turn Energy Stock ETFs into a ‘Yield Trap’?"

Jus sayin'
WTI up 40 cents at $51.93.
From Barron's Focus on Funds:
Oil prices have stabilized near $50 a barrel over the past month, giving lift to shares of dividend-paying energy shares.

Index-tracking Vanguard Energy ETF (VDE) bested the S&P 500 by 1.5% in February. Part of the appeal likely has to do with the fact that energy companies including ExxonMobil (XOM) and Chevron (CVX) look like juicy dividend plays, but research firm Markit warns that the bet could sour if beaten-down energy companies cut their dividend payouts. Simon Colvin, research analyst at Markit, warns bottom-seeking investors that they might be buying their way into a “yield trap.”
“Energy shares are disproportionately represented among the companies offering an attractive dividend yield compared to long term average. But several of the energy firms which offer attractive yields are expected to cut payments, according to Markit’s dividend forecasts.
Here’s the key: Markit finds that that fully one-quarter of companies with the most attractive yields come from the energy complex. Markit screened the 31 energy stocks that boast the best dividend yield payouts, relative to their average.

Within this group, the Markit forecasts that handful of companies will suspend their payments altogether, based on a mix of announced cuts and foretasted payments. These include Comstock Resources (CRK), GulfMark Offshore (GLF) and Exco Resources (XCO)....MORE

Wednesday, March 4, 2015

For Sale: 2nd Tallest Building In The U.S.

From the WSJ's Developments blog:

Willis Tower Hits the Sales Block 
The Willis Tower is on the block
Eliot Brown / Wall Street Journal
Now for sale: The country’s second-tallest skyscraper.

The owners of the Willis Tower – formerly the Sears Tower – are looking for buyers for the 1,451 -foot tower, a spokesman for the ownership group confirmed. The group recently tapped real estate services firm Eastdil Secured to market the 4.6 million square foot building, which is about 84% occupied.

The effort marks latest move by investors to cash in on a strong market for commercial property, as high-profile buildings in particular have become well sought-after by foreign investors.

Of course, selling such a big building could prove a tall order. The owners – New York investors Joseph Chetrit and Joseph Moinian and Skokie, Ill.-based American Landmark Properties — tried in 2011 to sell the tower, coming back empty handed as bids didn’t hit expectations, according to people familiar with the matter.

But the market at the time was still early in its recovery, and there had been few high-profile deals. In addition, the tower has secured some high profile new leases, and its revamped observation deck is among those experiencing a boom in visitation....MORE

In Commodites, Storage Rules

In the oil post immediately below I re-referenced:
...On the other hand Craig Pirrong seems to respect him and, although I don't have much interest in Pirrong's snark, the Prof. probably knows as much about commodity storage as anyone.
Storage, being the nexus between physical and financial, is the aspect of the commodity biz that matters most so anyone who can instruct me is jake in my book....
just as my attention was being directed to this story on storage.

From Reuters via the Dickenson Press:

Farmers store fertilizer to fight dealers’ pricing power
WINNIPEG-Canadian farmers are plowing profits from bumper crops into fertilizer storage facilities to mitigate the pricing power held by major retailers and producers.

Having their own storage lets farmers buy nutrients more cheaply during the off-season and creates fewer transport bottlenecks in the spring planting season.

Over time, the practice might erode the steep premiums farmers pay in the spring to retail businesses owned by Agrium Inc., Richardson International and Cargill, while shifting distribution patterns of producers Potash Corp. of Saskatchewan, Mosaic Co. and CF Industries.

The trend is part of a wider shift by North American farmers to gain more control over both costs and the prices they collect. In the U.S., farmers are building silos and bins to store grains and oilseeds until crop handlers entice them to sell.

Canadian farmers produced record-large harvests of wheat and canola in 2013, boosting their net income to Canadian $6.4 billion, the fourth straight year of gains, according to the most recent Statistics Canada data.
After diammonium phosphate prices spiked in 2008 to $1,200 per tonne, compared with less than $500 a tonne today, Saskatchewan farmer Kevin Hruska spent about Canadian $400,000 in 2010 to build storage for about 6,000 tonnes of blended fertilizer....MORE
HT: Big Picture Agriculture 

OPEC Is/Is Not the Central Bank of Oil: Taking Away the Punch Bowl

We have very mixed emotions about the writer's prognostication skills but other market participants seem to think he's swell.*
From RBN Energy:

The Era of Petro-Exuberance – The Real Reasons Underlying Today’s Crude Oil Prices 



Alan Greenspan coined the phrase "irrational exuberance" during his tenure as Federal Reserve chairman. He used it in a 1996 speech in reference to the excessively high prices of "dot-com" companies. He worried that assets were overvalued. Four years later, the dot-com bubble burst, confirming his concerns. Presently we are observing the last gasps of irrational exuberance in petroleum. Call it "petro-exuberance." This malady became apparent during a session on oil market issues at the World Economic Forum in Davos, Switzerland. Some panelists clearly had a case of irrational exuberance, an overenthusiasm no different from what we saw at the end of the dot-com and the housing crises.

Claudio Descalzi, chief executive of Eni, and the International Energy Agency's Fatih Birol showed the most distinct symptoms. Both seem under the illusion that oil price levels today are temporary rather than characteristic of a new ceiling that producers will welcome in a year or two. In his remarks, though, Descalzi unintentionally advanced an explanation for recent developments and the likely way forward for global oil markets: "What we need is stability. ... Opec is like the central bank for oil which must give stability to the oil prices to be able to invest in a regular way." His observation, if correct, promises a prolonged period of low prices and a harsh climate for those producing oil.
Figure 1 - Dated Brent Price
Panel moderator Daniel Yergin joined the dialogue and asked the participants whether the central bank of oil was making a mess of things. Their answers made one thing obvious: they had no concept of the role central banks play in economies. If they had, they might have said this: "Not at all. A major central bank of oil finally responded properly in November when a decision was made not to cut output. While the action came late, the bank took away the punch bowl, just as really good central bankers must do from time to time. Market participants had become irrationally exuberant, investing billions upon billions in high-cost projects."

In refusing to cut production, one central bank of oil (Saudi Arabia) followed a script written by Paul Volcker 36 years earlier. Volcker became head of the US central bank in August 1978 when inflation in the US was out of control. Oil today is in straits similar to those of the US economy in the late 1970s. The managers of the "central banks of oil," which include key producing countries and consuming nations that own large strategic stocks (especially the US and Japan), should be concentrating on oil prices and the rate of oil price increases or decreases, just as Descalzi suggests. However, all have ignored this responsibility for the last 10 years. This "dereliction of duty" on the part of oil producers and consuming nations allowed crude prices to rise to excessively high levels. As a result, an irrational exuberance grew in the oil industry, fueling larger and larger capital expenditures on gigantic projects to produce oil and, at the same time, prompting investment in expensive technology developments aimed at eliminating oil use. Investors in both camps received an additional boost from the quantitative easing advanced by central banks after the 2009 crisis.
Last year, the key Opec members recognized the danger in these circumstances regarding their market share and the future of oil in general. By refusing to decrease output to sustain high prices at their November 2014 meeting, they acted as a central bank should. In spite of his words, this is not what Descalzi and others in similar positions desire. That is, he does not want oil-exporting countries to act as prudent "central bankers" worried about the long-term viability of the world oil and gas business. What he and executives of other major oil companies really would like to see is Opec behaving like the imprudent banks of the early 2000s, the ones that kept layering credit default swaps upon mortgage loans upon other bad loans to keep their financial bonanza going.

Who Is the "Central Bank" of Oil?
The Davos presentations also exposed the flawed thinking of those in the energy business — pretty much everyone it seems who see Opec as the dominant "central bank of oil." The central bank idea originated more than 10 years ago at PFC Energy, a consulting firm since acquired by IHS. The firm popularized the view that Opec members, particularly Saudi Arabia, had taken on in petroleum the role accepted for economies by the US Federal Reserve, the Bank of England and the European Central Bank.

But neither Opec nor Saudi Arabia alone can act as the central banker of oil, just as no central bank, acting alone, can do much to affect global economic trends. Yes, in the event of an oil shortage, Saudi Arabia and other Middle Eastern producers can moderate prices by boosting production of certain types of oil (generally sour, medium to heavy grades). They can also reduce supply for short periods. Such actions do not always succeed, though. These countries, for example, could not stop prices from tripling or quadrupling from 2003 levels when demand for light, sweet crudes surged in 2007 and 2008....MORE
*From our June 2013 post "UPDATED--Izabella at Dizzynomics: "Fed, QE and commods"":
Update below.
Original post:
I have very mixed feeling about Mr. Verleger.
I am naturally suspicious of anyone who spends as much time on self-promotion as he does. On the other hand Craig Pirrong seems to respect him and, although I don't have much interest in Pirrong's snark, the Prof. probably knows as much about commodity storage as anyone.
Storage, being the nexus between physical and financial, is the aspect of the commodity biz that matters most so anyone who can instruct me is jake in my book....
***   ***   ***   ***   ***
Update: A very sharp physical oil trader points out that the above timeframe is rather wide enough to drive a tanker through without touching either side of the bracket and sends along a couple of Mr. Verleger's public predictions:
From Bloomberg:

Verleger Sees $20 Oil This Year on ‘Devastating’ Glut (Update1) 
That's dated July 16, 2009 with the front futures at  $61.18. Oil had bottomed the previous December at  $32.40. and besides not going to $20 it never traded lower than the day of the prediction, closing the year at $79.36.

More recently, 2012 we have Foreign Policy mag via NPR:
Foreign Policy: The Coming Oil Crash
...Given this already-existing revenue gap, one might fairly wonder what would happen if, as Citigroup's Edward Morse says is possible, prices drop another $20 a barrel for an extended length of time. Oil economist Philip Verleger's forecast is even gloomier — a plunge to $40 a barrel by November. Or finally, what Venezuelan Oil Minister Rafael Ramirez — $35-a-barrel prices, near the lows last seen in 2008. In Russia, for instance, "$35 or $40, or even $60 a barrel, would be devastating fiscally," says Andrew Kuchins of the Center for Strategic and International Studies. That could damage the standing of President Vladimir Putin, since his "popularity and authority are closely correlated with economic growth," Kuchins told me in an email exchange....MORE
There's nothing wrong with making a mistake, I do it on the blog all the time and even more often in the higher risk-hopefully higher reward stuff that doesn't make the blog.

The thing is, I just looked for a retraction or an apology or even an acknowledgement of these major mistakes and found zip.

And that's where the suspicion that self promoters engender comes into play.
In a business where you are marked to market on an hourly basis you don't have the luxury of being anything less than straight-up about your mistakes.
In other fields you can fudge, hedge, pretend, whatev. And self-promoters tend to do it more than folks with nothing to prove, or those with nothing to sell. 
After the 2013 post we followed up with "The Set Up For a Collapse of Oil Prices": 

Twice in the last six weeks FT Alphaville has referred to Philip Verleger's call for lower oil prices.
The thesis is higher interest rates would cause currently financialized inventories to come out of storage.

I agree but I wish to heck it hadn't been Verleger making the argument....
So who knows? I like the Schroedinger's OPEC idea.

2009 Fed Open Market Committee Transcripts: Big Yucks at the Big Table

From Real Time Economics:
Federal Reserve policy makers faced a dark economic outlook as 2009 began. They cut some of the tension at their Federal Open Market Committee meetings with their usual brand of central banking humor. The FOMC’s 11 meetings and phone calls in 2009 featured 303 moments of laughter–marked in the transcripts, released Wednesday, by a [Laughter] tag. We’ve collected some of the best and worst ones here.
Many of these were lame cracks to bring a bit of levity to an otherwise long and dreary gathering. If you read the transcripts for the jokes (Pro tip: Don’t do this) you’d be perplexed by many of the inside jokes about bureaucracy or the challenges of crafting the FOMC statement. So just remember this: They’re economists. You don’t pay them to be funny.
(Note: The transcripts run for thousands of pages, featuring serious discussions on a very long list of topics. Read our comprehensive coverage here on Real Time Economics to capture those discussions.)

January 27-28
The year must begin by electing a chairman of the FOMC, a post everyone knows will be filled by Fed chairman. Fed vice chairman Donald Kohn did the honors:
MR. KOHN. Mr. Chairman, it is a pleasure and an honor to recommend Ben Bernanke to be Chairman of this Committee. I am not sure what sins you committed in an earlier life, but I sure hope you had fun. [Laughter]

MR. HOENIG. It’s the first nomination I’ve heard like that. [Laughter]

Later, Fed staff funnyman David Stockton:

CHAIRMAN BERNANKE. … Let me turn now to the economic situation. Boy, I think it has been a while since we were three and a half hours into the meeting before we got to the staff forecast.

MR. STOCKTON. The GDP is a little smaller than it was at the start of the meeting.
[Laughter]

Fed officials go around the table offering their assessments of the economy. Here is then-San Francisco Fed president Janet Yellen:

MS. YELLEN. … The residential housing sector has now shrunk so much that the only real assurance that it will ever stabilize seems to be the fact that construction spending cannot go negative. This is just about the only zero lower bound that is working on our side. [Laughter]

*******************************************
Dallas Fed president Richard Fisher also has a T-shirt reference to make, followed by several other jokes:

MR. FISHER. I was first going to say to Dave Stockton that our wives have an affinity for T-shirts. My wife, a smart Wellesley woman who spent most of her time at MIT, arrived at Oxford noting that the ratio of women to men was 1 to 11. She had a T-shirt for other women which she sold briskly, and it said, “Come to Oxford where the odds are good, but the goods are odd.” [Laughter]

… Mr. Chairman, I want to report on the microeconomic input I received from my corporate contacts, which numbered some 29 CEOs around the country whom I talked to before this meeting. Unfortunately, it confirms what Dave and Steve presented. In fact, one actually called me and said, “Do you want some good news?” And I said, “Please.” He said, “Call somebody else.” [Laughter]

… I couldn’t find any silver linings. There is, I suppose, a pewter lining, as I like to call it. And, Governor Tarullo, without any insult to your industry, one of the virtues is that the legal industry is also contracting [laughter]; 6,000 people were laid off from major law firms year to date....
...MUCH MORE

Aon Political Risks 2015: Oil Prices Pose Biggest Risk

From CNBC:
Low oil prices will compound political risks across emerging markets this year, according to a new report released Wednesday.

Aon's Political Risk Map for 2015 warns that countries including Russia, Iraq, Venezuela and Libya will face further political pressure in the months ahead.
"The fall in oil prices are having quite a dramatic impact on a lot of oil producing countries which don't have the strength of foreign reserves," Karl Hennessy, CEO, Aon Global Broking told CNBC via telephone ahead of the report's release.

"As they start to lose revenue, this puts pressure on countries and raises the potential for instability."
The annual study grades 163 countries for political risk based on factors like the probability of political interference, banking sector vulnerability, sovereign non-payment and quality of regulation.
Ukraine continues to rank amongst the world's riskiest states. Despite hopes for a successful ceasefire as a result of the Minsk 2 agreements, Aon's report warns a resolution over the disputed region of eastern Ukraine is unlikely in 2015....MORE
Here's Aon's press release and link to the map.

Harvard Business Review Now Harvard Veterinary Review

From the HBR:
When you're a rabbit and your colleague is a guinea pig. "Since a rabbit’s basic assumption is that they are like anyone else, they never fully understand how guinea pigs think. It’s a huge blind spot. They under-estimate how much a guinea pig looks up to them and expects of them. They usually get into trouble with guinea pigs when they try to end or question relationships, or strike out more independently, or start to shine too brightly on their own."  
HT: going concern

Dollar and Oil Charts

WTI $50.59 up 7 cents. ca. $54 has stopped three rally attempts.
From Bespoke Investment Group:
The US Dollar index is on the move higher once again.  Below is a six month candle chart of the dollar.  As shown, after “hooking” lower since mid-January, it’s breaking out above its prior highs this morning.  The prior highs from January should now act as support going forward.

Meanwhile, after going down pretty much every day for months, oil is actually starting to form a nice base around the $50/barrel mark.  The commodity has yet to push higher and start to make a dent in its huge losses over the last year, but it has stopped going down for now.  As you can see in the chart below, the "base-building" action for oil has allowed its 50-day moving average to catch up to its price.  Over the last couple of weeks, oil has been tracking right along its 50-day.  Traders will be watching the price action very closely in the coming days to see if it can finally bounce off of this support level.  A break above its highs from February would be a bullish technical signal.

We expect to see another leg down in oil prices, partly because of the leg up in the buck. See for example Feb. 9's "Astenbeck Capital's Andrew Hall: Oil Is Going To $65 And The Surviving Shale Plays Will Do Just Fine":
I think he's early but right.
There are still 1100 oil rigs operating in the U.S. and they are now being directed to the lowest risk plays i.e. U.S. production won't start to decline until the third or possibly even the fourth quarter.

Probably more importantly the dollar is strong and any further appreciation could quickly knock 15-20% of the price of oil regardless of fundamentals....

Deloitte Top Trends: Institutional Investors Buying Hedge Funds

From ValueWalk:

Hedge Funds Monetizing By Selling Stakes To Institutional Investors
The financial services industry is on more solid footing than it has been for quite some time, yet institutional investors are increasingly taking equity stakes in the funds in which they invest, a report from Deloitte’s Center for Financial Services observes.
Deloitte monetization hedge fund

One of top three trends is institutional investors purchasing hedge funds

One of the top three trends occurring in the hedge fund world is fund owners “monetizing” their business and raising assets to manage by offering Institutional investors a stake in the company. This, in turn, is both creating opportunity and raising fiduciary concerns at the same time.
The trend toward Hedge Funds and private equity managers providing their institutional investor clients ownership in the fund took a significant uptick in 2014, the “2015 Alternative Investment Outlook” observed.  In fact, the trend has persisted to the point that what Deloitte characterizes as an “active marketplace” now exists where new would-be fund managers and existing managers offer their investors ownership exposure in the fund....MORE
Deloitte's 2015 Alternative Investment Outlook (20 page PDF)

"Worst-Case Wednesday: How to Smuggle Yourself Out of the Country"

A quasi-periodic review of  skills that may come in handy, should the worst happen.

From Worst Case Scenario:
You’re an extremely important figure, and you’ve just committed a crime that will definitely land you in a jail cell. It’s OK! We’ve all been blinded by power, and your high-falutin status is precisely why you think you should get a "get out of jail free" card.

Unfortunately, not everyone will agree. You’ve got to get out of the country to avoid the punishment you undoubtedly deserve, and quickly. What do you do? Ok, even if you’re a stellar citizen at the moment, everyone should be prepared to leave the country at the drop of a hat. You never know. Maybe you just need to wait until things cool down enough to assume but you’ve got to play it just the right way.
Luckily, The Worst-Case Scenario Almanac: Politics has some useful strategies to help you make a quick exit.

How To Smuggle Yourself Out Of The Country
1. Avoid changes in routine. Resist the urge to make your move too abruptly so you don’t alert authorities that you are about to escape. Maintain your daily routines while using every spare moment to plot your secret departure. Make sure you camouflage your efforts to gather materials for your escape under the guise of activities that you normally engage in.

2. Learn from others’ past mistakes. Review the cases of people that have been arrested for political reasons, focusing on how and where the government made arrests. Avoid similar circumstances.

3. Be wary of unsolicited offers of help. Rebuke anyone who approaches you about wanting to join or help you with your escape. He may be on assignment from the government to ensnare you.

4. Fake them out. Establish an event in the future that you will be sure to attend. If the government thinks you will be present in the country at least until an upcoming wedding, election, important speech, etc., they will probably wait to make an arrest in hopes of building their case against you. Just make sure you get out of the country before the event.
Also at Worst Case Wednesday:

Worst-Case Wednesday: How to Jump From Rooftop to Rooftop To Make Your Escape
Should the Worst Happen: Surviving Waterfall Declines
Worst-Case Wednesday: How to Survive in a Cheap Hotel
Worst-Case Wednesday: How to stop a Runaway Golf Cart
Worst-Case Wednesday: How to Make an Impromptu Toast
Worst-Case Wednesday: How to Deal with a Smart Aleck

2016 The Goldman Sachs Primary

From Politico:

It’s Bush vs. Clinton at Wall Street’s wealthiest bank.
Forget the Democratic and Republican primaries: The two biggest names in the 2016 presidential race are competing directly against each other in an elite forum, the halls of Goldman Sachs. Jeb Bush will be back in New York raising money next week with his sights set on Goldman, the wealthiest and most successful bank in Wall Street history. He has a pair of events scheduled for next Wednesday with current and former Goldman executives, sources familiar with Bush’s plans said.

The events signal that Bush hopes to go head to head for Goldman money and support with Hillary Clinton, who also has strong ties to the bank and is expected to raise large sums from its executives to help fund her likely presidential campaign. And it means employees of the nation’s richest investment bank are increasingly putting their money on the two best-known candidates, both of whom are viewed across Wall Street as centrists who could cool some of the scorching anti-banker rhetoric and policies emanating from the Elizabeth Warren wing on the left and the tea party movement on the right....MORE



On Momentum Investing

Just another tool in the toolbox.
From the Wall Street Journal:

Voices: Norman Conley III, on Using Momentum Investing 
‘It’s not about getting the grand slams; it’s about avoiding the devastating strikeouts’
Norman Conley III is chief executive and chief investment officer of JAG Capital Management in St. Louis.
 
If you’re not a practitioner of momentum investing, you might fall prey to the common misconception that it’s a de facto term for risky or aggressive. That’s far from the case. In fact, as part of a diverse portfolio that is actively managed, momentum investing is no more risky than any other alpha factor, and can actually reduce overall risk.

In the simplest terms, momentum is a style of investing that focuses on purchasing securities that are appreciating in price relative to peers in the broader market, and then selling those securities when they start to fall in price relative to peers. The fundamental concept is that which goes up will continue to go up for a period of time, and that which goes down will continue to go down.

Over the past 20 years, momentum investing has gained academic backing on par with more widely recognized styles of investing, such as small cap and value investing. So why is it misperceived as inherently risky? The answer comes down to the way that it has sometimes been practiced—regrettably with more focus on the upswing than the downswing.

If you practice momentum investing, you should have a healthy respect for market activity, up or down. During the tech boom of the late ‘90s, many momentum investors did very well riding the upswing. Not as many successfully negotiated the volatility of those stocks on the way down. There were spectacular failures. That may have soured people on momentum investing, but the problem was less in philosophy than in practice.

I see momentum investing as a continual process of trying to uncover and admit to your inevitable mistakes as a money manager. In that sense, it’s not inherently risky, but inherently humble. Momentum forces you to continually reappraise your original purchase, and to focus not on what has happened, but what could happen. When a stock starts to decline relative to its peers, in momentum investing that’s a yellow flag. An active, disciplined, and prudent momentum investor will treat it as such.

Properly practiced, then, momentum will not get you into a beaten-down stock at the bottom, and it won’t get you out of a roaring name at the top. Instead, it helps you catch a lot of middles....MORE
See also:
It's Anomalous: "Fact, Fiction and Momentum Investing"
The Most Important Thing To Know About Commodities Is...
Whoa! Has The Small-Cap Premium Disappeared? That Would Leave Only Momentum in the Tried-and-True Anomaly File!
Anomalies: Can Momentum Be Arbitraged Away?
AQR's Cliff Asness: "Fact, Fiction and Momentum Investing"
Momentum As The Only Reliable Market Anomaly 
Market Anomalies: When Momentum Crashes
Market Anomalies: Can You Combine Value and Momentum?
What a Long Strange Trip: From CAPM To Fama-French to Four (or more) Factor
"Two centuries of trend following"
Improving on the Four-factor (beta, size, value, momentum) Asset Pricing Model
A Look At Trend Following Hedge Funds And the Algos That Love Them

Tuesday, March 3, 2015

"The agricultural ETF shown below has been trying to bang out a bottom for ages"

From Slope of Hope:
...The agricultural ETF shown below has been trying to bang out a bottom for ages. It has been in a grinding, multi-year downtrend as defined by the channel I’ve drawn, so if you’re looking for a low risk long position, you might want to consider the wonderful world of wheat and soybeans.
0303-dba

The Best Selling Photographer In the World Has a Sweet Racket

From the New York Times, Feb. 21, 2015:

Peter Lik’s Recipe for Success: Sell Prints. Print Money.
Peter Lik is in awe of himself. When he describes his career as a fine-art photographer, he speaks with the satisfaction of a guy who has performed miracles, at the pace of a bystander who just caught a glimpse of Superman. The words tumble forth in self-exalting, run-on sentences, most of them laced with profanity, all of them in the sunny, chummy accent of his native Australia.

“I’m the world’s most famous photographer, most sought-after photographer, most awarded photographer,” he said one recent afternoon, sipping a can of Red Bull in a conference room at Peter Lik USA, a 100,000-square-foot headquarters in Las Vegas devoted solely to the production and sale of Peter Lik photography. “So I said” — and what Mr. Lik said next is an unprintable version of “the heck with it,” and then — “I want to make something special, special, special, special.”

That something special was a photograph called “Phantom,” an image of an eerily human-shaped swirl of dust in Antelope Canyon in Arizona. In December, his company announced in a news release that an anonymous collector had spent $6.5 million for “Phantom.” That crushed the previous record, held by Andreas Gursky, whose “Rhein II” fetched $4.3 million at an auction in 2011, and Cindy Sherman, whose “Untitled #96” brought $3.9 million at another auction the same year.



"Ghost" is a color version of “Phantom,” which Mr. Lik says is the most expensive photograph ever sold, at $6.5 million, to an anonymous buyer. Credit Peter Lik

But Mr. Gursky and Ms. Sherman are titans, with solo shows in pre-eminent museums.

Who is Peter Lik?

It irks him a little that you have to ask. Because by one measure — money — Mr. Lik may well be the most successful fine-art photographer who ever lived. He has sold $440 million worth of prints, according to his chief financial officer, in 15 galleries in the United States that he owns and that sell his work. The images are mostly panoramic shots of trees, sky, lakes, deserts and blue water in supersaturated colors. Generally speaking, his buyers are not people who acquire the art of Andreas Gursky and Cindy Sherman.

Which is just one reason that Mr. Lik considers himself an artist working outside a system established by elitist tastemakers. And while he says he doesn’t mind being snubbed by the establishment, part of him is bothered that his renown has lagged woefully behind his level of financial success.

So six months ago, he had an idea. Nearly every Peter Lik photograph is printed in a “limited edition” of 995; the first print sells at about $4,000, with the price rising as the edition sells out. With his eye fixed on a record-setting sale, he printed a single copy of “Phantom.” Then he alerted a handful of his most ardent collectors, one of whom, he said, agreed to the $6.5 million price. Before the deal was signed, Mr. Lik hired a public relations firm to make sure that the sale, and the record, were noticed....MORE
HT: The Conglomerate:
There's No Accounting For Taste Or Common Law Fraud?

"The Aging of the Tech Sector: The Pricing Divergence of Young and Old Tech Companies"

From Musings on Markets, Feb. 26, 2015:
As the NASDAQ approaches historic highs, Apple’s market cap exceeds that of the Bovespa (the Brazilian equity index) and young social media companies like Snapchat have nosebleed valuations, there is talk of a tech bubble again. It is human nature to group or classify individuals or entities and assign common characteristics to the group and we tend to do the same, when investing. Specifically, we categorize stocks into sectors or groups and assume that many or most stocks in each group share commonalities. Thus, we assume that utility stocks have little growth and pay large dividends and commodity and cyclical stocks have volatile earnings largely because of macroeconomic factors. With “tech” stocks, the common characteristics that come to mind for many investors are high growth, high risk and low cash payout. While that would have been true for the typical tech stock in the 1980s, is it still true? More specifically, what does the typical tech company look like, how is it priced and is its pricing put it in a bubble? As I hope to argue in the section below, the answers depend upon which segment of the tech sector you look at.

A Short History of Tech Stocks

My first foray into investing was in the early 1980s, as the market started its long bull market run that lasted for almost two decades. In 1981, the technology stocks in the market were mainframe computer manufacturers, led by IBM and a group of smaller companies lumped together as the seven dwarves (Burroughs, Univac, NCR, Honeywell etc.). Not only were they collectively a small proportion of the entire market, but of the list of top ten companies, in market capitalization terms, in 1981, only one (IBM) could have been categorized as a technology stock (though GE had a small stake in computer-related businesses then):
During the 1980s, the personal computer revolution created a new wave of technology companies and while IBM fell from grace, companies catering to the PC business such as Microsoft, Compaq and Dell rose up the market cap ranks. By 1991, the top ten stocks still included only one technology company, IBM, and it had slipped in the rankings. However even in 1991, technology stocks remained a small portion of the market, comprising less than 7% of the S&P 500. During the 1990s, the dot-com boom created a surge in technology companies and their valuations, and while the busting of that boom in 2000 caused a reassessment, technology has become a larger piece of the overall market, as evidenced by this graph that describes the breakdown, by sector, for the S&P 500 from 1991 to 2014:
Market Capitalization at the end of each year (S&P Capital IQ)
(click through to enlarge)
There are two things to note in this graph. 
  1. The first is that technology as a percentage of the market has remained stable since 2009, which calls into question the notion that technology stocks have powered the bull market of the last five years. 
  2. The second is that technology is now the largest single slice of the equity market in the United States and close to the second largest in the global market. So what? Just as growth becomes more difficult for a company as it gets larger and becomes a larger part of the economy, technology collectively is running into a scaling problem, where its growth rate is converging on the growth rate for the economy. While this convergence is sometimes obscured by the focus on earnings per share growth, the growth rate in revenues at technology companies collectively has been moving towards the growth rate of the economy.

The Diversity of Technology
As technology ages and becomes a larger part of the economy, a second phenomenon is occurring. Companies within the sector are becoming much more heterogeneous not only in the businesses that they operate in, but also in their growth and operating characteristics. To see these differences, let’s start by looking at the sector and its composition in terms of age at the start of 2015. In February 2015, there were 2816 firms that were classified as technology companies, just in the United States, accounting for 31.7% for all publicly traded companies in the US market....MORE