Monday, July 31, 2017

"Reddit raised $200 million in funding and is now valued at $1.8 billion"

So there I was earlier today thinking "Why does Reddit have an almost $2 billion valuation" as news of the financing crossed. Duh...after almost ten years, I just realized Reddit has ads.
I'm slow not because of ad blockers, we don't believe in them—if ads are the way a site makes money the implicit deal is to trade that reality for content, always reserving the option of not visiting at all.
Plus Reddit ads are whitelisted in most blockers.

No, the reason I didn't know Reddit had ads is I didn't consciously 'see' them. For years.
No wonder Proctor & Gamble could cut their online ad budget by $100 million last quarter and see no drop-off in sales: the 40% of traffic that isn't bots is basically blind to the ads.
Shhhh, don't tell Facebook or the GOOG, they'd be crushed.

From recode:

It’s going on a hiring spree and redesigning its website. 
Reddit has raised $200 million in new venture funding and is now valued at $1.8 billion, according to CEO Steve Huffman. 

The new funding round, the company’s largest ever, should expedite a number of internal product and business efforts, including a redesign of its homepage and its first foray into user-uploaded video, Huffman added in an interview with Recode

The money comes courtesy of a number of well-known Silicon Valley investors, including firms like Andreessen Horowitz and Sequoia Capital, and individual investors like Y Combinator President Sam Altman (also a board member) and SV Angel’s Ron Conway. It also includes money from the hedge fund Coatue, investment firm Vy Capital and mutual fund giant Fidelity. 

Advance Publications — which owns Condé Nast, Reddit’s one-time parent company — did not participate in this funding round but still owns a majority stake in Reddit, according to two sources familiar with the arrangement. Condé Nast CEO Bob Sauerberg sits on Reddit’s board of directors. Bloomberg reported last month that Reddit was raising more money. 

Reddit, which bills itself as the “front page of the internet,” has been a longstanding home for all kinds of online communities, both positive and negative, since it was founded in 2005 by Huffman and co-founder Alexis Ohanian. It’s had a tumultuous stretch since its last funding round, when it raised $50 million in 2014. When Huffman returned to Reddit in the summer of 2015 amid a user revolt, he became the company’s third CEO in less than a year. 

But things at Reddit have settled down since — and one thing that hasn’t changed much over the past decade is Reddit’s product. The network lets users post and comment on links akin to an early internet chatroom, and has amassed 300 million monthly visitors. But Reddit has also retained its early internet functionality and appearance — it still feels like a product that was created for the internet in 2005...MUCH MORE

Another Job the Robots Will Be Taking: Safecracker

Do we still have safecrackers? A quick check of the BLS' Standard Occupational Classification does not have a listing of either the broad category of 'criminal' or the narrower 'safecracker' occupation.

From Schneier on Security:

Robot Safecracking
Robots can crack safes faster than humans -- and differently:

So Seidle started looking for shortcuts. First he found that, like many safes, his SentrySafe had some tolerance for error. If the combination includes a 12, for instance, 11 or 13 would work, too. That simple convenience measure meant his bot could try every third number instead of every single number, immediately paring down the total test time to just over four days. Seidle also realized that the bot didn't actually need to return the dial to its original position before trying every combination. By making attempts in a certain careful order, it could keep two of the three rotors in place, while trying new numbers on just the last, vastly cutting the time to try new combinations to a maximum of four seconds per try. That reduced the maximum bruteforcing time to about one day and 16 hours, or under a day on average.

But Seidle found one more clever trick, this time taking advantage of a design quirk in the safe intended to prevent traditional safecracking. Because the safe has a rod that slips into slots in the three rotors when they're aligned to the combination's numbers, a human safecracker can apply light pressure to the safe's handle, turn its dial, and listen or feel for the moment when that rod slips into those slots. To block that technique, the third rotor of Seidle's SentrySafe is indented with twelve notches that catch the rod if someone turns the dial while pulling the handle....MORE 
Mr. Schneier also gets the hat tip for pointing us to McSweeny's from his 2012 post "Interview with a Safecracker":
Q: How did you learn to be a safecracker?
A: In 1978 I took a correspondence course to learn the basics of locksmithing. The ad in the Popular Mechanics classifieds said, “Be your own boss.”
The course consisted of about 70 lessons. I’d study each lesson and practice the particular skill required, like how to fit a key, lock disassembly, rekeying, etc.

Q: What does it mean to fit a key?
A: This is only one of a dozen basic locksmith skills. You insert a blank key, wiggle it while turning and the bumping action creates marks on the key blade. You file where the marks are until the key turns in the lock. It’s also known as “impressioning.”

Q: It seems like you could use this knowledge in bad ways if you wanted to.

A: Clients often ask, jokingly, whether we learn our trade in prison.
Technically, the biggest difference between what a burglar does and what I do is that the burglar wants to get in and out quickly and doesn’t care if the safe ever gets used again. I take my time because my objective is opening it with minimal damage so the owner can use it again.

A criminal safecracker also needs different knowledge and skills, beyond the technical, that I don’t have or need. I don’t need to know how to avoid leaving evidence, circumvent an alarm system, plan a get-away, or fence-stolen goods....

"Bank of England staff to protest on Threadneedle Street in row over pay"

'Twas ever thus, see after the jump.
From City AM:
Staff at the Bank of England will strike tomorrow for the first time in more than 50 years.

The central bank's maintenance, hospitality and security staff are staging a three-day walkout over their most recent pay review.

The Bank of England held talks with union Unite today via the conciliation service Acas, but talks broke down and staff will protest on Threadneedle Street tomorrow morning.

Unite has accused the Bank of giving staff "derisory" pay rises which are not in line with inflation, and has said up to a third of staff will get no pay rise this year.

The Bank said Unite had balloted two per cent of its workforce over the strike action.
A Bank of England spokesperson said:
The Bank has plans in place so that all essential business will continue to operate as normal during this period....MORE
An April 2011 post:

Wage Slaves at the 18th Century Bank of England
From the WSJ Europe's The Source blog:
The Bank of England has stood on more or less the same spot on Threadneedle Street in the City of London since 1734, about 40 years after its founders set up shop on nearby Cheapside with a £1.2 million IOU from a cash-strapped and grateful government.

A paper by Anne Murphy of the University of Hertfordshire, presented over the weekend at a meeting of the Economic History Society, sheds light on the daily activities of the bank’s clerks at the end of the eighteenth century. Their routine will be depressingly familiar to many City workers today. The clerks got in early, rarely had time for lunch and were still there when the place shut down at night.

In 1783 the bank appointed a Committee of Inspection to examine its working practices and recommend improvements, Ms. Murphy writes. Unlike the layabouts at the Treasury or the East India Company, for junior Bank of England clerks “the working day was long and left little time for idleness or large breakfasts.”
The bank was unlocked at 6.00am (7.00am in winter) and its gates closed at 11.00pm. Clocks were everywhere, marking time for staff and customers alike....MORE
Dr. Murphy has apparently been working on this subject for a while. According to VoxEU the instant paper will be part of a larger work, ‘The Grand Palladium of Public Credit: the Bank of England during the later eighteenth century’.

Here are her comments on the paper presented to the Society...MORE

Quants and Data Monkeys

From Victor Niederhoffer's Daily Speculations:

Quants: Another Form of Faith? from Bill Rafter
July 12, 2017
In our shop we consider ourselves "data monkeys" rather than quants, hoping that the disrespect of the moniker will limit wannabees. But if it looks like a duck and walks like a duck…

The problem of ever changing cycles/ figuring out the current regime/ the Church of What's Working Now is solved by most in a brutal fashion rather than a subtle one. Suppose you drive an old car from sea level to say 12,000 feet and it struggles. You could lift up the hood and tear the engine apart. You could also make an air-intake adjustment. Both methods work.

We data monkeys believe that the only things that count with regard to markets are sentiment and momentum. That is, it's all behavioral, and it's reasonably efficient. Sure we like to comment on fundamentals, but the fundamentals to us are only important because they influence the behavioral. When a market has been moving in a certain regime, sooner or later a market Watcher gets the inkling that a change is afoot. His action or inaction will disseminate exponentially to others, and then the regime really will change. The key to keeping up with this is to watch what the Watchers are watching....MORE
Daily Speculations home

HBR: The Simple Economics of Machine Intelligence—The World As A Prediction Problem

From the Harvard Business Review:
November 17, 2016 
The year 1995 was heralded as the beginning of the “New Economy.” Digital communication was set to upend markets and change everything. But economists by and large didn’t buy into the hype. It wasn’t that we didn’t recognize that something changed. It was that we recognized that the old economics lens remained useful for looking at the changes taking place. The economics of the “New Economy” could be described at a high level: Digital technology would cause a reduction in the cost of search and communication. This would lead to more search, more communication, and more activities that go together with search and communication. That’s essentially what happened.
Today we are seeing similar hype about machine intelligence. But once again, as economists, we believe some simple rules apply. Technological revolutions tend to involve some important activity becoming cheap, like the cost of communication or finding information. Machine intelligence is, in its essence, a prediction technology, so the economic shift will center around a drop in the cost of prediction.

The first effect of machine intelligence will be to lower the cost of goods and services that rely on prediction. This matters because prediction is an input to a host of activities including transportation, agriculture, healthcare, energy manufacturing, and retail.

When the cost of any input falls so precipitously, there are two other well-established economic implications. First, we will start using prediction to perform tasks where we previously didn’t. Second, the value of other things that complement prediction will rise.

Lots of tasks will be reframed as prediction problems
As machine intelligence lowers the cost of prediction, we will begin to use it as an input for things for which we never previously did. As a historical example, consider semiconductors, an area of technological advance that caused a significant drop in the cost of a different input: arithmetic. With semiconductors we could calculate cheaply, so activities for which arithmetic was a key input, such as data analysis and accounting, became much cheaper. However, we also started using the newly cheap arithmetic to solve problems that were not historically arithmetic problems. An example is photography. We shifted from a film-oriented, chemistry-based approach to a digital-oriented, arithmetic-based approach. Other new applications for cheap arithmetic include communications, music, and drug discovery.

The same goes for machine intelligence and prediction. As the cost of prediction falls, not only will activities that were historically prediction-oriented become cheaper — like inventory management and demand forecasting — but we will also use prediction to tackle other problems for which prediction was not historically an input.

Consider navigation. Until recently, autonomous driving was limited to highly controlled environments such as warehouses and factories where programmers could anticipate the range of scenarios a vehicle may encounter, and could program if-then-else-type decision algorithms accordingly (e.g., “If an object approaches the vehicle, then slowdown”). It was inconceivable to put an autonomous vehicle on a city street because the number of possible scenarios in such an uncontrolled environment would require programming an almost infinite number of if-then-else statements.

Inconceivable, that is, until recently. Once prediction became cheap, innovators reframed driving as a prediction problem. Rather than programing endless if-then-else statements, they instead simply asked the AI to predict: “What would a human driver do?”...MUCH MORE

Packaged Goods: "...America's Venerable Food Brands Are Struggling"

I'll reprise our introduction to March 7's "M&A In European Food":
I'm not sure that consumer packaged goods is the area to be in, at least not in the U.S. and not based on names like Kellogg or General Mills.

For a quarter-century those manufacturers ratcheted prices as though they were tobacco companies but people find it easier to give up their Cheerios than their cigarettes.

The managements milked that approach for pretty much all it was worth so, as operating entities, they aren't all that attractive but someone will decide the only thing left to do is to asset strip or dividend recap the life out of the former cash cows.

Top o'the market to ya....
From Morningstar, July 6:

So Long, Hamburger Helper: America's Venerable Food Brands Are Struggling
Big Food is in big trouble.
For over a century, brands such as Kellogg's cereal, Campbell's soup and Aunt Jemima pancake mix filled pantries of American households that wanted safe, affordable and convenient food. They provided companies with reliable revenue growth from grocery shelves, and there was little reason to mess with that formula.

Today, these giants are struggling with competition that is corroding business from both ends. High-end consumers are shifting toward fresher items with fewer processed ingredients while cost-conscious shoppers are buying inexpensive store brands. The makers of staples including Chef Boyardee canned pasta and Hamburger Helper meal kits failed to spot the threat and didn't innovate in time.

Anyone searching for macaroni and cheese, a childhood staple, can opt for fancy pasta with organic ingredients or inexpensive store brands such as Kroger Co.'s. Squeezed in the middle are Kraft Heinz Co.'s venerable blue-and-yellow boxes.

The pressure has set off a bout of soul searching in the industry as well as some dramatic restructuring. Some companies are shedding underperforming brands, others have contemplated mergers. Nestlé SA, which said in June it was looking to sell its U.S. confectionery business, is now the target of an activist investor.

Younger companies such as Chobani, the Greek-yogurt maker, have taken market share from giants such as General Mills Inc., which came out with Greek-style Yoplait yogurt, but too late to catch up. "We were late to respond as Greek yogurt developed early in this decade," said General Mills Chief Executive Jeff Harmening, noting double-digit declines in Yoplait sales lately. "Our sales have suffered as a result."

The plight of the packaged-goods companies is a classic business tale. An industry creates winning products, carves out strong market positions and enjoys reliable, sustained revenue -- only to be too slow to adapt to changes that threaten those cash cows.

"A lot of what's crept into big companies is internal focus, bureaucracy, PowerPoint presentations -- the antithesis of agility," said Sean Connolly, chief executive of Conagra Brands Inc., maker of Hunt's ketchup, Peter Pan peanut butter and Chef Boyardee. Mr. Connolly joined Conagra in 2015 and said he is trying to shake this mentality and move faster at coming out with new products.

Many big brands didn't move fast enough to remove artificial ingredients and haven't been able to shed the negative perception of processed food, said several food executives and others close to the industry.

At the same time, they faced low-cost store brands -- or "private label" products -- from retailers such as Costco Wholesale Corp., Wal-Mart Stores Inc. and regional grocers that sell copycat products. National brands, which have huge marketing costs, generally can't afford to compete on price with the in-house brands of stores, which need little marketing beyond displaying products prominently on their own shelves.

Store brands gained popularity around the financial crisis, and analysts expect their market share to rise as they add natural brands of their own and as discount chains, which mostly sell store brands, expand.

Private-label-product shelf space has expanded 3.5% a year since 2012, estimated Credit Suisse analyst Robert Moskow in a recent report. Big brands face escalating price pressure from the incursion of store brands and from retailers demanding lower prices, he wrote. "Up to now, the Big Food companies had sufficient pricing power to drive earnings higher even though they had been losing market share to smaller entrepreneurial organic and natural brands."

Big food sellers still dominate in America. The 25 largest food and beverage companies commanded a 63% share of $495 billion in U.S. food and beverage sales in 2016, according to consultancy A.T. Kearney....MORE
In May 25's "Nine of the World's Biggest Packaged Food Companies Have Launched Venture Capital Units" we looked at the charts for the two stocks mentioned in the March introduction:
...And on to the charts of the two companies mentioned in that March 7 post:
GIS General Mills, Inc. daily Stock Chart

K Kellogg Company daily Stock Chart

If interested see also 2012's "Illusion of Choice: Consolidation in the Packaged Food Industry":
From Chart Porn:
This has been making the rounds lately. I find it as interesting to look at the minimalist design inherent in modern logos as the ownership concentrations.


(click to enlarge)

"Court decision may boost biofuels, hit refiners"

New York / Reuters – The U.S. government may have to require more biofuels to be blended into the country’s fuel supply after a court ruled on Friday that the mandates must be reconsidered, a decision that boosted renewable fuel credits to seven-month highs on financial markets.

The decision sank stock prices of independent refiners PBF Energy and CVR Energy. They, along with others like Philadelphia Energy Solutions, may be forced to purchase more biofuel credits if the U.S. Environmental Protection Agency decides it must raise blending obligations to satisfy the court’s ruling.

Biofuel advocates, including the powerful corn lobby, hailed the decision as a major victory after the Obama Administration set biofuel blending targets starting in 2014 below levels set by a 2007 law.
Renewable fuel credits, known as RINs, surged as high as 89 cents on Friday, up from between 80 and 82.5 cents apiece on Thursday, traders said. On the New York Stock Exchange, PBF Energy shares fell about 2.6 percent and CVR Refining shares were down 4.4 percent.

The U.S. Renewable Fuel Standard (RFS), overseen by the EPA, requires biofuels such as ethanol to be blended into gasoline and diesel. Fuel importers and refiners must blend the renewable fuels or purchase credits from others that have.

The EPA had sought to lower the amount of biofuels that needed to be mixed into fuel. But the U.S. Appeals Court, District of Columbia Circuit said the agency had incorrectly interpreted a provision in the 2005 Energy Policy Act....MORE

Sunday, July 30, 2017

An Istanbul Earthquake: Since 1939 The Magnitude 7+ Quakes Are Moving Progressively Closer To Istanbul

This is just a heads-up, we are not following in Joe Granville's footsteps* and getting into the earthquake predicting business.

In July 20's "Risk:Today's 6.7-Magnitude Turkish Earthquake Was Not The 'Big One'" we noted:
"The epicenter is just offshore southwestern Turkey while  the 'big one' is expected in Istanbul's backyard...." and mentioned the North Anatolian Fault (NAF):

Here's the problem. The strong earthquakes along the NAF, pictured inside the red crescent in the small map below, have been steadily moving west toward Istanbul, population 14.6 million:
Source: From the USGS via Wikipedia:

The 1939 earthquake was a 7.8 magnitude and killed 32,000.
The 1942 quake, epicenter 200 km further west was a  magnitude 7.0 and killed ~3000.
The 1943 and 1944 earthquakes were both measured at 7.2 and killed 2800 and 3900 respectively.
The 1957 quake, a 7.1, killed 52 people and the 1967 quake also a 7.1 killed 86.

As can be seen in the top panel both of the latter earthquakes resulted in much less lateral slippage of the land compared to the earlier quakes, meaning the stresses were still building.

Finally the 1999 Izmet earthquake—not shown on this 1997 representation—was another 150 km closer to Istanbul. It measured 7.6 and killed over 17,000 people. The lateral slippage was 5.7 meters.

So don't be surprised if one morning in the next 5 to 10 years you wake up and there is some very bad news coming out of Istanbul.

*Our octa- and nona- genarian readers may recall Joe Granville.
From a 2008 post:
NYT, published: January 11, 1981
Joseph Granville doesn't use the word ''forecasting.'' He prefers to say that he applies to the stock market a ''theory'' that he declines to reveal but whose results he communicates to clients in a weekly investment newsletter.
Last week, as his latest bullish issue was still in the mails, Mr. Granville's theory suddenly turned bearish and advised selling. That advice, transmitted to about 3,000 clients in emergency telephone calls, triggered a selloff that drove the Dow Jones industrial average down 23.80 points and resulted in a new one-day volume record on the New York Stock Exchange. The next day, Mr. Granville predicted an earthquake of Richter magnitude 8.3 would hit Los Angeles in May.

From the New York Times:

NOTES ON PEOPLE; As a Seismologist, He's a Good Stock Analyst
April 11, 1981, Saturday
Late City Final Edition, Section 1, Page 16, Column 3, 224 words

When Joseph Granville, the Wall Street analyst, told the 3,000 subscribers to his Granville Market Letter to ''sell everything,'' they had enough faith in him to trigger the Dow Jones industrial Average into tumbling 23.8 points Jan. 8. It was the heaviest trading day in the history of the ...
Always remember that earthquakes can be tricky for equity analysts.

Signposts: Google Buys $820 Million Worth of Silicon Valley Properties

From the Mercury-News, July 27: 

Google grabs dozens of Sunnyvale properties, signaling a major expansion  
Moffett Park properties valued at more than $800 million
SUNNYVALE — Google has bought roughly four dozen properties in Sunnyvale with a combined value of around $800 million, setting the stage for what may be another major expansion of the tech titan’s Silicon Valley operations.

The properties are located on 13 different streets in a Sunnyvale business area known as Moffett Park, and the move comes as Google also explores a plan to build a massive tech campus in downtown San Jose.

The buildings Google has bought provide combined space of at least 2.3 million square feet, according to this news organization’s review of numerous property brochures and flyers for all of the properties. Google would not disclose its plans for the properties.

“This is a huge land grab,” said Chad Leiker, a first vice president with Kidder Mathews, a commercial real estate brokerage. “It’s a major repositioning of what’s going on in Sunnyvale.”
More than 11,000 Google employees potentially could work in these buildings, if the search giant fills the existing structures without dramatically altering the properties’ configurations....MORE
The "$820" figure came from the Silicon Valley Business Journal who first broke the story.

Without reforms, Iranian banking crisis looms

From al-Monitor, July 27:
In Iran, concerns are growing that banks may be facing the same fate as credit and financial institutions (CFIs), many of which are believed to be on the verge of collapse. CFIs, many of them unlicensed, have caused major disruption in the Iranian financial system in the past decade. The Central Bank of Iran (CBI) is under rising pressure from the parliament to immediately regulate these nonbank credit institutions, as an increasing number of depositors protest delays in the settlement of dues by a number of troubled CFIs. The situation has become so dire that the Supreme National Security Council has been dragged in. Now, there are fears that banks could be next. To avoid this scenario, pundits are suggesting that the CBI be granted more autonomy by the parliament so that it will take more serious disciplinary measures against all financial institutions when necessary.

For the past three years, the administration of President Hassan Rouhani has been trying to pass a bill in the parliament that seeks to grant more autonomy to the CBI. Certain influential bodies, however, have blocked the legislation, said former Bank Saderat CEO Ahmad Hatami in an interview with the Fararu news website June 10, without naming any particular organizations. The banking expert warned of a crisis point in three years or so if the CBI fails to reform the banking system.

The Iranian financial system has not been stable in the recent past due to external pressure and domestic mismanagement. A recent CBI report that reviewed commercial banks, specialized banks, state banks, and credit and financial institutions depicted a generally grim picture of how private banks handle their debt....MORE

"Academic journals 'doomed" as the "Pirate Bay for Scientists' grows bigger, says data analyst"

It was a great business while it lasted.

Just ask the founding families of Reed-Elsevier (now RELX Group), Taylor & Francis, Wiley-Blackwell, Springer or SAGE. But then the internet came along—"nice little oligopoly you got there, be a shame if anything happened to it"— and the days of 40% profit margins look to be seriously threatened.

From International Business Times:
Two thirds of the world's academic papers are now on Sci-Hub
The business model of subscription-based academic journals that require users to pay for access to research papers could soon come to an end, as over two thirds of the world's academic papers are now on Sci-Hub, the so-called "Pirate Bay for Scientists".

Data analysts from the University of Pennsylvania, University of Texas at Austin, Goethe University Frankfurt and e-commerce performance marketing platform Bidwise were wondering just how much of an impact Sci-Hub was making on the academic world.

They quantified the total number of academic papers in the world to be 81.6 million papers, and out of that number, Sci-Hub currently hosts 69% of the papers for anyone to download for free.
The researchers also broke down the research papers by the highest impact journals in the world, and found that Sci-Hub now had over 99% of all the papers from journals like The Lancet, Physical Review Letters, Analytical Chemistry, Tetrahedron Letters, Biochemistry, Brain Research, Inorganic Chemistry, the International Journal of Radiation Oncology Biology Physics and several other Physical Review journals for specific subsets of physic research.

"I think it's interesting that Elsevier and the American Chemical Society had some of the highest coverage and those are the publishers that have sued Sci-Hub. Maybe they realised that basically their entire corpus was in Sci-Hub. There were a lot of journals where Sci-Hub has every single article," Dr Daniel Himmelstein, a biodata scientist at the University of Pennsylvania, told Science.

"Just because an article isn't in Sci-Hub's database, that doesn't mean it can't get it for you. We estimated that Sci-Hub was able to fulfil requests 99% of the time — that suggests the 31% of articles that aren't covered by Sci-Hub are things that people really aren't requesting." 

What is Sci-Hub?
Sci-Hub was started by Alexandra Elbakyan, a neuroscientist from Kazakhstan who is now based in Russia. Her focus was on making all information free, breaking the monopoly of academic publishers and copyright holders, who often make it difficult for academics to access even their own work....MORE  
On a related note, in the U.S. there is a movement to make any research paid for with government dollars freely available, which seems reasonable but some researchers claim ownership of the databases and computer code acquired on the taxpayer's dime.
So it goes.

Government's Ability to Create Inflation

The Macro Tourist is on vacation but here's his last finance related post, July 25:
Today’s post will be a little bit of a rant, but I am hopeful that even amongst my complaining, there will be a lesson in here.

Much attention is paid to the supposed four D’s of investing in today’s environment.
Yeah, I get it. These are definitely valid themes to consider when designing your portfolio. And don’t mistake my push back - I don’t have any problem with the assertion that debt, deflation, and demographics, are the most important factors affecting the current financial environment. My issues lie with the part on the right hand side of the equal sign.

Recently ZeroHedge wrote a terrific piece that highlighted the always insightful David Rosenberg’s commentary about the “single most important thing for the market over the next decade.” I am stealing a few charts from the presentation, but I recommend you read the whole thing.
Rosy correctly identifies the tidal wave of changes that are about to be unleashed with the Baby Boomer generation entering their golden years.
And he notes that the public has saved precious little to fund this retirement.
Which brings Rosy to his conclusion that deflation, or at least low inflation combined with low interest rates, is a trend that will not be displaced anytime soon.
Rosenberg is by no means alone in this analysis. Many strategists have looked at the massively over indebted financial system, added in the over capacity built by China during the past decade, topped it off with the slowing population growth in developed markets, and concluded that these three D’s - debt, deflation, and demographics equals a destiny of lower rates for longer, with little inflation.
Yet I am not as sure that this conclusion is quite as obvious as many of these strategists assert. Yes, there is no doubt that these will be meaningful factors affecting the financial system in coming years and decades. But how can they be so confident about the outcome?

By claiming a “lower for longer” result, aren’t they assuming that both monetary and fiscal policy are impotent? Aren’t they concluding that regardless of where the Federal Reserve sets monetary policy, or how much the US government spends and borrows, officials are powerless to change this destiny?
I don’t buy it. I don’t think governments and Central Banks are irrelevant by any means. And in fact, I would argue that their response to these three D’s are what will determine the destiny, not the other way round....MORE

Saturday, July 29, 2017

Offshore Financial Centers and The Five Largest Value Conduits in the World

From CorpNet:
Public outcry over tax havens has increased in recent years. Journalists have shed light on the users of these offshore financial centres (OFCs), as well as the jurisdictions, banks, accountancy and law firms involved: OffshoreLeaks (2013), LuxLeaks (2014), SwissLeaks (2015), the Panama Papers (2015) and BahamasLeaks (2016).

OFCs are popular instruments for multinational corporations to (legally) reduce their tax bill by moving capital across borders in form of dividends, royalties and interests and taking advantage of loopholes in the legislation. By playing out one state against another corporations reduce their tax rate from around 35% to 15-25% (and some much lower). For instance, Apple uses a combination of subsidiaries in Ireland, the Netherlands and Bermuda to strongly reduce its tax payments in Europe to a stunning 0.005% in 2014 according to the European Comission.

If profits would be accounted where the economic activity takes place, multinationals would pay at least US$500-650 billion more on taxes, according to estimates by the Tax Justice Network and the International Monetary Fund. From this, around US$200 billion relate to developing countries, which means that developing countries lose more capital in tax avoidance than receive in development aid (US$142.6 billion).

What countries are Offshore Financial Centres?
Given this contested role of OFCs it is surprising that we still lack a broadly accepted definition of what makes a country an OFC. Instead, the identification of OFC jurisdictions has become a politicised and contested issue. International organisations such as the OECD or the IMF have published lists of alleged tax havens (OECD listIMF list), but the chosen criteria remained heavily influenced by politics.

To remedy this lack of transparency, we developed a novel, data-driven approach that identifies OFCs. We simply ask which countries or jurisdictions play a role in corporate ownership chains that is incommensurate with the size of their domestic economies (see Zoromé 2007). Our results show that offshore finance is not the exclusive business of exotic small islands far away. Countries such as the Netherlands and the United Kingdom play a crucial yet previously hidden role as conduits of offshore finance on its way to tax havens.

Using big data to find OFCs
Early attempts at OFC identification have resulted in for instance the Tax Justice Network’s “Financial Secrecy Index” and Oxfam’s list of the worst corporate tax havens. Jan Fichtner’s “Offshore-intensity Ratio” provides a helpful rough yardstick to judge which jurisdictions act as OFCs by describing the proportion between foreign capital (such as FDI) and the size of the domestic economy. However, these measures do not allow to differentiate if foreign investment reported by Bermuda originates in the Netherlands, or if in contrast it originates in Germany and is routed through the Netherlands. We still don’t know how offshore finance flows across the globe.

To overcome these problems we move from country level statistics to large scale company data. The coming together of political economists and computer scientists in the CORPNET research group at the University of Amsterdam made it possible to study how corporations make use of particular countries and jurisdictions in their international ownership structures.

We analyse the entire global network of ownership relations, with information of over 98 million firms and 71 million ownership relations. Note that here we are interested in how OFCs cater to the needs of multinational corporations, and not private individuals. Unlike previous attempts at identifying OFCs, this granular firm-level network data allowed us to identify and distinguish what we call “sink-OFCs” and “conduit-OFCs.” With some surprising results....
Figure: Sink Offshore Financial Centers (jurisdictions in blue have been under British sovereignty in the past or are still UK dependencies

HT: naked capitalism, July 26

Elon Musk's SpaceX Is Now Valued at $21 Billion

From Investopedia:
There is one more reason for fans of Elon Musk to believe everything the man touches turns to gold. SpaceX, the rocket maker founded by the technology entrepreneur and best known for wanting to colonize mars, is now worth an estimated $21 billion, making it one of the most valuable privately held companies in the world.

SpaceX’s valuation has nearly doubled after it was injected with millions of dollars of new financing. Equidate, a website that provides financial data on privately held companies, confirmed that SpaceX raised $350 million from its latest fund raiser, leading its valuation to soar to $21.2 billion. The company, which makes the majority of its money from sending commercial satellites into space, declined to comment. (See also: How SpaceX Reinvented the Rocket Launch Industry.)

According to The New York Times, the last time SpaceX received major funding was in 2015. Back then, Fidelity and Google pumped $1 billion into the company, bringing the rocket maker’s valuation up to around $11 billion.

The newspaper, citing data from research firm CB Insights, added that the near doubling of SpaceX’s valuation since then means it is now one of seven venture-capital backed company’s worth in excess of $20 billion....
Not everything Mr. Musk touches turns to gold, see, if interested last week's "Why SolarCity Has Become a Shell of Its Former Self Since Tesla Buyout (TSLA)". 
I hear he's also doing something with automobiles.

Well That Was Fast: "EU Proposes Account Freezes to Halt Bank Runs"

Just yesterday the Financial Times' Izabella Kaminska posed an interesting headline question at FT Alphaville:

Imagine if you received this note from your bank?
A message from bitcoin wallet provider Cryptopay to its customers, with our emphasis:
The SegWit/Soft Fork countdown has begun and the whole Bitcoin community is preparing for the ensuing protocol update on August 1st.

What does this mean?

The Bitcoin community (miners, main holders etc.) has developed two possible scenarios to increase the network efficiency. All of them assume that Segregated Witness will be adapted. You can read more technical details about the possible outcomes of both scenarios in our recent article.

As usual, we take the safety of your funds as our top priority. Therefore to protect them, we’re going to suspend all bitcoin deposits and withdrawals on 31 July 2017 at 23:00 hrs UTC.

Cryptopay will become fully functional when we deem it completely safe....MORE
Today we read at Reuters::

EU explores account freezes to prevent runs at failing banks
BRUSSELS (Reuters) - European Union states are considering measures which would allow them to temporarily stop people withdrawing money from their accounts to prevent bank runs, an EU document reviewed by Reuters revealed. 

The move is aimed at helping rescue lenders that are deemed failing or likely to fail, but critics say it could hit confidence and might even hasten withdrawals at the first rumors of a bank being in trouble. 

The proposal, which has been in the works since the beginning of this year, comes less than two months after a run on deposits at Banco Popular contributed to the collapse of the Spanish lender.
It also come amid a bitter wrangle among European countries over how to deal with troubled banks, roughly a decade after a financial crash that required the European Central Bank to print billions of euros to prevent a prolonged economic slump. 

Giving supervisors the power to temporarily block bank accounts at ailing lenders is "a feasible option," a paper prepared by the Estonian presidency of the EU said, acknowledging that member states were divided on the issue....MORE
HT: Mish's Global Economic Trend Analysis who has some additional thoughts.

"Claude Shannon, the Las Vegas Shark"


The father of information theory built a machine to game roulette, then abandoned it.
Many of Claude Shannon’s off-the-clock creations were whimsical—a machine that made sarcastic remarks, for instance, or the Roman numeral calculator. Others created by the Massachusetts Institute of Technology professor and father of information theory showed a flair for the dramatic and dazzling: the trumpet that spit flames or the machine that solved Rubik’s cubes. Still other devices he built anticipated real technological innovations by more than a generation. One in particular stands out, not just because it was so far ahead of its time, but because of just how close it came to landing Shannon in trouble with the law—and the mob.

Long before the Apple Watch or the Fitbit, what was arguably the world’s first wearable computer was conceived by Ed Thorp, then a little-known graduate student in physics at the University of California, Los Angeles. Thorp was the rare physicist who felt at home with both Vegas bookies and bookish professors. He loved math, gambling, and the stock market, roughly in that order. The tables and the market he loved for the challenge: Could you create predictability out of seeming randomness? What could give one person an edge in games of chance? Thorp wasn’t content just pondering these questions; like Shannon, he set out to find and build answers.

In 1960, Thorp was a junior professor at MIT. He had been working on a theory for playing blackjack, the results of which he hoped to publish in the Proceedings of the National Academy of Sciences. Shannon was the only academy member in MIT’s mathematics department, so Thorp sought him out. “The secretary warned me that Shannon was only going to be in for a few minutes, not to expect more, and that he didn’t spend time on subjects (or people) that didn’t interest him. Feeling awed and lucky, I arrived at Shannon’s office to find a thinnish, alert man of middle height and build, somewhat sharp featured,” Thorp recalled.

Thorp had piqued Shannon’s interest with the blackjack paper, to which Shannon recommended only a change of title, from “A Winning Strategy for Blackjack” to the more mundane “A Favorable Strategy for Twenty-One,” the better to win over the academy’s staid reviewers. The two shared a love of putting math in unfamiliar territory in search of chance insights. After Shannon “cross-examined” Thorp about his blackjack paper, he asked, “Are you working on anything else in the gambling area?”

Thorp confessed. “I decided to spill my other big secret and told him about roulette. Ideas about the project flew between us. Several exciting hours later, as the wintery sky turned dusky, we finally broke off with plans to meet again on roulette.” As one writer, William Poundstone, put it, “Thorp had inadvertently set one of the century’s great minds on yet another tangent.”

Thorp was immediately invited to Shannon’s house. The basement, Thorp remembered, was “a gadgeteer’s paradise. ... There were hundreds of mechanical and electrical categories, such as motors, transistors, switches, pulleys, gears, condensers, transformers, and on and on.” Thorp was in awe: “Now I had met the ultimate gadgeteer.”

It was in this tinkerer’s laboratory that they set out to understand how roulette could be gamed, ordering “a regulation roulette wheel from Reno for $1,500,” a strobe light, and a clock whose hand revolved once per second. Thorp was given inside access to Shannon in all his tinkering glory:...MUCH MORE

Friday, July 28, 2017

The Overnight Bus to San Francisco

From Los Angeles Magazine, July 5:

This Glorious New Bus to San Francisco Lets You Sleep in a Bed Overnight
What a time to be alive
Unless you love driving, road trips are easier when you’re not the one behind the wheel. You can relax, look out the window, browse Los Angeles magazine Facebook posts (cough, cough), or take a nap. A new travel option between Los Angeles and San Francisco aims to make that nap as easy and comfortable as possible. Cabin is a moving hotel—basically, a luxury bus full of private sleeping pods—that drives passengers between Los Angeles and San Francisco while they sleep. The company just announced that it has secured $3.3 million in seed financing, and it will start the overnight rides on July 14. Reservations are available now.

All Cabin trips depart at 11 p.m. and arrive by 7 a.m. the next day. (Guests have the option of sleeping in until 9 a.m.) Ticket prices start at $115 each way and include access to a shared bathroom and lounge area. Each rider has a private sleep cabin that includes a window with a light-blocking shade, WiFi, and “sleep-inducing amenities.”...

So What's Up With Bin Laden's Son and the Saudi Royals?

From al-Monitor, July 27:

Al-Qaeda strikes back
Al-Qaeda has upped its ideological challenge to Saudi Arabia with an attack by Hamza bin Laden on the royal family's legitimacy. This comes as the group's failed 2009 attempt to assassinate their Saudi nemesis, Prince Mohammed bin Nayef, ironically appears to have provided the pretense for his demotion from crown prince.

Al-Qaeda declared war on the Saudi royal family 15 years ago with a call to revolution by Osama bin Laden that precipitated the most serious and dangerous violence in the modern kingdom since its founding. Terror attacks hit every major Saudi city. Only after a prolonged counterterrorist campaign led by Mohammed, then interior minister, was al-Qaeda suppressed.

Bin Laden's favorite son has now issued two audio messages attacking the royal family. The first, released a year ago, hailed lone-wolf terror attacks and called for an uprising in the kingdom. The most recent recording is a history lesson and was issued by al-Qaeda's media arm, as-Sahab, from its hideout in Pakistan. In the message, Hamza charges that the founder of the modern Saudi kingdom, Abdul-Aziz bin Rahman Al Saud (Ibn Saud) was a British agent. Ibn Saud allegedly worked with the British to weaken the Ottoman Empire and its tribal ally in the Arabian Peninsula, the Rashids.

Hamza notes that when World War I began, the British sent an emissary to Ibn Saud, Capt. William Henry Shakespear, to propose a formal alliance against the Ottomans and the Rashids. Shakespear was later killed in a battle with the Rashids. Hamza charges that the Saudis betrayed Islam by working with the “crusaders” against the Ottoman caliphate. They were doing the bidding of the “crusaders,” who used the breakup of the Ottoman Empire to create Israel.

Hamza is being groomed by al-Qaeda to become its future emir, and his image as the heir apparent to his father is smart political theater. It is deeply ironic that al-Qaeda's attack on Mohammed bin Nayef has now come back to haunt the one-time Saudi heir apparent.

According to multiple press reports based on interviews with the prince's supporters, King Salman confronted Mohammed with the accusation that the failed attempt on his life had left him addicted to painkillers. One account said that Mohammed still has shrapnel from the attack in his body. The painkillers, it was alleged, were impairing the prince's judgment.

Saudi authorities have denied the reports, but have provided no alternative explanation for Mohammed's removal from the line of succession and command of the Interior Ministry. Al-Qaeda and bin Laden finally got revenge for Mohammed's campaign against them.

Mohammed's demotion has also led to a shake-up of the Saudi security establishment. The head of the Royal Guard has been dismissed and replaced without explanation, and the Interior Ministry is being reorganized. A few royal family members have openly criticized Mohammed's ouster, including Abdel-Aziz bin Fahd, son of the late King Fahd. Mohammed has not spoken in public since his dismissal and is said to be under house arrest.

At the moment, the new crown prince, Mohammed bin Salman, is keeping watch over the kingdom as his father, King Salman bin Abdul-Aziz Al Saud, is on his annual vacation in Tangier, Morocco. As is normal when the king travels abroad, he deputized his heir to run the kingdom in his absence. Salman has rented more than 800 hotel rooms in Tangier for his entourage....MORE

Firefox vs Chrome: "Firefox’s blazing speed with huge numbers of tabs leaves Chrome in the dust"

Just a heads-up for now, more to come I'm sure.

The first rule of computer security is don't connect to the internet anything you want to keep secure.
Which means you'll probably want to have dedicated computers whose only job is to link to the web which is where this little advance could come in handy.

Google made a serious error when they did the architecture for Chrome.

From techradar:

New beta of Mozilla’s browser is a power user’s dream
As you may be aware, Chrome has something of a reputation for being a resource hog, and rival Firefox is aiming to hit Google’s browser in this potential Achilles heel with news that it has hugely streamlined memory usage when lots of tabs are open.

And we mean lots of tabs. As Mozilla developer Dietrich Ayala explains, he did some testing with Firefox having 1,691 tabs open – yes, 1,691 – and found that while the current version of the browser (54) was very sluggish to start up and used a lot of system memory (unsurprisingly), Firefox 55 (currently in beta testing) and 56 make massive strides on both these fronts.

According to Ayala’s benchmarking, Firefox 54 took over four minutes to start up with this massive-multi-tab configuration open in the browser, but with Firefox 55 that time has been reduced to just 15 seconds.

Perhaps even more importantly, with all these tabs open Firefox 54 used up just over 2GB of system memory, whereas with Firefox 55, memory usage is less than 0.5GB. That’s obviously a startling improvement at just a quarter of the previous figure.
Quantum tricks
All this is down to the new ‘quantum flow’ project in which Firefox engineers are seriously trying to optimize the browser’s level of responsiveness, clearly with a good deal of success....MORE

Google's Nuclear Fusion Project Is Paying Off

And in Bond villain news from the mountain redoubt....
We knew they had quit* the "Renewables cheaper than coal" project, did not know they had gone full supernuke.

From Popular Mechanics:

The researchers netted a 50 percent reduction in energy loss, taking us one step closer to a future of unlimited clean energy.
Nuclear fusion, the process the sun has used for billions of years to fuse atoms of hydrogen into atoms of helium, could be the pot of gold at the end of the clean energy rainbow. If we could engineer a reaction to snowball but remain contained, nuclear fusion reactors could supply virtually unlimited clean energy here on Earth. Yet, the technology seems perpetually just around the corner.

Google and nuclear fusion company Tri Alpha Energy, which operates fusion reactor projects in California, just took us one step closer to rounding that corner. The two companies began working together in 2014, and they just released their first major research results. Google and Tri Alpha Energy developed a new process to sift through the enormous amounts of data that detail plasma's behavior in fusion reactors. The process involves humans who input preferences into an advanced Google machine learning algorithm, and so far the system has successfully achieved a 50 percent reduction in energy loss. The results were recently published in the journal Scientific Reports.

Tri Alpha's plasma generators use magnetic confinement, meaning they trap the plasma that is to undergo fusion using a magnetic field, but it is unique from other magnetic confinement reactors such as tokamak reactors. The Tri Alpha reactors use what is known as a field-reversed configuration, which takes advantage of eddy currents in the plasma itself to reverse the magnetic field, rather than relying entirely on external magnetic coils on the machine. The result is a self-stabilized, rotating cylinder of particles held in place by magnetism, similar in structure to a smoke ring. The major advantage to this technique is that as the energy of the plasma grows higher, the magnetic confinement gets stronger and more stable as a response....MORE
* Why Google Gave Up On Their Renewables-For-Less-Than-Coal Program (RE < C )

Previously on Tri Alpha:

Tri Alpha Energy Raised $500 Million To Pursue Nuclear Fusion, Has Exited Stealth Mode
The financial backers are the usual suspects: Goldman Sachs, the Rockefellers (Venrock), Queen of England Government of Russia etc. We had a couple prior posts, links below....

Data: Mining the Jargon of Traders

From Institutional Investor:

Mining Data From Trader Jargon 
Cloud9 Technologies partnered with Google and Quantiphi to build a machine learning-powered voice transcription service for traders."
For forty years, traders have called each other up to price potential transactions. Now, a fintech firm wants to turn those calls into market data.

Through a partnership with Google and data science firm Quantiphi, New York-based Cloud9 Technologies has developed a transcription service that can translate verbal communications between traders into text data using machine learning. This data, the firm believes, can revolutionize compliance as well as offer new insights into trading activity.

“It’s going to be transformative for the industry,” said German Soto Sanchez, Cloud9’s global head of corporate development.

Although the majority of equities traders have shifted to electronic trading, the bulk of fixed-income transactions are conducted verbally, with traders calling peers at other firms to get price quotes and ultimately agree on a transaction. Roughly 90 percent of fixed-income trades are done this way, according to Cloud9.

But the advanced phone systems used for voice trading have not really changed over the last four decades, Sanchez said. He said Cloud9 was founded in an effort to modernize and improve these systems – an effort which now means recording and mining conversations for data.

From a compliance point of view, turning voice recordings into data makes it possible to “pick out patterns and even emotion,” said Jerry Starr, co-founder and CEO of Cloud9. “Hopefully, catch a trader before he makes a bad trade,” he said....MORE
Yeah but can you do this:
How To Turn Risk Management Into an Alpha Strategy

Netflix and the Chaos Monkey

From Safal Niveshak, July 19:

Dealing with Failure in Life and Investing: Lessons from the Chaos Monkey
Amazon Web Services (AWS) is the Titanic of cloud hosting. It provides on-demand cloud computing platforms to both individuals, companies, and governments, on a paid subscription basis. The platform is designed as a backup to the backups’ backups that prevents hosted websites – including some of the largest in the world – and applications from failing.

Yet, like the Titanic, AWS crashed in April 2011, taking with it popular websites like Reddit, Quora, FourSquare, HootSuite, and New York Times, among many others, for four days.

It faced another major outage in February 2017, which again brought a large number of key websites down on their knees.

There was, however, one site that kept chugging along well during both these instances, despite also having AWS as its host at both the occasions.

This was Netflix, the world’s leading streaming video website and one that owns a dominant share of downstream Internet traffic – almost 35%; double of YouTube – in North America during peak evening hours.

Before we understand how Netflix survived this Internet debacle, let’s understand a bit about the cloud.

The cloud is all about redundancy and fault-tolerance. Since no single component can guarantee 100% uptime (and even the most expensive hardware eventually fails), companies need to design a cloud architecture where individual components can fail without affecting the availability of their entire system. In effect, a company’s cloud architecture needs to be stronger than its weakest link. And it must constantly test its ability to survive these “once in a blue moon” failures, like what happened in the form of AWS outages.

Despite the 99.99 percent availability that AWS’s agreement promises, when you are on the cloud, you must believe in Murphy’s Law, “Anything that can go wrong, will go wrong.”

So, what helped Netflix survive these outages when other large sites hosted on AWS faced blackouts?
It was seemingly Netflix’s deep faith in Murphy’s Law, and thus the creation of a simian army termed the Chaos Monkey....

HT Alpha Ideas

Position Available: The Royal Family Is Hiring

From Fortune:
They might be part of the British Royal Family, but Princes William and Harry and Princess Kate use LinkedIn to find applicants, too.

The three are looking to hire a new senior communications officer for their Royal Foundation. According to LinkedIn, nearly 1,000 people have already applied, with almost 50 applicants in the past day alone. About half of applicants appear to be in the London area, according to the career networking website. The position is a mid-senior-level full time job based in London. The listing states that applicants should have "extensive experience within a marketing, media or PR office" and a relevant degree or equivalent qualification, but specific experience in the charity sector is ideal....MORE
Seeing the headline my first thought was that the job had something to do with this:

But no. 
By the way, I think Matt Chorley captioned the pic first however I don't have it right to hand.

"Facebook wants to help news publishers sell subscriptions, but says it doesn’t want a cut of the revenue"

From recode, July 27:

Mark Zuckerberg says he doesn’t want publishers’ data, either.
Facebook says it wants to help publishers sell subscriptions. But Facebook says it doesn’t want a piece of the revenue those subscriptions generate, or any of the data involved in the transaction.
Those details are emerging as Facebook talks to publishers about a subscription tool it wants to launch later this year, in conjunction with its Instant Articles program, where Facebook hosts publishers’ articles on its own mobile app.

Industry sources say that instead of operating a subscription service itself, Facebook plans on creating a paywall it would implement after non-subscribers view 10 articles a month from a particular publisher.

When users hit the 10-article limit, Facebook plans on sending users to that publisher’s site to sign up for a subscription.

Campbell Brown, the news veteran Facebook hired earlier this year as its emissary to publishers, confirmed some of Facebook’s plans via a statement: “Quality journalism costs money to produce, and we want to make sure it can thrive on Facebook. As part of our test to allow publishers in Instant Articles to implement a paywall, they will link to their own websites to process subscriptions and keep 100% of the revenue.”

Facebook’s hands-off approach to subscriptions is an evolution from earlier plans, including one to bundle multiple publications into a single subscription offering.

It also distinguishes the company from other big platforms, notably Apple, which sells digital subscriptions through its App store and its Apple News feature but takes up to 30 percent of the monthly revenue from those transactions. Apple also gets direct access to subscriber data when that happens....MORE

Thursday, July 27, 2017

SoftBank, WeWork, Hony Capital Form $500 Million JV for China Expansion

Is it just me or does every other deal announcement seem to have SoftBank's name attached?
It's reminiscent of China's HNA after 2015 when they reported something like $50 billion in various cross-border deals.
But, be that as it may, here's The Real Deal, July 27:

WeWork, Hony Capital and SoftBank form $500M JV to focus on China expansion
Partners are already backers in the $20B co-working giant
WeWork investors Hony Capital and SoftBank have created a $500 million joint venture on the side with the co-working company to help expand its footprint in China.

The Chinese private equity firm and the Japanese telecommunications company will own minority stakes in the investment vehicle, WeWork China, which the startup will manage, Bloomberg News reported.

WeWork has an equity stake in the new company, but the exact breakdown of investments was not known....MORE

"'Overly dry weather' to prompt hefty drop in world grains harvest" - International Grains Council

From Agrimoney:

"Overly dry weather" has left the world on track for its steepest drop in grains output in at least a decade, the International Grains Council said, flagging "particular concerns" over supplies of high-quality wheat.
The intergovernmental group cut by 11m tonnes to 2.04bn tonnes its forecast for world grains production in 2017-18, downgrading its harvest estimate for a third successive month.
The revision reflected setbacks from dryness in many major producing areas, concerns over which sent the IGC's grain and oilseed price index up 5% in July to a one-year high.
"Because of overly dry weather, including in North America, the European Union and Australia, the outlooks for global maize (corn), wheat and barley harvests are revised lower," the council said.
Lower area, yields
The downgrade took to 88m tonnes, or 4.1%, the drop in world grains production expected in 2017-18 - the largest decline in at least a decade, beating a 3.0% drop in 2012-13.
"Both harvested areas and average yields [are] expected to be lower year on year."
While the impact on the inventory estimate was less dramatic - with a higher figure for carry-in stocks and reduced demand forecast offsetting somewhat the impact of the weaker harvest estimate – the estimate for world inventories at the close of the season was still downgraded by 2m tonnes to 478m tonnes.
"Although record opening stocks will help to cushion the fall in output, overall availabilities are expected to shrink by about 2% year on year," the council said.
The estimate for inventory held in major exporting countries, which being readily available to the world market is particularly important for prices, was downgraded by 6m tonnes to a four-year low of 150m tonnes....

Do Bots Have First Amendment Rights? We're About To Find Out

First Amendment, nah.
As the article points out that applies to government. This case is similar to a blogger blocking a commenter, you don't have a right to get on the platform, or as I've seen more than one person write:
Start your own damn website.

From Yahoo Finance:

LinkedIn's blocking of data-scraper's bots raises weighty 1st Amendment issues
In May, when lawyers for tech goliath LinkedIn warned a tiny data-scraping operation to stop gathering information from its members’ profiles, they probably didn’t realize they were teeing up a weighty legal conundrum over the “public square” characteristics of privately owned social media sites.
Yet because of the crucial role that data analytics now plays in society, a squabble of seemingly traffic-ticket dimensions has drawn world-class legal talent, with Harvard Law School professor Laurence Tribe enlisted in the data-miner’s defense, while former Solicitor General Donald Verrilli, Jr., has been retained by LinkedIn, which was acquired by Microsoft (MSFT) last year for $26 billion.   
On Thursday the people analytics” startup known as hiQ Labs, which has built its whole business on data scoured from LinkedIn’s member profiles, will ask a federal judge in San Francisco to order its unwilling host to stop blocking its bots, citing federal and state constitutional free speech guarantees.
“Data analytics on public information is a foundation stone of the modern internet,” wrote Tribe and two other hiQ lawyers in a brief filed last week. They depict hiQ as following in the footsteps of such seminal web pioneers as Alta Vista, Excite, and Google.  “Without such technologies internet users would be unable to make sense of the billions of web pages that exist in this modern marketplace of ideas,” the brief continues. “To allow LinkedIn to impose debilitating financial and criminal liability on a startup for accessing public pages would have a widespread chilling effect on innovation across the country, and thereby thwart valuable commercial and academic research.”
In response, LinkedIn portrays the case as far simpler. LinkedIn “is a private entity with a right to control access to its private property and to decide how and to whom it will make information available from its servers as part of its business,” argue its lawyers, Verrilli and Jonathan Blavin, both of Munger Tolles & Olson. “hiQ has identified no plausible legal justification for the unprecedented relief it seeks—a mandatory injunction granting hiQ access to LinkedIn’s computers so that hiQ can . . . threaten the privacy … of LinkedIn’s members and the integrity of LinkedIn’s relationship with those members.” (LinkedIn earned $975 million in revenue for the first quarter of 2017.) 

‘The modern public square’
Because hiQ’s information-gathering activity informs its communications with clients, hiQ maintains that it is entitled to free-speech protection. The First Amendment of the U.S. Constitution, however, ordinarily protects citizens only against government attempts to limit speech—not actions by private companies, like LinkedIn. For that reason, hiQ relies mainly on the free speech provision of the California state constitution, which has been found to afford protection even in certain quasi-public forums, like privately owned shopping malls....MORE

Latest memo from Howard Marks: There They Go Again...Again

From Oaktree:
Some of the memos I’m happiest about having written came at times when bullish trends went too far, risk aversion disappeared and bubbles inflated.  The first and best example is probably “,” which raised questions about Internet and e-commerce stocks on the first business day of 2000.  As I tell it, after ten years without a single response, that one made my memo writing an overnight success. 

Another was “The Race to the Bottom” (February 2007), which talked about the mindless shouldering of risk that takes place when investors are eager to put money to work.  Both of those memos raised doubts about investment trends that soon turned out to have been big mistakes.

Those are only two of the many cautionary memos I’ve written over the years.  In the last cycle, they started coming two years before “The Race to the Bottom” and included “There They Go Again” (the inspiration for this memo’s title), “Hindsight First, Please,” “Everyone Knows” and “It’s All Good.”  When I wrote them, they appeared to be wrong for a while.  It took time before they were shown to have been right, and just too early. 

The memos that have raised yellow flags in the current up-cycle, starting with “How Quickly They Forget” in 2011 and including “On Uncertain Ground,” “Ditto,” and “The Race Is On,” also clearly were early, but so far they’re not right (and in fact, when you’re early by six or more years, it’s not clear you can ever be described as having been right).  Since I’ve written so many cautionary memos, you might conclude that I’m just a born worrier who eventually is made to be right by the operation of the cycle, as is inevitable given enough time.  I absolutely cannot disprove that interpretation.  But my response would be that it’s essential to take note when sentiment (and thus market behavior) crosses into too-bullish territory, even though we know rising trends may well roll on for some time, and thus that such warnings are often premature.  I think it’s better to turn cautious too soon (and thus perhaps underperform for a while) rather than too late, after the downslide has begun, making it hard to trim risk, achieve exits and cut losses.

Since I’m convinced “they” are at it again – engaging in willing risk-taking, funding risky deals and creating risky market conditions – it’s time for yet another cautionary memo.  Too soon?  I hope so; we’d rather make money for our clients in the next year or two than see the kind of bust that gives rise to bargains.  (We all want there to be bargains, but no one’s eager to endure the price declines that create them.)  Since we never know when risky behavior will bring on a market correction, I’m going to issue a warning today rather than wait until one is upon us....MORE
HT: Alpha Ideas