Thursday, August 21, 2014

Another Day, Another 3D Printing, Robotic Harvesting, Internet-of-Things FarmBot

From MotherBoard:

FarmBot Will 3D Print Your Crops and Email You When It Harvests Them
Image: FarmBot
California's Silicon Valley gets all the ink, but given that California also produces way more agriculture than any other state, maybe the Salinas Valley deserves a nod every now and then. But then, maybe the distinction between the two won't last for very much longer—at least, that's what this “automated precision farming machine” has me believing. Meet the most Californian thing imaginable in the post-Governator era: the FarmBot.

Genetically engineered from 3D printers, open source tech, and world-saving rhetoric, FarmBot is the product of Rory Aronson, a mechanical engineer taking an organic agriculture class in college. FarmBot is the solution to the dilemma causing people to choose between huge industrialized farms, which produce large yields with less labor, and backyard gardening, which is more labor intensive but more biologically efficient than monoculture farming.

In his TedX talk, Aronson differentiates himself from Wendell Berry, back-to-the-fields types by pointing out that “people don't want to do manual labor.”...MORE
It's All Coming Together: The $210,000 Cow Miking Robot (can the dream of plowborgs be far behind?)
"Sea Robots Farm Algae for Fuel"
Answering the Question: "Do Androids Dream of Electric Sheep?"
"Agriculture VCs Seek $200M Fund II"
Possibly some tangential relationship:
Venture Capital Down on the Farm
Venture Capital: "Selling Agriculture 2.0 to Silicon Valley"
Silicon Valley to Focus on Ag in Central Valley and Beyond "Yup, I used to raise corn for ethanol. But then the topsoil blew away and I couldn't even get enough juice to run my tractor or get drunk on Saturday. Then this stranger came to town. Ordered something called a 'la-tay' and called himself a 'vee-cee.' Said he'd give me $20 million to come to Californee and herd algae. So we packed up our furniture in his little toy car and came west. Now I've got a regular bonanza of the slimy critters and the kids got shoes. Hain't looked over my shoulder back east since."
-from our post "Algaen Gothic"

Gold, Silver Hammered On Strong Dollar, Hawkish Fed

NYMEX gold $1276.5, down $15.90 after trading as low as $1275.50. Silver $19.40 off 9.7 cents, low $19.285.
From Kitco:

A.M. Kitco Metals Roundup: Gold Solidly Lower, Hits 2-Month Low, on Hawkish FOMC, Strong U.S. Dollar
Gold prices are sharply lower and hit a two-month low in early U.S. dealings Thursday.

The metal is seeing selling pressure in the wake of hawkish minutes from the latest meeting of the Federal Reserve’s Open Market Committee (FOMC) and by a rallying U.S. dollar index that hit an 11-month high overnight. December Comex gold was last down $18.70 at $1,276.50 an ounce. Spot gold was last quoted down $16.00 at $1,276.00. December Comex silver last traded down $0.147 at $19.415 an ounce.

The market place is still digesting Wednesday afternoon’s FOMC report. The Fed officials’ wording that the U.S. labor situation continues to improve fell into the camp of monetary policy hawks, as it hinted the U.S. central bank could move to raise interest rates a bit sooner than many had expected. The FOMC minutes pressured U.S. Treasury and gold prices, but the U.S. stock indexes ignored the data as the Nasdaq index set a 14-year high Wednesday, while the S&P 500 futures hit a record high. The better investor/trader risk appetite in the market place this week is also a bearish factor for the safe-haven gold market.

Focus now turns to the annual Kansas City Federal Reserve meeting in Jackson Hole, Wyoming, that begins on Thursday. The confab of world central bankers has in the past yielded important U.S. monetary policy speeches and clues to the direction of monetary policy. Fed Chair Janet Yellen and ECB President Mario Draghi are scheduled to speak on Friday in Jackson Hole.

In overnight news, the HSBC China preliminary manufacturing purchasing managers index (PMI) fell to 50.3 in August versus 51.7 in July. The August reading was a three-month low for the figure, and the market place deemed the report downbeat. The China data is an underlying bearish factor for the raw commodity sector. China is the world’s largest importer of raw commodities....MORE
...Technically, gold bears have regained the near-term technical advantage and have re-established a six-week-old downtrend on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the June low of $1,241.70. First resistance is seen at $1,281.00 and then at today’s high of $1,292.00. First support is seen at today’s low of $1,274.40 and then at $1,270.00....  
"...Gold Weakens in Wake of Hawkish FOMC Minutes"
Gold: Why Can’t It Break Out?
Sell Silver
Lines on Charts: Silver Is Poised To Break Lower

Also at Kitco:
Pressure Likely To Stay On Precious Metals As Jackson Hole Conference Begins – MKS 

Equities: Big Bear Turns Bullish (20% gain in 90 days?)

Alternate title: Slow Motion Capitulation.
From MoneyBeat:
Morning MoneyBeat: Another Bear Bites the Dust  
One of Wall Street’s biggest bears just reversed course on his views about the stock market.
Stifel Nicolaus stocks strategist Barry Bannister, who had been among the most pessimistic prognosticators on the Street, threw in the towel this week on his bearish forecast. He lifted his S&P 500 year-end price target to 2300—the highest among prominent strategists–from 1850, which had been tied for the lowest, according to research firm Birinyi Associates.

That means he expects the S&P 500 to rally another 16% from Tuesday’s close of 1981.60. It is already up 7.2% this year.

In a chat with MoneyBeat, Mr. Bannister said the five-year bull market has one final push higher left in it before the rally runs out of steam. As long as the Federal Reserve maintains its “lower for longer” monetary policies, there’s little reason why the market won’t continue rallying throughout the rest of the year and through 2015, he said.

After that, watch out.

“This is probably a finale for the market,” Mr. Bannister, a managing director at Stifel, told MoneyBeat. “This will be the big move that usually accompanies the end of bull markets…We’ll worry about 2016 when it comes.”...

And via MarketBeat's Dow Jones confrères at Barron's Stocks to Watch:

Can the S&P 500 Gain 20% in 90 Days?
Stifel’s Barry Bannister and Jesse Cantor just went from bearish to bullish on the S&P 500 in their most recent report. Where they once thought the S&P 500 would finish at 1,850–6.2% lower than yesterday’s close–they now think it will finish 2014 at 2,300, a whopping 17% higher.

Bannister and Cantor explain their about face:
The three Secular Bull markets over 6 years long, roughly the 1920s, 1950s and 1990s, all coalesced at this exact point before moving higher , and while this bull market hasn’t joined the 6-year “Secular” club (that occurs March 2015) stocks do appear to be consolidating as is normal at this point (Summer 2014) before potentially moving higher. We label the three stages of Secular Bull markets by the investor archetype whose enthusiasm we believe rises at each point, calling them the “Intrepid,” “Mainstream” and “Straggler” stages. As Stragglers arrive, much like 1987 and 1999, price history supports 90-day trading day upside of +20% for the S&P 500, in our view....MORE

TIAA-CREF Secures $1.4bn for Second Farmland Vehicle


TIAA-CREF secures $1.4bn for second farmland vehicle 
Private equity firm TIAA-CREF has secured $1.4bn for its second agriculture fund.
TIAA-CREF Global Agriculture II has received commitments from three LPs, a document filed with the US Securities and Exchange Commission showed. 
The firm did not disclose the target for the fund, which registered its first commitment last month.

TIAA-CREF launched its Global Agriculture unit with commitments of $2bn in 2011. The firm’s agriculture division makes investments in farmlands in the US, Australia and Brazil....MORE
Here's the Form D dated Aug. 14.

Feb. 2014 
"Half of U.S. Farmland Being Eyed by Private Equity"
Feb. 2013 
U.S. Private Equity Betting on World Agriculture (GMO; Soros; TIAA-CREF; the usual suspects)
Aug. 2012 
Three Big Timber Deals
Aug. 2012 
Too Greedy to Quit, Too Chicken to Steal: "Bypass Wall Street"
May 2012 
TIAA-CREF Raises $2 Billion for Global Farmland Investing Company
Oct. 2010 
"Is TIAA-CREF Investing In Farmland A Harbinger Of The Next Asset Bubble?" 

Report: Thompson Reuters to Use Drones to Gather Data on Retailers

And no, drone is not a new job title at TR.
Also, my sourcing is a bit sketchier than the first Lord Thompson of Fleet might have desired
From Crowdability:

Drones Are Set to Soar
Is now the time to bet big on “drones”?
Is this sector ready to take off?
The evidence points to yes – and stocks in this industry seem poised for flight.
But if you’re a believer in this space, stocks aren’t where the real money will be made...
The real money will be made elsewhere.
Today, I’ll walk you through why we think this sector is set to soar, and where the real returns will come from....
... Here are three sectors – and a handful of stocks – that could see a significant lift from the drone trend:

1.  Finance – A friend of mine works at Thomson Reuters. His job is to secure licensing deals for all of Thomson’s data products.

He was recently telling me about a new “drone data” service they’ve been selling.  In order to get more timely information on retail shopping trends, Thomson will deploy thousands of drones across the US to record shopping mall traffic.

Using a combination of heat sensor technology and advanced video processing algorithms, they’ll know — before the rest of Wall Street — how various retailers are performing, and what consumer spending might look for the coming quarter.

This is valuable stuff. Hedge funds pay big bucks – and earn even more – for access to such timely information.

Expect to see more investors leveraging this technology to get an edge.
You could take advantage of this trend by betting on firms like Thomson Reuters (NYSE: TRI)...MORE

British Intelligence Sets A Trap For Assange, Should He Emerge

Outside the Ecuadorean embassy:

Embedded image permalink

Repo Fails Still a Thing

From Alhambra Investment Partners:
Searching For Fail, And Still Finding It
While the credit markets were looking elsewhere these past few weeks, funding markets are again off their axis as repo fails spiked significantly one more time. The current level of fails is not quite that of June, but it is enough to engender some more pause about financial plumbing.
ABOOK Aug 2014 Repo Fails
For the most part, explanations have been offered on the supply side, as in the supply of (lack of) collateral. QE has certainly played a large role with a direct impact on the availability of collateral supply. That wasn’t supposed to be the case as the Fed’s reverse repo program was supposed to alleviate any of these problems. Yet, here we are again wondering about the deepest reaches of financial funding in the wholesale banking system.
ABOOK Aug 2014 Repo RRP
There is no short answer here, though I’m sure everyone wishes there was an easy indication. Looking at Primary Dealer holdings (inventory) of all manner of UST’s shows nothing much of a relatable phenomenon or movements. There is a very obvious decline in the inventory of t-bills, but that fits well within the recent paradigm of t-bill issuance and the Treasury’s variable deficit financing.
ABOOK Aug 2014 Repo PD Bill Inventory
T-bill rates have been low, but nothing approaching persistently at or below zero which would be an obvious signal of stress with t-bills as marginal collateral. Most have surmised, myself included, that repo participants have been forced down the curve in search of larger stores of securities (supply side again) which is why repo trouble seems to be engaged in the coupons rather than bills (which was where most of history prior to the QE’s was focused)....MUCH MORE

New Fed Exit Strategy Emerges and Foreign Banks Big Winners

From Real Time Economics:
Federal Reserve officials haven’t decided when to raise short-term interest rates, but as The Wall Street Journal reported earlier this week, they are closer to finishing a blueprint for how they’ll do it.

Minutes of the Fed’s July 29-30 policy meeting laid out fresh details and elaborated on others. Among the big winners in the new approach–as we’ll explain lower in this post–are foreign banks.
But first the details:
  • Rather than target a specific federal-funds rate, as it did before 2008, the Fed in the future will try to keep its target interest rate within a band. Right now it is between 0% and 0.25% and when it decides to raise rates the Fed will move that quarter-percentage point band higher. “Almost all participants agreed that it would be appropriate to retain the federal funds rate as the key policy rate, and they supported continuing to target a range of 25 basis points for this rate at the time of liftoff and for some time thereafter,” the minutes said.
  • The Fed’s primary tool is an interest rate it pays banks for the money they have on deposit with the central bank, known as interest on excess reserves, or IOER. This will be the upper end of the band. This rate is now 0.25% and seems likely to go to 0.5% with the Fed’s first rate increase. The lower end of the band will be interest the Fed pays money market funds and other nonbanks for cash not on deposit at banks (known as the overnight reverse-repo rate, or ON RRP in Fed lingo). This is now 0.05% and seems likely to go to 0.25% with the Fed’s first rate increase. “Most participants anticipated that, at least initially, the IOER rate would be set at the top of the target range for the federal funds rate, and the ON RRP rate would be set at the bottom of the federal funds target range,” the minutes said.
  • The Fed wants to gradually shrink its securities holdings and eventually get its portfolio of mortgage-backed securities to a minimum.
  • After the Fed starts raising short-term interest rates using these tools, officials will allow their holdings of all securities to shrink as the securities mature. Right now, the Fed is reinvesting proceeds from maturing securities to keep the size of its portfolio stable. “Most participants supported reducing or ending reinvestment sometime after the first increase in the target range for the federal funds rate,” the minutes said.
  • The Fed is going to avoid disrupting financial markets by selling its securities, unless absolutely necessary or for fine-tuning its portfolio. “Most participants continued to anticipate that the Committee would not sell (mortgage-backed securities), except perhaps to eliminate residual holdings.
  • Fed officials are on track to formalize the plan in September, but want to give themselves wiggle room because they’ve had to revise their vision of this process before and they’re still learning how to use some of these new levers. “Participants agreed that the [Fed] should provide additional information to the public regarding the details of normalization well before most participants anticipate the first steps in reducing policy accommodation to become appropriate. They stressed the importance of communicating a clear plan while at the same time noting the importance of maintaining flexibility so that adjustments to the normalization approach could be made as the situation changed and in light of experience.”
The most striking feature of the Fed’s strategy is that it keeps in place an effective subsidy that the U.S. central bank is currently paying to foreign banks.

Here’s how:

In recent years foreign banks have been tapping U.S. money market funds for very cheap short-term loans. Unlike domestic banks, foreign banks don’t have domestic depositors to tap for funds, so they turn elsewhere for dollars. Money market funds make the funds available for a few hundredths of a percentage point. The foreign banks in turn park those loans at the Fed for 0.25% interest. They earn profits on the spread between the cheap cost of funds available from money market funds and the higher rate they get at the Fed....MORE

Deep Learning is VC Worthy

From recode:

Nervana Raises Second Round This Year, as Silicon Valley Bets Big on Deep Learning
Nervana Systems, another player in the suddenly hot “deep learning” space, has closed its second round of capital in the last four months.

The San Diego startup said it raised $3.3 million in Series A funding led by DFJ, which comes on top of a $600,000 seed round in April.

DFJ’s Steve Jurvetson will take a seat on the company’s board as part of the latest investment. Allen & Co., AME Cloud Ventures and Fuel Capital also participated.

Deep learning is a form of artificial intelligence that researchers have credited with recent leaps in areas like speech recognition and image search. That has sparked growing interest in Silicon Valley, with Google, Facebook and Twitter making notable acquisitions or hires in recent months and various prominent players betting their own money on the space.
As Re/code explained in an earlier piece:
Deep learning is a form of machine learning in which researchers attempt to train computer algorithms to spot meaningful patterns by showing them lots of data, rather than trying to program in every rule about the world. Taking inspiration from the way neurons work in the human brain, deep learning uses layers of algorithms that successively recognize increasingly complex features — going from, say, edges to circles to an eye in an image.
Notably, these techniques have allowed researchers to train algorithms using unstructured data, where features haven’t been laboriously labeled by human beings ahead of time. It’s not a new concept, but recent refinements have resulted in significant advances over traditional AI approaches.
Nervana is aiming to distinguish itself in the nascent field by focusing on building hardware optimized for deep learning software — and vice versa....MORE

Wednesday, August 20, 2014

Saudi Aramco Invests In Natural Gas-to-Gasoline MIT Spinout

Saudi Aramco is the world's most valuable company, worth maybe $10 Trillion according to the FT.
A bit under a billion dollars a day revenues.
Pretty good margins.
From xConomy San Francisco:
Siluria Bags $30M from Saudi Aramco for Natural-Gas-to-Gasoline Tech 
Many startups are seeking to take advantage of cheap and abundant natural gas to make chemicals and fuels, but Siluria Technologies is one of the few moving to large-scale production.

The San Francisco-based company today said that Saudi Aramco Energy Ventures has invested $30 million of a planned $50 million Series D round expected to close this year. It’s the first time that Siluria has taken on a strategic investor, rather than financial investors, a move that could lead to Saudi Aramco using Siluria’s natural gas-to-chemicals process.

The money will be used to complete construction of a demonstration plant in La Porte, TX and continue research into using Siluria’s technology in other areas. Siluria expects to be operating two commercial-scale plants in 2017: one for producing the chemical ethylene and one for making gasoline from natural gas, says Rahul Iyer, the company’s vice president of corporate development.

Siluria’s technology uses catalysts to synthesize methane into more complex—and valuable—molecules, a fundamentally different approach to making the chemicals and fuels used in the petrochemical industry....MORE
We'll be back with more tomorrow .
For our journalist friends here are some of the MIT connections:
MIT's 2014 50 Smartest Companies
More on the Tech Review 50
Co-founder, Director Angela Belcher--look her up.

Kleiner, Paul Allen’s Fund Back Natural Gas to Chemicals Tech
The 50 Smartest Companies of 2014 (Apple's not one of them)

The RE-fracking Boom and the Second-best Correction Of the Day (HAL; SLB; BHI; WFT)

A subject near and dear, links below.
From Reuters:

CORRECTED OFFICIAL-INSIGHT-Refracking brings 'vintage' oil and gas wells to life
(Encana official corrects quote in fifth paragraph to read "understimulated" instead of "unstimulated.")

By Anna Driver and Ernest Scheyder
NORTH DAKOTA Aug 20 (Reuters) - A fracking boom isn't enough for U.S. oil and gas producers - they're now starting the re-fracking boom.

Wells sunk as little as three years ago are being fracked again, the latest innovation in the technology-driven shale oil revolution. Hydraulic fracturing, which has upended global energy markets by lifting U.S. crude oil output to a 25-year high, has been troubled by quick declines in oil and gas output.

The development highlights how producers must constantly invest and tinker, both to raise overall oil recovery rates that can be as low as 5 percent and to limit steep drops in production suffered by wells drilled into tight oil deposits.

Canada's Encana Corp invested $2 million to refrack two wells in Louisiana's Haynesville shale formation earlier this year, after seeing its production in the area dip 27 percent from 2012 levels.

"There were a significant number of wells that we considered understimulated," said David Martinez, Encana's senior manager for Haynesville development.

Using minuscule plastic balls, known as diverting agents, pumped at high speeds with water into the old wells, most of which are three to five years old, Encana blocked some the older fractures, or cracks. 
"The thought is that the diverting agent will go to the cracks with the least amount of pressure," bypassing cracks with higher pressure and boosting the pressure of the entire well so output climbs, Martinez said....

That's a good solid entry in the correction sweepstakes but it just doesn't compare with this effort:
HT: Romenesko

Back in 2012 we glanced at the coming refracking boom:
Frackers: Sterne, Agee & Leach on the Oilfield Service Stocks (SLB; CAM; OIS; HAL)
Something to remember: All of the natural gas wells that were fracked over the last couple years will have to be re-fracked as the production rates decline, some wells will get fracked three or four times over their expected lives. It's like an annuity for the service companies, something I've not heard any analysts talk about.... 
Natural Gas: The Astounding Production Decline Rates of Shale Wells 
I've mentioned we heard from landowners that their monthly royalty checks dropped 75% between month 1 and month 12 after completion. This is good news for gas bulls and good news for the well service companies who will be called in to re-frack the wells 4-5 times over their producing lives.
Not such good news for folks who want to see gas back under $2.00....
Over the ensuing two years the group has done well (so to speak), both absolutely and relative to the broader market:
Chart forSchlumberger Limited (SLB)
Yahoo Finance

"...Gold Weakens in Wake of Hawkish FOMC Minutes"

Higher real rates really mess with the opportunity cost losses computation for holding gold.
From Kitco:
Gold prices sold off moderately in the aftermath of FOMC minutes that revealed Fed officials believe the U.S. labor situation is moving closer to normal, and with other clues hinting the Fed could raise interest rates sooner than many expected. December Comex gold was last down $6.50 at $1,290.20 an ounce. Spot gold was last quoted down $5.90 at $1,289.75. December Comex silver last traded up $0.009 at $19.485 an ounce.

The FOMC minutes report was the economic highlight of the day for the market place. The Fed officials’ wording that the U.S. labor situation continues to improve fell into the camp of monetary policy hawks, as it hinted the U.S. central bank could move to raise interest rates sooner than many expected.

Now, focus turns to later this week and the annual Kansas City Federal Reserve meeting in Jackson Hole, Wyoming, that begins on Thursday. The confab of world central bankers has in the past yielded important U.S. monetary policy speeches and clues to the direction of monetary policy. Fed Chair Janet Yellen and ECB President Mario Draghi are scheduled to speak on Friday in Jackson Hole....MORE
Here's Kitco spot, $1291.10:
24 hr gold chart

Warren Buffett on Intelligence

From Farnam Street:

What makes Warren Buffett a great investor? Is it the intelligence or the discipline?

Warren: The good news I can tell you is that to be a great investor you don’t have to have a terrific IQ.
If you’ve got 160 IQ, sell 30 points to somebody else because you won’t need it in investing....


HT: The Big Picture's Wednesday AM Reads

Now, what if one is approaching from the other direction and is at the market as a buyer?

Grantham Mayo Van Otterloo's 7-Year Return-vs-Volatility Investing Soufflé

Mr. Grantham did not use the term "Investing Soufflé", that was me, looking for an alternative to 'matrix'.
From ZeroHedge:

GMO: "There Is No Safe Place To Hide"
We have been writing quite a bit about why asset allocation today is in one of the toughest investing environments we’ve ever encountered. And it’s not just because we think equity markets are overvalued.
No, we’ve seen that plenty of times before over the past decade or so. Remember the technology bubble of the late ’90s? That was challenging, sure, but what got lost in the shuffle was that while U.S. large-cap stocks were outrageously overpriced, it turned out that real estate investment trusts, emerging equities, and international small caps were deliciously priced.
And it was perfectly clear to us what we had to do: avoid technology and own the cheap stuff, even though it might have looked a bit unconventional. Then we entered the 2007–2008 credit bubble, and while, yes, virtually all equity markets were overpriced, it was perfectly clear to us what we had to do: hide and wait. And that was not a bad proposition because there were plenty of safe places to hide—Treasury Inflation-Protected Securities, U.S. Treasuries, and a strategy we had developed called Alpha Only—and earn a decent, if not spectacular, return....MORE

Private Equity: Carlyle raises $1.86bn for international energy fund

From altAssets:
Private equity giant The Carlyle Group has registered $1.86bn commitments for its International Energy Partners fund.
The capital has been raised via investments from 146 LPs, according to the firm’s filing with the US securities regulator.

Carlyle has also listed $2.5bn worth of sales commission which the firm says will be borne by the GP and the not the fund’s investors.

The Energy Partners vehicle was launched in August last year and has so far its investment portfolio includes oil and gas platform Varo Energy and energy company Discover Exploration based in London....MORE

AllianceBernstein: "Is a Big Equity Correction Imminent? Not Yet"

The S&P 500  is seven points from its all-time high, 1984.29 last, the DJIA is trading at 16956.14.
From Context, the AllianceBernstein blog:
Many investors think US stocks are due for a correction: They feel that the market has run too far, that the Fed has been slow to act, that complacency has created pockets of excess. Do these gut feelings mean a major equity correction looms? Not yet, in our view.

The S&P 500 Index has seen 16 one-year corrections of at least 15% since 1927. These corrections were preceded by sharp equity run-ups, and we’ve seen a comparable return streak recently. This is consistent with the intuition that equity corrections follow on the heels of excessive optimism.

Common wisdom—colored by 2007—says corrections are preceded by complacency, but this doesn’t bear out historically. Trailing volatility and asset correlations in precrisis periods—the “price” of risk—are roughly in line with historical averages. Of course, even if complacency doesn’t seem to precede corrections, that doesn’t mean it should be ignored. The take-away is that cheap capital can boost asset prices much longer than appears rational. The key in today’s market is to monitor and hedge exposure to areas of excess that are forming in the markets because of abundant liquidity and cheap risk.

A Historical Perspective
Almost every economic recession since 1950 followed a flat or inverted yield curve, and most equity corrections have followed a flattening yield-curve slope. The current yield curve is still very steep in historical terms, but the recent flattening is consistent with fears that the Fed is slow to respond—and that the eventual withdrawal of liquidity will hurt economic growth. The big issue is timing: equity markets generally rally early in rate-hike cycles and decline only after interest-rate policy is viewed as hurting future growth. When rates rise from very low levels, equity returns are actually strongest (Display).
What about the most obvious indicators of an equity correction: earnings and valuations?

Surprisingly, earnings per share fell in just over half of the market corrections since 1950. This is at odds with many investors’ views, which are anchored in the last two corrections, 2000–2001 and 2008. Those corrections happened during recessions, and were extreme in the context of earnings declines at the time...MORE

Loss of Skills In the Workforce

Been there, done something
From The Growth Economics Blog:
There’s a recent working paper by Alexandra de Pleijt and Jacob Weisdorf that looks at skill composition of the English workforce from 1550 through 1850. They do this by looking at the occupational titles recorded in English parish records over that period, and code each observed worker by the skill associated with their occupation. They use the standardized Dictionary of Occupational Titles to infer the skill level for any given occupation. For example, a wright is a high-skilled manual laborer, a tailor is medium-skilled, while a weaver is a low-skilled manual Pleijt and Weisdorf 2014
The big upshot to their paper is that there was substantial de-skilling over this period, driven mainly by a shift in the composition of manual laborers. In 1550, only about 25% of all manual laborers are unskilled (think ditch-diggers), while 75% are either low- or medium-skilled (weavers or tailors). However, over time there is a distinct growth in the the unskilled as a fraction of manual laborers, reaching 45% by 1850, while the low- and medium-skilled fall to 55% in the same period. You can see in their figure 10 that this shift really starts to take place by 1650, while before the traditional start of the Industrial Revolution.

Looking at more refined measures, de Pleijt and Weisdorf find that the fraction of workers classified as “high-quality workmen” – carpenters, joiners, wrights, turners – rose only from 3.9% to 4.9% of the workforce between 1550 and 1850. These are precisely the kinds of workers that Joel Mokyr claims are the crux of the Industrial Revolution in England. They built, improved, adapted, and micro-innovated all the classic inventions of the IR. While they were only between 4-5% of the workers, and this proportion didn’t expand rapidly, given population growth the absolute numbers of these high-quality workmen went up by a factor of 4 between 1700 and 1850 (from about 200K to 850K)....MORE

Score! Swiss dairy exports profit from Russian embargo

There is an entire subculture (!) of cheese puns that I won't inflict on gentle reader, save for the granddaddy:

From Swissinfo:

Dutch Gouda, Italian Parmesan and other cheeses have been banned from Russian supermarkets. Swiss cheeses are filling some of the gaps.
On the shelves of Moscow’s supermarkets, European cheeses have begun to thin out. Swiss production however isn’t enough to fill the gap, and a mountain of paperwork is in the way. It’s not easy to get a foothold in Russia.

The Margot cheese warehouse in Yverdon is one company impacted. It isn't as well as known as other Swiss brands, but the company is the number one Swiss exporter to Russia. Since the European embargo, orders have tripled.

While Europeans accuse Switzerland of exploiting the embargo, Swiss companies are asking for more clarity from the Swiss authorities.

A good share of the market is there for the taking, although it is still a niche market catering to the wealthiest Russians. European products, sold at €2 a kilogram, are much cheaper than Swiss ones....MORE
Now I will retreat, Caerphilly avoiding the temptation to wordplay...

"Patent troll drops suit against Adam Carolla after discovering podcasts don't make any money"

That's the headline at the Verge about the guy who says he has the patent for podcasting.
Here's their link to the ars technica write-up on the lawsuit settlement:
Patent trolls have a simple business model: they collect broad patents that appear to cover some part of an industry, and then they sue everyone, hoping that most companies will choose to pay a settlement over the hassle and cost of a lawsuit.

That's what Personal Audio did with podcasters: the company has a patent that appears to cover distributing podcasts over the internet, and it began filing lawsuits against several popular podcasters, including Adam Carolla and How Stuff Works. There was only one problem: there's no money in podcasts, so Personal Audio decided it wasn't worth the cost to collect whatever percentage of revenue it was demanding from the companies it sued. Here's a press release the company issued in July (emphasis added):
"When Personal Audio first began its litigation, it was under the impression that Carolla, the self-proclaimed largest podcaster in the world, as well as certain other podcasters, were making significant money from infringing Personal Audio's patents. After the parties completed discovery, however, it became clear this was not the case. As a result, Personal Audio began to offer dismissals from the case to the podcasting companies involved, rather than to litigate over the smaller amounts of money at issue."
While other companies took the dismissals in July, Carolla apparently pushed back until now. We don't know the exact terms of the settlement, but a motion to dismiss was filed yesterday and both parties agreed to a quiet period that will last through September 30. As the EFF pointed out yesterday, if suing a podcaster with the reach of Adam Carolla isn't a profitable enterprise, it's probably not worth it to sue any podcasting group. Score one for the little guys with no money....MORE
The memory jog to link this piece was this morning's FT Alphaville post "Patent trolls as the new rentier class":
According to the Merriam-Webster dictionary, a rentier is a person who lives on income from property or securities.

From the point of view of Marxist rentier capitalist theory, a rentier is also a parasite who adds no value to society, but instead survives solely due to his ability to extract rents (tribute) from productive people. A rentier achieves this through muscle or social norms which defend his exclusive rights over property in such a way that he must be compensated for their use by others.

Today, patent trolls are emerging as the world’s most nefarious rentier types.

The reason they’re so particularly nefarious, we’d argue, is directly linked to the type of property that they’re trying to monopolise. Intellectual property.

Organised productive society has always had to deal with parasites, of course....MORE

Russian sanctions means extra focus on Raiffeisen Bank tomorrow

The first sentence of this heads up says Friday but the company writes the semi-annual release date is the 21st.
From Saxo Bank's Trading Floor blog:
Raifeissen Bank, Austria's largest banking group, reports its Q2 results on Friday at approximately 05:30 GMT. The release will undoubtedly attract many investors as the shares are down 27% since their peak in June. The reason behind this dramatic fall is the ongoing crisis in Ukraine and the subsequent sanctions against Russia, a market that accounts for 21% of the group's total revenue.
RBI share price
Source: Bloomberg, Saxo Bank
  • All eyes on bad loan provisions tied to Russia and eastern Europe... but also a previously announced provision charge in Hungary tied to a new law which obliges banks to refund FX spread margins. The bank's exposure to Russia and Ukraine will be a particular focus for investors tomorrow as they have pushed the share price down to reflect increased uncertainty over profitability. Raiffeisen Bank is the third biggest foreign bank in Russia and generated 74% of the group's pretax profit last year....MORE

New York Fed: The Declining U.S. Reliance on Foreign Investors (that's not necessarily good)

From the Federal Reserve Bank of New York's Liberty Street Economics blog:
The United States has been borrowing from the rest of the world since the mid-1980s. From 2000 to 2008, this borrowing averaged over $600 billion per year, which translates into U.S. spending exceeding income by almost 5.0 percent of GDP. Borrowing fell during the recent recession, as would be expected, and then rebounded with the recovery. Since 2011, however, borrowing has trended down and fell to 2.4 percent of GDP in 2013, the smallest amount as a share of GDP since 1997. A reduced dependency on foreign funds can be viewed as a favorable development to the extent that it reflects an improvement in the fiscal balance to a more easily sustainable level. However, it also reflects the lackluster recovery in residential investment, which is one reason the economy has yet to get back to its full operating potential.

    The amount borrowed from the rest of the world is measured by the current account balance, which is the broadest measure of cross-border transactions. As seen in the chart below, the United States was spending substantially above its income before the recession, to the tune of 5.8 percent of GDP in 2006. The amount of borrowing fell during the recession and started to rebound in 2010, but borrowing has since trended down.

U.S. Borrowing from Abroad

    A nation’s foreign borrowing is the difference between domestic saving and investment spending. Consider simplified national accounting identities with income allocated to consumption or saving and spending allocated to consumption or investment. Dropping out consumption from both identities shows that the difference between spending and income is the same as the difference between saving and investment spending, with the gap determining whether a country is lending to or borrowing from the rest of the world. That is, a country borrows from the rest of the world when it does not save enough to finance its own investment spending. From this perspective, the United States is borrowing less because the difference between saving and investment spending is shrinking. ...MORE

"Private equity follows hedge funds into reinsurance for long-term capital"

Great, more capacity.
Short 'em all.
From Artemis:
It’s not just hedge funds that are entering the insurance and reinsurance market in search of so-called long-term capital to put to work in their strategies, private equity firms targeting the space are also seeking opportunities to add assets under management.

The entry of large private equity investors into the insurance and reinsurance market in recent years has led to much discussion of the reasons for this move, according to this Institutional Investor article, as well as to discussion at regulator level whether it is in the industries best interests.

This discussion has been even louder in the case of private equity firms tapping low-returning business, such as the fixed annuities space, but what these firms are seeking is, much like the hedge funds, a new source of capital to boost their assets under management and to earn them fees in return for managing it.

In particular the article highlights that private equity firms have been buying life and annuity companies, with predictable lines of longer-tailed business, perfect for generating that all important float for investment purposes.

Here is where the regulators come in. Generally the regulators have a concern that private equity firms may move life and annuities insurers investable assets into riskier asset classes, in an effort to generate an outsized return.

However, data from SNL Financial shows that two of the leading proponents of this strategy, Apollo’s Athene Holding and Guggenheim Capital, have not made drastic changes to the investment portfolios of insurers they have bought, in fact any changes made to the asset mix have been in-line with the life insurance industry as a whole....MORE

The Bottom Is In For Interest Rates


Charts Confirm An Interest-Rate Bottom
Last Friday, interest rates hit 2.30% on the 10-year bond. While counter intuitive, this looks like a long-term bottom prior to a move back to 3%. The charts always tell us the truth, so let's take a look. First, note the large sell on Friday with huge volume. This can be seen clearly on the ProShares UltraShort 20+ Year Treasury (ARCA:TBT). The volume was the biggest since interest rates last bottomed in early-mid 2013. That's called 'capitulation', and is clear signal of a bottom. In addition, the following day (Monday) interest rates did a complete reversal of their down move. That's known as a 'reversal candle' and is a major sign that we're near a bottom.

These signals are clearly telling us that rates will begin to move higher and could see 3% by year's end.
 ProShares UltraShort 20+ Year Treasury
ProShares UltraShort 20+ Year Treasury

Here's the CBOE 10-year, currently 2.405 up 0.0180:
Chart forCBOE Interest Rate 10 Year T No (^TNX)

Tuesday, August 19, 2014

"Delivery Start-Ups Are Back Like It’s 1999"

From the New York Times:

Last year, I was excited to hear about a new start-up in San Francisco that delivered cheap bottles of wine within an hour. It was called Rewinery, and it was fantastic. I ordered a $5 malbec one day and a $10 chardonnay the next, delivered by bike courier for a modest fee. Already, San Francisco was crawling with bikes, inching up the hills, shuttling sushi and groceries and new clothes, all summoned with the tap of a finger. But Rewinery was the first of the delivery start-ups that made me feel the way I felt back in 2000, when I could order a video and a pint of ice cream to my doorstep from Rewinery felt too good to be true.

It was. One day, seeking refreshment, I opened the app to find that Rewinery had gone out of business.
In the tech crash of the early 2000s, on-demand delivery services like Kozmo and Webvan weren’t just among the most colossal failures. They also became a sort of grim joke, symbolizing the excess that portended the bust. Afterward, conventional wisdom hardened: Web-enabled delivery was not a good business because it simply cost too much to build warehouses, manage an inventory and pay drivers. There was too little opportunity to recoup expenditures in delivery fees; people will pay only so much for toilet paper to be delivered before they decide to fetch it themselves.

But something is in the air of late, making hindsight blurry. Despite the early demise of Rewinery and the shrunken ambitions of others, such as eBay Now, similar start-ups with names like Caviar, SpoonRocket and DoorDash have raised half a billion dollars in investment in the last year, according to CB Insights, which tracks venture capital. Even Louis Borders, the founder of Webvan (as well as the Borders bookstore chain, another Internet casualty), is at work on a grocery delivery start-up. Uber is using the $1.4 billion it just raised to expand beyond delivering people to delivering things. Meanwhile, venture capitalists joke that every other entrepreneur they meet pitches an “Uber for X,” bringing goods and services on demand: laundry (Washio), ice cream (Ice Cream Life), marijuana (Eaze) and so on. Investors are stuck wondering whether this is 2000 all over again, or whether this new breed of delivery start-ups can succeed where the last crop so famously failed.

John A. Deighton, a Harvard Business School professor who wrote a case study on Webvan, likes to compare the delivery business to shining shoes. “You make as much profit on one shoe as you do on a thousand shoes,” he said. “There’s just no scale.” In years past, it was difficult for Deighton to even teach his students about Webvan, because its fatal flaws were so obvious. They didn’t understand how the euphoria of the dot-com boom could have obscured its shortcomings. But in the last year, he has been asked to teach it three times. “Something has changed,” he said....MORE

Whoa!: "SpaceX Denies Funding and Valuation Rumors"

Following up on "Elon Musk's SpaceX Is Raising Money At A Valuation Approaching $10B".
From recode:
TechCrunch reported earlier Tuesday that Space Exploration Technologies was in the midst of a large fundraising round that would value the company at just under $10 billion. But the private space flight company has denied the story in an email to Re/code. SpaceX Communications Director John Taylor said: “SpaceX is not currently raising any funding, nor has any external valuation of that magnitude or higher been done. The source in this report is mistaken.” Earlier SpaceX funders and others named as prospective investors declined to comment or weren’t immediately available.
Regret the error etc.
(more like:  I acknowledge mine iniquities: wherefore, I humbly beseech thee, forgive me)

The1930s New Yorker Style Guide for Today’s Modern Blogger

From Pando:
Fans of James Thurber will hopefully be well familiar with his memoir about his time spent at the New Yorker, working with its founding editor, Harold Ross. ‘The Years With Ross‘ was first published in 1958 and is still in print.

Flipping back through an old (1959) copy of the Penguin paperback edition the other day, I landed on Thurber’s long extract from a memo by New Yorker copy editor Wolcott Gibbs, in which Gibbs shares with Ross some of his rules for editing the magazine’s fiction writers. (Journonerds will probably best know Gibbs for his famous ‘Backward ran sentences until reeled the mind‘ parody of Time magazine’s ‘Timespeak’.)

Although the memo was first written in the 1930s, twenty years before Thurber quoted from it, I was struck by how many of Gibbs’ principles are applicable to most of today’s bloggers who dabble in long-form, including those of us who work at Pando. I’ve quoted the relevant ones below, including Thurber’s introduction.

(Hopefully it goes without saying that the links have been added by me. Gibbs wasn’t that prescient. Any typos that have slipped in during transcription are my doing, too.)
Here’s Thurber’s introduction to Gibbs:
Wolcott Gibbs has never got the attention he deserves. He was easily, not just conceivably – to use one of his favourite words – the best copy editor the New Yorker has ever had. For years he had to deal with the seventy per cent of New Yorker fiction that has to be edited, often heavily, before it reaches print. Gibbs, an accomplished parodist, was always able to fix up a casual without distorting or even marring its author’s style.
He was inimitable, as such word experts are, but when he quit as copy editor in the fiction department to become the magazine’s dramatic critic and to write some of its best casuals and profiles, he wrote and sent to Ross – this must have been twenty years ago – what he called ‘The Theory and Practice of New Yorker Article Editing’, based on his experiences, often melancholy, with the output of scores of writers, male and female.
The final straw, in his editorial career, was a casual that began: ‘Mr West had never been very good with machinery.’ Here was the little man, a genre sometimes called, around the office, the Thurber husband, popping up for the thousandth time, and it was too much for the Gibbsian nerves. The Gibbs essay on editing, which has not been published before, follows:
And here’s the memo itself:
The average contributor to this magazine is semi-literate; this is, he is ornate to no purpose, full of senseless and elegant variations, and can be relied on to use three sentences where a word would do. It is impossible to lay down any exact and complete formula for bringing order out of this underbrush, but there are a few general rules.

1. Writers always use too damn many adverbs. On one page recently I found eleven modifying the verb ‘said’. ‘He said morosely, violently, eloquently, so on.’ Editorial theory should probably be that the writer who can’t make his context indicate the way his character is talking ought to be in another line of work. Anyway, it is impossible for a character to go through all these emotional states one after the other. Lon Chaney might be able to do it, but he is dead.

2. Word ‘said’ is O.K. Efforts to avoid repetition by inserting ‘grunted’, ‘snorted’, etc., are waste motion and offend the pure in heart....

Today's modern blogger:
Okay, 1937's.
At Saratoga.
Last seen in May's "Resiliance, Brittleness and Catastrophic Failure: Everything Is Fine, Until It Isn't".

"We’re Back: Russell 1000 Growth Finally Breaks Dot-Com Bubble High" (IWF)

It doesn't feel the same.
Which is a good thing. Onward and upward.

From Barron's Stocks to Watch:
This just in: The Russell 1000 Growth Index just hit an all-time high of 925.98. Now this isn’t just another all-time high, the way we’ve been getting them in the S&P 500 and the Dow Jones Industrial Average, which have hit multiple highs this year. This is a big deal.

The reason: The previous high in the Russell 1000 Growth Index was back in March 2000–right at the peak of the dot-com bubble. That means it’s taken nearly 14-and-a-half years for the index to finally scale those heights.
The Russell 1000 growth index is chock full of big tech companies like Apple (AAPL), Microsoft (MSFT), Verizon Communications (VZ) and Google (GOOG).The big difference now is that these types of stocks actually make oodles of money and trade at (more) reasonable valuations.

Those stocks are also big components in the Nasdaq 100 and Nasdaq Composite indexes–just about the only major U.S. indexes that have yet to hit their all-time high....MORE
IWF is the iShares ETF based on the index.

French Nude Models Walk the Picket Line

From The American Interest:
Nude protesters have become a fairly regular occurrence in recent months. But in France, people are now protesting by keeping their clothes on. French artists models are demanding state pensions, and refusing to disrobe until they are regarded in the same light as Renoir’s mistress, according to The Times:
Dozens staged a one-day stoppage in Paris, and said they may keep their clothes on again unless Aurélie Filippetti, the culture minister, opened negotiations over their status.

They want the recognition afforded to the great 19th-century models, such as Lise Tréhot, Renoir’s muse, or Victorine Meurent, who posed for Manet.

They also want to be classed as performance artists, and entitled to generous unemployment benefit between jobs, sick pay and state pensions....

Sell Silver

Following up on Friday's "Lines on Charts: Silver Is Poised To Break Lower".
From Inside Futures, Friday Aug. 15:
Silver Futures--- Silver futures in the December contract are under pressure this Friday afternoon in New York trading lower by $.25 trading at 19.65 hitting an 8 week low as I’ve been recommending a short position in silver placing your stop above the 10 day high which currently stands at 20.35 around $.70 or $3,500 risk per contract at today’s price level as the commodity markets remain bearish as the U.S dollar hit a 6 month high against the Euro currency this week pushing commodities even lower.

In my opinion I do believe that the U.S dollar will continue higher against the Euro currency due to all the problems in Europe and the Ukraine and I don’t think those problems are going away anytime soon so continue to look at for higher prices in the U.S dollar which could pressure the precious metals especially silver prices as the next level of major support is around $19 an ounce. Silver futures are trading below their 20 and 100 day moving average telling you that the trend is lower as the chart structure is outstanding at the current time so continue to play this to the downside and sell any rallies making sure that you place the proper stop loss risking 2% of the account value on any given trade. TREND: LOWER –CHART STRUCTURE: EXCELLENT
September-$19.400 last, down 23.5cents.
Here's the action over the last couple weeks from FinViz:

Equities: The Short Term Prognosticator of the Day Award Goes To....

...this bit, written just before 11 EDT:
This is the third attempt to push through the ~4,030 level this morning. If it happens the upside would manifest very quickly.  
Chart forNASDAQ-100 (^NDX)
Sometimes you get lucky.
Next I'll explain why the bet on Harold at Hastings actually was the smart money.

CORRECTED--Elon Musk's SpaceX Is Raising Money At A Valuation Approaching $10B

Correction: "Whoa!: 'SpaceX Denies Funding and Valuation Rumors'".
Original post:
From TechCrunch:
Space Exploration Technologies, the commercial space transportation startup founded by Elon Musk with ambitions to land people on Mars, is raising investment that values the company somewhere south of $10 billion, TechCrunch has learned.

These new details are emerging while SpaceX, as the company is more commonly known, continues to make advances with its own spacecraft and rack up more agreements for future commercial and government launches. The company also potentially faces stiffer competition from other commercial firms that are looking to compete more aggressively in the new space race.

The latest capital infusion includes a large secondary investment, which appears to be somewhere in the region of $200 million. This confirms some of the details published in April this year by Quartz, which cited a source reporting that the company might be raising between $50 million and $200 million....MORE

Google’s 10 Zaniest Projects in the 10 Years Since the IPO (GOOG)

I am confident this is the first time we've ever used any variation of zany in a headline.
From recode:
Ten years ago today, Google Inc. went public in an offering that raised nearly $1.7 billion and valued the young Internet company at around $27 billion. The Mountain View, Calif., startup quickly put that money to work, transforming itself into much more than an online search company.

By the end of 2004, it had acquired the companies that would form Google Maps and Google Earth. It was already pushing beyond the confines of the Internet, scanning physical books to make them searchable, too. And the company launched, which, among many other projects, would seek to develop ultra-efficient vehicles, confront global poverty and analyze data to predict real-world events like flu outbreaks.

In 2006, Google picked up YouTube. In 2007, it announced Android. And in 2008, it introduced the Chrome browser.

Along the way, Google has continually expanded what online search meant, even as it pushed into areas further and further beyond its core business. In 2010, it launched Google X, which has plumbed the depths of science fiction for ideas ever since.

Here, then, is a list of 10 of the biggest, most ambitious or zaniest projects that Google has explored in its decade as a public company, most of which occurred since the launch of its secretive research division.

Self-driving cars: In late 2010, Google took the wraps off a secret effort to develop self-driving cars, aiming to turn that staple of futuristic films into a consumer reality. Specifically, the company revealed its autonomous vehicles — Toyota Prii equipped with lasers, sensors and computers — which had already logged thousands of miles along San Francisco Bay Area highways.
self-driving carThe company had hired several leading researchers to push the field forward, including Sebastian Thrun, who led the Stanford team that won the 2005 DARPA autonomous driving challenge. More recently, at Re/code’s Code conference in May, Google unveiled a new car built from the ground up to operate under robot control, eliminating the wheel, gas pedal and brake altogether.

Project Loon: Last summer, Google began conducting experimental trials of Project Loon in New Zealand, an effort to move more of the developing world onto the Internet through a series of connected balloons floating in the stratosphere.

As Google explained: “Loon balloons go where they’re needed by rising or descending into a layer of wind blowing in the desired direction of travel. People can connect to the balloon network using a special Internet antenna attached to their building. The signal bounces from this antenna up to the balloon network, and then down to the global Internet on Earth.”...MORE

Equities: Another 7% Higher on the Nasdaq 100 (NDX)

This is only a guess but it is as good as any, plus the summer-into-autumn color palette is nicely topical.
The hundo's up another 9.69 at 4,030.19.
This is the third attempt to push through the ~4,030 level this morning. If it happens the upside would manifest very quickly.
From Dragonfly Capital:
Seems like since the bottom in March of 2009 everyone, their neighbor, their barber, their Uber driver and their mother has been trying to call a top in the markets and an impending correction. What if everyone of them is wrong? The Nasdaq 100 gives a clue as to where it might go if it just keeps running. It is mot a prediction or a forecast but take a look.
A very simple AB=CD pattern, where the move higher before the pullback is repeated after it stabilizes and turns again higher, projects the current leg could go as high as 4300. That is almost another 7% higher. What do the momentum indicators say?...MORE
Here's Yahoo Finance on this morning's action:

"Harry Potter and the Neverending Promotions"

From the Reason Hit and Run link post:
J.K. Rowling issued another Harry Potter short story, again, as a tactic to drive traffic to the online Potter experience, Pottermore. Sounds like "Harry Potter and the Neverending Promotions," huh?
Also at Reason:
Americans Warming Up to the Idea of Bombing Iraq

The world has been Onionified.

BMO's Belski: "Bull market will charge higher for 15 more years"

No, no it won't.
If a bear market is defined by a 20% or greater peak to trough decline, I'm pretty sure we'll have one of those, which would, by definition, mark the end of the current bull market.
And we're bullish.
From Yahoo Finance:
Forget the naysayers! This bull market has another 15 years left in it. At least that’s what Brian Belski, chief market strategist at BMO Capital Markets, says while admitting “the believability of this market is very low.”

Belski’s call doesn’t mean we’re in for a decade and a half of smooth sailing. “Stocks are rarely linear for long. Near term we could be in for some bumpy trading...If we get some sort of a surprise correction to kind of cleanup...near-term complacency,” he says, “longer term we are in the camp that U.S. equities are the place to be. They are the most stable asset in the world.”

As such, Belski argues, “North america will drive growth going forward for the next five years at least.” He suggests that will give emerging markets in Europe the time they need to straighten out their issues....MORE

David Cay Johnston on Kinder Morgan’s Evolving Tax Strategy (KMI)

Not as gimlet-eyed as yesterday's "The "Kinder Morgan Is a House of Cards" Theory and the Pros and Cons of Going Short (KMI)".
In addition, the real concern with KMI is a dividend payout ratio north of 100%.

From TaxAnalysts via TaxProfBlog:
David Cay Johnston (Syracuse), Kinder Morgan’s Evolving Tax Strategy, 144 Tax Notes 881 (Aug. 18, 2014):
Johnston looks at Kinder Morgan’s recent announcement that it would be folding two master limited partnerships into a C corporation holding company.

Bárðarbunga--How to Short a Volcano (hint: this time it's probably not the airlines)

The alert level is still 'orange' 4 on a 5 scale.

Back in 2010 we posted "How to short a volcano" (What did Eyjafjallajökull screw up?) with an extensive list of areas and activities the volcano affected:
...(In addition to grounding European aviation for days on end and exhausting headline-writers’ supplies of volcano puns.)
The UK General Electionbetting on 2010 temperaturesSouthern California music festivalUK schoolgirls’ geography field tripthe Norwegian Government (iPad to the rescue)touring wrestlersBoston Marathon runnersthe London Book Fairhealth of petsfootball, ice hockey and runningPremier League refereesthe gilded progresses of celebs and pop starsJohn Cleese’s trip homefootball, cycling and runningPolish state funeraltransport of wounded soldiersDubai luxury hotel openingMorocco golf tournamentsexams, exotic foods and surgeryyet more celebs (Hollywood ‘paralized’, no less)Japan MotoGPthe international oil marketand even more celebsEuropean stocks and sharesKenyan flower growersKenyan vegetable growersmovie premieresBMW production in South Carolinaand still more celebs (superstar forced to take Irish Sea ferry)youth boxingequestrianismfootball (also boxing, running, tennis, motorcyle racing)organ transplantsGhana farming, war crimes trials, rose growing, car making, flowers for New York weddingstravel plans of dogs, horses, snakes, geckos, turtlesclassical concerts in San Diegoclassical concerts in Salt Lake Cityclassical concerts in New YorkTribeca Film FestivalMetallica tour (kings of heavy metal fight back, take bus)

Here's the latest from Britains Channel 4:
Bároarbunga: why air travellers needn’t fear another 2010
Iceland’s Bárðarbunga volcano looks like it’s about to blow. But don’t worry, say volcanologists, the eruption probably won’t ruin anybody’s travel plans – it’s the wrong kind of ash.

When the Eyjafjallajokull volcano erupted in 2010 departure boards across Europe clattered to a halt for six days as an ash cloud grounded air traffic. More than 10 million travellers were affected with costs estimated at around a billon pounds.

But evidence from mapping the recent earthquakes near the volcano, which usually presage an eruption, suggest it’s not going to generate the kind of ash that will spread across Europe.

Rather than erupting from the centre of the volcano, magma appears to be heading for two separate areas to the side of Bárðarbunga – Iceland’s second highest mountain....MORE