Tuesday, September 23, 2014

Izabella Unbound: Capital Investment and Bubbles

It is becoming obvious to almost anyone who is honest about the matter that the preferential tax treatment of capital is not achieving the policy goal of job creation by way of CapEx. We should probably try something new.
I propose hunting peasants for sport.*
From FT Alphaville:

Let there be bubbles!
Citi’s Matt King has jumped on the secular stagnation bandwagon with a really nifty collection of charts that ties the whole story of how we got to this point together.

He starts off with the capex issue, noting that despite the cyclical recovery corporates don’t seem to be investing all that much. In fact, according to King, declining capex may be a key aspect of secular decline, which he suggests began in advanced economies and is now spreading to emerging markets as well.

Namely: Anything but capex, because capex ain’t what you need when the name of the game is artificial scarcity.

But, as King notes, with companies (for some reason) not keen to expand on the capex side — see our beyond scarcity for why that may be the case — that leaves everyone with a growing dependence on credit:
Growth has instead been propped up by an increasing reliance upon credit acceleration effects. Unfortunately this implies that the recent boost from the end of deleveraging in many economies may prove temporary: either we lapse back into releveraging, or else growth risks fading.
Which opens the door to Larry Summers-style thinking that “we need leverage to support the economy and/or faddy bubbles (ideally in non systemic areas like bitcoin) to keep things ticking over”.
In other words, as King notes, you can pump it in, but you can’t control where it goes.

Case in point, you can provide cheap money but you can’t make banks lend if the economic agents don’t think they will be able to pay back the loan, or invest that money productively....MORE
*It's a joke. As was the story of the Russian noble who said to his English host  "I've shot two peasants this morning" it was a joke. And I don't really know why I swiped the title of a mediocre Shelley play to refer to Izzy except that Prometheus gave fire to humanity and Izabella unshackled of corporate responsibility would probably be awesome and...

Anyhoo, here are the Richter Scales:

Equities: Where to Now?

Yesterday we were talking 1000 points of downside. This morning, with 107 of those points in the can the question is what comes next. On a very short term basis the 1978 bottom of the last decline is support. Here are some further considerations from Slope of Hope:

Two Down, One to Go
SPX broke down hard yesterday and closed near the lows, giving bears their first complete day in a while. SPX broke back below the daily middle band and, as long as we don’t see a daily close back above it, the next obvious targets are the daily lower band at 1985 and the 50 DMA at 1976. The band pinch here means that it is very likely that SPX will start an extended band ride in the near future. The bulls had a shot at starting an upper band ride last week and couldn’t sustain it. If bears can get SPX to the lower band then they get a shot at starting a lower band ride instead. SPX daily chart:
140923 SPX Daily Trendlines BBs MAs

Natural Gas: "EIA Data Indicates Monthly Shale Decline Rates Have Risen Recently"

From RBN Energy:
Highlights of the Natural Gas Summary and Outlook for September 19 2014 follow. The full report is available at the link below.
Natural Gas Summary and Outlook
  • Price Action: The October contract fell 2.0 cents (0.5%) to $3.837 on a 20.6 cent range.
  • Price Outlook: True to form, the market was able to forge a new high before ending on a weak note. Prices are within a few ticks of a new low and that is clearly the bias for next week. However, there do not seem to be enough fundamental factors to drive prices far from the recent $3.75/$4.00 range in the next few weeks and there seems to be an increasing likelihood of a rare inside week despite a contracting weekly range. An inside week is not expected this week with a new low so close. The liquidation in the managed money net long position continued with the position breaking the November 2013 level and now just barely above the mid-January 2013 level. Total open interest rose to 3.75 million as of September 16. CME futures aggregated open interest rose to 971,000 as of September 18.
  • Weekly Storage: US working gas storage for the week ending September 12 indicated a build of 90 bcf. Thus total working gas inventories rose to 2,891 bcf. Current inventories fall 408 bcf (12.4%) below last year and 435 bcf (13.1%) behind the 5 year average.
  • Storage Outlook: This week did not establish a new 5 year weekly maximum, although it did exceed the other two injection metrics. The 5 year weekly maximum for the upcoming week is 89 bcf. An injection of 93 bcf is required to equal 117% of the 5 year average and an injection of 90 bcf is needed to exceed the 5 year average by 11 bcf to put inventories on pace to reach 3,500 bcf in early November. Inventories are on pace to reach roughly 3,550 bcf.
  • Supply Trends: Total supply fell 0.5 bcf/d to 71.7 bcf/d. US production, Mexican exports and LNG were unchanged while Canadian imports slipped. The US Baker Hughes rig count was unchanged with oil rising while natural gas slipped. The total US count now stands at 1,931. The Canadian rig count fell 28 to 377. Thus, the total North American rig count fell 28 to 2,308 and now surpasses last year by 159. The higher efficiency US horizontal rig count fell 1 to 1,341 and rises 250 above last year. Technology will have to continue improving to sustain future production growth with national decline rates increasing. EIA data indicates monthly shale decline rates have risen from 2.8% last fall to 3.4% recently. Volumetrically, monthly legacy well production fell 934 mmcf/d last fall with recent volume declining 1,405 mmcf/d.

"Entertaining Malthus: Bread, Circuses and Economic Growth"

At first glance I thought this paper a parody but further examination showed it to raise some interesting ideas.
Via the Washington Center for Equitable Growth:

Lemin Wu et al.: Entertaining Malthus: Bread, Circuses and Economic Growth: “We augment a simple Malthusian model…
…by allowing agents to consume something besides food. Whereas food (in our case: bread) is both enjoyable and necessary for survival, the other good, circuses, is pure entertainment: it has absolutely no impact on survival, but does enhance the quality of life. With this very simple modification, we show that, whereas food supply may remain at subsistence, technological change will have a great impact on the consumption of everything else. Most strikingly, though the population remains bound by a Malthusian constraint, sustained improvements to living standards can no longer be ruled out. We also argue that our model better fits the known historical facts–the widely-held belief that growth prior to the Industrial Revolution was flat is based largely on historical measures of food production. Although food supply throughout history may have been (and for most individuals still is) at or near subsistence levels technological advancements have brought greater convenience and comfort to wealthy and poor alike, a possibility that Malthus himself conceded in his later (and often ignored) work. Therefore, our model not only describes historical growth patterns and demographic transitions better than traditional ‘Malthusian’ models, but is also more in line with Malthus’ later thinking.
(25 page PDF)

Pacific Century: Japan Born Admiral Nominated to Head All U.S. Pacific Forces

From the Kyodo News Service via The Japan Times:

Japanese-American admiral named next Pacific Command chief
U.S. President Barack Obama has nominated a Japanese-American admiral as the next head of the Pacific Command, the Defense Department said Monday.

If confirmed by Congress, Adm. Harry Harris, currently commander of the Navy's Pacific Fleet, will succeed Adm. Samuel Locklear as chief of the whole operations of the Army, Navy, Air Force and Marine Corps from the U.S. West Coast to the Indian Ocean.

Harris was born in Yokosuka, south of Tokyo, to a Japanese mother and her American husband and raised in Tennessee and Florida. The U.S. Navy has its Japan headquarters in the port city in Kanagawa Prefecture.

Here is the Admiral's Navy biography.

Monday, September 22, 2014

"Why Germany Won The Philosophy World Cup"

A favorite of nerd-girls and nerd-boys everywhere.*
From The Critique:
Well, the Germans have won both World Cups this year, and the football win was clearly deserved. But did they deserve to win the Philosophy cup? Whereas the football team was striking for its balance of individual brilliance and team play, the philosophy team is noted for its fractious lack of cohesion, and there were clearly arguments about the selection of the first eleven.
The German Philosophy World Cup National Team
Starting XI:
(1) Immanuel Kant
(2) Karl Marx
(3) Georg Wilhelm Friederich Hegel
(4) Gottfried Wilhelm Leibniz
(5) Arthur Schopenhauer
(6) Friederick Nietszche
(7) Johann Gottlieb Fichte
(8) Friedrich Wilhelm Jospeh von Schelling
(9) Gottlob Frege
(10) Martin Heidegger
(11) Edmund Husserl

Does Fichte’s individual brilliance really outshine Habermas’ inspiring teamwork? Does Frege’s technical skill in attempting to understand language through logic match up to Adorno’s probing forays into why the modern world, which has so many resources for making life better for everyone, ends up in the horrors of the Holocaust? The omission from the substitutes bench of Friedrich Daniel Ernst Schleiermacher who, along with Johann Gottfried von Herder and Johann Georg Hamann (who did at least make the substitutes bench), initiated the modern concern with language as central to philosophy, and of the early Romantic proto-pragmatists, Friedrich Schlegel and Novalis, also raised some eyebrows. These worries apart, the question of why the German philosophy team still managed to beat the much-favoured ancient Greeks (18 votes to 15) and the recently very successful British and US teams deserves some answers.

The central role in establishing German preeminence in philosophy must go to Kant. Understanding Kant’s texts is notoriously difficult, but understanding why he is important isn’t that difficult. Think of the following. The shape of the modern world is determined to a massive degree by modern science, which produces reliable laws that enable ever-increasing technological control of natural processes. These laws can claim to be ‘objective’, as they rely on excluding merely random ‘subjective’ opinions about the world. They do this by being based on necessary ‘a priori’ truths in mathematics, and on repeated observations which are agreed on by scientists working in different contexts and locations. However, and this is what concerns Kant, the possibility of such laws also depends on something ‘subjective’, namely the capacity of those investigating natural phenomena to test, and often reject, what the established authority of the church and of ancient Greek and other traditions claimed to be objective truth. This rejection was part of the wider ‘Enlightenment‘ movement in Europe that questioned traditional authority, in the name of the demand for publicly accountable rational justifications, in science, religion, and politics. As is well known, the French Revolution saw itself in terms deriving from the Enlightenment, particularly the assumption that people should be publicly responsible for what they say and do. This assumption puts subjectivity at the centre of philosophy in an unprecedented manner, which was inconceivable in cultures like that of Ancient Greece. Indeed the very notion of ‘subject’, the Greek word for which meant something like ‘substance‘, in the sense of what objects consisted of, now effectively inverts its meaning into the modern sense, that relates to the notion of ‘self-consciousness’....MUCH MORE
*Being fans of Schopenhauer's "Die Kunst, Recht zu behalten" we usually post whenever his name comes up i.e. not often but a few times:
Germans vs. Greeks: The Greatest Soccer Match Ever!
Help, I May Be Having A Stroke
This may be the funniest thing I've read this year:
"...Out-of-touch - or downright callous - economists like Kaminska - she's hardly alone - are lost in models and assumptions that have little if any connection to the real world of real people..."
When I visited the Alphaville post "How I learned to stop worrying and love (eurozone) deflation?" the above reader's comment was, to say the least, unexpected....
But not always:
Big Four Accountant Partners: "Does Kant’s definition or Augustine’s and Aquinas’s definition of evil as privatio boni in subjecto..."

Markets: Where the Action Was-September 22

From Global Macro Monitor:
Click on table to enlarge and for better resolution


"SEC to pay $30 million in largest-ever whistleblower award"

From the Chicago Tribune:
An anonymous tipster living abroad will be receiving more than $30 million, in the largest whistleblower award ever doled out by U.S. securities regulators as part of a program that aims to incentivize insiders to report wrongdoing.

The Securities and Exchange Commission said on Monday that the whistleblower provided crucial information that helped investigators uncover a “difficult to detect” ongoing fraud.

“This record-breaking award sends a strong message about our commitment to whistleblowers and the value they bring to law enforcement,” SEC Enforcement Director Andrew Ceresney said.

The SEC won new powers in the 2010 Dodd-Frank Wall Street reform law to entice whistleblowers with monetary awards. Prior to the new law, the SEC was only able to reward people for helping on insider-trading cases.

The new program lets the SEC pay a whistleblower who provides tips and original information that leads to an enforcement action with sanctions that exceed $1 million.

The SEC can award a whistleblower anywhere between 10 percent and 30 percent of the money the agency collects....MORE

"ISIS Equity changing name to something less terrorist-y"

From Fortune:
Private equity firm feels like it has no choice but to bail on its brand.

ISIS Private Equity is the latest business to change its name so as not to be associated with the terrorist group that is most notable for its barbarism.

The London-based firm was founded in 1995 to invest in mid-market British companies, so far having done more than 100 deals. It has raised over $1.5 billion in fund capital, most recently securing $360 million for its fifth flagship fund in 2012....MORE

The Musk Who Fell To Earth: SolarCity and Tesla Both Down Large (SCTY; TSLA)

Weep not for Mr. Musk, his net worth remains above $11 Billion.

The first half of the headline is the title of an upcoming episode of the Simpsons.*
Based on 20.8 million shares of Solar City, down $3.77 (5.84%) and 33.1 million shares/options of Tesla, down $9.29 (3.58%) Elon is off $78.40 + $307.50=$385.9 million on the day.

*According to the Simpsons Wiki "The Musk Who Fell To Earth" will air on January 11, 2015.
Mr. Burns will lose all his money to Elon Musk. Mr. Burns will try to kill him, and it will reveal Elon Musk's master password. 
Script copyright applied for.
(why? it's copyright when written)

Northern Trust Survey says Institutional Investors Are Idiots

And I'm not talking the run-of-the-mill idiocy of conflating volatility with risk.
I'm talking not knowing what the risks are.
From Barron's Focus on Funds:
Institutional Investors’ Strategies Leave Them Uncertain About Risk: Northern Trust
There’s some debate about how smart ‘smart beta’ is over time, these alternative strategies still appeal to about half of ETF-focused financial advisors.

Perhaps then it’s not surprising that institutions as well have been turning to strategies that try to find better risk-return offerings than the market.

Yet as Northern Trust Asset Management notes in a new report on risk-factor investing, institutions turning toward various strategies that focus on everything from momentum investing to volatility and yield may not actually know the real risk levels of their investments.

Among the 139 institutional investors from around the globe surveyed, a mere 18% responded they were “very certain” of the actual risk factor exposure across their listed equity portfolios. A majority—51%—offered the more tepid response of being only “moderately certain” of actual risk, and nearly a third—31%—admitted to being “fairly uncertain.”

All of this also comes with unintended consequences, notes the report:
Based on the survey results and in-depth analysis of three pension funds in the United Kingdom, Europe and United States, the study finds that institutional investors incorporating a wide range of active and passive equity strategies in their overall portfolio end up with a neutral factor exposure – despite intended tilts to one or more factors – so that portfolios do not always reflect the investors’ goals and objectives....MORE
Good grief.

Boko Haram's “Abubakar Shekau” Killed Was One Bashir Mohammed

Following up on "Boko Haram Leader, Abubakar Shekau, Reported Dead".
From SaharaReporters: 
A Nigerian military intelligence source has told SaharaReporters that the top Boko Haram figure killed in a recent operation was one Bashir Mohammed, leader of the Islamist sect’s Uye camp.
Cameroonian authorities yesterday released a photo of a dead man they identified as Abubakar Shekau, the loquacious and attention-seeking leader of the terrorist group that has launched deadly strikes in Nigeria’s northeast zone as well as Cameroon.

The Nigerian intelligence source told SaharaReporters that Nigerian soldiers, not Cameroonian troops, had killed Mr. Bashir last Friday in a fierce battle against Boko Haram insurgents in Konduga, Borno State. The late Mr. Bashir, who bore a striking resemblance to Abubakar Shekau and had appeared in a recent video, was killed as he led insurgents who were attempting to capture Konduga and then made a bid to seize Maiduguri, the Borno State capital, as well. Nigerian soldiers routed the Islamist militants in Konduga, killing hundreds of them and capturing weapons as well as vehicles abandoned by fleeing insurgents....MORE
Still more effective than #BringBackOurGirls
Also at SaharaReporters:

Some Terrorists Surrender With Weapons In Konduga

Goldman's Forecast For The Euro: 1:1 Parity With The Dollar

It's the only thing that will save the European exporters which in turn are the only thing to save the European economy.
From Business Insider:

Goldman Sachs Has A Startling Forecast For The Euro
The Federal Reserve has been priming the market for tighter monetary policy as the US economy has continued to improve.

Meanwhile, the European Central Bank has been easing policy further as economic activity stagnates and prices fall. In fact, the latest effort by the ECB to stimulate the economy flopped, and that has economists predicting even looser monetary policy.

All of this has resulted in a stronger dollar and higher US interest rates and a weaker euro and lower eurozone interest rates.

Goldman Sachs strategists see the euro tumbling all the way to $1 from the $1.29 level today.
"The euro has weakened by 8% versus the US dollar since May," Goldman Sachs' David Kostin wrote in a new note to clients. "We expect the downward gravitational pull on the EURUSD will persist for the next several years until it trades at parity versus the dollar by year-end 2017. From a spot of 1.29, our economists forecast the euro will depreciate by 7% vs. the dollar during the next year (to 1.20) and fall by 22% to parity by 2017."

Call it Janet's Gift.
See also:
Ageing of Europe

Updated--Boko Haram Leader, Abubakar Shekau, Reported Dead

Update: "Boko Haram's “Abubakar Shekau” Killed Was One Bashir Mohammed"

Original post:
From Nigeria's Daily Post:
If the ongoing report from the troubled Northeast Nigeria is anything to go by, then a prominent Boko Haram Commander suspected to be the sect’s leader, Abubakar Shekau might have been killed.

However, one report that appears conflicting is whether the alleged victory was actually won by the Nigerian Army or the Cameroonian soldiers.

The conflicting reports stemmed from the claim by troops of both countries of being responssible for the death of the most wanted terrorist in the North....MORE
If true it beats the hell out of #bringbackourgirls

Equities: How's About a Thousand Dow Points (to the downside)?

On April 9, in the midst of the smallcap-biotech-momentum-stock doom-and-gloom we posted "How's About a Thousand Dow Points (to the upside)?" at DJIA 16,256.14.

The INDU closed at  17,279.74 on Friday and, since we're already looking for a 5% drop in the S&P 500, to ~1900 we might as well go whole hog on the round numbers (plus, the futures are indicating a down 36 point open).

From SafeHaven, Fri. Sept. 19:
The indexes have been on a fantastic run this week and for the most part, I enjoyed riding IWM up, getting long at 113.49. I did get stopped out before the Fed announcement, but that was because my stop was very tight. I am not a big fan of holding either side when something allows the algo's to wipe out both sides before making the real move.

Yesterday I started on the short side of IWM at5 115.43 and will use strength to build a position using 1/3 positions. Once filled I will manage the trade. Most of the time though, I never have a full position running. If I do, it means I was wrong on my directional thinking.

Why am I looking short? Well the first reason is, the small caps (IWM is all I trade using options) has been the weakest index. The SPX and Dow have been the leaders and the Dow is in a very bearish pattern, which is looking for a 1000+ drop to start in the coming days.
Dow Daily Chart
Larger Image
If the leader of the current rally (the Dow) is in a very bearish pattern, I doubt we will see the weakest index (Russell 2000) break away and suddenly become strong. My thinking and reasoning for shorting the Russell 2000 (IWM) if the strongest indexes roll over like I expect them to, downside momentum will pick up steam for the small caps.

Woody Dorsey of Sentimenttiming.com has been looking at 09/18-09/24 as a turn date for the indexes. Being it appears we are heading higher into these turn dates, a reversal to the downside would be expected. He bases his turn dates off of behavioral trading and investor sentiment.

So even with the indexes pretty strong this week, I am expecting a reversal to the downside that could start as soon as Friday 09/19/14 (the Dow was +80 when I started typing this) My separate sentiment data is looking for at the least, a $1-$3 drop on IWM. We are currently short (10) put contracts using the Week 1 October 115 puts

Have a great weekend and let's see what plays out-but be careful, complacency is very high right now.

Recent Russian Maps Show A Much Smaller Ukraine

From The Daily Signal (Heritage):
Russian propaganda specialists, political technologists if you will, are flooding the Internet with redrawn maps of Ukraine, shrinking the country to half its actual size.

On the new Russian maps, all that’s left of Ukraine is western Ukraine. Eastern Ukraine has been renamed Novorossiya (New Russia). The brain behind the Russian propaganda surge is former KGB man, Russian President Vladimir Putin. Putin is counting on the power of images over reality. It is classic propaganda with a new set of tools.

In this week’s Atlantic magazine, author Peter Pomarantsev writes,
Nobody who lives in that part of the world today ever thought of themselves as living in Novorossiya and bearing allegiance to it—at least until several months ago. Now, Novorossiya is being imagined into being: Russian media are showing maps of its ‘geography,’ while Kremlin-backed politicians are writing its ‘history’ into school textbooks. There’s a flag even a news agency (in English and Russian.) There are several twitterfeeds. It’s like something out of a Borges story—except for the very real casualties of the war conducted in its name.
The new fictitious maps fit with the Russian propaganda surge against Ukraine since demonstrations started in Kiev last November. Directed by the Kremlin’s new propaganda office, Russia Today, portrayals of Ukrainian demonstrators as neo-Nazi thugs were common in the Russia and even penetrated Western media. The reward for the Russian government was hesitation on the part of Europeans to deploy effective sanctions against Russia.
(via springtimeofnations.blogspot.com )
(via springtimeofnations.blogspot.com )
But the Russian propaganda machine, which draws on Soviet era traditions, has other elements as well. According to the Wall Street Journal, the office of Russia Today television, which in 2005 was renamed RT, has plans to grow its Berlin-based staff from two to at least 30. In late August, the Russian government publically announced a $39 million budget increase for RT in order to open a channel in French. This will complement RT’s existing English, Arabic and Spanish services....MORE

In 2009 Mitsubishi Tried To Corner the Market In Bluefin Tuna, Now They're Buying Norway's #2 Salmon Farmer

What's next, Norsk Hydro?
(I still think Kristian Birkeland should have received a couple Nobels)

From the Financial Times:
Mitsubishi Corp has offered NKr8.88bn ($1.4bn) for Norwegian salmon producer Cermaq, in the latest sign of consolidation in the fragmented seafood industry.
The bid by Japan’s top trading house comes as demand for fish has increased significantly over the past few years, due to the growth of the middle classes in developing countries and a trend towards healthier eating in developed economies.

The consumption of farmed fish is expected to overtake that of wild fish this year, according to the UN Food and Agricultural Organization in Rome.

Oslo-based Cermaq is one of the world’s leading salmon farmers with operations in Norway, Canada and Chile. Its output of 170,000 tonnes a year accounts for just under 10 per cent of global production....MORE
Combined with Mitsubishi's salmon operations the acquisition creates the world's #2, trailing only Norway's  Marine Harvest ASA, recently listed NYSE, symbol MHG.

Back in 2009 we noted:
Mitsubishi Tries a Corner in World's Bluefin Tuna Market
I can't recall another attempted corner in an endangered species, usually the perps sell as soon as possible.

Mitsubishi freezing fish to sell later as stock numbers plummet toward extinction
Which was followed a month later by:
How to Break a Market Corner: Breeding Breakthrough Helps Sushi Baron Create Sustainable Tuna

Sunday, September 21, 2014

Chart du Jour: Goldman on 150 Years of Monetary Policy Highlights

Via ZeroHedge:
While everyone debates if the Fed will, once again, be wrong in its forecasts about a rate hike cycle starting some time in mid-2015 (spoiler alert: it will be), we decided to take a look in the other direction.

The chart below shows the key global events that have influenced monetary policy for the 4 major legacy central banks: the US, UK, Germany and Japan since the mid-19th century....MORE
On the far left side of the chart you'll note the 1869 occurrence known as 'Black Friday'.
Here is a musical analysis of that event from Steely Dan along with some pics that seemed relevant in 2008:

The song refers to Black Friday, September 24, 1869 when an attempted corner of the gold market by James Fisk and Jay Gould was broken by the Federales.
When Black Friday comes
I'll stand down by the door
And catch the gray men
When they dive from the fourteenth floor
When Black Friday comes
I'll collect everything I'm owed
And before my friends find out
I'll be on the road
When Black Friday falls you know it's got to be
Don't let it fall on me...

UPDATED--Startups: "Y Combinator Releases Its Curriculum as a Stanford Class — And Online"

Updated with some of our earlier Paul Graham/YCombinator posts after the jump.
Original post:

I don't believe that entrepreneurial ability can be taught, there are just too many university level classes that haven't produced much.
And then there's Y Combinator.
From recode:
Especially in boom times, Stanford has a reputation for being a channel for ambitious young techies to plug themselves into Silicon Valley, sometimes in lieu of academics.

Now it’s coming true, literally. This fall, Stanford will offer a course in “How to Start a Startup,” taught by incumbent startup school headmaster Sam Altman, the president of Y Combinator. It’s officially “CS183B” and worth credit for Stanford students.

Ironically, Altman himself is a Stanford dropout, having founded a mobile location startup his freshman year.
The 1,000-minute course will also be made available online and will include appearances by well-known investors and entrepreneurs. Peter Thiel will give a lecture on monopoly theory, and Marc Andreessen and Ron Conway along with Ben Silbermann of Pinterest will talk about how to raise money. These are based on talks that the same speakers have made at Y Combinator class dinners over the years in Mountain View, Calif. They’ll be posted on Altman’s personal website as well as on iTunes and YouTube, rather than in one of the existing “MOOC” online education platforms....MORE
Some of our previous posts on Y Combinator:
YCombinator's Paul Graham on How to Get Rich
Milestone: The Value Of Y Combinator's Portfolio [Companies] Exceeds $30 Billion
Y Combinator: When Raising Money, How To Convince Investors
Y Combinator's Demo Day
Y Combinator's Paul; Graham: "How to Get Startup Ideas"
Attention Brainiacs: Y Combinator on What They're Funding Now (not yet a brainiac? become one in ten days)
YCombinator's Paul Graham on "Startup = Growth"
"The Aha! Moments That Made Paul Graham's Y Combinator Possible"
"Frighteningly Ambitious Startup Ideas"
Venture Capital: Behind the Scenes at Y Combinator
And many more. We do take Mr. Graham and his approach seriously.

"The PayPal Mafia: Who are they and where are Silicon Valley's richest group of men now?" (EBAY; TSLA; LNKD; FB)

From The Telegraph:
The company founded by Peter Thiel, Elon Musk and Max Levchin has spawned three billionaires, many, many millionaires and generation-defining companies. Here, we break down the key players from the most notorious group in Silicon Valley. 
Photo: Corbis. All Rights Reserved.
The picture above features some of the most poorly dressed men of the 2000s. Behold the outsized sportswear, the leather blazers, the silky shirts. But these men can afford to both laugh off our criticism and buy several new wardrobes. For they are the ‘PayPal Mafia’ and between them, these 13 men are worth billions and billions of dollars. And to be fair to them, they were styled as faux gangsters for the 2007 Fortune magazine shoot that birthed their infamous moniker. Mick Brown recently met PayPal co-founder Peter Thiel for an extraordinary Telegraph Magazine feature. The vast success enjoyed by Thiel and his former colleagues got us thinking: how did one company breed such a remarkable crop of entrepreneurs and capitalists? Click on the famous Fortune photograph below and discover exactly who the PayPal Mafia are. 

1. Jawed Karim
Role in PayPal: Designed and implemented PayPal’s incendiary real-time anti-fraud system, among other key components of the business.
After PayPal: Karim, Chad Hurley (designer of PayPal’s first logo) and Steve Chen (another PayPal colleague and early Facebook employee) founded a video sharing site in 2005. They named it YouTube. Soon after developing the fledgling site, Karim enrolled at Stanford University where, despite having already displayed a certain acumen in this area, he chose to study computer science. He continued to act as an advisor to YouTube before cashing in 137,443 shares of stock (worth a cool $64 million) when Google purchased YouTube for $1.65 billion in November 2006. Now 35, Karim launched a business called Youniversity Ventures in 2008 aimed at helping students and graduates develop business ideas with early PayPal investors Kevin Hartz and Keith Rabols.
Estimated net worth: $140 million
2. Jeremy Stoppelman (below)
Role in PayPal: Joined PayPal as an engineer whilst it was known as X.com, eventually becoming the Vice President of Engineering.
Post-PayPal: Resigned soon after PayPal was picked up by eBay for $1.5 billion in 2003, taking a year to attend Harvard Business School. Inspired whilst poorly with flu and finding it tricky to find decent doctor recommendations, he and a former colleague Russel Simmons dreamed up the idea for online reviews site Yelp in 2004 and convinced former PayPal Chief Technology Officer Max Levchin to put up $1 million in initial funding. Steve Jobs convinced him to reject Google’s acquisition offer in 2010 and in 2012, Yelp became a public limited company. But it’s not been a smooth recent few years: Yelp reviewers leaving negative reviews have faced legal action from affronted businesses and the site’s faced accusations of handing positive reviews to advertisers.
Estimated net worth: $111-$222 million
3. Andrew McCormack
Role in PayPal: Joined in 2001, working closely as an assistant to Peter Thiel as the company prepared for its initial public offering (IPO)
After PayPal: Helped set-up another Thiel venture, hedge fund company Clarium Capital before founding a restaurant group in San Francisco. Currently a partner at venture capital firm Valar Ventures, he found his way back to Thiel in 2008 to join Thiel Capital via corporate development roles at eCount (now part of US banking conglomerate Citigroup) and Yahoo!.
Estimated net worth: Unknown
4. Premal Shah
Role in PayPal: Spent six years at the company as a product manager.
After PayPal: Became President of non-profit organisation Kiva, which allows people to lend money to struggling entrepreneurs and students in over 70 countries via the internet. Founded by former programmer Matt Flannery and his businesswoman ex-wife Jessica Jackeley, the site was raising around $1 million every three days by November 2013.
Estimated net worth: Unknown

5. Luke Nosek
Role in PayPal: One of the co-founders, alongside Thiel, Elon Musk and Ken Howery and his friend from the University of Illinois, Max Levchin and Vice President of Marketing and Strategy.
After PayPal: Departed after the eBay takeover and travelled the world, before founding San Francisco venture capital firm Founders Firm (slogan: ‘We wanted flying cars, we got 140 characters’) with Thiel and Howery in 2005. Has spoken extensively about the benefits of brain training through meditation.
Estimated net worth: $1.2 billion
6. Ken Howery
Role in PayPal: A co-founder and Chief Financial Officer between 1998-2002.
After PayPal: Hung around as eBay’s Director of Corporate Development for just under a year after the takeover, before rejoining Thiel as vice president of private equity at Clarium Capital in 2004. Started Founders Fund less than 12 months later with Thiel and Nosek. In 2012, he co-founded Popexpert, an online learning platform that allows users to connect face-to-face with experts across a broad range of fields. Howery’s available for consulting sessions if you have a spare few $100,000.
Estimated net worth: $1.5 billion 

Friday, September 19, 2014

The Ig Nobel Prizes, 2014

Some people perceive religious imagery in things as mundane as a piece of toast:
I don't see it although, I suppose that with a great imagination, one might divine, so to speak, the hint of an outline of an image.
Still, it seems a bit of a leap.
From NBC:
Even seemingly silly science can be useful — for example, it's good to know that if you're experiencing a raging nosebleed, shoving a slice of cured pork up your nose just might save your life. Or that it's normal to see the face of Jesus on a piece of toast. 

Those published scientific findings, and many more, won the highest honors at the 24th annual Ig Nobel Prize ceremony, conducted at Harvard's Sanders Theater on Thursday. The Ig Nobels are traditionally given out during the buildup to the real Nobel Prize announcements, under the auspices of a humor magazine called the Annals of Improbable Research. 

"Every winner has done something that first makes people laugh, and then makes them think," said Marc Abrahams, the magazine's editor and impresario for the event. 

Some of the winners go on to win honest-to-goodness Nobels — such as the University of Manchester's Andrei Geim, who won an Ig Nobel for his work with levitating frogs and then shared the 2010 Nobel Prize for physics, thanks to his work with graphene. 

The winners of the Ig Nobel Prize for neuroscience may not get a Nobel for their research into what happens in the brains of people who see Jesus' face in toast. But the University of Toronto's Kang Lee, one of the laureates, said the study could provide those people with valuable reassurance. 

"You're completely normal if you see non-existent faces in everyday objects," Lee told the crowd....MORE
And from Harvard's own Improbable Research: 
The 2014 Ig Nobel Prize Winners
The 2014 Ig Nobel Prizes were awarded on Thursday night, September 18th, 2014 at the 24th First Annual Ig Nobel Prize Ceremony, at Harvard's Sanders Theatre. The ceremony was webcast live.
PHYSICS PRIZE [JAPAN]: Kiyoshi Mabuchi, Kensei Tanaka, Daichi Uchijima and Rina Sakai, for measuring the amount of friction between a shoe and a banana skin, and between a banana skin and the floor, when a person steps on a banana skin that's on the floor.
REFERENCE: "Frictional Coefficient under Banana Skin," Kiyoshi Mabuchi, Kensei Tanaka, Daichi Uchijima and Rina Sakai, Tribology Online 7, no. 3, 2012, pp. 147-151.

NEUROSCIENCE PRIZE [CHINA, CANADA]: Jiangang Liu, Jun Li, Lu Feng, Ling Li, Jie Tian, and Kang Lee, for trying to understand what happens in the brains of people who see the face of Jesus in a piece of toast.
REFERENCE: "Seeing Jesus in Toast: Neural and Behavioral Correlates of Face Pareidolia," Jiangang Liu, Jun Li, Lu Feng, Ling Li, Jie Tian, Kang Lee, Cortex, vol. 53, April 2014, Pages 60–77. The authors are at School of Computer and Information Technology, Beijing Jiaotong University, Xidian University, the Institute of Automation Chinese Academy of Sciences, Beijing, China, and the University of Toronto, Canada.

PSYCHOLOGY PRIZE [AUSTRALIA, UK, USA]: Peter K. Jonason, Amy Jones, and Minna Lyons, for amassing evidence that people who habitually stay up late are, on average, more self-admiring, more manipulative, and more psychopathic than people who habitually arise early in the morning.
REFERENCE: "Creatures of the Night: Chronotypes and the Dark Triad Traits," Peter K. Jonason, Amy Jones, and Minna Lyons, Personality and Individual Differences, vol. 55, no. 5, 2013, pp. 538-541.

PUBLIC HEALTH PRIZE [CZECH REPUBLIC, JAPAN, USA, INDIA]: Jaroslav Flegr, Jan Havlíček and Jitka Hanušova-Lindova, and to David Hanauer, Naren Ramakrishnan, Lisa Seyfried, for investigating whether it is mentally hazardous for a human being to own a cat.
REFERENCE: "Changes in personality profile of young women with latent toxoplasmosis," Jaroslav Flegr and Jan Havlicek, Folia Parasitologica, vol. 46, 1999, pp. 22-28.
REFERENCE: "Decreased level of psychobiological factor novelty seeking and lower intelligence in men latently infected with the protozoan parasite Toxoplasma gondii Dopamine, a missing link between schizophrenia and toxoplasmosis?" Jaroslav Flegr, Marek Preiss, Jiřı́ Klose, Jan Havlı́ček, Martina Vitáková, and Petr Kodym, Biological Psychology, vol. 63, 2003, pp. 253–268.
REFERENCE: "Describing the Relationship between Cat Bites and Human Depression Using Data from an Electronic Health Record," David Hanauer, Naren Ramakrishnan, Lisa Seyfried, PLoS ONE, vol. 8, no. 8, 2013, e70585. WHO ATTENDED THE CEREMONY: Jaroslav Flegr, David Hanauer, Naren Ramakrishnan
See also:
The 2014 Ig® Nobel Prize Ceremony & Lectures

Here's the Ig Archive page
From our previous coverage of the awards ceremony:
"Announcing: The 2013 Ig Nobel Prize winners"
2011 Ig Nobel Ceremony webcast tonight!"
Last year Nobel prize co-winner in physics, Andre Geim became the first person in history to win both of the prestigious prizes!
 From 2010 which was a great vintage:
"Largest Group Of Nobel Laureates To Remove A Sword From Someone's Throat"
Largest Group Of Nobel Laureates To Remove A Sword From Someone's Throat
1 2 3 4 Next >
On October 1, 2009, during the 19th First Annual Ig Nobel Prize Ceremony in Cambridge, Massachusetts, eight Nobel Prize Laureates removed a 22-inch solid steel sword from Ig Nobel Prize Laureate sword swallower Dan Meyer's throat.
The Nobel Laureates involved:
Rich Roberts
- Nobel Prize in Physiology/Medicine, 1993
Wolfgang Ketterle
- Nobel Prize in Physics, 2001
Dudley Herschbach
- Nobel Prize in Chemistry, 1986
Paul Krugman
- Nobel Prize in Economics, 2008
Roy Glauber
- Nobel Prize in Physics, 2005
Frank Wilczek
- Nobel Prize in Physics, 2004
Martin Chalfie
- Nobel Prize in Chemistry, 2008
William Lipscomb
- Nobel Prize in Chemistry, 1976

- sword swallower must be a legitimate sword swallower officially verified and recognized by the Sword Swallowers Association International
- sword must be a solid steel non-retractable sword with a blade at least 15 inches in length
- Nobel Laureates must be recognized bonafide Nobel Laureates who have actually been awarded an official Nobel Prize

"US land market weakest since world economic crisis"

Ya think?
Here's corn so far this year via FinViz:
We didn't realize the fire we were playing with riding that little upswing from $4.27 in November 2013 to $5.00 in March 2014. But we got out and rather than making the smart play of shorting the darn things waited patiently for an entry point.
And waited.
And waited...and...Sometimes you get lucky.
The last trade was 331'6 down 6'4 and just off the new lowest-since-2010: 331'4.
From Agrimoney:

The US farmland market is at its weakest since the depths of the world financial crisis, with the agricultural equipment sector in even worse health than then, depressed by the slide in grain prices.
A farmland price index compiled by Nebraska-based Creighton University "slumped" to 33.7 this month, down from 41.4 last month.
That represented the 10th successive month of price declines - ie below the 50.0 figure which indicates a neutral market - and was the lowest reading since March 2009, as the global financial crisis was at its height.
And it reflected weaker crop prices, with corn, soybean and wheat futures setting a series of four-year lows in Chicago.
"Much weaker crop prices are taking the air out of agriculture land prices," said Professor Ernie Goss, the Creighton economist in charge of the survey.
'Market has slowed'
The market weakness was underlined by separate data showing farmland prices in Iowa, the top US corn and soybean producing state, falling 3.4% in the six months to the start of this month, to $8,000 an acre.
Year on year, prices were down 8.8%, according to the data, from the Iowa Realtors Land Institute.
The institute's chairman, Kyle Hansen, said that the decline had been "expected".
"We've seen commodity prices decrease and the land market has slowed from the standpoint of how much land is on the market as well as how active the bidders are at auctions," he said.
Lowest on record
The Creighton study also highlighted the extent of the dent to the farm equipment sector from lower profitability prospects, with an agricultural machinery sales index falling to 17.6, from 25.5 last month.
That was the 14th successive month of decline, and the lowest figure since the survey began eight years ago....

Possibly prescient:
Iowa State's Worst Case Corn Prices: $2.89 By 2017

Gold Down, Silver Collapses

NYMEX Gold $1216.80 down $10.10, Silver $17.883 down $0.634.
From Forbes:
Gold futures have now given up most of their gains for the year as the metal was pressured again Friday by a muscular U.S. dollar.

After the pit close on the Comex division of the New York Mercantile Exchange, gold for December delivery lost $10.30 to $1,216.60 an ounce. The market hit a low of $1,214.20 that was its weakest level since Jan. 2 and within striking distance of the ending 2013 price of $1,205.70.

December silver fell 67.3 cents to $17.844 an ounce, with a session low of $17.78. On a futures continuation chart, silver had not been below $18 an ounce since August 2010.

The London afternoon gold fixing was $1,219.75, down from the morning fixing of $1,222.50 and the Thursday afternoon price of $1,220.50.

“It’s because of nothing more than a higher dollar here,” said Sean Lusk, director of commercial hedging with Walsh Trading....MORE
That's a 4-year low for silver. 
Chartology: "The Downside Target in Silver is Below $15"
Silver Bounces at Support For the Fourth Time In 14 Months
An Argument For $13 Silver and $1100 Gold  
Gold, Silver Continue Fearless Decline
And many more.

Really Smart Investing: Ocean Tomo's 3D Printing Patent Study (AMAVF; DDD; SSYS; MTLS)

Long time readers may remember Ocean Tomo for their Ocean Tomo 300® Patent Index, a stock index based on the value of the constituent companies intellectual property. There is a small but distinct positive price anomaly for the stocks in the index:
Ocean Tomo 300 Patent Index vs S&P 500
We first started following the index in January 2008's "Really Smart Investing" which had to use a backtest as the index was then only celebrating its first anniversary. That chart has since been supplanted by the above.

The results are similar to those achieved by screening for R&D spending as a percentage of revenues but less choppy and more convenient.

Here's another Ocean Tomo offering:
Fueled by the rapid advance of the Maker Movement, powered by open design communities, the 3D printing market is rapidly expanding. The 3D printing (3DP) or additive manufacturing market is over 30 years old. As the market expands from industrial market applications like rapid prototyping to mainstream consumer market, the industry is projected to grow to $16.2 billion in 2018.
In order to rationalize this growth projection, Ocean Tomo, the Intellectual Capital Merchant Banc™ firm, undertook a study of the patent quality and historical trends within the 3D Printing space.

The Ocean Tomo Ratings™ System Study of 3D Printing Patents issued by the USPTO presents insight on the 3D Printing market useful to governments, corporations, research institutions, patent prosecution law firms, investment analysts and the media.
The report presents a unique look inside the patents issued by the USPTO that are supporting the development of the 3D Printing Market along with the assignees and inventors operating in the space. The report presents a focused look at the expired, abandoned and in-force patents within five leading technology areas in the 3D printing space including:
» Stereolithography (SL)
» Extrusion-based Fused Deposition Materials (FDM)
» Selective Laser Sintering (SLS)
» Material Jetting
» Binder Jetting

These five technology areas represent 76% of the patents issued within the 3D printing space.
Further insight into Directed Energy Deposition, Electrophoretic Deposition, Laser Metal Forming, Laminated Object Manufacturing, Multiphoton Lithography and Photolithography is available as custom reports.
The report also provides a patent portfolio assessment, an objective assessment of the overall quality of patents within the 3D Printing Market, as well as a competitive landscape – identification of relevant patents, assignees and inventors.

Report Excerpts:


Possibly related (yeah, we have an interest in this stuff):
Being a Patent Troll Now Patented
Electronic Frontier Foundation Mobilizing to Fight 3D Printing Patent Trolls
Patents vs. Innovation: 3D Printing Edition (SSYS; DDD; IRBT)
DLA Piper: Clone Wars 3D Printing and Intellectual Property ( and Nathan Myhrvold's Cunning Plan to Prevent 3-D Printer Piracy)
3D Printing: Electronic Frontier Foundation Challenges 6 Troll Patents

Dude, Bitcoin Is So Over

I don't know where she found the patience but Izabella has been dogged on this story.
From FT Alphaville:

Cult Markets: When the bubble bursts
This is Jean-Paul Rodrigue’s stages of a bubble chart:
This is a chart of the price of Bitcoin from the BoE:
See any resemblance?
If you do, you might also note that we *could* be approaching the critical fear-through-capitulation stage.
Today’s low so far on the Bitstamp exchange is $399 and $383 on BTC-e exchange (changing quickly!). Here’s a snapshot of the BTC-e action via BitcoinWisdom:
We’re going to stick our neck out at this stage and call this the end of Bitcoin. The reason being, the positive-feedback loop forces which drove Bitcoin to $1124.76 have now become the same very same which will drive it down to the bottom....MORE, including links to the various posts in the Bitcoin Mania series

Kill The Patent Trolls: Matchmaking Edition

From ars technica:

Lumen View gives up on “matchmaking” patent, can’t defend it under new law
A patent troll called Lumen View Technology got stopped in its tracks last year after it sued Santa Barbara-based startup FindTheBest, then asked the company for a quick $50,000 settlement.

Instead of settling to avoid a costly lawsuit, as several other small companies had, FindTheBest responded with a pledge to fight the patent all the way and also slapped Lumen View with a civil RICO lawsuit.

The counter-attack caused Lumen View's patent to be dismantled in short order, when the judge in the case ruled that it was nothing more than a computerized twist on an ancient idea. The patent delineated a process of having parties input preference data, and then an automated process of determining a good match. "Matchmakers have been doing this for millennia," wrote US District Judge Denise Cote in her order invalidating the patent.

Things got worse for Lumen View when its lawsuit became the first case in the country to apply new fee-shifting standards created this year by the Supreme Court. In May, Cote ruled that Lumen View would have to pay FindTheBest's costs, as punishment for seeking a "nuisance settlement" and then threatening "full-scale litigation" with "protracted discovery."...MORE

Thursday, September 18, 2014

Al Qaeda Offshoot Says It Hijacked A Pakistani Navy Ship to Attack U.S. Vessels

From Reuters via gCaptain:
File photo of PNS Zulfiqar courtesy Wikimedia Commons
File photo of PNS Zulfiqar courtesy Wikimedia Commons
Al Qaeda’s South Asia wing has claimed responsibility for hijacking a Pakistani naval ship and trying to use it to fire rockets at U.S. vessels in the Arabian Sea, in the first major assault by the newly created group.
The SITE monitoring service quoted its spokesman, Usama Mahmoud, as saying a group of militants had succeeded in seizing control of the Pakistani frigate PNS Zulfiqar and tried to use it to attack nearby U.S. vessels.

“These mujahideen had taken control of the Pakistani ship, and they were advancing towards the American fleet when the Pakistani army stopped them,” he said.

“As a result, the mujahideen, the lions of Allah and benefactors of the Ummah, sacrificed their lives for Allah, and the Pakistani soldiers spoiled their hereafter by giving up their lives in defence of the enemies of the Ummah the Americans.”...MORE
Roger that, lions of Allah thwarted, over.

Scotland Votes: Scenes From the Run-up

From TomoNews:

Next on TomoNews: Armpit hair selfies sweeping China

Handy Interactive Real Interest Rate Charts for Various Nations

From Dollar Collapse:
The folks at Gresham’s Law just published a nifty interactive chart of real (i.e., inflation-adjusted) interest rates since the 1960s that explains a lot about today’s world.
Real interest rates
To make sense of this, let’s start with a a little background: Interest rates are the rental cost of money, but to figure out the true cost you have to adjust the nominal (or numerical) interest rate for inflation, which is the rate at which the currency being borrowed is falling in value. 

If the nominal interest rate is higher than inflation, then the real interest rate is positive. If the real rate is both positive and high, that’s a signal that money is expensive and that one is better off being a lender (to reap those high returns) than a borrower (who has to pay the high true cost of money). The opposite is true for negative real rates, where the nominal cost of money is lower than the rate at which the currency is being depreciated. In this case a borrower actually gets paid to borrow because the true cost of the loan falls as the currency loses value. So negative real rates tell market participants to borrow as much as possible.
Given these incentives one might expect the following....MORE
Here are the charts, based on OECD data.

"How Often Do Stocks and Bonds Decline at the Same Time?"

From A Wealth of Common Sense:
Earlier in the year many investors were under the impression that something had to give because stocks and bonds were both rising.  I looked at the historical data on positive stock and bond returns to show that this is more common than most investors assume:
Stocks Bonds Rise Together
Since performance has been so strong in both stocks and bonds during this cycle, the chorus continues to grow for lower returns going forward for both, something that’s not out of the realm of possibilities. This brings up the question about how often stocks and bonds decline at the same time to prepare for the possibility.

It’s actually extremely rare on an annual basis historically when looking at the S&P 500 and 10 year treasuries from 1928 to 2013:
Down yrs stocks bonds
It’s only happened three times and the last occurrence was in 1969. That’s less than 4% of all annual periods, an impressive record.
Breaking it down a little further, when we look on a quarterly basis, stocks and bonds have fallen together more often.  Going back to 1976, using the more diversified Barclays Aggregate Bond Index, here are the 14 instances where both fell:
Down yrs stocks bonds 2
That means about 9% of all quarterly periods saw both go down together....MORE

Credit Suisse's Mauboussin: "We believe that some of the lessons of freestyle chess are useful...."

The quote goes on:
"...Properly done, a melding of fundamental and quantitative methods may well yield better results than either of them on their own”
From ValueWalk:
Credit Suisse managing director Michal Mauboussin argues that freestyle chess suggests a better way to combine quant and fundamental investment strategies

It’s been a long time since humans have been able to hold a candle against top chess programs, Kasparov famously lost to Deep Blue back in 1997 and amateurs have been losing to computers for even longer, but that doesn’t mean that people have become obsolete. Freestyle teams, which combine human and computer players, are still consistently better than machines playing on their own.

“We believe that some of the lessons of freestyle chess are useful. Properly done, a melding of fundamental and quantitative methods may well yield better results than either of them on their own,” write Credit Suisse managing director Michael Mauboussin and VP Dan Callahan in a September 10 report. “If we had to say which camp had the most to gain from the other, we’d say that the fundamental analysts have more to learn from the quants than the other way around.”

Process beats skill in freestyle chess One of the early lessons from freestyle chess is that the skills necessary to win change dramatically as soon as you bring a machine into the mix. In 2005 Zackary Stephen and Steven Cramton, neither of whom is a chess expert by ELO ranking, beat grandmaster Vladimir Dobrov and another highly ranked player to win a freestyle tournament. Without computer assistance Stephen and Cramton wouldn’t have had a prayer, so what changed?

Stephen and Cramton were credited with having a better process that let their different chess programs do the computational heavy lifting and only interjected with human judgment when those programs suggested different moves. Dobrov relied more on his own (impressive) chess skills and didn’t make the most of the software at his disposal.

Freestyle chess: parallel with fundamental and quantitative trading The obvious parallel that Mauboussin and Callahan are trying to draw is between fundamental and quant investment strategies, and they think both sides of the cultural divide has something to learn from the other....MORE

Realizing That Gold Is down $70 Thus Far In September, Barclays Cuts Forecast

"Il faut bien que je les suive, puisque je suis leur chef."*
Phrase historique prononcée à Paris - 1848

$1221.90 last, down 14 bucks.
From MarketWatch:
Gold loses luster on Fed; Barclays cuts forecast
Gold prices dipped Wednesday on concerns about a stronger dollar ahead of the Federal Reserve policy statement and in response to Barclays lowering its gold forecast.

But the precious metal may get a reprieve in the short term as the Fed’s statement, released after gold settled, reiterated that the central bank will keep interest rates low for a “considerable time” after it curtails its bond buying program.

Gold for December delivery GCZ4, -1.20%  ticked down 80 cents, settling at $1,236.70 an ounce.
As for the vote on Scotland’s independence, Edward Meir of INTL FCStone expects the “no” vote to prevail, but said markets could get dicey if it doesn’t.

“We do expect to see a massive short-covering rally in gold if Scotland votes ‘yes’, an event that should be momentous in terms of the economic fallout on both the U.K. and Europe,” Meir said.
Barclays bearish view on gold is linked to rising rates and the dollars strength. “Rising rates and a significantly stronger dollar present headwinds, which are set to overwhelm any seasonal strength in physical demand this year,” said Barclays’ analyst Suki Cooper.

With that, Barclays cut its fourth-quarter 2014 quarterly average forecast for gold to $1,220 an ounce and its average 2014 price to $1,270 an ounce. For 2015, the analysts see price risk skewed to the downside, with average prices set to reach only $1,180 an ounce.
*Schoolboy translation: "I must follow them for I am their leader."