April - 2016
 S&P +13.60
 USB -0.02
 S&P -7.60
 USB +0.09
 S&P -18.70
 USB +1.18
 S&P +21.40
 USB -0.28
 S&P -25.10
 USB +1.21
 S&P +5.60
 USB -0.26
 S&P -6.20
 USB -0.03
 S&P +21.20
 USB -1.02
 S&P +20.20
 USB +0.27
 S&P +0.70
 USB -0.18
 S&P -1.60
 USB +0.26
 S&P +11.70
 USB -0.24
 S&P +7.00
 USB -0.10
 S&P +4.30
 USB -1.21
 S&P -15.20
 USB -0.19
 S&P +3.20
 USB -0.07
 S&P -2.80
 USB -0.17
 S&P +5.20
 USB -0.25
 S&P +2.30
 USB +1.15
 S&P -18.30
 USB +0.02
 S&P -13.30
 USB +0.18



One admires the typical high tech earnings report. Made 15 cents excluding certain items. Those items include salaries. With salaries loss of 20 cents. Twitter an example today. Something rotten in the way sale growth of 30% versus estimate 35% is cause for the 15% decline rather than they can't earn money. 

Ed Stewart writes: 

If you think that is bad you should read the "value" stock releases. Every quarter it is "but for" earnings and the analysts play along with the BS to the extent that the fake numbers are the ones that are the default in factset.



 It's a wrestling match today with bonds up a half from 7 down days and a 2 month low, and crude at a 4 month high, up another 2%. It is interesting to note that somehow the Fed believes that moves in oil are ephemeral and have no effect on inflation.

anonymous writes:

Here is a paper presented by Vineer Bhansali at JOIM : "Beyond the Quant Model" [36 page pdf]

I got a lot out of it even when I couldn't follow the physics examples.

Alex Castaldo replies:

I see that in late December 2015 Vineer Bhansali left Pimco to start his own firm LongTail Alpha:

LongTail Alpha is named after its strategy that "sustained portfolio performance comes from expecting the unexpected, and positioning portfolios to earn yield while maintaining convexity," according to a statement he issued. Bhansali said he is initially funding the firm himself. He earned a Ph.D. in theoretical physics from Harvard University in 1992 after receiving bachelor's and master's degrees in physics at the California Institute of Technology. He […] worked at Pimco for 16 years.

It would seem he is a convex combination of The Professor, The Upside Down Man and the Derivatives Expert. 

The talk is billed as a light talk rather than a technical one. He discusses lessons learned from hobbies and other fun activities and summarizes them in 10 points:

1.  Focus on Structure (and on the one idea that supports the structure)

2.  Let the data speak (and be Bayesian when you listen to it)

3.  Use proper coordinates and units

4.  Know the types of errors (and correct for them)

5.  Simplify

6.  Look for scaling rules (and anticipate the possibility of sharp/sudden transitions)

7.  Simulate freely (especially if you suspect path dependence) and use Gedanken (thought) experiments

8.  Identify tradeoffs (and deal with imbalance by owning free or cheap options)

9.  Don’t fight momentum (look for it and ride it)

10. Pay heed to the environment (and be flexible in adjusting to it)



In Alaska many oil workers and support industries are laying off workers. The oil quantities are at minimal. The state is hurting.



 Guaranteed to happen in quest for egalitarian world state.

"Obama: UK Will Not Be Able to Strike Trade Deal With US Soon After Brexit
" :

April 22 (Press Association) — Britain would not be able to strike a free trade deal with the US "any time soon" if it leaves the EU, as Washington's focus would be on reaching agreement with the European Union, Barack Obama has said.

The President was speaking after Downing Street talks with Prime Minister David Cameron during a two-day visit which he has used to speak out in favour of continued UK membership of the 28-nation bloc after the June 23 referendum.

At a joint press conference in the Foreign Office, Mr Cameron insisted that the special relationship between the UK and US was not "constrained" by Britain's EU membership. EU membership gave Britain "a powerful tool" to stand up for the values it shares with the US, said Mr Cameron, adding:

"Now, I think, is a time to stay true to those values, and to stick together with our friends and allies in Europe and around the world."

Mr Obama said the UK would be "in the back of the queue" for a trade deal if it left the EU, because the US would focus on the bigger bloc.

John Floyd writes: 

Amazingly the supercilious EU has done wonders for the likes of Italy where one might consider that despite bailouts, low rates, low euro, low oil prices and many other beneficial headwinds:

- Italy is too big for the ECB to save with the 3rd largest government bond market and public sector debt that exceeds US $2 trillion.
- Italian GDP is down 6% point to point since the pre 2008 peak while the US economy is up 10% over the same period.
- Italian NPL's are around 17% compared to the European average of 6%
- Anti-European sentiment is rising and support for Renzi's government has halved over the past 2 years
- Public debt to GDP has gone from 105% in 2008 to 130% in 2015

There will soon be a new dish on the menu next to Grexit and Brexit. The chefs are now adding Itexit with a red or white sauce.



 This is a biography of Elvis's top 290 comic moments. The King of rock and roll is for the first time revealed as the King of humor. Girls, guns, guitars, morgues, one-way mirrors, fleets of gifts, duping the U.S. President, chimpanzee sex, charade assassins, and water pistol fights are the deepest insights into the real Elvis. Presley had a thoughtful, comprehensive sense of humor, as detailed in the first chapter 'The Psychology of Elvis' Humor'. The best comic moments of his life follow.

It started three years ago as a syndicated story 'Elvis and the Memphis Racquetball Mafia'  that turned into a May 2016 ESBN film release 'When the King Held Court'

The book is called Elvis' Humor: Girls, Guns, and Guitars



 I am often asked which is the best business book besides Monte Walsh and Atlas Shrugged.

I would recommend True Grit by Charles Portis.

The heroine is good with accounting, mortgages, bargaining, and investing.

It is true to time and place, and has many L'Amouresque and Schaefferian educational facts about the West as it was in the late 19th century.

Apparently the Coen brothers' production of it  is the best film of it.

And the book and movie are the favorites of some of the most astute authors like Roald Dahl.

It can be read with pleasure by all from 10 to 80.



 Geoffrey Williams has done a study of the Fraud in the Development of Victorian British Banking. I came across it while doing some research into the failure of the City of Glasgow Bank in 1878.

Two comments were particularly interesting:

"In the first 20 years of the Victorian era, 1837 to 1857, there were more than a half-dozen large-scale bank failures due to fraud in England, as well as a number of others in Ireland and Scotland, not to mention fraud-induced failures of smaller banks."

"Fraud at the high levels of financial institution management appears to have been a major issue across the period, with serious consequences for shareholders, depositors and the general public. The early years of joint stock banking were particularly problematic, with particular problems during the boom years of the 1850, and in the Lancashire region."

Lancashire was the Jiangsu and Zhejiang of its day. Those of you who understand what is going on now in the world of large credits and debits can tell us whether our time is seeing a variation on a 19th century theme.



"The Tokyo Whale Is Quietly Buying Up Huge Stakes in Japan Inc."

Reminds me of John Law and his Mississippi Scheme. Banque Royale was the central bank. What happened to France afterwards is well known…. The money supply of France was inflated to support share prices. When the collapse came many people were ruined. It also contributed to the French Revolution.

BOJ should study history.



A 20mph northerner blew throughout my weekend hike in the Sonora near Slab City, CA, bringing the temperature down to 90F and creating a meteorological freak called a tornado belt. I found myself slaloming wind devils for eight straight hours. Every thirty minutes, like clockwork, a dark funnel formed about five miles away from the same NE source and direction, heaving a perfect dancing tornado directly at me.

Each was as if manufactured from an atmosphere stencil and was about 100 yards wide, one mile tall, brown with blowing sand, and a few flying branches, moved with the wind, and whirled clockwise. Seven twisted at me in all, holding ground in nearly a straight path. When they reared and started toward me, I had about three minutes to walk at right angles slightly uphill to the east, as it seemed the wind devils were so heavy they flowed downhill.

According to the American Meteorological Society, these dust devils range in width from about 10 to 100 feet, with an average height of about 650 feet. However, these expanded version today in the high temperature and squall were much larger. They formed as a swirling updraft under sunny conditions when hot air near the desert floor rose quickly through a small pocket of cooler, low-pressure air above, and if there was a ground or atmospheric 'solid' in the way, the twister shaped.

Two mile-high tornados came straight at me where there was barely time to sidestep. On these two occasions I walked briskly to the lee side of an Ironwood tree, clamped my sunglasses tight, covered my ears, and waited for the twister to roar up. The circular wind I estimated at 50mph, and the brown core passed within 20 yards of me ducked behind the tree where the wind whistled through the densest branches on earth at about 40mph. It didn't get a rise out of me with 20-pound ankle weights.

At midday I stepped up out of a wash and beheld an astonishing sight. A piano stood in the open desert by flowering ocotillo, creosote, and barrel cactus. The keys were perfect and wind was blowing nearly hard enough to play 'They Call the Wind Maria'. It shown regal and beautiful in the sunlight. Before it a wind-sand polished bench was pushed up to the piano at just the proper distance for a man to sit and play a spell. How long? An empty wine bottle rocked in the wind on the low note keys.

Then I examined the old instrument. 'Manufactured by Story Roberts Co. of Chicago' the name tag read, and another metal one, 'Established in 1837.' Fresh pickup tracks led out into the open desert, about five days old. Behind the piano lay a fire extinguisher. Nothing else.

Every picture tells a story. I believe a virtuoso had driven the piano into the desert, carefully unloaded it, and leveled it with a stick under the right rear corner. He lit a match, but glanced down at the keys and decided to play a tune before torching the bewitching instrument. He sat, uncorked the bottle, reached out, and tickled the ivories. He liked what he heard, and played until the wine was gone. There would be no fire for the extinguisher to save the surrounding desert because he could not bring himself to burn it any more than a person could shoot his beloved old pet.

The piano was perhaps 100 years old and the model name written in gold above the keyboard was 'F__K Fame'.

I rose from the bench, and walked to the next tornado.











What would you say is the physical analogy to the situation which often arises in markets where one market repels the other. Oil often repels bonds and bonds often repels stocks. It is sort of like the forces that make a motor to me? What's a better analogy? Here's a good discussion of like charges repelling.



 Seals are the most rugged and dependable of the military branches. The primary reasons are they are selective, draw mainly from swimmers (vigorous and smart), and their training is the most demanding with the highest attrition rate. Hence, we are protected by the best evolution offers from the U.S. military. Still, in looking over their '6 Lessons from Seal Team 6', improvement is possible. Here are the Seal lessons, and my upgrades (in italics) from experience in the jungles, streets, rails, mountains and deserts.

1. Consider a weapon not just by the traditional description but in terms of all the tools you can train and deploy, particularly your mind. Willpower is a powerful weapon.

– Willpower is a poor substitute for ability. I'm reminded of the Special Forces soldier who jumped from a plane, and his parachute didn't open. 'So far, so good,' he reminded himself. Then his emergency chute didn't deploy. 'So far, so good,' he said to himself…

2. Never attack from the same place more than twice at most, keep your opponent off-guard and move around.

– Never attack from your strength first, I might add.

3. Minimize emotions or you will have difficulty maintaining a focused mind.

–Do not attach emotion to the things you do in life, is key to the military, sports, and even business.

4. Assume there is no back up and control your risk accordingly.

- Always keep a back up, is better, implying to enter a situation without considering support, and remember it if the position sours.

5. Think outside the box, but don't chase things you can't see.

- A clearer way to phrase it, Think inside the box of tricks you've been taught, and if those tricks fail, think outside the box.

6. Nerve, stand for something every day and remember the SAS creed "those who dare win"

– Given the choice of cowardice and violence, always choose violence.



 At the gym yesterday, I was struck in the parking lot by how many Teslas were there. They seemed to be all over the lot. In Silicon Valley, having a Tesla is no longer much of a status symbol. There are simply too many of them. I suppose a Ferrari or a Maybach counts for something in the status wars seemingly omnipresent out here. But you don't see many of them (and fortunately, even the Ferraris have reasonable colors—no pink ones like I saw in San Diego—maybe she was a Mary Kay salesperson). On the Stanford University lots near the engineering section of campus, the proclivity of Porsche Carreras is hard not to notice.

Not many Jags, though. At one time, Jaguar was among the leaders in the sports car market. The premium sports car market. Jags could (and did) win at Le Mans and other racing venues (D-type had that honor). The problem with Jags was that in order to buy one, you needed to be prepared to pay for the mechanic who would live in your home to keep the car going. Even so, Jaguar, to its credit, made some gorgeous cars. Some that were works of art. Many in the 1960s lusted for the Aston Martin, especially after Goldfinger was released.

My favorite, though, is the Jaguar XKE, sometimes referred to as the E-class. Simply exquisite. I contend that there has never been a finer car built, from an appearance perspective, than the Series 2 XKE, which was more drivable than the Series 1. The Series 3 is the one I like least of all (it strikes me as overdeveloped)l but I'd take it in an instant with the right opportunity.

I don't know which version of the XKE he was looking at when he said it, but Ferrari (as in Mr. Ferrari) thought it the most beautiful car ever built. The Roadster XKE is in the permanent collection of the Museum of Modern Art. It's not a car easily found these days—there were fewer than 75K ever manufactured. At one time, I had a dream of buying one that had seen better days and rehabbing it. As it turns out, that concept and Jaguars, at least for the XKE, do not mix.

As I write this, I'm hearing one of my neighbors barreling down the street in his Lamborghini, the automobile version of a Harley. At least everyone that I've seen is loud. The cop who's now chasing him down the road wouldn't have had a chance at catching up on an interstate, but here in the neighborhood, there's likely to be a ticket issued and accepted.

As for the Teslas, I'm still waiting for the company to post a profit. Any damned fool can produce something at a loss, especially with a government subsidiary.

There are those who enjoy Lamborghinis, though I'm not one of them. But the XKE? Now there was a car.



 Most families make the journey to DisneyWorld or Disneyland soon after they judge that "the kids are old enough now." "You haven't been to DisneyWorld?!" has the force of a shaming epithet in elementary school peer groups. Parents who have not "made the trip" are often considered poor providers.

I have concluded that Disney is a deep threat to American society. Visiting these parks is a training system for the America-to-come (and other countries where the movement has gained traction)…an America I don't think I will like.

Disney visits teach two things:

1. be an observer, not a participant …. a Disney trip is way down on the interactive scale, most "rides" are passive excursions through a terrain or story or experience over which the guest has virtually no control or input. And

2. how to wait in line politely and passively for long periods of time with tethered, exhausted, sugared children tugging on the parent…perhaps an apt experience for preparing us to endure the DMV or the post office

Disney's contribution is to make this otherwise awful experience into something that cannot be passed up. The best people mover of all time consults other companies and organizations on crowd management and control.

Is there a place for Disney in fighting terrorism?

Rocky Humbert writes: 

 I thought the original post about Disney was tongue-in-cheek — as it left me ROFL — but I'm starting to wonder whether it was a serious anarcho-anti-establishment rant?

Without opining on the misery of standing in queues under the Florida sun, Disney sells a professional, well engineered, family-friendly entertainment product. It is difficult to fault their franchise, execution and profitability. I have found critics of Disney are the same folks who hate the American Flag, Mcdonalds, baseball and apple pie. That Disney has a slightly left of center political bias is a reflection of its market research rather than agenda — I am certain that they would shift their bias quickly if it suited their profitability.

I have not been to a Disney park in many years, but it is a right of passage for most every parent with young children. My memory of it was pleasant. My primary complaints about the experience were the cost and the food quality.

If you are going there to glean a deep understanding of history, science, environmental studies, etc., it will be disappointing But if you are going there to have your youngsters smile and not be exposed to vulgarity, profanity and things that many of us consider the dark side of the work, then it is a great place.

Again, every detail of their product is micro managed and they should be saluted, not pilloried, for providing consumers an interactive product that they want and pay for. Good luck to the parents of young children who think they should go "rock climbing." See you at the ER.

Russ Sears writes: 

While I concur with Rocky's sentiments that Disney leaning left is most likely due to the leaderships belief that the left will win the future. What bothers me is not the left or right side of their politics but their marketing preference towards girls and capturing a large segment of the young girls and their mothers. I have only daughters and they loved Disney. But when 60% of the college graduating class is female, and 40% is male, a figure that was reverse in the male chauvinistic 70's, it hurts to think that the young boys' futures are so bleak that Disney doesn't market too strongly to boys or their fathers and knows where the future is. While it maybe the future, is such an accelerating trend sustainable for the next 30 years or is there a limit to how bad this can get?

Jim Lackey writes: 

 Disney world is fantastic. It is expensive, yet worth it. There are some good points that strong women and some men point out. Life is not a fairy tale and you're not a princess. However, once that statement is out of the way the experience is best if you look at it as purely entertainment and have fun.

Nothing for the boys? My best memories are when my dad said: NO RACING this vacation son! We are going to Florida. I am taking your sister to Disney. Your brother wants to do the water park. Son, I want to fish in the Keys. It is your job to navigate. Here is the map, the compass and my cc card. Plan the trip. P.S your sister will refuse to stay in a hotel without a diving board. Your mother needs, we need, for your mother to have a car and a place to shop. Love Dad.

Yes, that was a note he was off to work 7/12's to raise the funding for the trip.

I lived in Fla from July 91 until June 2006. In that 15 years I went to Disney countless times. We also hit Busch gardens, when Budweiser still owned it. I had fond memories of that park from a kid. It wasn't in the parking lot of the ball park of Disney. Once a year I was kicking and screaming about a summer Disney trip, again for my wife and small children. My wife set me up. She had paid for a full day of me driving the Richard Petty driving experience (12-1 compression aaah about 550 HP stock car.) I had to follow the instructor for 15 laps (2 cars.) Then he realized I could drive the car. They had a speed limit of about 150 on the strait so we had to coast, then right before you slam on the brakes to corner he had us go full throttle for one thousand one one thou, SLAM the brakes…. right before the apex of the turn, which is quite unnatural, you went back to full throttle. I noticed the slight delay from the full throttle to the power band of the engine. Actually I noticed a puff of fuel come out of the lead race car's header or exhaust pipe before the car slammed the apex, where a driver would normally go full throttle. Then we had it wired.

I upset him by pushing him down the strait when he was waiving his arm frantically (which meant slow down back off 3', we were 150 mph about 100 feet into the strait. I dunno if I did 50 or 60 laps. All I can tell you is I wanted out of that hot box on the 95 degree Fla day so bad the final 10 laps were work. I though damn these stock car drivers must train very hard on long distance bicycle or run many miles a week to drive 500 miles in this hot box. They must have full focus in real racing for that 3 hours and that takes endurance. I walked into Disney and the wife said, "so? Are we trading the Drag car for a stock car?" No way baby, I'll never be a stock car driver.

Disney rocks. If you can't find something to do there…send me a note. Few realize all there is to offer.

Disney is my retirement plan. That will be my job from 62-82. I'll be rebuilding engines, motors, hydraulic pumps and training young men, how to work. Did you ever notice how they take out the trash restock the concessions, or how the leaf blower/ vacuum exhaust smells but doesn't stink like your gasoline lawn mower?

I remember as a 11 yo kid asking dad, are they running vp racing gas in that leaf sucker? Pops can you smell that exhaust? That's the same sweet smell of fuel burning at the dragstrip. Only you'd notice, son. Did you wonder where does all the trash go? We could never figure out how is it that every kid that works there for the minimum is so happy. My wife, the UCF grad explained it to me. Talk to the management. Where are they? Exactly!

Stefan Jovanovich writes: 

 A trip to Orlando's theme parks would not be complete without a trip to Florida's own surf city, Cocoa Beach. We make a day trip over to CB at least 7-8 times a year, usually in spring and summer, and sometimes stay a few nights at the surfer friendly Wakulla Suites.

A typical day trip begins at 3AM with a stop at our local 7/11 for coffee and donuts. Boards strapped and secure on the top of the car, we race up I-75 until we hit I-4, take a right to Orlando where we exit and take the 528 over to Cocoa Beach. Our excitement is palpable when we get close on the 528 causeway, and one can smell the Atlantic Ocean. Pulling into Cocoa Beach on A1A, if all goes well, usually happens around 6:15-6:30 AM. Our ritual is to always stop at the Waffle House for a greasy breakfast, some good country tunes on the juke box, while rubbing elbows with working people and an eclectic mix of tourists and surfers. I love the waitresses at Waffle House, the way every customer is referred to as "Hon."

After breakfast, we find our parking spot, unload the car, set up the tent, and paddle out for a nice dawn patrol. Since we always take a couple of local kids along with us, they get the job of setting up our site. The kids are always good sports, and "Get the Joke" as Lack would say. Generally, we will surf for a couple of hours, taking time to stay hydrated (one loses a lot of water in the sun and surf), then relaxing with a quick siesta under the shade from the little tent. Waking up, we'll put on sunscreen (Bullfrog) and go back out for a couple hours.

My wife will make a run over to Publix for some excellent deli subs, some salad and fruit which we will eat for lunch right on the beach. Usually after lunch is another short siesta, then back to the waves. Since my wife learned to ride a longboard, she will paddle out for a few after lunch. Otherwise, she is content to stay under the tent, watching us surf while reading.

If the surf is really good, we'll stay out until 4-4:30 or until exhaustion takes it's toll. I have found that using a waterproof ipod is just the ticket for adding the enjoyment of good music to a surf session. My son does the same, and while my surf music tastes tend to gravitate towards Coltrane and Monk, his is more geared towards punk and hip hop. The difference in musical tastes is very common between old guys like me on longboards, and young guys who ride those potato chip shortboards. Either way, the good tunes extend the length of a surf session and make it much more fulfilling and spiritual.

After surfing all day, late afternoon creeps up quickly and we feel a tired sense of satisfaction and accomplishment. Wrapping up the day, the groms know their duty is to pack up the boards, tent, coolers, etc. We always make it a rule to park near Ron Jon's. We wander into their huge 2 level surf shop, gawking at the lobster burned tourists, the cheap "Made in China" trinkets and other souvenirs of questionable repute. We always head upstairs to look at the huge selection of surfboards, talking story with the board sales staff, who are usually grisly old guys who have as much surfing experience as Gerry Lopez. I always buy the groms something useful, as they generally come from very limited circumstances and things like no-name wetsuits, leashes, rashguards quite inexpensive at Ron Jon's. Sometimes Ron Jon will have good deals on Hawaiian shirts, the kind that I live in 360 days a year. My wife will always ask, "Are you sure you need another 5 shirts?" She's always a good sport, lets me have the shirts, and I make sure to find something good for her as well.

After an hour or so taking in the spectacle that is Ron Jon, we walk across the street to "The Shark Pit Bar and Grill," at Ron Jon's main competitor, the Cocoa Beach Surf Company. Their meals are quite delicious, with generous portions, an attentive waitstaff, and are quite filling. After dinner, we'll check out the boards and equipment at the CBSC shop, then drag our way back to the car.

Leaving Cocoa Beach around dark, we always stop at a Starbucks, where I like to get a quadruple venti cappuccino, drugging myself in order to make the 3.5 hour drive home. We usually make it home before midnight, barring some horrible traffic on I-4. The drive home finds everyone in the car passed out, leaving me to enjoy my thoughts, sense of accomplishment, and the love that I have for everyone around me.

Dropping the groms off, we make our way home, to the comfort of our beds. The car is never unloaded until the next day, usually in the late afternoon. I never unload the car myself, preferring to delegate the job as there are more pressing things on my mind, like sleeping in all day long. Still, one cannot have a day trip to Cocoa Beach without suffering one major unintended consequence, which usually manifests itself as an ear to ear smile that lasts for a couple of days. If you have never been on a surf run to Cocoa Beach, or it's sister New Smyrna Beach, your life is sadly incomplete.



 When Wiswell got into a complicated situation, he'd always say, "I'm in over my head, I better simplify". That seems like a good strategy. The risk has increased and the expectation has not increased, so the utility of the position has decreased. Yet when a comparable situation in the market occurs, i.e. when the outlook becomes more uncertain– for example, before an upcoming announcement or when a regularity changes from good to mixed, the tendency of myself and my traders is to either stay with the whole position or close it out entirely– never to reduce by half as Wiswell would do in his game.

The question arises–why does this bias occur? And is it a characteristic of all traders or is there something in my background and those that follow me that makes us fish or cut bait? One will ask Dr. Brett for guidance as well as soliciting guidance from fellow specs.

Russ Sears writes: 

It would seem that the Chair's question is related to the Cassandra Portfolio mentioned earlier. If the trade makes its forecasted return quicker than forecasted then "flattens" or starts to drop, it makes sense to sell the whole and look for a new edge. If however its return is "flat" at first, it makes sense to stick to the original forecast.

Where we don't have the magical 21 day forecast… If we have an edge that we believe in I try to go with my coaching mantra "have a good plan. Believe in the plan. Stick too the plan."

There is always someone touting the latest greatest new training method, diet, etc etc. Many good runner's jump to the latest fad to the next. But the great ones stick to their logically built training plans until they shows signs of overtraining.

Perhaps a related question is what are the signs a trader is "in over his head".



 Slab City girls are different. They're seasoned, leery, and well-traveled. So the approach to ask for a date is different:

1. Show her your tattoos.
2. Say you've been on the road for a year or more.
3. Claim to get a monthly dole.
4. Keep the chat to a minimum.
5. Pull out a condom.
6. Don't be surprised if she doesn't have underwear.
7. Let her brag about having more stab wounds than you.
8. Let her choose a position.
9. Expect intense swiftness.
10. Accept after her speech, 'I'm sorry, I have to go get more sex.'



 "Forever stamps" are not forever. They just lost 4%. A long time ago a reader mentioned (in jest) investing in forever stamps as an inflation hedge. What does this deflationary move say? Are they way behind the curve as usual with everything else starting to inflate a bit now? They are us 500% since 75, so that is fairly consistent with inflation. Here is the price chart.

In Hawaii, real estate is getting hot. No rentals, immediate sales at asking. In Cali real estate has been super hot.



 I was fortunate recently to attend a seminar in part given by a "serious" Seal Team 6 member. Recognizing that using the word "serious" in referencing a Seal Team 6 member is redundant I will do so anyway with that knowledge for emphasis. I can say this with a fair degree of accuracy given my own training and the fact I was 5 feet away for the multi hour seminar. While I was not being demonstrated on I found some time to make some notes. Later in a private conversation he and I talked about the cross application of the techniques and lessons across many fields and in nature. Here are just 6:

1. Consider a weapon not just by the traditional description but in terms of all the tools you can train and deploy, particularly your mind. Willpower is a powerful weapon.

2. Never attack from the same place more than twice at most, keep your opponent off-guard and move around.

3. Minimize emotions or you will have difficulty maintaining a focused mind.

4. Assume there is no back up and control your risk accordingly.

5. Think outside the box, but don't chase things you can't see. On offense, though, you need to own the situation.

6. Nerve, stand for something every day and remember the SAS creed "those who dare win".



 Who are the claquers for the market, and are they paid by the theatre owners the way they were in Paris during the 19th century, and how can we profit from it.

anonymous writes: 

Trading newsletters and chat rooms seem to be the craze on twitter.

Surely a great revenue stream for the owners who won't admit trading is not just chart patterns.

They must pay for retweets and likes touting their calls on the market to attract fresh business.

I believe fresh participants like this are needed.



 Enoch Powell wrote a nice piece about the absurdity of price controls in the British empire. A restaurant was fined because its recipe for bernaise sauce did not take account of the cost of ingredients when it raised its price for a steak with sauce. Nothing as foolish has appeared since then except for the living wills regulation for banks. They only provided for the first 7 days of cash flow after bankruptcy but didn't forecast for the eighth and subsequent days. The absurdity of this political query to show that the collective was on its toes with companies with 250 billion net worthy, would make Enoch Powell fulminate from above.

News item five big banks' living wills rejected by u.s. banking agencies



 For an eternity Harvard has paid its fund managers 100 times as much as the average professor. The overseers seem too foolish to understand that when you have funds already raised, the performance fee should be 1/20 of what it is. The managers are able to fool the professors by saying that if you went outside, the cost would be much higher, and we only get paid much if we beat the bogey. The regression fallacy seems unknown to the professors, i.e. that some will beat it by luck, and they will absorb the bad and pay for the good, and the whole fund raising apparatus which is Harvard's main asset does not take a cut from the manager's pay.



 One thing that is almost entirely gone from baseball is seeing coaches arguing with the umpire.

Where are the Billy Martins and Earl Weavers of these last few generations?

Basketball seems to still have coaches in college and pros that work the refs. Coach K comes to mind. You don't seem to see many coaches purposefully getting T'd up anymore to motivate the team and sway a ref?

Where are the McEnroe's in tennis?

All sports have seemed to have lightened up a bit. Quite possibly it is because of "video replays" and "challenges" that have take the great theatrical performances away from the game of sports.

Could it have gone away from the markets too over the years? Can't blame or swear at an electronic fill? In the past you had the "lady in the wire cage" to blame, market maker in the jacket, and countless others.

Baseball theatrical tiffs are what I miss the most.

Steve Ellison writes: 

One of the great memories of my childhood was attending a Red Sox vs. Yankees game at Fenway Park in 1977 as the two teams were in a close race. At some point, a Boston player lined a base hit to right field in the general direction of Reggie Jackson. Jackson didn't get to the ball for some time, even though it was in front of him. Meanwhile, the hustling batter got to second base. Immediately, Billy Martin pulled Jackson out of the game. When Jackson reached the dugout, he and Martin got in a fight, to the great delight of the crowd. Despite the ongoing feuding between Martin and Jackson, the Yankees went on to win the World Series that year, and Jackson earned the nickname "Mr. October".

Hernan Avella writes: 

That observation–that a fight is an event very few people can turn their attention away from– has been used by Mixed Martial Arts promoters for a long time. The UFC (ultimate fighting championship) has to be the fastest growing sports franchise since 2000. The Fertitta brothers bought it for 2 million in 2003 and recently there was talk of selling in the range of 4-6 billion. 2015 revenues around 600 mill.

anonymous writes: 

How soon before we have Gladiator games? What's preventing it? If we have the so-called right to choose how we die, and legalized suicide then why not allow voluntary death by public spectacle? Million dollar prize money for the winner, and an annuity for a victim's family should he not survive the bout should make it worth it for folks without economic hope, or a fear of eternal Justice. Combine it with in-the-ring porn star rewards for the victor, and you've got a bread and circuses diversion superior to that of the Roman Empire. A new sport for a new blood-lusty God-less New Age.



 Wheat and corn are up close to 3% today. Junk following up as well. Why would ag commodities and junk be correlated? Carry?

Jeff Watson writes: 

I haven't looked at that correlation, but am closely looking at the May CBOT/KCBOT wheat spread which is quite inverted and is widening. Somewhere along the line, a great trading opportunity will present itself. However, the caveat is that one only need to look at the 2007 Dec CBOT/KCBOT inversion that caused major mayhem with many of the specs. Market and personal memories of that time suggest that trading any spread of this nature to be similar to walking naked, blindfolded through a minefield. Caveat Emptor.



 I checked in on Shackleton this morning and his situation is dire. A 12' leopard seal just leaped onto the ice floe and is chasing one of his men to eat. The ice chunk is shrinking by the minute, down from a mile across to 100 yards. Killer whales are rearing their toothy heads all-around, but a 70mph southeastern gale blew their ice sheet 15 miles during the night to within twenty miles of the goal – Antarctica.

The ice cracks and quarters or halves periodically. The men jump to either side, toss across lines, and try to pull themselves back together. There is an unique sailor's condition called 'cross-seas' where the wind is strong opposite the current, causing angry waves to crash from opposite directions and crescendo. The 27 men have been eating dog persimmon, two biscuits apiece, a gob of blubber, and melted snow next to their bodies for five months on the thawing floe, banging into icebergs like a frozen pinball game.

The expedition started on the outbreak day of WWI, with permission to launch from England's Prime Minister H.H. Asquith. Bound for Antarctica, polar explorer Ernest Shackleton planned to cross on foot the last uncharted continent. After battling seas for six weeks through a thousand miles of ice, the Endurance became locked inside an island of ice, and was slowly crushed like a bug in a frozen vice. A skeleton crew escaped with dogs, and sleds, that were eaten and burned for fuel, and their ordeal had barely begun. They retreated to this largest ice flow with three 21-feet springy oak life boats – the James Caird, Dudley Docker, and Stancomb Wills - waiting for the ice to break up.

Shackleton was a true leader by example. He made instant unpopular decisions where all options were detested, and still the men followed. When the ice cracks under their tents during sleep, he heaves them in their sleeping bags out of the glacial water and walks them all night, with the ice cracking from their frozen garments and ice crystals tinkling and falling from them.

After five months on the cube, it began to shatter into open sea, and the fierce Antarctic predators, drawn by the warm currents, drew closer. Shackleton voice called above the beasts' howls, 'Launch the boats!' Will they survive to walk across Antarctica? I don't know, but three-quarters through this book, it's a page burner.

This is an astonishing tale of survival where heroes are born, and their diaries scrutinized by the apt author, Alfred Lansing, whose sea pen is a part Louis L'Amour and a bit Patrick O'Brien. This is considered the definitive, raw, and authentic account of Shackleton's fateful trip.



A few years ago there was a discussion on the site about an esteemed Dailyspecer's paper:
"Modeling the Active versus Passive Debate

That article generated a considerable amount of hate mail from investment "professionals" who felt the piece threatened their buy-and-hold livelihood. I consoled myself with some rather unkind thoughts.

Roger Arnold writes:

This reminds me of the discussion we had here 15 years or so ago when Triumph of the Optimists was published.

When I discussed the subject of the outsized returns of equities versus other asset classes with the principal author, Elroy Dimson, he said that in his opinion the 20th century returns were unique and not likely to be repeated over the next century. I won't go into his reasoning here as we discussed it then and I'm not sure if It's been discussed during my absence from the list.

The gist of the conversation though was that everything that provided the positive drift to publicly traded equities has been exhausted.

The positive drift is what made passive management a plausible money management scenario.



 My friend Roger Arnold, among others, has been writing about the approaching economic cliff presented by the automation of our society. It's not hard to see that in maybe 5 years and surely 10, jobs in warehouses like Amazon's will be but a memory. In 20 years, much of what we now call "jobs in the economy" will likely become "machines in the economy."

The link describes the tensions the economic transition in China is unleashing, and I have to wonder if the US isn't going to live something similar (tension wise). We're already seeking what is arguably one of the most contested presidential primary elections in decades (it's now April and there's no clue who will be the nominees; there may be some bets, but in terms of anything with certainty? Nada—not this year) and I suggest that some of that contestation is the result of tensions already forming.

Whenever there are losers (such as with jobs that are just disappearing for eternity), there are winners, too. Who will be the winners over the next 20 years as the US enters the I Robot era?

"China is trying to make a huge industrial shift that could have disastrous consequences"



Bill Rafter and I have discussed for years the steadily growing discontinuity in the BLS's employment data versus that implied by payroll tax receipts.

A few years ago the staff economists at the Atlanta Fed got so fed up with the nonsensical BEA GDP reports that they started issuing their own report anticipating the GDP release wit their GDPNow report.

Although the media has since glommed onto the report it is treated in similar fashion to the ADP employment release.

The differences between the two is important however.

The ADP report is distinct from the BLS data and uses inputs chosen by ADP.

The GDPNow report is designed to mirror the BEA's data inputs to anticipate not what what GDP is but what the BEA will report that it is.

The Atlanta Fed staff are putting the manipulators on notice, and those in the media and at the FOMC willing to go along with it, that there are consequences.

The actions by the Atlanta Fed staff have also helped to embolden other Fed staff members to do similar work and make it public.

The Richmond Fed staff economists have now produced a model of unemployment called the non-employment index that challenges the accuracy of the BLS data.

The importance of this is that it challenges the usefulness of the U3 unemployment rate and the FOMC natural rate of unemployment (NROU) predicated on it.

The point is that data is being willfully corrupted by providers and this has engendered, finally, a push back by others.

Being aware of the totality of this, especially for a group focused on clean data is important.



 There is a new book with an unusual perspective: A Burglar's Guide to the City

He devotes the book to the "misusers" of cities, people who refuse to be stopped by walls, doors and ceilings in their quest to steal.

Burglars are some of history's greatest architecture critics, finding the flaws in every building — and rebuilding them from the inside, with tunnels under the floors of banks, or perfect portals through the drywall between apartments.



 I watched a beautiful bunt sacrifice attempt last night at the local high school baseball field. A runner on first, the pitch, with the batter already squared with bat set to bunt, as the entire field moves poetically. The catcher rocked forward on his heels, the first and third basemen raced toward the batter, the second baseman covered first, center fielder moved in to cover second base, and the fastball sped toward the bat. The ball popped up to the first baseman who caught it on the fly ten feet from home plate, he wheeled and lobbed the ball to the second baseman covering first base, and the runner was out too, as the umpire in black jerked his thumb toward the stars and screamed, 'Double play!' The sacrifice had failed, but it often succeeds.

The bunt in baseball is a special type of offensive technique. The goal is to tap the ball into fair territory to advance the base runner in a sacrifice of the batter. It requires great physical dexterity, concentration, and a knowledge of the fielders' positions, and foresight of the pitcher's most likely pitches. One of the sport's most famous early figures, Dickey Pierce, used this 'tricky hit' to effect as the rules permitted it to roll foul and still be counted as a hit. The bunt did not become common until the 1880s, and it has been accepted as a baseball strategy, with periodic waves of acceptance and dominance, to this day. During the 'dead ball' era of the 1960s, bunting was an important offensive weapon. Conversely, and now in the 'fast ball' and 'money ball' era of staying ahead of the economic curve of the fan in the stands who demand big hits, the bunt is seldom seen. Nevertheless,the role of the sacrifice bunt in baseball strategy is one of the daily discussions for baseball fans.

It is an exciting moment in the game. It reminds me of chess where every move is as strategic, making chess more exciting than baseball with at least as much sweat. Some situations in the board game that parallel the bunt are any gambit, pin into a weak position, zugzwang, or piece sacrifice to lose the position but win the game.

Likewise,with upright humans, there are various sacrifices that parallel the bunt. In a true sacrifice, the officer will have to play with less soldiers to capture the objective. In a sham sacrifice, a fake flank attack gains leverage in a territory. In speculative sacrifices, the commander risks losing something that he believes will soon regain material of the same or greater value.

In survival, after many years of baseball and chess, but none at war, the bunt is a repeated metaphor. To live, you must be able to bunt, over and over. For example, in hoboing you board a 'dog' slow train, and hop off as it pulls away to climb aboard a 'hotshot' to evade the bull. In the Amazon jungle, you raise your arms on greeting a wild mammal to feign a taller profile, while risking balance and putting your hands in reach of an anaconda. In the mountains, you risk crossing a snowy pass to reach a village before starving. In the desert, you walk at night to avoid the heat at the risk of stepping on snakes. On skid row, you may 'chuck a dummy' by faking a fainting fit in order to get a sympathy coin. In a dark alley, you take one on the chest to put on on his chin.

Learn the strategy of the bunt and you're almost home in baseball, into the mid-game of a good chess match, gotten the upper hand in a fight, and are half way out of the woods in survival.

David Lillienfeld writes:

With all due respect, I cite Earl Weaver: All that you do with a bunt is give up an out. You've only got three in an inning. Why give one up? Some of the time (I've lost track of the stats on it), the sacrifice is a twofer, as in a double play.

As noted, bunts require much dexterity, they also require lots of speed if one is bunting for a base hit (I think even Weaver was supportive of such) if the infield was back far enough. Rod Carew was perhaps the most able bunter I've seen who could/would bunt for a hit. Ricky Henderson was pretty good it, too, though showing less control the bat than Carew (admittedly subjective assessment).

Pitching, three run homers, and great defense was the Weaver prescription. There were no sacrifice bunts in that formula. (Weaver wasn't a great lover of the sacrifice fly, either, but he figured the batter had had a shot at a hit and at least the runner(s) could advance, maybe even score (if on 3rd).)

If sacrifice bunting ever becomes part of the Orioles game plans at Camden Yards, don't be surprised if there's a rumble in the ground by home plate; the ghost of Weaver will have been awakened.



Check out this video of commercial fishermen at work in case anyone ever questions you about whether or not the commercials have an advantage versus the small time spec.



Here are the 25 companies in the S&P 500 that are domiciled outside US, from DB research. It's interesting to see future performance vs. the rest of S&P and if the new tax inversion laws have any traction in tampering future gains. I quickly looked at the charts and didn't see anything immediate aside from Allergan's deal breakdown.



 There was a restaurant which had good service and good customer satisfaction 15 years ago. Over time, customer satisfaction went down, and average lunch duration crept up to 75 minutes, up from under 60. They hired a consultant to figure out why.

Now when people are seated, 15% ask to be relocated, up from zero before. When seated, waiter brings water and menus in same time, but people look at their phones for 6 minutes, and 12% ask waiter for assistance with wifi. When asked what their order is, most say, we haven't looked at menu yet. When food comes, in same time, a number take pictures with their phones, and ask waiter to take their picture for social media. An increasing number then complain about food being cold, or having gluten, meat, fats, sugars, cheese, nuts, or some food allergy thing. Net result: satisfaction down, time up. Whose fault?

I see a many people about who act and feel entitled. This seems more prevalent on the East Coast. These are the people who try to cut the line to just drop something off, or ask a "quick question". These are people to berate the waiters, the postal employees. We know the anecdote about the tragedy of the commons. But time is a communal resource in public situation. How much time is being wasted globally? I would be an interesting metric to quantify.



 In regards to the IMF, I would highlight the salient points from a recent speech by David Lipton, the number 2 at the IMF:

The weak recovery is taking place in the context of unresolved legacies. In many parts of Europe, for instance, sovereign and private sector balance sheets remain highly leveraged and banks' non-performing loans high. In the US, aging-related spending pressures and unfulfilled infrastructure needs diminish economic prospects. And in Japan, deflation is putting the recovery at risk.

At the same time, we are witnessing an emergence of new risks. The global economic slowdown is hurting bank balance sheets and financing conditions have tightened considerably. In emerging markets, excess capacity is being unwound through sharp declines in capital spending, while rising private debt, often denominated in foreign currency, is increasing risks to banks and sovereign balance sheets. Concerns about the global outlook have weighed heavily on world financial markets. The decline in equity price indices in 2016 so far this year has averaged over 6 percent, implying a loss of global market capitalization of over US$ 6 trillion (or 8.5 percent of global GDP). This is roughly half the US$ 12.3 trillion loss incurred in the most acute phase of the global financial crisis. Some Asian markets, such as in China and Japan, have been particularly hard hit, with losses of over 20 percent since the beginning of the year. Meanwhile, emerging market currencies have weakened, while their sovereign credit spreads have continued to widen—in Latin America and Africa by over 300 basis points over the past year.

What may be most disconcerting is that the rise in global risk aversion is leading to a sharp retrenchment in global capital and trade flows. Last year, for example, emerging markets saw about $200 billion in net capital outflows, compared with $125 billion in net capital inflows in 2014. Trade flows meanwhile are being dragged down by weak export and import growth in large emerging markets such as China, as well as Russia and Brazil, which have been under considerable stress.

Furthermore, inflation has fallen to historical lows. Headline inflation in advanced economies in 2015, at 0.3 percent, was the lowest since the financial crisis, and in emerging markets core inflation remains well below central bank targets. Why should we be concerned about these developments? First, because protracted low global demand, and adverse feedback loops between the real economy and markets may generate additional deflationary pressures, putting us at risk of secular stagnation. Second, and equally relevant, is that labor supply and labor productivity growth have fallen considerably over the past decade, further aggravating these adverse dynamics. While some aspects of the weak recovery are clear, we and many others in the policy world and in the markets are still debating and analyzing the role and the severity of several key transitions now underway:

• How will China's transition—with the deceleration in export oriented manufacturing activity and a pickup in sectors satisfying household demand —alter patterns of global trade and investment?

• Will the transition to lower oil and commodity prices be a plus, as predicted, or a minus? The expected pickup in consumption in commodity importers has been weaker than expected, possibly reflecting continued deleveraging in some of these economies and a limited pass-through of price declines to consumers. At the same time, declining prices have reduced investment in extractive industries, pushed some producers to or beyond the edge of profitability, and weighed on growth prospects for commodity exporting countries.

• Will geopolitical tensions, the related refugee crisis, and global epidemics further increase uncertainty and weigh on economic activity? With all these uncertainties, even our latest baseline for global growth may no longer be applicable. In any case, the downside risks are clearly much more pronounced than before, and the case for more forceful and concerted policy action, has become more compelling."



Readers of Dailyspec normally speak of picking spots to trade S&P for brief statistically anomalous moments they identify. They do no try static timing approaches to beat the S&P by only trading the S&P. A weasel could put out predictions and escape scientific judgement by evading the selection of a benchmark for comparison of results. Since legitimate reasons exist for not using the S&P as a benchmark for taxable investors in a trading account, the skewer arrives as a dull blade. The Thomson Reuters Eikon idea holds more interest.

What strikes me is that as the competition increases, events could go the way of the cellphone data provider model. They get rid of the business model of the non-negotiable onerous bi-annual contracts first, and then they offer to pay the remainder of the competitor's contract to get clients to switch. Will that cut the margin projections for all of them and make it a lower margin business generally? The new tax inversion rules cannot help US based business valuations and might lead to foreign based lesser-market share competitors gaining in their relative profit margins as well.

Russ Sears writes:

Much time is wasted looking for static rules to sell stocks, but the converse is where the static rules apply, what time to buy stocks. I believe many investors confuse the potential to time individual stock sell indicators with the market as a whole. My battles have not been finding static ideas or getting institutions to implement ideas that beat the market. If it is static, it is not labor intensive enough to give investment department credit beyond luck. Static market ideas are simple by their nature, and therefore its easy to label them as luck rather than sophistication, and when they are 10/ 20 baggers to cash them in once someone decides they need money to lessen the "risk" because it was just lucky. The same goes with long term stock holders. The kids find a nice portfolio of stocks that the wise old deceased patriarch held forever, which made the family rich. The kids are told to sell into something with less risk because the portfolio just got lucky.



 Dr. Garth Davis writes:

There is a new study following over 500,000 people since 2004. HUGE study. This latest analysis in the prestigious New England Journal of Medicine is fascinating. Those people that ate fruit daily had lower blood pressure, lower blood sugar, and consequently a lower risk of heart disease. Impressive results given they did do multivariate regression analysis. Large studies like these try and control for confounders but hard to do. Regardless, this is strong evidence that fruit does a body good.

"Fresh Fruit Consumption and Major Cardiovascular Disease in China"



There are times when I don't want to be long stocks identifying them in the past is quite easy but in the future it's a different ballgame. What I have decided, right or wrong, is that I want to be fully invested and working the long side of the market.

Unless… we are entering a recession. Stock prices do miserably during a recession everything else I'm willing to hold through. Thus the very little long-term market timing I do is based on that idea; side step recessions. To that end I have done a lot of work on recession indicators none of them are negative at this time. Happy trails to all.

anonymous comments: 

Larry, I agree being flat during most of a recession, not short but flat. Short you are likely to wait too late to recognize the recovery. I would suggest that recessions are the best time to make quick entries in panic and exits on the long side quickly after a nice pop up day.



 Is there a similarity between Japanese 10 year yields over the past 20 plus years and the Argentine Peso? I realize the Japanese yields are not pegged but even though Perry's black ships did arrive Japan is incredibly homogeneous and while declining Japanese bond ownership is largely domestic.

Is there a growing disconnect between the "peg" of European peripheral yields and social, economic, and political disparities that seem to be rising? For example look at GDP growth, yields, and debt level growth amongst the parties.

Further to the point on the military being a social good how does that factor in with: recent success and failure rates globally over the past few decades, growing domestic debt levels, "fair" and "delinquent" contribution to such treaties as NATO, etc…. is there a peg involved here as well?

As someone like Rocky will rightly point out this may all be well and good, right, or wrong but the key is to monetizing such theses: making the most when you are right and losing the least when you are wrong…both monetarily and mentally. Determining not only what may happen, the expected probabilities, size of possible price changes, catalysts, and how to best express the view directly within appropriate risk parameters and the best instruments with which to do so.



 Developing diagnostic tests for Alzheimer's hasn't been quite the burial grounds that developing therapeutics for the disease has been. That's mostly because there has been even less progress on basic science underlying diagnostic testing than that on the therapeutic one.

I don't know if much of the electorate appreciates that while there is much work taking place on Alzheimer's disease, particularly therapeutics, a significant portion of that work is based around one hypothesis for the etiology of the disease—amyloid. For 30 years, advocates of the amyloid hypothesis have pushed for research funding (perhaps more than 30, I know just the past 30) into that particularly line of thought. Other areas haven't received quite as much funding even as the amyloid hypothesis work hasn't been able to show much progress on the therapeutic front. Perhaps that will change if there is a diagnostic test for an earlier stage of disease when more neuronal pathways presumably remain intact.

A similar focus was made in the national War on Cancer. The research hypothesis then was viruses, and because the Nixon and Ford Administrations were convinced that scientists outside the government (and even most of those in it) were people who were wasting precious government funds proceeding in an organized manner, those administrations issued contracts for research mostly into a viral etiology. Perhaps there is a viral etiology to cancer; the research conducted certainly didn't find it, and the bureaucrats in the White House who directed the NCI to contract this research at academic medical centers and contract research organizations (think RAND, Batelle, and so on) were insistent that this be the singular focus of the NCI. (BTW, funding to develop stealth technology was originally declined by the White House because it was too "fanciful"—the term used by the analysts in the Office of Management and Budget and work on the Internet (then known as the Arpanet) almost met the same fate except that it was sheltered in the ARPA budget; the assertion by the White House then was that if the ARPAnet really had any value, it would developed by private industry, not the government.)

Not much progress was made on either the etiological or therapeutic fronts (in contrast to heart disease, where the research program of the government, spearheaded by the NIH) rested on a variety of etiological and treatment hypotheses) with cancer. Indeed, for thirty years, the major achievements of the War on Cancer was the reduction in the incidence of lung cancer. That result was achieved principally through smoking cessation programs (the culmination of research at the NSF as well as the NIH—some from the heart institute, some the cancer one), not the contracted basic science work. With lung cancer incidence in decline, the NCI decided to roll the dice with other prevention programs, principally diet and supplements. The basis for such an approach was not nearly as developed as for smoking cessation (for which the epidemiologic base was solid), and it has not been nearly as productive.

The knowledge on viruses was useful, just not for cancer. Peter Ducker notes that this research was still valuable for discerning that viruses were not the etiological approach to be further pursued (at least not then) and that the information gleaned in the course of that research was nearly as valuable as if the research had been successful. The response to the AIDS epidemic, when research funds were finally made available, was greatly facilitated by having that knowledge base about viral etiologies of disease available. And in that respect, it's probably one of the reasons AZT, originally developed as a treatment for cancer before work with it was discontinued, found its way into the treatment regimens for the disease. It took some time to develop a sufficient basic science basis for the develop therapeutics for HIV infection, and we still lack a cure (and for all the hoopla about how those with HIV live almost as long as those without it, the reality is that resistance is developing to the available medications so the need to develop new medicines is still present).

One of the lessons of the success of the smoking cessation programs compared with the other approaches to cancer was that the basic science work needed for those programs—from epidemiology and behavioral science—was established by the time the cessation programs were developed. (The same can be said for high blood pressure control and stroke.)

The problem with the moon shot approach to biomedical research is two-fold: 1. It needs to be coordinated by the government (and as NCI demonstrated, picking the winners in such research isn't something the government does well—better to take the ideas from the medical community and pursue the leads meeting with increasing success) and 2. (as Peter Drucker has noted on many cases) in the absence of an established research base, such efforts are doomed to failure. For both Manhattan Project and Apollo, the scientific base was established before the "moon shot programs" developed.

Don't be surprised if the current moon shot approach to cancer meets with the same fate as the viral etiology one.

As for Alzheimer's, maybe this diagnostic test will mark the beginning of a different approach to the etiology and treatment of the disease.



 "As the poor die earlier, Social Security isn't paying off"

This noise is a prelude to a means to testing. It will eventually be a reality.

BTW, has anyone really dug into the new 2012 mortality tables? IMHO, they are a real game changer for both SS and pensions.

I posit that most defined benefit plans will be underfunded once they have to apply the 2012 tables to their calculations.

Big changes are coming in the pension world. I'm seeing a lot more buyout offers being made, even from pension funds that are supposedly over funded.

Data point: I don't know if it was across the country, but I know that locally retired teamsters have seen their monthly pension checks cut by 40% - 50%. That's a real unpleasant surprise to couple who is living on their pension and SS. Couple that with the fact that their SS COLA was (almost) completely eaten up by the increase in medicare premiums and we have a recipe for a real problem cooking…..but of course, I've been saying this for years on this site.



 I hypothesize that the prevalence and visibility of homeless and poverty and related downtrodden stricken people is an intentional manifestation of the collectivists attempt to keep us all small–i.e the idea that has the world in its grip. It makes us think purpose of life is to take care of the unworthy. The underlying cause of this might not be conscious activity by evil collectivists but could be an invisible evil hand at work. I'd be interested in your views on this hypothesis.

Stefan Jovanovich writes: 

The "news" has only two sources:

1. press releases from the government and businesses and non-profit agencies and celebrities and academics who are announcing to the world what they are (or claim to be) doing

2. journalists' own "investigations"

There are no incentives for either group to minimize the "visibility" of poverty, any more than there were any incentives for missionary groups to tell the congregations back home that "actually the heathen seem quite content to remain unconverted".

The government gets its money because of "problems". Businesses want always to seem "charitable". Non-profit agencies are in the business of "charity" and "problems"; and, as Jason Reitman's wonderful script puts it, every celebrity needs a "cause". No explanation is needed for the academics.

Here is something for those who have not yet heard of Nick Naylor.



It only stands to reason that where there's sacrifice, there's someone collecting the sacrificial offerings. Where there's service, there is someone being served. The man who speaks to you of sacrifice is speaking of slaves and masters, and intends to be the master.

-Ayn Rand



 My friend said to me the other night, "I don't seem many people carrying or using cash much any more, except in the gangsta videos. Coins certainly are a pain in the neck to carry and spend."

Even street level drug dealers use Square now a days since their users utilize 7-eleven bought money cards. Wholesale drug pushers can carry around 500k easily in money cards and the police wouldn't know the difference. Lot more deceptive than the gangsta rolls with rubber bands (Escobar spent 25k per mo.). You can hide money! So, even the lowest level of illegal activity is paperless these days.

Jim Sogi reflects:

In Roman times, leaders coined their own currency. In old England, when the mint failed to print small enough coins to pay small labourers, a private company came up with a copper penny to allow wages to be paid and business to go on.

Stefan Jovanovich writes: 

There is a fascinating (to me, at least) book on the question of private coinage that is freely available through Google books: Private gold coinage of California, 1849-55, its history and its issues, Edgar Holmes Adams.

Adams describes how the shortage of legal tender coins led to private minting in California after the gold rush began. What is fascinating is that the private coinage did its best to imitate the products of the U.S. Mint even as people were busy accepting ingots as payment. The private money-makers did so because that allowed them to do a minor bit of counterfeiting; the private coins were, on average, 3% less than the proper weight and fineness that the Coinage law specified.

This is not the story told by the Misean gospel; it directly contradicts what Murray Rothbard used the incident to try to prove - namely, that sovereignty was irrelevant to the question of money.

Sovereignty is the only question where money is concerned - what monopoly authority has decreed that their paper, coins and digits are legal tender as far as the sheriff, bailiff, court clerk, tax collector and other licensed strong-arm agents of the government are concerned.

Bitcoin is not yet money for the simply reason that you have to get someone to exchange it for legal tender if you want to use it to buy any legal tender currency. Neither are the phone cards, money cards and other forms of wealth verified by magnetic strips that the dealers are using. (I think J.T. is unfairly maligning N.C. cops; according to K.H. (a now-dead vice cop for one of the cities here in the Triangle and a truly wonderful person) the first thing cops do is run the plastic through the dealer's own Square to see what it is worth.)

Bit coin may become money; some forms of credit are now as officially sovereign as the Federal Reserve's own certificates of IOU. You can now pay your taxes and court fines (though not yet large judgments) using credit cards that Visa and Master Card (though not, in this jurisdiction, American Express) are willing to clear.

The authors of the Constitution gave Congress and Congress alone the authority to "Coin Money" because they had seen the ruin caused by the States abusing their sovereignties to issue money that was, in fact, nothing more than bad credit. That remains the central question of all discussions about "money" now - how good is the credit. J.T. and James are right; money, as legal tender, is no longer Coin. It is now only and everywhere an IOU that is a form of credit officially-approved by the sovereign.

The tricky part remains the one people dealt with in California in 1849. How good is the assay? For us retards Bitcoin's assay remains far more than 3% below par. 

Jeffrey Hirsch dissents: 

Cash is still king. US $20 bill is still the best global icebreaker.

Anonymous writes: 

In Argentina a $20 US bill buys $100 in value, and is readily accepted and preferred over the peso. 



 There's been much hand-wringing since the Great Recession to explain not only why the US economy hasn't grown faster but why the global economy is in such a morose state. Explanations include the overhang of personal/government/corporate (take your pick) debt, demography/aging of the population, central bank interference, among others.

Carder and I had a discussion today about this subject. Somehow, the topic of 9/11 came up, and he noted that we've spent a small fortune in responding to the security issues presented by that event. There have now been a number of other terrorist attacks in Europe, and I expect that there has been a considerable amount of money spent in shoring up security there, too.

I therefore wonder if the two aren't connected. First, the amount that was spent on security infrastructure and operations was not available for investment or any other economic use. Second, that the tightening/less open state of Western society in the hopes of creating a sense of security (in the pursuit of zero incidents) has created enough impediments to wealth creation in itself that the performance of Western economies has been rendered sluggish. To rephrase, that the West has, in its search for security, reduced the openness of the society that created the wealth which placed a target on the West in the first place.

If that hypothesis were correct, then the terrorists will have succeeded in at least some of their aims without having exploded yet another bomb.

I'm sure there are those who disagree with that hypothesis, likely including many on this list. I put the idea out here for discussion.

Nigel Davies writes: 

Yes, as Nimzovitsch pointed out, the threat is stronger than the execution. Much of chess mastery consists of the correct gauging of 'threats', defending by minimal means and keeping every part of your position equally weak (Lasker). The problem is that in a democracy the clamor for resources will not be based on this kind of logic but rather than influence over the electorate per unit cost.

Peter Grieve writes: 

Excellent point. Imagine a chess game where millions of people vote to decide the next move, and subgroups receive a different share of the winnings depending on which pieces are left on the board at the end. Laskerian principles might be hard to maintain in this case.

Not a perfect analogy, of course, but I think it hits Nigel's idea.



 There are big rule changes coming down the pike for Financial Advisers, Brokers, or anyone who sells and/or implements a financial product for a client.

Here is a very brief overview of the Fiduciary Rules that were released overnight. I have a link at the bottom if one would like to read more on the subject matter. I'll try and write more on the subject as I can.

This is one of the biggest changes that has come down from regulators in years. I was talking about this to one of my employees yesterday. He was worried about what this would mean for us. I told him not to worry because we already act as fiduciaries and disclose any possible conflicts of interest that may arise from time to time.

But, as I told him, there is one big change that will likely (and we now know I am likely right) come from this: MORE PAPERWORK.

The regulators have come up with something called a "Best Interest Contract" (BIC). I haven't seen one yet, but I'm sure it will be at least one more page of paperwork, likely many more.

This will, almost certainly, create new paperwork for the clients to sign. The problem this creates is that there is already WAY TOO MUCH paperwork for clients. I know the regulators think they are making things better for client by creating this type of disclosure, but in reality, it makes things worse. If clients carefully read and reviewed everything I'm required to give them, there would likely be close to 1000 pages of disclosure documents (more in many cases) that they'd have to go thru.

What's worse, is that most the disclosures are written by lawyers for lawyers. The average person can't understand what is written let alone "see the whole picture" that is presented in all the documents.

So this will effect me by the increase in paperwork that new (and possibly existing) clients must sign. I don't see how it will have anything other minor "other effects" on my business.

However, my friends that are in brokerage business and sell commission based products for a living are likely going to be in for a big surprise. Now, I don't yet understand what the level of surprise is for them, but I think it will be big. We'll have to wait to see how the individual regulatory agencies are going to interpret and enforce what is in these new rules.

Final thought (and this is strictly opinion): This is a wonderful thing for big financial businesses and a horrible thing for the small financial businesses. Sure, this will initially cost the big brokerage firms a lot of money in the beginning. But don't worry, they can afford it. The good news for them is that the more complicated things get, the more compliance intensive things get, the more compliance/regulatory costs rise, the more it squeezes out the little guy. And if you're a big guy and in this for the long haul, this is even a better deal because it makes it even more difficult for new little guys to start up their small shops.

Here is a link that gives some additional color on the new fiduciary rules.



Generally, market regime has been simply defined as up, down, and sideways. Clearly that is not enough for all kinds of trades. I believe that there is at least one way to define market regime based on any type of trade one conducts. So market regime is really a relative term and can be defined in countless ways.

Here is a list of 10 ways I define it.

1. based on past high-low vs multiples of ATR

2. based on the position of current close vs past high-low

3. based on change of price moving average

4. based on standard deviation of closing prices vs. percent of closing price

5. based on slope of linear regression

6. based on change of ATR

7. based on ATR vs percent of closing price

8. based on sign of average returns

9. based on average of abs(return) vs percent of closing price

10. based on standard deviation of returns vs percent of closing price

Jim Sogi adds:

11. Vol
12. Liquidity
13. Bar size
14. Speed



 We've had many discussions about bitcoin over the last couple of years. It seems the Swiss like to focus on banknotes, not bitcoin. For some countries, such notes provide a means of artistic expression, and in others a way of providing a history class. The subjects of banknotes may also reflect the values of the country itself.

Stock certificates,when they were still used, provided a similar venue for artistic expression. Then, of course, there were cultural phenomena at work. Sometimes a Bar Mitzvah boy would get a share of Apple, given with the physical stock certificate. At other times, it might be a share of Playboy.

Some collect mint quality banknotes as a reflection of the country's artistry and values. Like antique maps, some frame such bills and use them for wall decoration.

The same is true for stock certificates. My own collection is based around Israeli companies, with the underlying contention that in those certificates lay the economic story of the state.

I wonder if the same holds true for banknotes. Somehow, I don't think so, but I'm sure there are those on the list with better knowledge of the subject than I do.

"Cash is Still King in Switzerland"



A good book on deception is Cheats and Deceits by Martin Stevens. Also the wikipedia entries on deception and also the books listed in Cheats and Deceit. Everything in our field is colored and infused with deception.

Pitt T. Maner III writes: 

Here is short article by the author of Cheats and Deceit with a few pictures that may be of interest. Finding lunch or the avoidance of becoming lunch are key concerns.

"The struggle to survive and reproduce is intense for all organisms, and we should not be surprised that cheats are everywhere. What's remarkable is the extent to which animals and plants exploit one another and the level of sophistication involved. Nature is a brutal place, so it's a good idea to cheat and deceive if you want to be successful."

"Nature's Cheats: How Animals and Plants Trick and Deceive"



 Tomorrow, at 3:05 in the afternoon (Eastern Time), one of those moments of celestial perfection will transpire, a moment when all seems possible and nothing has been tarnished by the dropping of the grains in the hourglass, the passage of time. Boys of the deep South will understand that moment as the baseball equivalent of the moment before Pickett's Charge. At that moment, in Camden Yards, arguably the king of all ballparks and certainly the grandad of the current retro design parks, Chris Tillman will reach back in his windup to throw the hardest fastball he can as the 2016 season opens—at least the Orioles' 2016 season.

For golf fans, the green jacket of the Master's champion will find a new bearer for the year, and the US and British Opens loom large. For basketball fans, the Final Four beckon. For ice hockey fans, well, I don't know, I've never followed ice hockey.

The unfolding disaster that is the Rio games will soon come into view. But for the moment at least, one's attention is on baseball, on the opening of the season, and one's vision turns to Orioles Park at Camden Yards. Or Camden Yards for the cognoscenti. Or just the Yards for Baltimoreans.

Camden Yards has not yet ascended into the annals of baseball as sacred ground the way the Old Gray Lady of 33rd Street, Memorial Stadium, site of 1966 World Series with the dominance of the Orioles over the Dodgers, site of the last game Sandy Koufax ever pitched, the site of the "Here" pennant, the site of Brooksie, Frank, Pancakes and Cueller, the Kingdom of Earl and much of Cal Ripken's streak, no tomato plants by which one could time when the club would start to perform, never mind the Colts and all that went with that tradition before the Indianapolis theft (of the name, not the team—starting with the shape of the stadium from above—has. Like other storied venues, like Ebbet's Field, the grandeur that was once there has been reduced to a plaque that future generations can walk by with little understanding conveyed of the significance of the site that they are standing by.

The Yards with Boog's barbecue. With the 6:30 minyans. With the kosher (glatt this year?) hot dogs. All are the sentinels of an approaching game that evening.

Tillman will rear back and let loose a fastball because throughout his career, when Tillman starts off a batter with a breaking pitching ("curve ball" is so passe´—particularly since kids in Little League are so determined to throw curve balls that it screws up their arms and leaves the Show with little more than a 5 man rotation and a bunch of weak arms (compared to the ear before the 1980s)), there's a 4-fold greater chance of the hitter assuring that the ball becomes the new acquisition of some child in the bleachers than if Tillman throw some heat. There may be a shift, though why baseball refuses to follow the example of the St Louis Cards I do not know. Regardless, for that one moment after the ump (hopefully with glasses and a certificate attesting to his visual prowess) screams, "Play ball!" and Tillman winds up and throws, for that one moment as the pitch sails towards home plate, when the standards show all teams tied for first place, for that moment the world sits in an state of quiet perfection, with the ills of seasons past banished and the promise of 162 games going into the win column unfolding, for that one moment peace is on earth and there is goodwill towards all.

Then the ball hits hard into the catcher's mitt. Thump! And the call will be heard throughout the ballpark, "Strike 1!" as the ump, in a demonstration of his visual skills, holds up his right arm with the index finger extended.

The 2016 season will have begun.

How will the Orioles fare this year? Probably not at the level the Card will. Scott, you will have a much easier season, I am sure.

For Baltimore fans, there will be much gnashing of the teeth, wonderment that Danny Duquette decided that paying a pitcher like Ubando Jimenez $4+ million to learn how to pitch—again, questioning of why Duquette did so little to address the seemingly perpetual weakness of starting pitching (and this from the club which 45 years ago had 4 20 game winners (only one of whom, Jimmy Palmer, made it to the HoF), and hoping that for once, the pitching and defense are actually in sync with the hitting. Some questions remain: Will Manny Machado make it through the season without an injury—if so, he starts to look like a worthy successor to Brooksie and Cal; will Davis hit now that he's no longer looking at free agency; will the bullpen perform—particularly Zach Britton; and will Kevin Gaussman finally show that his future isn't always in the future. We'll know soon enough. six months hence. 162 games, to be exact.

It is a time when all is possible, and a young man's fancy turns from the cold snows of winter to the hummingbirds of spring. And the knock of the bat hitting the ball.

Play ball!



 The results of a recent study of 119 tank vs. tank combat actions during the Korean War (U.S. Sherman, Pershing, Patton, and Chafee and British Centurion tanks vs. Russian, Chinese,N. Korean T-34s:

Allied tank fired first 60%, roughly 2/3rds resulting in kills T-34 fired first 40%, with 3/8ths resulting in kills

75% of enemy tanks lost to Allied air strikes 1/3rd of Allied tanks lost to mines (Kill-ratio for enemy anti-tank mines: 1 tank for every 1000 mines laid)

The Lessons: "Boots on the ground" most reliably get killed by what is under it and what is up in the air.

Andrew Goodwin writes: 

The Vietcong mastered the counterattack methods in their tunnel defenses. Some great defenses emerged that allowed entire hospitals and armies to gather in cities underground that were nearly impervious to attack. Here are some of the methods they employed. I got these tactics from an army manual on counter guerrilla warfare that General Petraeus helped constuct:

1) Build an elevated chamber near the tunnel entrance that collects the smoke from incendiaries designed to flush you out of the tunnel. The smoke gathers in the chamber and nullifies the clearing tactic. If they throw grenades down the tunnel entrance, then you need a capture chamber for these with a drop tunnel beyond the first cavity impervious to this first assault.

2) Place one mine that is obvious to the tunnel rat invader's eye so he avoids that one while the really big mine is buried a short distance behind the obvious one. When the rat dismantles the obvious mine he thinks he's found the trap but gets in trouble with the secondary hidden charge.

3) Hang live poisonous snakes from the roof of the tunnel to terrorize the raiders. Otherwise leash poisonous snakes to an anchor inside the tunnel on the natural approach line.

Basically the tunnels allowed infiltration into enemy areas and were too dangerous to dismantle. Aerial bombardment in the Iron Triangle could not alleviate the tunneling method successfully.

In avoiding a corporate raid or a bear raid, the number of toxic defense strategies and deceptions are limited only by one's devious creativity.



 My daughter has been given the assignment of writing a 4 page paper on global warming. What might others more knowledgeable than I suggest for research that would lead to a balanced gathering of facts in an objective fashion?

Stefan Jovanovich writes:

There are three basic questions to be asked:

(1) Has human activity over the last 150 years, in particular, increased the release of CO2 into the atmosphere over what it would have been if tail-less monkeys had not been using carbon-based fuels?

The answer, by everyone who has studied the data, is "Yes"?

(2) Does an increase in CO2 releases into the atmosphere cause an increase in below surface and surface temperatures in the oceans, surface temperatures on land and low altitude temperatures in the atmosphere?

The answer is "It depends". The evidence from ice core samples drilled near the poles tends to suggest that temperature rises come BEFORE increases in CO2; this is somewhat confirmed by tree ring data. But there is other evidence that suggests that CO2 increases come first.

(3) Is the interaction between CO2 and global temperature so intensely powerful that the projected releases of CO2 over the next half century will cause a climate catastrophe?

The answer, so far, is "No". The scientists who think that we are on the eve of destruction have not distinguished themselves by being scrupulously honest about their research data. Some of them have been downright dishonest in the way they have rewritten the data to make it say what they want. Does that prove them wrong? No. But it does suggest that their certainty is more religious than scientific. That may explain why their criticisms of the scientists who disagree have used the terms that the devout have applied to heretics and non-believers.

As our Chair and KSS wisely remind us, religious discussions are best left for private exchanges after dinner in the ward room is formally adjourned.

Simon Franak writes:

Some quotes

"The cooling has already killed hundreds of thousands of people in poor nations. It has already made food and fuel more precious, thus increasing the price of everything we buy. If it continues, and no strong measures are taken to deal with it, the cooling will cause world famine, world chaos, and probably world war, and this could all come by the year 2000."
–Lowell Ponte, The Cooling, 1976.

The facts have emerged, in recent years and months, from research into past ice ages. They imply that the threat of a new ice age must now stand alongside nuclear war as a likely source of wholesale death and misery for mankind."
–Nigel Calder, former editor of New Scientist and producer of scientific television documentaries, "In the Grip of a New Ice Age," International Wildlife, July 1975.

I believe that increasing global air pollution, through its effect on the reflectivity of the earth, is currently dominant and is responsible for the temperature decline of the past decade or two" Reid Bryson, "Environmental Roulette, Global Ecology: Readings Toward a Rational Strategy for Man, John P. Holdren and Paul R. Ehrlich, eds., 1971.

At this point, the world's climatologists are agreed…Once the freeze starts, it will be too late."
–Douglas Colligan, "Brace Yourself for Another Ice Age," Science Digest, February 1973.


Because you can't argue with science. There is always something to be scared of, from which the State has to save us. The problem is usually artificially created, so then it can justify expansion of the State. Like in Atlas Shrugged, they always "need to do something."

No problem that there were no goods on the shelves, it's the cost one must've paid for peace in the Soviet bloc. It can be a diseases such as sars, bird flu, and ebola; it can be2 terrorists such as Al Qaeda or ISIS. The more invisible but potentially dangerous and global it is, the better. Climate change is then perfect problem for the State to save us from.



 Zika presents a clear and present danger to the US, both medically and economically. Think not? Remember the economic impact of SARS a little more than a decade ago? Those empty planes and hotels?

Then there are the costs associated with the births. And the neurological consequences (which seem to include GBS).

Will there definitely be an outbreak? No. But the setting for there to be is definitely there.

And the economic hit? You can't just write it off. Hopefully, it will be a lot better than the worst case scenario.



Information is facts provided or learned. Nowadays information has far reaching value.

For example, learn enough about your job and you profit financially. Learn enough about sex and you become the salmon who swims downstream to spawn. Play chess and you are already half-proficient at sports. Acquire computer programming and all walks of life come easier. Foster a lure for secret knowledge and you have an ace in the hole in any relationship.

I enjoy an information advantage and feel an incentive to exploit it. This is why my wallet is fat with notes.



"Exercising the right of occasional suppression and slight modification it is truly absurd to see how plastic a limited number of observations become, in the hands of men with preconceived ideas".

-Francis Galton, 1864



The numbers on Payroll Taxes are quite bullish. However if the Jobs Report shows similar, the stock market response could be negative, anticipating hawkish Fed moves.

The big difference in the data is that the BLS Jobs Report indicates jobs without any discrimination as to actual earnings. That is, a $10 per hour job counts as much as a $1000 per hour job. Payroll taxes intrinsically reflect the quality of the job.

Victor Niederhoffer writes: 

And yet Erica Groshen is still Commissioner of Labor Statistics and she's a very good friend of the Chair and they frequently speak together at testimonials and I believe coauthored an article on inequality together. However, unlike Erica, I have not been able to find evidence that the Chair sent her kids to Camp Kinder the way Erica did.

Bill Rafter writes: 

Today's comments by the Fed Chair give us an interesting observational platform.

If the Jobs Report on Friday is bearish on the economy, then it would appear that the Fed Chair was informed and stepped in before the release to keep the party going. (Whether such response is good is debatable.) Note that the survey period for this month ended on Saturday March 12th, so there has been plenty of time to inform someone who has a need to know.

However if the Payroll Taxes are correct and the jobs numbers are bullish on the economy, then the Fed Chair must be either poorly informed or illogical. Neither is comforting. In such a case one might question the need for such a Fed.



Recently I found some interesting papers on SSRN by Hilary Till . She gets 54, 65, 81 uploads. No joking. And then there are some really superficial papers about momentum and they get 80-120k uploads. Those are at the top in uploads. It is interesting. There is definitely a momentum in cheap momentum papers on SSRN.



 The Seven Pillars of Statistical Wisdom by Steve Stigler provides an illuminating and entertaining foundation for statistical activity. The seven pillars are Aggregation, Information, Likelihood, Intercomparison, Regression, [Experiment] Design, and Residuals. Every page of the book contains something fascinating and instructive.

It is at once an adventure story, a history lesson, a textbook on the foundations of statistics, and a tour de force with ingenious extensions of the works of the great in each field in Stigler's own inimitable hand — a persona that reminds one of Stigler's heroes, Galton himself.

The level of the book is such that the layman and the expert will both gain from it. I found every page insightful and it uplifts one to be part of a field with so many ingenious founders, and to know that there are such pillars that hold the edifice up.

I recommend the book highly. It is a masterpiece classic that will live forever.



 This is a fascinating article that leads me to imagine how much more the subconscious mind performs everyday with the visual signal without our awareness. Is it at work when we read something? If it is, then it could get different meanings of the text from our understandings. How much could the difference matter to us? Surely it is at work when we look at trading charts. Does it have a better way to trade the charts than what we are aware of? How can we best know what it tries to guide us? Perhaps this is a strong hint on the benefits of meditation, by which we are supposed to obtain clearer understanding of the situations we are in.


"A patient with bilateral damage to primary visual (striated) cortex has provided the opportunity to assess just what visual capacities are possible in the absence of geniculo-striate pathways. Patient TN suffered two strokes in succession, lesioning each visual cortex in turn and causing clinical blindness over his whole visual field. Functional and anatomical brain imaging assessments showed that TN completely lacks any functional visual cortex. We report here that, among other retained abilities, he can successfully navigate down the extent of a long corridor in which various barriers were placed. A video recording shows him skillfully avoiding and turning around the blockages. This demonstrates that extra-striate pathways in humans can sustain sophisticated visuo-spatial skills in the absence of perceptual awareness, akin to what has been previously reported in monkeys. It remains to be determined which of the several extra-striate pathways account for TN's intact navigation skills."



 "Johan Cruyff, footballer - obituary: Proud and mercurial Dutch football star who developed a fast-moving and fluid
style of play"

Anatoly Veltman writes: 

OMG Stefan! I was a big fan circa WC 1974 (could it be his upright "arrogant" posture?) As the youngest Master of Sports among all official sports in that era's Soviet Union, I think I was pervasively identifying.

In most of the 10×10 checkers games (each game lasting 4-6 hours in a daily round-robin) that I won in category under-19 (I wasn't 13 yet), my opponents felt somehow crashed right out of the theoretical openings. Their sitting posture at the board was somehow deficient, believe it or not. They might have been more gifted tactically, and counted forward better than my max. 30 or so moves - but they felt I somehow had strategic grip, and they slowly relinquished key cell configurations, resorting to (the inferior) off-center surround strategies.

RIP Maestro Cruyff.



What is the difference between the "smart-beta" index built around "momentum factor" (offered by Russell or some other index provider) and a trend-following CTA? It seems to me like a lot of smart repackaging (trend-following is now called momentum since more academic research is about momentum, trading is now asset allocation, etc.)….

Aside of fees, of course :-)

Ralph Vince writes: 

All trading systems can be represented as indexes. (even your simplest, go long here, flat there, short here, has aggregatge weightings of 1, 0,1 on the various positions — cash always 1-position weight).

All portfolio models, can be represented as indexes.


Trading Systems ~ Portfolio Models ~ Indexes (~ representing "equivalent to")

It's a matter of packaging.

And further building on this edifice scratched in the walls of my darkened cave….

And all long positions ~ short put + long call of same series.

And all of this occurs within the hyaline manifold of leverage space, which readily explains things that are often not so evident on the surface (such as why a short etf will have a long-term downward drift, as well as all leveraged ones, just as with any form of portfolio insurance) and on and on and on and on.)

Rocky Humbert writes: 

Ralph articulates this well.

I would add one point:

We know as a logical syllogism that the overall return from an entire market (to all participants) is the overall return from an entire market. Putting aside the mark to market paradox, if I were the sole market participant and I owned the entire market, then my return would be the intrinsic market return (i.e. cash flow, profits, dividends, etc). And if there were two market participants, then the intrinsic return is shared between those two participants. Again, mark to market paradox notwithstanding, just as it is impossible to squeeze blood from a stone, one cannot produce a total return that exceeds the intrinsic market return. The only question therefore is how to allocate the return — which, beyond the intrinsic return, resembles a zero sum game. (Some people here call the intrinsic return, "drift", but it is really dividends, retained profits, etc.)

An academically pure index must capture the entire market's intrinsic return. And it would do that by owning the entire market capitalization of that market. The S&P500 doesn't do this exactly — the index owners exercise nuance and discretion — and that process might give some opportunities to the smart-beta crowd. That the S&P is market cap weighted further gives rise to the mark to market paradox (i.e. the starting point when one purchases the entire market cap).

But if one could actually purchase a piece of the entire market on the day of the market's creation — and own it until the end of the world — that investment will produce a return that will, after taxes and expenses — beat holding any given smart beta strategy for the same duration. This is a purely theoretical point — because during any given holding period, some particular smart beta strategy will surely outperform. Again, it's a mark to market issue. So the goal is to figure out which one will and which one won't. (Assuming that this is possible!)

So yes Virginia — there is a pure index. But it is theoretical ideal.

anonymous writes: 

I used to trade and develop "smart beta" strategies back at the fund.

I don't think there is an established "this is smart beta and this is not," but I can tell you as to what people expect. The momentum strategies are a bit different than typical CTA trending strategies (not using crossovers for example). Instead momentum is tracked by other measures such as relative performance across sectors and going long/short the best/worst performing ones.

The implied idea of smart beta, which is not exclusive to CTAs, are the other benefits of using these strategies amongst others in a way that utilizes portfolio construction or a dynamic weighting strategy (like monthly rebalancing on vol).

The goal with smart beta is to not produce alpha outright, but to accept that the majority of alpha has been "sapped" and you are now using diversified strategies that have a known cyclical alpha. This is where you get into gray area but I differ the two by saying:

alpha means the sharpe significantly deteriorates as others discover the method smart beta means the sharpe has already significantly deteroriated, but because it has, you can more easily predict the regimes in which they work/don't work. For example, AQR's paper: value and momentum everywhere discusses the idea that momentum (continuation) and value strategies (mean-reversion), tend to have negative correlations, albeit both strategies have lower sharpes (0.4 to 0.7).

anonymous writes: 

Assume, all flows as dividends etc produce an intrinsic market return of zero over some point. Trader A loses 10. Trader B gains 9 (dont forget the vig). Ok till this syllogism its a zero sum game

A sold at 100, B bought at 100.
A stopped out at 105.
B stopped out at 95.
There must be a C or a CDE.. and so on and so forth.
Still sounds like zero sum. 

But if over a length of time some stay in the game, majority keep dropping out. Then it becomes a series of zero sum games.

Next, If A,B,C,D,E…. et al become very large numbers then its a zero sum game between those who stayed in the game up to the point the non participants came in. This also explains the Lobogolas.

Market therefore is a variable sum game. People vary their exposures, they vary even their presence for prolonged periods of time. No one rides an investment bus permanently the way sage does. Normal people buy stocks with an "intention" to sell at some point.

The drift in equities is explicable by a fact that it is the only asset class where reinvestment in growth occurs. For Indian equities I have had calculated in the past it mimicks the curve of (1+GDP growth)*(1+inflation). Perhaps true for other markets too. Given in the long run supernormal profits dont exist, its the ability of businesses to pass on inflation to their customers that produces the drift in their cashflows and thus stock prices. 



It is interesting to consider the standard deviation of the daily change each day of the week from the preceding close to the day 2007-present. While we're at it a daily algbrc change also.

 day of week     stand deviation    av algbrc change

             Monday           16              -0.4
             tue                 17               1.2
             wed                16.5             0.0
             thur                 17               1.0
             fri                   15               -0.3

The changes listed — Monday is the change from Friday close to m on close. Etc.



 As Mr. Vince knows better than anyone, the variance of a sum is equal to the sum of the variances. I believe the market ecosystem works its magic each day of the week to do its damage and make the public lose more than they have any right to lose every day of the week without regard to levels or rest.

Ralph Vince replies: 

Which, by extension, we would expect the one-trading-day-variance from Friday to Mon to be the tamest of the five, consistent with your results, but not proof that weekends don’t matter.

If you could trade on Sat or Sunday it would be expected to get out of line compared to what we see from Friday come Monday, yes?

Victor Niederhoffer comments: 

The NYSE and many of the Asians I believe used to trade on Saturdays, and the changes on Sat were very small relative to the other days. I believe it’s because there is not as much damage that the collectivists do over the weekend.

Ralph Vince comments: 

When NYSE was open on Saturday, wasn’t that only half-day sessions? Us millennials know nothing of those bygone days.

Victor Niederhoffer writes: 

In the good old days, trading continued well into the evening at the fifth avenue hotel and the curb.

Anatoly Veltman writes:

Just got back from Seafire grill and I see this about the good ol’ days. Among other things, in my 1980’s better days, gold was only offered during Shabbat by HK dealers, and only a couple of hours. One memorable curb occurred after the Friday Oct.13th, 1989 Comex close. Late that Friday, following the UAL deal collapse, stock futures closed basically limit down. Gold futures that were closing full 1.45h earlier, didn’t discount any of that. I stared down a dozen screens, so I was anticipating SP technical troubles way ahead of the field. I kept soaking up gold offers all day - yet the darn contract barely edged up. My partner on the floor, who among others had no concept of what might have been transpiring with the stock market, kept a better tally: “we’re about 1,000 lots over the initial margin requirement!”

So going into COMEX closing sequence, I tell him: “We have no choice. Announce the offer of 1,000 lots, but please - no locals. Just keep yelling out “1,000 or nothing!” Don’t hit any partials.

No one took’em… An hour after COMEX close a good bank friend calls: “I heard you had some. Any market?” I give him .5% above Comex settle, he says buy’em, I say “1 bar mate”, he says “appreciate”. Half hour later he says “Aron is looking, help me out” (that’s Goldman). I give him 1% above settle, he says buy’em, I say 1 bar mate, he says “Wise. Appreciate”…And then HK quotes 1% higher and .5% wide - and no trade till Sunday…So Sunday night Sydney opens to a 1% higher bid, which I hit for my remaining 920 extra lots - and they’re thanking me! My broker calls Monday morning: “Any wire coming in?” I say you’ll hate me, but no wire; here is my 1,000 offsetting EFP shorts, I’m no longer your problem, made a quick million in the closed market, sorry mate, HOW ARE YOU DOING! He says “appreciate your concern; lots of accounts really fxxxup” I say sorry, not a freaking soul wanted them during COMEX, I be damned. He says don’t do it too often, and you owe me dinner… Guess what: I never got to buy him that dinner. Despite SP opening limit-down Monday, COMEX traded back down around Fri settle. My 920-lot Sunday opening sale was apparently passed around in Asia and thru Europe like a hot potato, with no one caring about the stock market again, like on Friday. I be damned… 



I received a message from a brokerage of mine that some perceive as working contrary to the interest of clients. It was to inform me that one or more accounts of mine held CHF, EUR or SEK. If I were not aware of the fact, the memo was to serve to inform me that I would be charged interest for holding these currencies.

The message goes out to managed account holders as well who then question the wisdom of holding any sort of position positions with negative carry.

For institutional traders who understand annualized day counts, it seems manipulative and contrary to the interest of the clients. The brokerage makes institutional traders fill out forms indicating their levels of expertise so it borders on manipulative to me to inform both those whose expertise was vetted and those whose money is run by those who vetted the expertise.

Though I have no formal model to incorporate the messaging intentions of brokerages, I have used it to increase my position in a negative carry position somewhat.



 This is a nit in the world of markets, but today might represent a continuation of an interesting trend. In short, the market and DC's utility regulator see the same world differently.

Twice before, DC regulators spurned EXC's attempt to gobble up POM. Twice before, the market guessed wrong. Moments before DC's regulators announced their decision, equity markets projected an approval.

The markets were right. The regulators were wrong. Moments after DC's announcement, POM crashed. Consumers were denied the benefits of a stable utility.

Today, DC regulators plan to announce their new decision. For the first time, the market is pricing POM with an ~ 80 percent probability that DC regulators will reject EXC's proposal.

This is supposedly EXC's last attempt. If DC's regulators reject EXC's third offer, EXC will either appeal to the federal courts or take their toys and go home.

Are the markets right? Are regulators foolish? Will POM jump?

I don't have answers except to point out the obvious: At midday there will be volatility around EXC and POM.

If DC rejects the merger again, POM is a dead company. No utility will attempt to acquire them. Their regulators will prevent growth. Shareholders could lose dividends. Consumers could lose reliability.

Enjoy the entertainment. Enjoy the day. DC's cherry blossoms are out in full bloom



 It's clear to me personally, that whatever the mouthpiece for the Fed will be next week, will try to tepidly unwind a bit of dovishness that triggered the USD collapse this week…

A much longer term consideration is that I'm speculating that USD will remain the world's single reserve currency for quite some time, despite the growing mountain of debt. This will keep US inflation in check, no matter what horrible deficit picture will need to be addressed from time to time. And Europe's inflation will be checked by wage stagnation. As to the emerging markets' real world: they have decades of survival experience with 5-10% inflation, and such would not be an issue to their economies and population.

Stefan Jovanovich writes:

Could we all agree to stop using obsolete terms like "reserve currency"? The term had a specific meaning before 1914 when banks throughout the world held pounds sterling as a reserve against calls for specie redemption by their depositors and counter-parties. It had a shadowy meaning after WW 2 when central banks agreed that the U.S. Dollar would be treated as being as good as gold, but no part of that Bretton Woods notion of the dollar as a reserve currency included the right to demand specie itself from either the Fed or the U.S. Treasury. If people and banks and central banks now choose to own dollars, they do so because they expect to use the dollars to pay someone else or they expect the exchange price of the dollar to rise against another currency or currencies. There is no reason to believe that people's preferences for holding dollars has any direct effect on the prices of goods and services traded in open markets, given the fact that all "major" currencies can be fully hedged and arbitraged. In such a world "inflation" itself has no independent meaning that can be distinguished from changes in exchange rates and price increases that are caused either by reductions in supply or rising demand. Monetarist theory itself becomes a tautology when all legal tenders are central bank IOUs.

Anatoly Veltman writes: 

Thanks Stefan! To re-iterate the technical picture: I anticipate very profound USD strength going into Q2 2016. This will test the commodities anew…And curiously, I also anticipate Yen's renewed strength - albeit after it first digests its sizeable 2016 gains to date. There, I'm at a bit of a loss for fundamental explanation: to envision this peculiar global macro scenario, in which both the risk currency USD and the risk-off currency JPY will suddenly dominate Q2!

Stefan Jovanovich comments:

Almost from the first day Vic was kind enough to let me wander in from the street, I have been panhandling his List's members for answers to my foolish questions. Thanks to AV's recent comments, I think I have found another.

It always puzzled me why people who traded stocks, futures and bonds were so sensitive to what a government spokesman said or was rumored to be about to say. Why should the people who were directly engaged in the most directly competitive of enterprises want to know about stale information from people whose idea of risk was going to a new restaurant on their government-paid expense accounts? Why would Henry Kaufman's guesstimates about M numbers be able to move the markets?

"Markets" are no more "free" than trade is; what distinguishes them from autocratic directives is the fact that their activities are open to anyone willing to make a bid. That is stating the obvious; but what is not so obvious is the fact that people use their bids in open markets to offset the risks from autocratic directives. The markets move in response to government (fill in the blank as to type) statistics as a hedge against (1) what those statistics are likely to make the government do and (2) what future bids are likely to be after the government "does something". A market cannot controlled by the government; if it is, then people stop coming into the room to bid. But all markets, because they settle in legal tender, end up being like taxpayers; they have to account for what the large idiot in the room will do.



 The NY Post had a splashy (in both senses) photo of President Obama on the tarmac greeting the foreign hoo-ha of cuba. There were several dignitaries in evidence as well as a number of Secret Service men, as is usual in all such circumstances.  You know that old adage, A picture is worth 1,000 words? This picture says more, some of which –surprisingly–show learning on the part of our obdurate and preternaturally untransparent 44th. Or maybe his chief of protocol finally earned his keep by orchestrating the noted change in comportment. Let us count the ways.

In previous such outings in rain or storm with President Obama, his Secret Service detail were shamefully abused by being forced to hold umbrellas over the heads of Obama and whomever else he thought warranted the cover. To outside observers, this may not seem a big deal, but to cognoscenti, the use of Secret Service agents for any purpose other than alert protection is unlawful. The President was informed of this misuse of his protection services by the Service. In this newest photo, as he makes what he hopes would be a legacy-cementing jaunt to the miserable Communist country at our foot, he holds his own umbrella.

Note that he is holding it over himself. The foreign dignitary he is shaking hands with does not have a cover, nor does anyone hold one over his head. Obama shakes hands with Cuba's foreign minister Bruno Rodriguez, his tall elder daughter in sneakers behind him.Three men appearing to be Secret Service, a few females standing behind the Cuban foreign minister, and…fairly obvious, neither Raul nor ailing Fidel Castro bestirring themselves to appear as a respectful nod to the significant visit by arguably the hegemon of the continent, if not the globe. This is the man who has loosened the restrictions on travel and trade that mean billions in sales, inflated hotel usage, tourists and the like, to this decrepit country hobbling along until either death or takeover frees the population from 60-year-long Castroite handcuffs.

Two nondescript greeter-women, without umbrellas, hold flowers, presumably for the President. They do not look enthralled.

Slap in the face to the United States, as airstrip pomp is noticeably lacking for this apparently self-abasing chief executive, who has extended more than a 'hand in friendship' to the renegade longtime Communist country a hop from Florida's nether toe.

It is uncertain whether the President will inquire as to human rights on the brutal regime where persons with HIV, for instance, are sequestered, and reasons for incarceration vary from state crimes to poetry that runs against the tastes of the Castros. Prisons are notoriously unhygienic and unmodernized,far from the conveniences and allurements of Guantanamo. No squash courts, recreation, reading material or niches for korans, exceptional menu fare that puts pounds on the once-rangy frames of terrorists caught on the battlefield in Muslim lands of cruel call. No telling if he'll request extradition of our criminals, like Joanne Chesimard, AKA Assata Shakur.

Ready and waiting for a tell-all doc by the pubic-faced obeso, Michael Moore. Documentarian of the assertion that Cuban medical care exceeds that available on the mainland. Maybe with Affordable Care Act implosions, price hikes and disreputable absence of actual care, Moore is the person to shame this President into a belated recognition of ACA fails. Naah.

Next, note that the President is again bowing from the waist to the foreign minister, as he did, notably, with the Saudi king early in his regime. (Obama's regime, not Abdullah's.)

The protocol is that US Presidents never bow to foreign leaders. It lowers our prestige, and raises theirs. It is not done. Except by the groveler who cannot even yet, after seven years of making our country visibly weaker (ask any African head—the weaker we get, the weaker they get. Talk to any small-nation potentate, such as the leader of Togo, trying to stay free) abase his country enough.

Third, the sissyboy we have seen on girlie bikes while he is on his multimillion-dollar vacations in Martha's Vineyard and elsewhere is a sissyboy here, too. If all the men in the picture but he are without umbrellas, why does he have to be the sole meltable? It may be all right for Sasha to hold an umbrella, since she's female, and her clothing or shoes or hair may have set the American taxpayer back five-figures, as we have read recently. Her graduation dress reportedly cost $30,000—nice work if you can get it. But this president: Does he have to be the nerd o' nerds? Be a male, O. Just because you live in a permanent protected bubble does not mean you have to lose your manhood. If the Cuban Foreign Minister can cope without a bumbershoot, you can, too.

Fourth, note the smile on this "statesman's" face. Can you imagine Presidents Reagan, Bush 41 or 43 or Eisenhower making such photogenic tools of themselves for an enemy nation, even one on the verge of taking further advantage of the US? Why not be presidential, greet ministers he meets with reserve and decorum? One notes that in Obama's forthcoming visit to the United Kingdom, Queen Elizabeth will not be meeting with this President. No doubt a considered response to his slap in the face to Great Britain when newly anointed 44th president, B.H.Obama, unceremoniously returned the iconic bust of Sir Winston Churchill, hero of the Second World War,on his White House ascendancy. And Obama's shockingly narcissistic "gifts."

A smaller photo in the Post article showed the President near his multi-million-dollar Beast, an armored car the likes of which no man on Earth has ever had. He's smiling the signature wall-to-wall grin we've seen for seven and a half dispiriting years: Mr Ecstatic, cruising in Cuba. How winsome.

How much power can be exerted by such a namby-pamby leader-from-behind? There you have it: 1,000 words matching those telling historic snaps.



 There are many whom one might point to and declare that they are an architect of our society, or that the world would likely be dramatically different had they not strode upon the face of the Earth. Some might go so far as to suggest that the impact of someone is so great that the current world is practically impossible to conjure in the absence of that individual. Andrew Carnegie, Alfred P Sloan, Steve Jobs, and Bill Gates are all in that category.

So is Andrew Grove. Or I should say, was Andrew Grove, who passed early in the day:

I wrote recently about Grove’s place among the Intel Trinity. Unlike his peers at Intel (Moore and Noyce), Grove was directly involved in the creation of Wintel and all that it encompassed. Whether one thinks in terms of PCs, the internet, or the electronic controllers in automobiles (among other places), one sees Grove’s handiwork. It would be easy to wax poetically about the man and his accomplishments. He was not only a phenomenal CEO who shone in an age of phenomenal CEOs, he was a phenomenal teacher, both at Intel and at Stanford University. His course in the Graduate School of Business was easily the course most in-demand on the entire campus. At one point, there was a waiting list of GBS students hoping to take the course, never mind from disparate parts of the university.

A refugee (escapee might be a better description) from communist Hungary, Grove might have taken a stance on the political right. He did not, and was among those who championed the Democratic Party in one of the few geographical areas in California in which the GOP was even somewhat competitive. He was a tireless support of the Silicon Valley Jewish community and worked furtively to develop strong ties between SV and Israel. It was no accident that Israel became not only one of Intel’s research centers but also a major microprocessor manufacturing center—and that faith was returned when the plant remained open during numerous attacks on Israel over the years, with barely a hiccup in production.

There is the oft-uttered phrase “We shall not see his likes again in our lifetime.” It seems likely to apply to Dr. Grove. I hope that it does not, however. The world could use many Andy Groves. He will be missed.



You may have heard the following quote:

Philosophy is like being in a dark room and looking for a black cat.

Metaphysics is like being in a dark room and looking for a black cat that isn't there.

Theology is like being in a dark room and looking for a black cat that isn't there, and shouting "I found it!"

Science is like being in a dark room looking for a black cat using a flashlight.

Spirituality is being in a dark room looking for a black cat with a torch and discovering "you" are not there.

I would like to add: 

Trading is like waiting for a bookie to get in a dark room first and yell out a spread and then not going into the room until you have locked up one leg of a wider spread, then going in and giving it to the bookie at the tighter spread he is holding on to. 

Of all ideas available, wherein non action is not a possible choice, then choosing the one where one may claim better understanding or lesser severity in testability to handle adverse incursions better, is defined as risk management. 

I disagree with the definition of science, since the moment you have a flash light on, the room ain't dark any more. So will instead settle if you kindly change that to looking for a black cat in a dark room using body heat sensors. 



It is useful to consider whether there is a formula like I = E/R for markets with appropriate random elements. Would a resistor for the stock market voltage be bonds or euro? Does the speed with which a market moves a given magnitude have a differential effect on the future?

Stef Estebiza writes: 

Check this out: "Charging and Discharging a Capacitor"

They know this stuff because right now they are experiencing a flow of money from China/asiatic markets and Macao. They are discharging the capacitor in China to upload that to Macao.

The product of Resistance R and Capacitance C is called the Time Constant τ= tau, the time constant which characterizes the rate of charging and discharging of a Capacitor. But if you use a fixed resistance and change the supply voltage (variable) you can change the time of charge of a capacitor anyway.

So, from 2009 the capacitor S&P 500 was loaded in ascending exasperated way, despite the high resistance (endless but constant). The monetary mass, (the applied voltage) was very high, steadily increasing, just to force the charge of the capacitor, despite strong resistance. The money supply, which, thanks to the tapering they said NOW to be reduced…so, if you reduce the voltage, the capacitor will start to discharge…it has a current when it has a potential difference, currently, the condenser is charged, it is in full charge, and equals the voltage applied to load it (monetary mass).

So, in real life you can't go over the capacitor features, if you rise the voltage to force a further charge on the capacitor, you risk to destroy it. But…it looks like someone (some kids well informed) short-circuit the capacitor for brief moments. (short-circuiting the poles of the capacitor).

If the resistance across the capacitor's pole is zero (short circuit) the current tends to infinity, as well as the transformation of value from the nominal value (on the markets) in cash. So, yes, like Macao teaches, the important thing, if you remove the tension, you open the circuit so that there is no discharge of the condenser. In reality the capacitor has its own internal resistance that sooner or later download the condenser…SO YES, EUR$ can go to 1.15 and over… (the higher the better to buy then$) (I was waiting) for 1.20/22.

"Does the speed with which a market moves a given magnitude have a differential effect on the future? "( Yes, we are managing a phenomenon of discharge or runoff ).

All that is to help Emerging (see the yuan) Europe and USA (strong $)…Alchemy of Finance if they can manage the crisis and then do the quantitative easing for the masses, everything can get going again, otherwise, they have not understood anything about the current situation.



 This pic shows Vic Niederhoffer with Andrew Romay (born in Hungary in 1922) at the 50 Year birthday party for Roy Niederhoffer.

Andrew Romay survived the Mauthausen concentration camp in March-May 1945, then came to the United States where he became well known as an investor and lawyer in the Hungarian emigre community.

So careful was his due diligence work that the famous phrase was often heard "OK, I am willing to invest if I can come in pari passu with Andy on this deal".



I figure there are a lot of phone calls between central banks [now], namely the Fed calling the shots [just like] after 2008.

I see that after consolidation, the dollar yen ramped up for about 10 months (after the Japanese stepped it up the week after the Fed stepped it down on qe) and eurusd was belted for about 10 months from top to bottom. Funnily enough Draghi had his cake and ate it too. (The last sentence kept the Fed happy).

So how about the USD has a breather [i.e declines] until about October, and then everyone has had their day in the sun [i.e has had a turn at depreciating their currency], and maybe fx101 is back on track.

John Floyd writes: 

I would caution some danger of being too sanguine of such prospects and consider the following question: "What are the differences between 1998, 2008, and the current set up in 2016?".

One might consider the key question to ask preceding 2008 was what was driving the US consumer and what were the prospects for housing, mortgage equity withdrawal, the size of consumption as percent of the US economy, and the US economy as a percent of world GDP.

The vulnerabilities in 2016 are not centered in the US and the emerging markets represent a significantly larger portion of world GDP. China is now the world's second largest economy and emerging markets as a whole account for about 40% of the world's GDP.

But, unlike 1998, the emerging world's weakness is not anchored to fixed exchange rates that were prevalent in Asia and Latin America and public finances are in better shape.

Rather than being US centric fault lines are seen on multiple fronts such as the UK, China, Brazil, South Africa, Russia, Japan, and the European periphery to name a few.

The room for official policy maneuvering is also very different in 2016 than it was in 1998 or 2008.

One of the things I found most helpful pre 2008 was the simple math of looking at the components of GDP by country and the global weights of GDP and anticipating the direction and size of changes. Today, that same math yields some interesting conclusions into the possible outcomes and market reactions.



An interesting area of research is being done at Stanford.

1. "The Sky May Hold the Secret to Efficient Air Conditioning"

Air conditioning accounts for almost 15 percent of all energy use by
buildings in the United States. One way to cut that is to send heat to
outer space, according to Aaswath Raman. 

2. "How do half-inch ants survive the Sahara? Silver hairs, scientists say"

Nature was first! Rather than face predators during cooler hours, silver ants only emerge from their dens at the hottest point in a Saharan day. Extra-long legs keep their bodies as far as possible from the hot sand, and special heat shock proteins allow them to withstand temperatures up to 128 degrees F. But these adaptations can only do so much – any more than 10 minutes in the sun means certain death for the silver ant, so they must hunt quickly, sprinting 70 times their body length every second. and "This is very, very unique," Yu says. "I've haven't seen other examples [of animals] that are so close to perfect in every sense. It is highly reflective in the solar spectrum, so the energy intake is minimized, whereas it's highly emissive in the thermal radiation spectrum, so the heat dissipation is maximized. This is the best thing you can do without electricity. You can only expect to see such extreme engineering in the biological world in such harsh environments."



In two weeks the March Jobs Report will be out (Friday April 1st at 8:30am). The data to be reflected will be that collected thru this past week (March 12th). The Payroll Tax Receipts (distributed by the U.S. Dept. of the Treasury) thru March 16th already presage a Jobs Report considerably stronger than the prior one.



 Summary: Some people just aren't creative, and those that are often don't know when you should and shouldn't tweak a good idea to turn it into a great idea. Is it already a great idea, or can it be made better?

I've often found in my life that inspiration needs to be followed with hard work. An original idea gets tweaked until it fleshes out into something that just works better. And once you have an idea that works better, you continue working to make it even better.

Many people just slog through life trying to make it, living day to day, week to week, paycheck to paycheck and, as a result, never get to tap into their true creativity…..or maybe I have it wrong. Maybe they slog through day to day, week to week, paycheck to paycheck because they lack the ability to be creative and see the opportunity that surrounds them.

I grew up surrounded by these people. Many of them are dead, many are in prison, many have served time in prison. Many of them are just shells of flesh waiting for the spark of life that lies inside of them to extinguish.

One particular memory I have is of a party I went to in grade school at Tommy Notter's house. His parents were supposed to be home, but they weren't that night. So a bunch of grade school kids got into his parents liquor cabinet. Someone even brought marijuana. It was one of my first introductions to the life that most of my friends would choose to live. I declined to imbibe that evening, and had to face much ridicule for my choice to not be cool.

However, that is not the main memory that I have from that evening. My main memory is of sitting on the coach in Tommy's living room and hearing the song "War Pigs" (by Black Sabbath) played on his parents stereo, for the first time in my life. The song absolutely kicked my butt.

For those in this group that enjoy a bit of an edge to their rock, you know what I'm talking about.

Today, I heard what I believe was the original version of the Black Sabbath heavy metal anthem, War Pigs. The song was originally called Walpurgis.

Although Walpurgis is a good song, it doesn't hold a candle to the masterpiece that is War Pigs.

At the end of this missive, I've placed links to both songs for your enjoyment.

Since I've reopened my practice and I'm taking new clients for the first time in years, I've had to work on tweaking my communication skills and, more importantly, my listening skills.

Over the last 20 months, I've noticed a marked change in my results as I become more and more comfortable with my listening and creativity skills.

My results clearly show a move a positive direction, both in client acquisition, client retention and client satisfaction.

For me, it's more of a "feel" thing. Like pilots who say they can fly by the seat of their pants because they can feel the plane and know what to do, that is the way it is my practice. Whether it's ability to see the path of least resistance so that you can lead the prospective client to making the right decisions, or to just know that you're wasting your time with a prospect who isn't going to change no matter what.

The introspection and thought process that goes into the creativity associated with communicating with people and reading people is a valuable skill set and one that everyone could improve on, even if you're not a "people person".

For me, it's a constant journey to improve…..and the biggest challenge I think I have much of the time is knowing when to say, "it's good enough and I can't make it better".

I'm sure there are applications to market and trading….i.e. is your system good (i.e. Walpurgis) or can it be tweaked and improved (i.e. Walpurgis to War Pigs).

I'll let you decide which is better: Walpurgis or War Pigs


War Pigs



The Intel Trinity
by Michael S. Malone

First, this is an outstandingly written book, the post-war industrial biography of the Santa Clara Valley in California. It reads like a novel: Isaac Asimov meets Tom Clancy in the ease of reading. And the story presented is a compelling one. In short, it was an enjoyable read. Let’s dig a little deeper.

One of my majors in college was electrical engineering/computer science. It’s a bygone era. No one remembers much now about Unix, Version 6 (the first version that allowed the computer, typically a PDP-8 or -11) to perform such that one didn’t think there was really a washing machine trapped inside the cabinet of blinking lights. I doubt that many recall when MSI stood for middle scale integration or LSI for large scale integration, indicative of the density of transistors on the chip. Ask an engineering student about an 8080 and you’re as likely to be told that that’s a low starting monthly salary for her to receive upon hiring just after graduation. That the 8080 (and arguably the 8008) is the origin of the modern PC is probably something about which she has no idea.

[This review continues here.]



In the last four weeks U.S. equities have risen nicely. Some were lucky or good enough to forecast what happened (check their records). And there are some who are apprehensive about where the market is now. I cannot guess everyone's motive, but I believe more than a few of the hesitant are so because they fear a further bursting of the Chinese Bubble. However I present to you a brief phantasmagorical tour showing that the Chinese Bubble has already deflated.

In terms of three usable commodities (copper, wheat and cotton) the Shanghai Stock Exchange has mean-reverted to its price in mid-2014. If you are betting on a further Chinese decline, be cautious.



"Many scientific “truths” are, in fact, false"

In 2005, John Ioannidis, a professor of medicine at Stanford University, published a paper, "Why most published research findings are false," mathematically showing that a huge number of published papers must be incorrect. He also looked at a number of well-regarded medical research findings, and found that, of 34 that had been retested, 41% had been contradicted or found to be significantly exaggerated.

Since then, researchers in several scientific areas have consistently struggled to reproduce major results of prominent studies. By some estimates, at least 51%—and as much as 89%—of published papers are based on studies and experiments showing results that cannot be reproduced.

Bill Rafter writes: 

In academia the currency is published articles. It should therefore not be a surprise that many published articles are useless or worse, flat-out-wrong to the point of being fraudulent. Consider that in the United States the typical number of scientific-based papers published in a peer-reviewed journal by a doctoral candidate is ONE. In certain other countries that number could easily exceed a dozen. Consequently the avid reader of scientific papers learns to discriminate in his reading habits against certain universities and certain countries of origin.

Would you do business with a bank that had a reputation for handing our counterfeit currency? And the fact that counterfeit banknotes exist casts suspicion over all transactions.


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