My personal recollections between the lines of De Graff's Headhunters of the Amazon include the same items 150 years after De Graff describes them well: Bird eating tarantulas, 400-pound fish, a green pharmacy, instant thunderstorms, rivers rise 20 vertical feet in 24 hours, people perched like frogs on water for a month, alligators as long as Cadillacs, cane blowguns, headhunters, vampire bats, killer hornets, tusked hogs, 30' snakes, ayahuasca, heart palms, paranormal exhibitions, handhewn canoes, telephone trees, strangling figs, ravishing women, 10' pumas, colorful parrots, triple-deck steamers, sapo frogs, army ants, malaria, butterfly clouds, howler monkeys, electric eels, flesh eating piranha, algae covered sloths, pink dolphins, unmapped regions, and happy faces.



 I am reading Ken Follet's book Fall of Giants.

It is eye opening as to the mixups that caused the WW1.

It also has many facts that explain the particular weaknesses and strengths of the parties that led to the way.

It also contains a discussion of the fog of way, and the confusion that the Parties to it felt that is reminiscent of trading the market.

I would recommend the book to all who wish to be educated about war and people.



 The idea that Peter Strzok while hoping and insisting that Hilary would win could make a impartial determination of whether Hillary violated the law is ludicrous. How often does one determine an activity of the one you are desperately rooting for is wrong. Consider a ball game and a close call. How often do the fans of the home team agree with a ref's close decision for the away team?



 This may seem like an under the radar issue, but it's a big deal.

In Carter administration, the US decided that civilian spent nuclear fuel should not be recycled. Instead, it was to be stored and buried in deep geologic repositories.We can have some fun criticizing Carter's decision, but there were reasons for making the disposal decision. The decision paved the way for the construction of Yucca Mountain, which is funded by utilities (not taxpayers).

I'm in favor of recycling. Burying spent nuclear fuel in a cave is like burying a car because the battery died. As a car can be recycled after a new battery installed, nuclear fuel can be recycled after the fuel has been processed.

In the end, recycled fuel will need disposal. However, the volume is dramatically reduced (from a car to a used battery), and the ultimate disposal becomes less costly.

Recycling is an expensive process. Facilities cost billions to build. But, Yucca Mountain has already cost $12 billion, and the project is far from finished.

George Devaux writes: 

From Policy Options for Nuclear Waste Management:

Sustainable Solutions for Expanded Nuclear Energy

"Reprocessing technology has the ability to decrease the volume of HLW by a factor of 4 while at the same time decreasing the required storage timeframe from hundreds of thousands of year to less than 1,000 years. The HLW produced from reprocessing is also vitrified in glass, to produce a stable, homogenous waste product. Reprocessing and recycling SNF could require only one Yucca Mountain-sized repository this century and decrease the amount of fresh uranium fuel required by 25 percent."



 I thought this was an interesting article: "Why Soccer Players Take Dives".

There is a rule against flopping in the NBA now but as evidenced in the ongoing World Cup games the use of deceptive practices by soccer players, despite the risk of penalty (yellow card), to influence referees and officials has evolved into an advanced art with strategic dimensions.

Many of the professional players, in fact, are so good at flopping that it is only through a close examination of replays that it is possible to determine whether there was sufficient contact to cause the trip and/or injury being acted out by the aggrieved player.

In some cases very close matches can hinge on the decisions made by referees to award penalty kicks. Teammates add to the drama by frantically arguing the merits of the referees' decisions and then whipping up their nationalistic supporters through various gesticulations into a frenzy of whistles (boos) and catcalls.

I was recently amused while walking past a Swedish elementary school playground to see a young kid apparently emulating the deceptive antics of an Iranian goalie shown on TV during a recent World Cup game. His performance was outstanding as he rolled around on the ground in feigned pain after unwittingly allowing a goal while reaching down to tie the laces on his shoes. The lesson of "The Boy Who Cried Wolf" was perhaps temporarily forgotten.

A related article:

"Some scientists have proposed using machine vision algorithms to detect flopping, but soccer is a notoriously stodgy sport. Video replays were just approved for the first time in this year's World Cup, and even electronic goal detection remains controversial."



The Pax Americana is changing – substantially

I want to bring this model to the attention of the readers of this site-– because it helps (me) understand many of the recent geopolitical events and the markets by extension.The model is as follows:

America is the most benevolent empire the world has ever seen–but an empire it is.

What changes now, is that this empire wants less from the world–than the world wants from the US and less than the US wanted from the world in the past.

The main reasons for this are good US demographics, US energy independence (shale), superior geography, the winning of the cold war and a dominant navy–by far.

If you are a country leader today and you want something from the emperor–you better bring gifts.

This is a substantial change. Previously the US gave the gifts (economical gifts and gifts as security guaranties ).

The Chinese in Xi Jinping and Japan do understand this – both currently compete for the love of Trump (and the love of America) and both bring gifts. China just pressured NK's Kim into submission and has probably stopped to oppose a Korean unification. Japan brought lot's of FDI.

(A brief excursion: This is a result of Trump's policy of maximum pressure It also shows Trump is well informed, active and not a fool regarding Korea. "Maximum pressure" most likely also includes some juicy stuff - like allowing NK to steal attack plans, exaggerating Warmbier, using MOABs nearby and high level defections )

Russia in Putin understands this. Putin is a player. He plays a weak hand excellently– as Russia always has.

Israel understands this. Besides many other things–this is why they are schmoozing up to Russia and KSA.

UK understands this. They bring two super carrier.

I thought France in Macron understands this–but after the G7 I am not sure.

Germany in anyone does not understand this change. (Lots to say here, but I am currently enjoying meine Schadenfreude about this.)

Canada in Trudeau does not understand this–though the eyebrow might know and left . Canada and Mexico are special cases, because they are hard-wired into America' s economy.

One can go around the globe and watch how players act against this new reality of America's shift.

What is great about Trump is: a) He is a tweeting Tom–his tweets make geopolitics nicely transparent b) He acts according to the model (consciously and unconsciously).

(The above is heavily influenced by a series of texts by Peter Zeihan - I Think They Get It Now, Part I).

Stefan Jovanovich comments: 

The U.S. is no more benevolent than any other empire run by popular election. Like the Athenians and the English and the Republican Romans, we have always let majority self-interest define the morality of our decisions. The dominance of our Navy is as fragile as the superiority of the British was after World War 1. Our aircraft carriers are now as technologically and financially obsolete as Jackie Fisher's battle cruisers were ib 1919. But for the German decision to commit their limited shipyard capacities to the building of turret armed battleships and cruisers instead of submarines and carriers, "the Allies" would have lost the Battle of the Atlantic. The Chinese seem to be making the same mistake by putting their efforts into carrier battle groups instead of stealthy drone/sea to sea missile platforms. The British should know better; for the cost of these 2 Mary Rose show projects, they and the Germans could have developed silent running submarines that would dominate the sea lanes from the Gulf of Arabia to the Baltic and Arctic Circle.

None of this has any relation to Trump's cleverness about shifting tax burdens from U.S. wage earners to American corporate importers of goods and foreign workers. That is, as P R notes, truly brilliant political economic thinking as apt for the U.S at this time as Lord Salisbury's were for Britain after the disasters of the previous perverse reformer (Gladstone then, Obama now).

The Admiral (actually a retired Navy Captain who shares David's cursed condition of being a lifelong Orioles fan) tells me I am half wet about the Germans in WW 2. Submarines–yes, aircraft carriers– never. Land-based 4 engine bombers were a far better choice.



 Summer car theft is rife in Slab City when occupants leave their camps to vacation in cooler climes. Expecting to find their vehicles on return in the fall, they are surprised but should not be. This is the number one town in the nation per capita for auto theft.

The five cities with the highest car theft rate, according to the Federal Bureau of Investigation, lay along the Pacific where the fine weather keeps them looking fresh: Albuquerque (7000 thefts per 100,000 people), Modesto, San Francisco, Bakersfield, and Stockton. But none has the frequency nor the style of Slab City with the highest criminal genius population in America.

Anyone who lives here has signed in blood an unwritten contract that anything he owns may be taken unless he protects it. The old cartoonist Dogpatch, who lives near the Pet Cemetery, should have known better when he left by public transportation two weeks ago to sell art in Los Angeles. There are a dearth of cars among the summer residents that made his cherry red Corvette a target.

With so few running vehicles an enterprising young man stole a truck in order to steal the car. He spotted the blue pickup stuck in the sand up to its hubs on the southern fringe and tried to unearth it. The miss driver lost patience in the heat and walked away for help. He got the vehicle out and hotwired it.

Driving to the lady’s camp to return her truck, and collect an anticipated reward, he hooked onto the red Corvette in broad daylight and towed it to her camp. It so happened she owned a dented yellow Corvette with balding tires of the same make and model sitting in the back yard.

It’s as common as roadrunners in this town to maintain duplicate vehicles: a beat-up one that one pays minimal insurance on, and a purloined lookalike that is then painted the same color to make them twins. The driver’s door is then switched to install the old VIN to the newer car, which passes inspection in the sheriff’s eyes, at the old insurance rate, and the old car is parted out as needed for the new.

The double carjack would collect two fees.

The day after the double theft on my mobile library route, I zipped from camp to camp to gather pieces of the puzzle for the big picture. With an overview and the pieces, any mystery may be solved. Books are icebreakers and bribes for clues. I talked to a witness who watched the thief hotwire the pickup, to another who saw him hook it up to the Corvette, and drove to the stuck lady’s camp on the east side. On her doorstep I asked her to turn in the Slab shoplifter, but she wheeled and, a few seconds later might return with a pistol, when I was gone.

I needed counsel, and swung into Camp Eden in south Slabs run by a Mama, as is often the case with huge craniums and foliage on the chin, overseeing a neighborhood of some dozen like-minded citizens collected from all parts of the country in the name of freedom and anarchy. Their shanties hem in a circus tent patchwork of tarps, blankets and shower curtains, inflated by a green cloud of marijuana smoke. A group of eight Slabbers perched on cross-section log seats around a spool table chewing the cud and passing the pipe.

They are criminally intelligent, notwithstanding soiled and ragged costumes from hard lives on the slabs, with unblinking eyes and white heads, not with the frosts of age but from the effects of exposure and the sun. One has a pet mouse named Jonah swimming in his dreadlocks, looking out as I spoke.

After describing the double theft, a Chinese hippy stood on his log and proclaimed, ‘May a smile crease the face of any outlaw here would stoop to it!’

Everyone smiled broadly except one sullen young man with a bushy beard that seemed to have no mouth.

‘He should go to jail!’ I emphasized.

‘Throw away the key!’ shouted Mama.

‘How long do the sheriffs look for such skunks,’ demanded the Chinaman looking down at the young man.

‘Three days, I replied, ‘and then they give up.’

A smile like a wave on a sand dune swept his face. Our glorious unwritten constitution with expanded rights had protected us, and he would never steal again.

They were laughing until they wept, as I left to continue the book trade smelling like a joint.



A documentary about Slab City is available on youtube.

"Slab City: The Last Free Place in America"



 "Mergers Would Make AT&T, Comcast World's Most Indebted Companies"

In the last week in February, 1901 J. P. Morgan, Elbert H. Gary, the founder of Federal Steel in Chicago, Charles Schwab, President of Carnegie Steel, and William Henry Moore, owner of National Steel, incorporated United States Steel. On March 2, 1901 they entered into an amalgamation agreement. U.S. Steel's capitalization, most of which was debt, was $1.4B. This was the first combination in history to be a "billion dollar company".



 There are five constants in Slab City found nowhere else in the world:

•    Freedom

•    Lawlessness

•    Drug use

•    Poverty

•    Reading at sunset

One hour before each summer sunset 20% of the population is seen under a shade tree in a scavenged easy chair reading a paperback with his feet propped up on an ice chest. The citizens read until sunset, and then pull out a headlamp to read a few hours more. Some fall asleep on the spot, and their books are stolen by those who have finished theirs. This was the stimulus for the Mobile Library on my Honda motorcycle.



 "Could Dirt Save the Earth?": This article is very interesting, and covers many topics.

The methods of farming described, which include having animals on the land, are probably well worth considering, especially when taking into account the problems with weeds and insects and fungi becoming more resistant to poisons each year. One major challenge with this type of farming is scale. Someone I knew showed me a fruit tree he had just planted. He told me the spot was formerly occupied by a peach tree, thus all the fungi and insects and etc. that liked to eat peaches and peach trees knew where to look for a peach tree, and had moved in. After the peach tree died he replaced it with a different species of tree, which he said would start to bear fruit in 20 to 30 years (he was 93 years old at the time). He pointed some distance away, to the spot where he planned to plant a peach tree. All this and the chickens fertilizing the trees and etc. was working well for him, and provided him and his friends with an abundance of food. But, he had a generous pension from having been a teacher in California. Actually being able to supply thousands of one type of fruit to enough buyers to make a living requires large numbers of trees of the same species, which violates all the principles that he successfully used to minimize pests without the use of poisons. Despite the challenges, I think in the future more farming will be done by methods somewhat closer to what the article describes than what is common now.

As for the idea of storing carbon, there are two main ideas in the article: storing carbon in the form of plants growing above ground with roots in the soil, and storing carbon within the soil itself.

The supposed benefit of storing carbon is to get it out of the atmosphere to stop or reduce global warming. Carbon Dioxide is reportedly differentially opaque to various wavelengths of infrared light - it is more transparent to infrared light at the wavelengths emitted by the sun, and less transparent (more opaque) to infrared light at the wavelengths emitted by the earth. Therefore, the higher the concentration of Carbon Dioxide in the atmosphere, the greater the amount of infrared radiation that is bounced back from the earth to the earth, causing the earth to warm up. This is what is commonly called "The Greenhouse Effect," which has little to nothing to do with how a greenhouse works. I have no doubt the 2-atom molecules that compose most of the atmosphere (Oxygen in the form of O2 and Nitrogen in the form of N2)are rather transparent to infrared light, while larger molecules (3 or more atoms, including Carbon Dioxide) are not nearly as transparent to infrared light. Having owned infrared cameras from the days when they cost $15,000 gives me confidence that this is true. Beyond that, knowing just how increased Carbon Dioxide levels in the atmosphere influence temperature levels, I do not know - all I can do is listen to various scientists enjoying varying levels of government support.

But, suppose one wonders how to get Carbon out of the atmosphere - for any reason.

Planting a tree is reported as being good for the planet, and also good for removing Carbon Dioxide from the atmosphere. The story goes that trees capture Carbon Dioxide from the atmosphere. This is true as far as it goes. The hydrocarbons that trees and fruits and vegetables are made of are produced by destroying water and combining the resulting Hydrogens with Carbon from Carbon Dioxide in the air. The Oxygen leftover from destroying water and Carbon Dioxide is released from the plants. Yes, the first step in photosynthesis is photolysis - using the energy in sunlight to separate water into its components - Hydrogen and Oxygen. Animals do the opposite: when digesting food (hydrocarbons) we produce new water that didn't exist - we combine hydrogen from our hydrocarbon food with Oxygen from the air to produce water, and we combine Carbon from our hydrocarbon food with Oxygen we breathe to produce Carbon Dioxide which we exhale. The cycle goes around and around - animals producing water and adding Carbon Dioxide to the air, while plants destroy Carbon Dioxide and destroy water and emit Oxygen and produce Hydrocarbons. Around and around the cycles go. But burning oil and gas and coal are a different story - burning them produces new Carbon Dioxide and new water. The new water produced should never ever be mentioned in any discussion of sea levels, as it is a widely agreed scientific fact that the amount of water on the planet is fixed and cannot change. The only result of burning fossil fuel that should ever ben mentioned is the Carbon Dioxide produced, despite the fact that burning fossil fuel produces vast amounts of water that never existed before.

As the story goes, Carbon Dioxide can be removed from the atmosphere by plants. Yes, it can and is. But, what is rarely mentioned is that when plants die, the Hydrocarbons they are made of are soon broken down into Water and Carbon Dioxide - either by animals that eat the plants, or by bacteria that eat the plants, or by fire (fire and digestion are the same basic chemical reaction - the speed of reaction is the difference). So, the harsh reality is that anyone wishing to remove Carbon Dioxide from the atmosphere by causing it to be absorbed in plants is only doing so for the short term - the life of the plant. Any thought that Carbon Dioxide can be removed from the atmosphere long term by use of plants is simply folly with no use other than generating research grants and etc.

I own a few pieces of property with trees and lawns and some areas that are not exactly lawns, and not exactly overgrown. Those trees reproduce whenever I don't stop them. Elsewhere, anyplace nobody stops them, trees grow where conditions allow. When I see that a company says they planted trees to offset their carbon footprint, I laugh, or I feel sad they are wasting time and money. If they plant trees where conditions do not encourage tree growth (the middle of a desert), the trees will not grow, and they are wasting time and money. If they plant trees among other trees in a recently cut forest, they are also wasting time and money, because trees will grow there anyhow. Any soil-erosion-reduction benefits could have been achieved by cutting fewer trees - leave some saplings behind. Wherever conditions allow the trees will grow, as they have for thousands of years, and don't need people's help. most such efforts are simply folly.

As for the other idea mentioned in the article, absorbing Carbon into the soil, I expect the amount that can be absorbed is trivial compared to the amount released when burning the vast amount of fossil fuel burned these days. I think the main impact of this new idea is a new way to generate research funding and to perhaps sign people on to campaigning for new regulations or advertising food grown in a way that allegedly benefits the earth by encouraging storage of Carbon in the soil.

Note to all those who will respond by saying that they disagree with what I said about any connection between increased atmospheric Carbon Dioxide levels and atmospheric temperatures: I never said there is any connection. I said what the common story is, and then wrote about the folly of attempting to remove Carbon from the atmosphere by planting plants. I do not know if the earth is warming up, and if so, what might be causing it.

Disclaimer: I am a supporter, not a dependent. I do not and have never made a living off your taxes, nor do I get laws passed requiring people to purchase any goods or services from me, and do not plan to. I financially support all those supported by research grants, and pledge to do so for the rest of my life.



Here's a very short documentary about the origins of the CBOT. One takeaway, 6 out of the first 20 Chicago mayors were CBOT members.



From my blog today:

Historically, next week has been horrendous for DJIA, S&P 500 and to a slightly lesser degree NASDAQ. DJIA has dropped 24 times in 28 years during the week after June option expiration. DJIA's average loss is 1.06%. S&P 500 is somewhat better with 20 losses and an average loss of 0.73%. NASDAQ has the best record since 1990 and yet still has 15 loses since 1990 and its average performance is -0.21%.



  During WW1, in 1917, the price of wheat went to a record $3.25 a bushel. Using an online CPI calculator(courtesy of the Bureau of Labor Statistics), that price in today's dollars would be $60.24. A far cry from the $5 and change wheat is trading today. Grains in general have had a long term decrease in price over the past couple hundred years. We owe this price decrease to improvements in technology. After all, in 1917 a farmer was lucky to get 14 bushels of wheat an acre while today a farmer can anticipate a yield of over 55 bushels per acre….and the cost of production in both time and labor has decreased substantially. One wonders what the yields will be like in another 100 years.

Brendan Turner writes: 

Gro Intelligence put out some interesting data points on fertilizer and pesticide use in the US.

From them:

"Sixty five years ago, harvested area of corn sat around 77 million acres, and average US corn yield was just 54 bushels per acre. Presently, corn acreage is at 82.7 million acres, and yield now sits at a median of over 170 bushels per acre. In the 1940s, soybean harvested area was at just 10.7 million acres. Today, there are around 89.5 million acres harvested, representing an increase of 736 percent. Soybean yield was less than 20 bushels per acre in the 1940s, but now averages 49 bushels per acre."

From me:

While the growth in US grain and oilseed production is no doubt impressive, the rise of other agricultural players in South America and the Black Sea have had the largest influence on keeping a lid on prices thanks to their explosive production.

Back home in Saskatchewan, every year, our family farms about 15,000 acres of pulse crops like lentils, peas, and chickpeas. The varieties for these crops were mainly developed by university and CDN government partnerships and the large majority of the harvest of these pulses have been shipped to India or the Middle East. However, for the last decade or so, these varieties have been exported to places like Kazakhstan and Russia and now, the Black Sea is replacing Canada as the staple exporter of pulses to these markets.

Simple equation: Lower costs of production by new players –> lower selling price points –> downtrend shift in margin for major producers –> potentially fewer acres planted by major producers (assuming demand isn't increasing proportionately to supply)

Of course, this thesis gets thrown out the window when there is a drought in a major producing country (or any commodity). However, In a drought situation, for markets like pulses where there is no futures market, speculation is a bit more suppressed. By this, I mean less volatility and thus, decreased opportunities to capture value within volatile markets like you might w/ corn or soybeans or wheat.

Stefan Jovanovich writes: 

$3.25 in 1917 is equal to today using the gold currency unit of account As the Watsurf notes, the BLS with its CPI calculation estimates today's nominal dollar price as 18.53 times the record 1917 price for wheat. If you use the 1917 dollar price as the gold currency unit of account (gold adjusted for the change in official price in 1933 and the changes in the open market price of the metal and the relative prices of the dollar against other major currencies since 1973), the change is even more dramatic. $3.25 becomes $133.90 - a multiple increase of 41.12. As always, the BLS CPI calculations fall far short of the actual price collapses of currencies against physical commodities.

For an average acre of land suitable for wheat growing the total yield in 1917 was $45.50 in gold currency units of account (gcus). At that time Kansas wheat acreage sold for roughly $200 (gcus). Today the same acreage produced produces a total yield of $6.67 (gcus) and sells for $50.87 gcus ($2100 in current nominal dollars).

So, based on P/Es measured in gcus, the prices for Kansas wheat acreage were a seeming bargain in 1917 (less than 5 times gross yield).

The difficulty is that P/Es do not seem to be very useful as predictors of what comes next. Kansas wheat land prices peaked at slightly less than $300 in gcus in the 1921; nearly a century later they are selling for less than 20% of that price using the same unit of account.

I defer to our expert and others for any speculations about what may happen to Kansas wheat land prices over the next century. The current P/E is - once again - a relative bargain: 7.6 times gross yield. 



Last night at dinner a former floor trader and very successful hedge fund guy told me, "The only news you want to trade on is the news you make up yourself".

Jeff Watson writes: 

My mentor taught me to look at the big news, and then look at the market reaction. And if the reaction is different than what one would expect from the news, then this in itself is a very important "tell" about the market. Even the reaction to every day little news is worth watching. In my case I watch things like country movement, exports, and yields. The market reaction in many cases is more important for trading than the actual "news" (at least in my time frame).

Doug Martin writes: 

That's the whole, "Bad News Good Action" concept. News and reaction, is most of the time too complex for me to analyze. I'm never correct in my analysis on that front and typically will look at the news only after observing/trading the move.

The only "tell" I can derive from news, is how FAST the effected market moves. Much of what I do revolves around observing/measuring the speed in which a market moves to tell me how significant traders interpret the event or non event.

For instance, yesterday the speed in which Euro and Aud moved was significant in the time frames I trade.



 As usual and as predicted, no sooner was a deal with Korea made then every media rushed in to say that it was totally worthless and meaningless… what is the appropriate Aesop's proverb that captures this situation? Tom Wiswell always said something appropriate when a kibitzer told him how he could have won the game in a much easier fashion then he did.

anonymous writes: 

Hillary's first missed Nobel.



Like Stefan, I too dropped out of economics 101.

My marketing professor gave numerous examples of how he, as an advertising guy had increased prices of quite a few items and that cause an increase in sales. His point was it was about perception.

Somewhere during the first week of my economics class I was shown a curve that proved my advertising professor was wrong… As price goes down demand goes up. I argued with the professor that curve wasn't reality. He showed me reality… The door

Years later Jack Kemp summed it up best one day when we were talking, during his campaign in the middle of Iowa, about economics and he said just substitute the word incentive for the word economics and you'll understand it a whole lot better.

I have learned the more people talk about economics the more confusing it becomes, yet, it is easier to understand than understanding women is for me.

anonymous writes: 

One of the simplifying assumptions often made in basic economics is perfect information. That of course differs from reality. The basic curve assumes such perfect knowledge and that the product is the same regardless of the price. But with some items, like cosmetics, the price itself becomes a proxy for the assumed quality of the product. So a price increase leads enough consumers to believe they are buying a higher quality product, increasing sales. In essence in those cases the assumed product across different price ranges is no longer the same product in the eyes of the consumer.



 1. Bicycles.

There are a LOT of shared bicycles on sidewalks in many cities. It's now very easy to use them. Pre-registration or deposit are no longer needed. With either Alipay or WeChat apps on a smartphone, one needs only to scan the two-dimensional QR code printed on a bike to unlock it. One can basically leave it anywhere when finished. Locking it concludes the rental. For basic bicycles, the rent is 1 yuan per half hour. Considering the cost of a bike is about 500 yuan or less, the rate can make the business very profitable if usage is high. It looks now that there are just so many bikes available. In addition to basic bicycles, there are also electric bikes, for which the rents are higher.

2. Cars.

Car rentals are nearly pervasive in cities. The easy way to rent one is by an app like Ctrip where electronic payment is conducted. One surprise to me is the rental rates. The rate can be as low as 25 yuan per day for an economy car with unlimited mileage. Cars are not brand new though, usually with 50k kms on them. A rate of 60 yuan is fairly common. The cars are of all major brands, not only chinese. What's odd with the low rates is the high cost of mandatory insurance. About 40 yuan per day for the basic coverage with about 1500 yuan deductable is required (one's own personal car insurance policy doesn't cover rental cars). This is way too expensive given a similar but better covering mandatory policy for a private car costs only 1000 yuan per year. One should note that car rental companies are all private and the insurance companies are all state-owned. So the low rental rates vs. the high insurance rates illustrate quite well about the business environment in the country, where state-owned companies command higher prices.

3. Ride.

With the exit of Uber a couple years ago, there is basically just one car hailing company: Didi. The cost of calling a car is up: now more expensive than calling a taxi. And oftentimes, either the system or the driver play some tricks jacking up from the estimated amount, citing things like congestions. Although the cars are in better condition than taxis, the experience is far poorer than when the competition was here.

4. Housing.

Airbnb is still here. There are also a couple domestic companies. Short-term rentals are quite abundant. A 3-bedroom apartment that easily sells for over 1 million yuan can be rented for about 300 yuan per day with nice furnishings included. Many places as required by the government only accept Chinese nationals, though.

5. Trains/flights.

Most trains are now bullet trains with top speed around 300km/h. Prices are set by the government, and are roughly 150 yuan for about 300km for second-class seats, which is about 3 times higher than the old train. First-class seats are about 250 yuan and business class seats (higher than first-class) are 500 yuan for the same distance. Old trains are mostly out of service. Trains are mostly full. Despite being owned and operated by the government, the trains are not without competitions. Flights, controlled by a different department of the government, set in to compete, albeit slightly. For a 1000km trip, a flight taking less than 2 hours was discounted to be a bit less than the train taking over 5 hours.

6. Places of interests.

Every place a bit interesting, from city park, temple, mosque, to natural site and certainly historical site (original or man-made), charges an entrance fee plus other fees like internal transportation, guides and performances. There is almost no interesting place in the country that is not encircled up for money collection. Entrance fees range from 30 yuan to as high as 400 yuan. Around 100 yuan is fairly common. Take the famous terracotta warriors museum in Xi'an for instance. Entrance fee is 150 yuan. Guide is 90 yuan for a group up to 6 people. Earphone to listen to the guide is 8 yuan per person. Bus for 1km is 10 yuan. Self-photo in front of a nice scene is 20 yuan. Self-photo without waiting in-line is 100 yuan. There is a large shop in a big exhibition hall which sells a lot of over-priced items. After visit, one has to walk through a 1.5km shopping street to get to the exit.

7. Cashless payments

Again, with AliPay or WeChat, one now can pay almost anything electronically, from from small snacks on the streets, to buses and taxis, to groceries, to any tickets (either on the spot or online).



 Why are we at war with Canada? According to the Trump Administration, there's a net trade surplus between US and Canada (goods and services):

"The U.S. goods trade deficit with Canada was $17.5 billion in 2017, a 59.7% increase ($6.5 billion) over 2016."

"The United States has a services trade surplus of an estimated $26 billion with Canada in 2017, up 8.0% from 2016."

Stefan Jovanovich writes: 

1. Cars and Auto Parts.

Canada manufactures 4 million cars. It buys 3 million and exports 1 million to the United States. It is also the largest auto parts exporter to the United States.

2. Marketing Boards

Canada uses the agricultural marketing board mechanism for controlling production and prices of domestic dairy and other "grocery" farm products. To support this mechanism the marketing boards restrict all imports by tariff and by quota while allowing Canadian "surplus" production to be exported at foreign market prices.

Question: Who would profit most from the shift of car and auto parts production to the United States? Whose domestic production of "grocery" farm products would be boosted by the exclusion of "surplus" Canadian production?

Answer: Agricultural and car and auto parts producers in the Great Lakes States of the Mid-West

Ain't the study of actual political economic events much more interesting than further refinement of marginal utility theory?

Geoge Zachar writes: 

The reports I've seen indicate Canadian dairy protectionism is driven by Quebec…something the the anglophone provinces deeply resent, as they're forced to pay up for dairy products.

So, in addition to being seen supporting important US constituencies, Trump is deepening political divisions north of the border.

Stefan Jovanovich writes: 

The Canadian Parliament decided to "stand with Canadian workers" when President Trump announced the steel and aluminum tariffs.

I doubt very much that they have examined their own history with regard to trade "wars". If they had, they might have been tempted to take President Trump at his word about the need for "reciprocity".

In the Elgin-Marcy Treaty, signed in 1854, the U.S. and London entered into a free trade agreement. As the Wikipedia article notes, the Canadian business interests threatened to ask the U.S. for annexation if Britain did not work to open the U.S. markets to Canadian exports. Under the Treaty timber and wheat and coal were admitted to the U.S. without duties or quotas; the existing 21% tariff was eliminated by the U.S. The reward for the Americans was open navigation on the Great Lakes and St. Lawrence and access to the Grand banks fisheries. The arrangement was broadly popular and hailed as the Canadian-American Reciprocity Treaty.

Within 4 years the Canadians decided that they needed to protect their manufacturers. The Cayley tariff of 1858 and the Galt tariff of 1859 raised the duties on imported manufactured goods 20 per cent. For the new Republican Party, this was an absolute Godsend. In 1860, as now, the United States had the lowest tariffs and least restrictive trade rules of any country. Why, Congressman Morrill asked, should American producers have to accept foreign competition but be shut out of foreign markets? Morrill shifted the discussion on tariffs from being a question about protecting Northeastern manufacturers to one for the nation as a whole. He introduced his bill by announcing this change: "In adjusting the details of a tariff, I would treat agriculture, manufactures, mining, and commerce, as I would our whole people—as members of one family, all entitled to equal favor, and no one to be made the beast of burden to carry the packs of others." The "free trade" Democrats did not have an answer.

By 1861 the U.S. had increased overall tariffs from 17% to 26%; by the end of the Civil War the average rate had increased to 38%. It was to stay there until the Underwood tariff (the Revenue Act of 1913).



Here in the bleachers we are entertaining ourselves during the half inning and pitching changes by discussing FX. This has more than a purely academic examination since our handicapping spreadsheet for the U.S. stock market keeps offering ADRs among its "can't lose" picks. The magic formula has us owning positions in companies in Taiwan (TSM), China (NTES, SHI,YY) and Argentina (TGS); companies whose stocks trade in non-U.S. dollar markets are now 20% of the List.

So, for 1 out of every 5 stocks, the "Buy" recommendation involves a double speculation– a long on the companiese individual fortunes and a short on the U.S. dollar.

Keynes hoped that the very question of foreign exchange would disappear, that money would cease to be part of economics by becoming universally invisible. His dream was for all FX clearings to be handled through the Bank for International Settlements - the intermediary first established to receive the German reparations payments that were to be financed by U.S. loans of gold. The reparations were not, in fact, paid, even though Keynes never revised his opinion that the Treaties by which Germany promised to pay them were somehow the main cause of the Great Depression. Those of you fortunate enough to have studied economics in and after college know that this is still the Number 1 explanation for the collapse in domestic and international credit that occurred between 1927 and 1934. In any case, Keynes' dream of the Bancor never came true; on the contrary, clearings between countries remain stubbornly ties to particular national currencies and the money of the European currency bloc aka the Euro.

So, the question remains: which money offers the best chances for relative gain. The smart(er) guys out here in the bleachers think that FX is THE QUESTION. Frontrunner, the most obnoxious of us all (this year he is wearing an Astros cap) - points out that, if you use the world's private currency (gold) as a unit of account, for a Japanese investor the Nikkei is currently selling for the same price being offered in 1978.



 I have read the book Scale by Geoffrey West and I find many of the charts tautological and suffer from the part whole fallacy. I wonder how many of the scaling relations are predictive and not related to the physical dimensions of weight and height of the many species he approximates with algorithmic charts that are consistent with random numbers.

Leandro Toriano writes: 

West's stuff is poorly regarded among technical people–it pops, but power laws can be made to look like they fit too many things. (There are a few critiques on arXiv, iirc.)

Recently I came across Indra's Pearls by David Mumford, Caroline Series, and David Wright. They do hat-tip Mandelbrot's Hausdorff (fractal) dimension, but don't fall into trendy theory. Easily makes my top 100 of all time, and probably top 3 mathematics books for non-mathematicians. In it you'll find more reasonable discussions of this stuff than elsewhere.

Koebe 1/4 on youtube has a good video of Curt MacMullen speaking on Renormalisation.



 "Dust rising - Salton Sea's toxic dust to get worse and worse"

Bo Keely writes: 

Bill, u forget how intelligent u are. u hit it on the head a year ago in Slabs saying the alkaline air makes the climate here almost intolerable. it isn't the heat, nor the Salton Sea, but the alkaline soil that is absorbed into the air creating a 'coal-miner lung' effect. i can feel the sapping effect of alkaline dust on my skin and lung lining walking any day over 100F. at that temp the air is also rarefied to provide less pressure making it more difficult to breath like being at altitude. i can walk anywhere else in the world at that temp w/out a problem, but not here at 120' below sea level where the air is alkaline.

last weekend it was only 105F but i walked too long following century-old brass survey markers and the remains of the surveyor's camps into the Chocolate Mt. gunnery range and ran out of water and got discombobulated. i sat on my hat during a rest stop to keep off the hot ground and forgot it. that left me walking hatless six more waterless hours into the sun and i suffered for it. finally, i could walk no more, not a step to save my life, and collapsed in the scanty shade of a Palo Verde for two hours til after sunset to recover. the problem was that after the sun went down i couldn't see where i had parked the motorcycle, which meant more hiking but by then my tongue had shrunk from it's previous dry swelling that nearly blocked the oral passage. you'll be able to hear of similar exploits in Texas Ranger 'Big Foot Wallace'.



 What can we learn about the market from the recent playoffs?

1. A team that is behind near the end takes desperate shots and loses by an even greater score, i.e when the market is down near the close any rallies are ephemeral.

2. Ephemeral shots like those of Curry are very erratic compared to LeBron and Durant and can't be relied on… short term spikes are not sustainable.

3. A team with many scorers is much better than a team with a concentrated few and this will tell at the end of a game. The beard and the boaster from Cleveland both fell by the wayside in crucial moments at the end. A sustained move requires confirmation from related markets and will not stay if it is just its own.

4. Erratic players who have problems with the intake of substances will lose at crucial times, i.e. don't drink or take drugs while you are trading.

5. The difference between the winning team and losing team is like the battle between up and down. When a winning team is ahead near the close it is usually not overtaken. Indeed the lead tends to increase as the other team tries desperation shots.  

6. The stats on basketball are much more valuable than what we use for markets, i.e. the % of shots scored off the dribble versus catch and shoot and the % of hits from each sector of the court.

7. What else?



 The alpha female outlaw of Slab City once advised me, 'Beat your opponent psychologically and all things flow from there.'

Then she robbed me.

Her brain is wider than the sky above the Slabs, and her scares are the scars in nearly every mind in town. She terrorizes them before she plucks their properties clean of valuables. These are her chief techniques to look for:

•    Finger paints feces on windows

•    Shreds clothes on a line with a razor

•    Drops meth needles on properties

•    Poisons guard pets

•    Slashes water containers

•    Plants stolen articles at camps

•    Trojan gifts with spyware

•    Sleeps with significant others

•    Deniability - screams at night, 'You're robbing me!' to elude the chase

These PSYOPS make the Belle a bullseye for our top outlaws, male and female. They call her Sun Tzu with a vagina. She allows them to seduce her, and then each has gone to jail or disappeared.

Belle's tactics, as in sport, politics and business, set a backdrop in the subconscious. It softens them to become thankful when she doesn't steal, grateful when she eventually does, less likely to intervene, and kills any courage to retaliate.

However, two men are stepping up to rally other Slabbers. One threw a potluck to raise money to hire two large girls to 'beat her within an inch of her life', and another raised an empty jug and toasted, 'As soon as this fills with whiskey I'll push her down a mine shaft.'

The mind has no farewell. There's a war out here, and it's not about who's got the longest knife or most bullets. It's about who controls what the other side thinks. To date, the Belle is on top.



From hamsters to dogs to elephants to whales, the number of heartbeats per lifetime is nearly the same, namely about 1.5 billion

— Geoffrey West, Los Alamos National Laboratory, and the Santa Fe Institute

Zubin Al Genubi writes: 

This sound a bit too deterministic. While genetic disposition is a large factor, conditioning, good diet, exercise, lifestyle must play a substantial part. Moderation must help. 

Russ Sears writes: 

While I cannot give the source because it been 35 years since I read it. This heart beat speculation was part of why doctors up until recently did not recommend running for health benefits. If g-d had designed us that way, why should we even test it with statistics.

It's only been since 80s women ran a marathon in the Olympic because of these types of simple reasoning.

The statistics speak volumes about the benefits of cardio exercise especially running. However that benefit declines the more you train and it's not surprising that one could design a study which shows overtraining can lower life expectancy. As I've aged the difference between training and over training has become much harder to draw a line… hence I suspect many of the negative life expectancies are from older endurance athletes over training.

And I suspect these shocking to unsuspecting readers are in much more demand too produce due to click-baiting of journalists than real science.

Also many of theses studies one can use a simple test if they are legitimately looking at the issues. If the study is look at average age at death or actually deaths to expected. Average age of death is heavily influenced by the start of running boom and early outlier deaths. It will take many more year before averaging age is valid In other words most serious endurance athletes are still living so their positive effects not seen in average age at death. Opposite of survival effect in stock market historical studies.



On employment day:

up at 820, up 820 to close: 17

up at 820, down 820 to close: 16

down at 820, up 820 to close: 30

down at 820, down 820 to close: 24

(Note: the announcement occurs at 830)

Peter Pinkhasov writes:

With the following, I am very much at risk of misunderstanding the Chair or to expose my ignorance. Yet I think Vic's numbers and my brief research suggest no leakage.

- The pre-release movements do not seem to anticipate the quality of the NFP headline number.

- A case for leaks can be made, if the quality of the NFP headline number is ignored, but then what was leaked? -> The Bond momentum starts during the globex session

- Maybe the leaker uses a sub-component of the report ?

- Potentially no NFP-day drift in equities similar to Fed-days

- (But: N is small)

- (But: I took the numbers by hand - potentially with some errors).

My table:

Victor Niederhoffer explains: 

My numbers suggest that there are leaks but that those who aren't privy to the leaks can't profit from them. The real problem is that so many people get the numbers in advance and that this creates a movement in the correct direction. This is an endemic and terrible problem.



 There is an interesting ratio of plants: bacteria: fungi: animals in units of GT C (1015 g of carbon) of 450:70:12:2.

With a total biomass estimated at 550 GT C or 550 quadrillion (American system) g.

Roughly 605 billion tons with a natural world emphasis on organisms good at photosynthesis and recycling.

From "the Biomass Distribution of Earth":

"The composition of the biosphere is a fundamental question in biology, yet a global quantitative account of the biomass of each taxon is still lacking. We assemble a census of the biomass of all kingdoms of life. This analysis provides a holistic view of the composition of the biosphere and allows us to observe broad patterns over taxonomic categories, geographic locations, and trophic modes."



 "A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines." -Ralph Waldo Emerson

From his "Essay on Self Reliance" (At 10,000 words, this essay is worth a read. (It measures at a 7.4-grade level on the Flesch-Kincaid method in Word. I struggle to get below 12 in my writing.)

"The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function." -F. Scott Fitzgerald

Whenever I turn to an analysis of China, I ultimately realize that I also need to consider India. This duality causes me difficulty and the two quotes above indicate that I require a mental prosthetic.

Therefore, I created a new word by inserting "di" into China. The result - ChIndia.

Would other mental prosthetics for dichotomies be useful in investing? For example, buy and hold vs. buy low, sell high.


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