Tuesday, May 31, 2016

Dear Alpha Ideas, Did You See David Keohane Yesterday?

Alpha Ideas is a smart blog focused on the Indian markets about which I have one small complaint.
Not enough Bollywood.*

Here's the Keohane piece.
From FT Alphaville:

The intended (and unintended) consequences of India’s crackdown on black money
Before we begin, how about a very, very quick quiz?

Question: What percentage of Indians paid income tax in the 2013 fiscal year?
Answer: 1 per cent.

That stat is from a note from Ambit which dropped last week while some of us were gamboling through the Himalayas. It echoes work done by Credit Suisse before on the simply silly size of India’s informal economy, which has repercussions for the entire system including the preponderance of ponzi schemes which India is finally trying to get a grip on.

In this post we’ll be looking at simple, straightforward, black money, the scale of which should be obvious from that income tax statistic. But if it’s not, click to enlarge this Ambit chart:...MORE
*As I've mentioned elsewhere, I know a Pakistani guy who is addicted to Bollywood dance scenes.
Any time I visit, before we can talk business or anything else, we have to have tea while watching his latest favorite find.

A regular source of said dance scenes would do as much for my income as a new secret factor to add to Fama-French.
Maybe more.

In Bid To Forestall Layoffs, New York Times' Paris Staff...

...Suggest firing folks in other bureaus.

Gary Larson, The Far Side
Liberté, fraternité, infélicité.

From The Guardian:

New York Times' Paris staff launch bid to save editorial operation 
Journalists claim international edition will lose the ‘sensibility’ it has had for 130 years
New York Times staff in Paris have launched a last ditch attempt to save an editorial operation in the city that stretches back to the 19th century.

The NYT told staff in April it was cutting 69 out of about 110 posts in Paris, where the original Paris Herald – later the International Herald Tribune and the International New York Times – has been based since 1887.

The proposal suggests keeping about half of the editorial jobs the company wants to axe, while making up some of the cuts in London, New York and Hong Kong....MORE

Seed Stage Accelerator Y Combinator Developing A Basic Income Pilot Project

From Y Combinator's Posthaven blog:

Moving Forward on Basic Income
We have a few updates we want to share on our Basic Income Project:

Our Research Director

Elizabeth Rhodes is joining Basic Income Project as our Research Director.

She recently completed a joint PhD in Social Work and Political Science at the University of Michigan, where her research focused on health and education provision in slum communities in Nairobi.

We received over 1000 applications for this position (including tenured professors from Oxford, Columbia, and Harvard), and Elizabeth stood out as the right candidate based on her aptitude and her ambition. We’re very excited to work with her.

Pilot Study in Oakland

We want to run a large, long-term study to answer a few key questions: how people’s happiness, well-being, and financial health are affected by basic income, as well as how people might spend their time.

But before we do that, we’re going to start with a short-term pilot in Oakland. Our goal will be to prepare for the longer-term study by working on our methods--how to pay people, how to collect data, how to randomly choose a sample, etc.

Oakland is a city of great social and economic diversity, and it has both concentrated wealth and considerable inequality. We think these traits make it a very good place to explore how basic income could work for our pilot.

It’s also close to where we live, which means we’ll be closer to the people involved.  We think our local resources and relationships will help us design and run this study effectively, and we hope that will enable us to produce the best research possible.

In our pilot, the income will be unconditional; we’re going to give it to participants for the duration of the study, no matter what. People will be able to volunteer, work, not work, move to another country—anything. We hope basic income promotes freedom, and we want to see how people experience that freedom.

If the pilot goes well, we plan to follow up with the main study. If the pilot doesn’t go well, we’ll consider different approaches.

And Some Thoughts on how We’re Thinking About Basic Income
We think everyone should have enough money to meet their basic needs—no matter what, especially if there are enough resources to make it possible. We don’t yet know how it should look or how to pay for it, but basic income seems a promising way to do this....MORE

Risk: "Are insurers prepared for Hurricane Andrew II?"

Ahead of tomorrow's formal start to the 2016 hurricane season I think we can safely answer the question with a 'no'.

From Property/Casualty 360°:
At the start of the 1992 hurricane season, catastrophe-modeling company AIR had been in business for five years, and its hurricane model was projecting that a major hurricane striking Miami could cost the insurance industry more than $30 billion.

This seemed like an outlandish figure at the time — few people believed this number or even knew what a catastrophe model was.

It was difficult to convince insurers and reinsurers that a new approach to estimating catastrophe losses was needed. The reinsurers were quite sure their tried-and-true traditional formulas were robust and they needed no other tools. After all, they had been making money for decades. Insurers simply relied on the brokers to determine how much reinsurance they needed, and that, too, seemed to be working fine.

The traditional approaches seemed adequate because no major hurricane had made landfall near a highly populated area in decades. And while the 1970s and 1980s were relatively inactive with respect to hurricanes, property values along the coast were growing exponentially. But insurance companies were not monitoring their exposures in 1992 — insurers and reinsurers were using premiums to estimate potential catastrophe losses.

Hurricane Hugo, instead of serving as a strong warning, had made companies even more complacent. The insured loss from the 1989 storm was only $4 billion, even though the hurricane was a Category 4 storm that “hit” Charleston, S.C. Actually, Hugo’s most intense winds occurred well to the north of Charleston along a sparsely populated area near McClellanville, S.C. So even after Hugo, the industry thought the probable maximum loss for the market as a whole for a hurricane hitting anywhere along the coast was $7 billion. 

Hurricane Andrew
This water tower, shown Aug. 25, 1992, a landmark at Florida City, Fla., still stands over the ruins of the Florida coastal community that was hit by the force of Hurricane Andrew. The storm damage to the South Florida area was estimated at $15 billion, leaving about 50,000 homeless. (Photo: Ray Fairall/AP Photo)
Enter Hurricane Andrew
As Hurricane Andrew was making landfall on Aug. 24, 1992, there was again disbelief when the first hurricane model projected that the loss could exceed $13 billion.

In fact, it would take more than six months for the industry to fully realize it was going to pay out $15 billion in losses. And it didn’t take much math to calculate that had Andrew hit farther north, closer to downtown Miami, the loss could have been $60 billion.

Fast forward to 2016 and complacency has once again set in.

It’s been 10 years since a hurricane has made landfall in Florida — unprecedented in the historical record — and no major hurricane has made landfall near a populated area in the United States since 2005’s Katrina. Coastal property values in Florida and elsewhere have continued to swell. The catastrophe models have now become the traditional tools, and the industry has become far too comfortable relying on the model-generated probable maximum losses.

Over the past few years, new tools have come into the market, and these innovative scientific techniques clearly show that the traditional catastrophe models don’t provide a full picture of an insurer’s loss potential. In many cases, the traditional model-generated probable maximum losses give a false sense of security — just like the traditional approaches used in 1992.

And as in the pre-Andrew days, there’s inertia, and even some resistance, to new scientific methodologies and insights into catastrophe loss potential.  

Using the characteristic event methodology
Among the new tools is the characteristic event methodology that provides insurers with information on what size losses different return period events will cause.

CEOs, boards and other senior decision makers in the insurance industry often mistakenly refer to their 1-in-100-year probable maximum lossess as the 100-year events. But the model-generated probable maximum losses don’t refer to any specific events — they’re simply points on the estimated loss distributions. And what is also often forgotten is the 100-year probable maxim loss shows the loss amount for which there’s a 1% chance of exceedance....MORE

"The Prosperity Puzzle"

Longtime readers will know most of this stuff but we post it because:

a) Nordhaus is one of the smartest economists out there and
b) Irving W-B is pretty sharp in his own right and is the King of the hyperlink to boot.

From Irving Wladawsky-Berger:
The April 30 issue of The Economist includes a special briefing on The Prosperity Puzzle. The briefing highlights how tricky it is to compare living standards across countries, across economic classes within a country, and, - arguably hardest of all, - across time.

“Which would you prefer to be: a medieval monarch or a modern office-worker?,” it glibly asks.  “The king has armies of servants.  He wears the finest silks and eats the richest foods.  But he is also a martyr to toothache.  He is prone to fatal infections.  It takes him a week by carriage to travel between palaces.  And he is tired of listening to the same jesters.  Life as a 21st-century office drone looks more appealing once you think about modern dentistry, antibiotics, air travel, smartphones and YouTube.”

The point is further illustrated by referencing the research of Yale economist William Nordhaus.  In the mid 1990s, Nordhaus looked at the evolution of the price of light over the past two centuries in Do Real-Output and Real-Wage Measures Capture Reality? The History of Lighting Suggests Not.

He first calculated the price of light by adding up the prices of the things people bought over the years to make light, - from candles in 1800 to compact fluorescent light bulbs in 1992.  This is the traditional way that prices are calculated using GDP, - “a measure of the value of all final goods and services produced in a period (quarterly or yearly).”  By this GDP-like measure, the price of light rose by a factor of between three and five over the past two centuries.  Next he calculated the change in the true price of light, by estimating the price in cents per lumen-hours, a measure that would quantify the considerable innovations in generating light over the same time period.  By this measure, the true price of light has plummeted by considerably more than a hundredfold since the early 1800s.
Nordhaus’ research implies that the true price of light “has been underestimated by a factor of between nine hundred and sixteen hundred since the beginning of the industrial age.  If the case of light is representative of those products that have caused tectonic shifts in output and consumption, then this raises the question of whether the conventional measures of real-output and real-wage growth over the last two centuries come close to capturing the true growth.”

According to The Economist, not only is GDP a poor measure of material well-being and prosperity, but it’s not even a reliable gauge of production.  Our heavy reliance on such a deeply flawed measure may account for our prosperity puzzle, “distorting levels of anxiety in the rich world about everything from stagnant incomes to disappointing productivity growth.”

GDP was first developed in the 1930s at the request of the US Congress to quantify the full economic impact of the Depression.  In the 1940s it was used in the US and the UK to help estimate their economies’ capacities to make guns, tanks, airplanes and everything necessary for the second world war.  Since then, GDP has become the key measure of a country’s production capacity, while GDP per capita is generally viewed as an indicator of a country’s standard of living.
Most measures of economic performance used by government officials to inform their policies and decisions are based on GDP figures, including setting taxes, fixing unemployment and managing inflation.  But, many concerns have been raised about the adequacy of GDP-based measurements given the major structural changes that economies around the world have been experiencing over the past few decades.

GDP does not adequately capture the growing share of services and complex system infrastructures that characterize advanced economies.  In the 1950s, the industrial sector made up more that a third of GDP, and the service sector was a bit over 50% in the US and the UK.  Today, services account for close to 80% of of their economies, while manufacturing has significantly declined....MORE

"Hedge funds cut bullish bets on ags - but may wish they hadn't"

Corn     411-2 down 1-4.
Wheat  478-6 down 2-6.

From Agrimoney:

Hedge funds reduced some of their, expansive, bullish bets on agricultural commodities – but may wish they hadn't, given the firm performance by many contracts late last week.
Managed money, a proxy for speculators, cuts its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to cattle, by 62,466 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.
The reduction followed an increase in the net long - the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall – to its highest in nearly two years as of mid-May, amid talk of funds switching cash from shares to commodities.
However, the reduction preceded something of a late-week bounce in ag prices, with soybean futures for instance, in which speculators trimmed bullish bets for only the second time in 12 weeks hitting a 20-month top, and Chicago wheat futures soaring more than 3% on Thursday.
Caught out on wheat
In fact, hedge funds raised their net short in Chicago wheat by more than 17,000 lots ahead of the price recovery, despite the concerns over US wetness and the competitiveness of the grain against corn viewed as spurring the late-week bounce.
The shift took the net short nearly to 90,000 contracts, a historically large position, if short of the record 111,409 lots set a year ago.
Hefty net short, or net long, bets often raise alarm bells among investors, in raising concerns that the position has become too "crowded", and is liable for a reversal, threatening a sharp and contrary move in prices.....MORE

"The Untold Story Behind Saudi Arabia’s 41-Year U.S. Debt Secret"

From Bloomberg, May 30: 

How a legendary bond trader from Salomon Brothers brokered a do-or-die deal that reshaped U.S.-Saudi relations for generations.

 President Nixon walks with Saudi King Faisal in Saudi Arabia in June 1974.
Failure was not an option.
It was July 1974. A steady predawn drizzle had given way to overcast skies when William Simon, newly appointed U.S. Treasury secretary, and his deputy, Gerry Parsky, stepped onto an 8 a.m. flight from Andrews Air Force Base. On board, the mood was tense. That year, the oil crisis had hit home. An embargo by OPEC’s Arab nations—payback for U.S. military aid to the Israelis during the Yom Kippur War—quadrupled oil prices. Inflation soared, the stock market crashed, and the U.S. economy was in a tailspin.

Officially, Simon’s two-week trip was billed as a tour of economic diplomacy across Europe and the Middle East, full of the customary meet-and-greets and evening banquets. But the real mission, kept in strict confidence within President Richard Nixon’s inner circle, would take place during a four-day layover in the coastal city of Jeddah, Saudi Arabia.

The goal: neutralize crude oil as an economic weapon and find a way to persuade a hostile kingdom to finance America’s widening deficit with its newfound petrodollar wealth. And according to Parsky, Nixon made clear there was simply no coming back empty-handed. Failure would not only jeopardize America’s financial health but could also give the Soviet Union an opening to make further inroads into the Arab world.

It “wasn’t a question of whether it could be done or it couldn’t be done,” said Parsky, 73, one of the few officials with Simon during the Saudi talks.

At first blush, Simon, who had just done a stint as Nixon’s energy czar, seemed ill-suited for such delicate diplomacy. Before being tapped by Nixon, the chain-smoking New Jersey native ran the vaunted Treasuries desk at Salomon Brothers. To career bureaucrats, the brash Wall Street bond trader—who once compared himself to Genghis Khan—had a temper and an outsize ego that was painfully out of step in Washington. Just a week before setting foot in Saudi Arabia, Simon publicly lambasted the Shah of Iran, a close regional ally at the time, calling him a “nut.”

But Simon, better than anyone else, understood the appeal of U.S. government debt and how to sell the Saudis on the idea that America was the safest place to park their petrodollars. With that knowledge, the administration hatched an unprecedented do-or-die plan that would come to influence just about every aspect of U.S.-Saudi relations over the next four decades (Simon died in 2000 at the age of 72).

The basic framework was strikingly simple. The U.S. would buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America’s spending.

It took several discreet follow-up meetings to iron out all the details, Parsky said. But at the end of months of negotiations, there remained one small, yet crucial, catch: King Faisal bin Abdulaziz Al Saud demanded the country’s Treasury purchases stay “strictly secret,” according to a diplomatic cable obtained by Bloomberg from the National Archives database.

With a handful of Treasury and Federal Reserve officials, the secret was kept for more than four decades—until now. In response to a Freedom-of-Information-Act request submitted by Bloomberg News, the Treasury broke out Saudi Arabia’s holdings for the first time this month after “concluding that it was consistent with transparency and the law to disclose the data,” according to spokeswoman Whitney Smith. The $117 billion trove makes the kingdom one of America’s largest foreign creditors.
Yet in many ways, the information has raised more questions than it has answered. A former Treasury official, who specialized in central bank reserves and asked not to be identified, says the official figure vastly understates Saudi Arabia’s investments in U.S. government debt, which may be double or more.

The current tally represents just 20 percent of its $587 billion of foreign reserves, well below the two-thirds that central banks typically keep in dollar assets. Some analysts speculate the kingdom may be masking its U.S. debt holdings by accumulating Treasuries through offshore financial centers, which show up in the data of other countries....MORE
When President Obama went to Saudi Arabia in April the King did not meet the President on the tarmac and instead made the President come to him. The headlines read:
President Obama begins Saudi Arabia trip with snub by King Salman, as activists unearth more evidence of Saudi links to 9/11 
Times change, things change.

Monday, May 30, 2016

Land rush: The Sellout of Europe’s Agricultural Land

The linked report was published last November but is still worth noting.
From Farmlandgrab:

Land rush: Sellout of Europe’s agricultural land
The study “Land Rush - Sellout of Europe’s Agricultural Land” was commissioned by Maria Heubuch, Member of the European Parliament of the German Green Party, to shed light on the issue of land concentration in Europe. It shows that the concentration of agricultural land constitutes a major threat to sustainable small- and medium-scale agriculture and young farmers.

The report gives an overview of the current policy discussions at the EU level (European Economic and Social Committee, European Parliament) and at UN level (Tenure Guidelines). Looking at the cases of Germany and Romania, the study examines land concentration as a consequence of post-socialist privatisation policies. It describes the French policies aimed at controlling land transactions, land prices and rents. It analyses new challenges to European land market policies such as the sale of shares of companies which own land.

The study asks for urgent action to ensure access to land as the basis for sustainable family farming in Europe and it proposes a list of steps to be taken at national and EU level.

The study is available in German and English, and can also be accessed online here: http://www.maria-heubuch.de/medien/publikationen/ 

Farmlandgrab homepage

Don't Steal From Russian Women

Seriously, do not

Both via the Only in Russia Twitter feed

This May Be A Sign: Pierre Cardin's "Le Palais Bulles" Is Still On the Market at $456 Million

Some portents are easier to understand than others:

'If only God would give me some clear sign! 
Like making a large deposit in my name at a Swiss bank'
-Woody Allen

That's pretty hard to misinterpret.

In the same way, having a house topping the 'For Sale' league table named The Bubble Palace is, as the Hollywood types say, maybe a bit on the nose.

The Bulles tidbit is from Wolf Street's link to the big New York Times May 28 story on the surfeit of residences asking $100MM and up:
Last Time this Happened, the Housing Market Collapsed

In 2015 we linked twice to the only property asking more, in May's "Signposts: Movie Producer/Developer Expects Spec Home to Fetch $500 Million" and then in November's vaguely desperate-sounding "Builder Says $500 mil Mansion Should be Seen As a Bargain".

Of course there's always "Now It Can Be Told: The Story Behind L.A.'s Billion Dollar Trophy Property... plus a Special Bonus!" should the bull market last a couple years longer.

Here's the Daily Mail on Cardin's listing last fall, not to my taste but in a nice 'hood, down the road from Antibes and Cannes.

Study Suggests That Dark Energy Is The Reason The Arrow Of Time Moves Forward

The Moving Finger writes; and, having writ,
Moves on: nor all thy Piety nor Wit
Shall lure it back to cancel half a Line,
Nor all thy Tears wash out a Word of it.

-Fitzgerald's translation of  
The Rubáiyát of Omar Khayyam, 1859

From 3tags:

Study Suggests That Dark Energy Is The Reason Time Moves Forward 
Ever since Lemaitre and Hubble’s first proposed it in the 1920s, scientists and astronomers have been aware that the universe is expanding. And from these observations, cosmological theories like the Big Bang Theory and the “arrow of time” emerged. Whereas the former addresses the origins and evolution of our universe, the latter argues that the time flows in one-direction and is linked to the expansion of space.

For many years, scientists have been trying to ascertain why this is. Why does time flow forwards, but not backwards? According to new study produced by a research team from the Yerevan Institute of Physics and Yerevan State University in Armenia, the influence of dark energy may be the reason for the forward-flow of time, which may make one-directional time a permanent feature of our universe.

Today, theories like the arrow of time and the expansion of the universe are considered fundamental facts about the universe. Between measuring time with atomic clocks, observing the red shift of galaxies, and creating detailed 3D maps that show the evolution of our universe over the course of billions of years, one can see how time and the expansion of space are joined at the hip.

The question of why this is the case though, is one that has continued to frustrate physicists. Certain fundamental forces, like gravity, are not governed by time. In fact, one could argue without difficulty that Newton’s laws of motion and quantum mechanics work the same forwards or backwards. But when it comes to things on the grand scale like the behavior of planets, stars, and entire galaxies, everything seems to come down to the second law of thermodynamics.

This law, which states that the total chaos (aka. entropy) of an isolated system always increases over time, the direction in which time moves is crucial and non-negotiable, has come to be accepted as the basis for the arrow of time. In the past, some have ventured that if the universe began to contract, time itself would begin to flow backwards. However, since the 1990s and the observation that the universe has been expanding at an accelerating rate, scientists have come to doubt that this.

If, in fact, the universe is being driven to greater rates of expansion – the predominant explanation is that “dark energy” is what is driving it – then the flow of time will never cease being one way. Taking this logic a step further, two Armenian researchers – Armen E. Allahverdyan of the Center for Cosmology and Astrophysics at the Yerevan Institute of Physics and Vahagn G. Gurzadyan of Yerevan State University – argue that dark energy is the reason why time always moves forward....MORE
So the first thing I think of when I read the headline about time 'moving forward' is that bit from the Rubiayat and I jot it down and the second thing I think of is "Am I remembering Eddington correctly?" so I go to Wikipedia's 'Arrow of Time' page and there at the bottom of the main article is the Fitzgerald and I realize I have no hope of ever being original in this life and time keeps on slippin', slippin' slippin' into the future.

Sunday, May 29, 2016

Memorial Day 2016

Fort Snelling National Cemetary
"...that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion--that we here highly resolve that these dead shall not have died in vain, that this nation under God shall have a new birth of freedom, and that government of the people, by the people, for the people shall not perish from the earth." 
-Abraham Lincoln at Gettysburg, November 19, 1863

Saturday, May 28, 2016

Iceland Is Full (and stop with the offshore fund flows too)

From Curbed:

Iceland Is Full
The country of 330,000 had 1.26 million tourists last year
Iceland, population 330,000, had 1.26 million tourists last year as a combined result of it being home to various Game of Thrones filming locations and also being so beautiful as to have drawn Game of Thrones to film there in the first place. Now, essentially, the country is worried that it is full: overcrowding is a problem, along with a massive strain on infrastructure not built to accommodate so many people, as well the fact that tourists keep doing rude tourist things like trampling all over/ruining the natural environment. So for now, next time you consider a trip to Iceland, just take that beautiful pristine landscape you're imaging and fill with a whole bunch of other people just like you who can't find a bathroom.

Is Tourism Spoiling Iceland? [City Lab]
And from the Wall Street Journal:

Iceland Puts Freeze on Foreign Investors 
New law offers foreign holders of about $2.3 billion worth of krona-denominated government bonds a tough choice
Iceland has spent eight years locking down its financial markets to keep foreign investors in. Now some are complaining the island nation is trying to shove them out.
A law passed May 22 by Iceland’s parliament offers the foreign holders of about $2.3 billion worth of krona-denominated government bonds a Hobson’s choice: Sell out in June at a below-market exchange rate, or have the money they receive when their bonds mature impounded indefinitely in low-interest bank accounts.

Investors, including Boston-based mutual-fund companies Eaton Vance Corp. and Loomis Sayles & Co., a unit of Natixis SA, don’t want to go. They say they will reject the government’s offer.

“We would like to stay invested,” said Patrick Campbell, a global bond analyst at Eaton Vance.
The dispute is the result of a wholesale turnaround in Iceland’s relationship with foreign investors.
The country became synonymous with financial alchemy after its banks ballooned by borrowing in bond markets and attracting foreign depositors with high interest rates. That system imploded in 2008 when depositors made a run on the banks just as their bonds fell due, causing the krona to sharply devalue against the euro.

Yet a growing number of fund managers are now buying Icelandic government bonds, including those that were marooned on the island when it applied capital controls. The country is now one of the few offering a combination of high interest rates and strong economic growth prospects.
Eaton Vance and another holder of the legacy debt, also called “offshore” debt, hedge fund Autonomy Capital LP, have been courting the government for months to allow them to keep their cash on the island, even offering to swap their holdings into long-term bonds that they would pledge to hold on to.

But the country isn’t interested. Instead, officials behind the law say they aim to keep the $16.7 billion economy of the island with a population of 327,386 from being swamped anew by the ebb and flow of offshore funds.

“We don’t need the money,” said Mar Gudmundsson, governor of Iceland’s central bank. “These are remnants from the last boom and bust, and we are not going to repeat that mistake.”...MORE

News You Can Use: Smiling Faces Edition

"I never smile if I can help it. Showing one's teeth is a submission signal in primates. When someone smiles at me, all I see is a chimpanzee begging for its life."
From Althouse
"But in Japan, India, Iran, South Korea, and... Russia, the smiling faces were considered significantly less intelligent.... In countries such as India, Argentina, and the Maldives, meanwhile, smiling was associated with dishonesty...."

At the link — to "Why Some Cultures Frown on Smiling/Finally, an explanation for Bitchy Resting Face Nation" in The Atlantic — there are some charts arraying the countries from one extreme to the other....

Today in Whack Ungulate News: "Welsh sheep go on rampage...

...after eating cannabis plants."

From United Press International:
SWANSEA, Wales, May 25 (UPI) -- Officials from a city in South Wales are warning that a group of sheep could have ingested cannabis causing them to stir up trouble in nearby towns.

Swansea County Councillor Ioan Richard feared that sheep in the area could ingest cannabis plants that were dumped from an illegal cannabis factory.

"I dread to think what will happen if they eat what could well be cannabis plants -- we could have an outbreak out of psychotic sheep rampaging through the village," he said.

Richard added that one flock of sheep had already been seen roaming about a Welsh village and intruding on people's homes.

"There is already a flock of sheep roaming the village causing a nuisance," he said.
"They are getting in people's gardens and one even entered a bungalow and left a mess in the bedroom."...MORE

"Inside Silicon Valley's Culture of Spin"

As Elizabeth Holmes at Theranos is finding out, healthcare is different from food delivery apps.
From Fast Company, May 16:

Founders have learned that they need to embellish to get funded, but at what point does making bold claims become an outright lie?
"I get lied to by entrepreneurs every day," says Bob Kocher, a venture capitalist who specializes in health IT.

Kocher is regularly confronted by sky-high revenue projections in pitch decks for customers that are currently enrolled in a free pilot; "advisors," who the founders actually met once for coffee; or a pitch deck that lists a well-known hospital as a customer when the reality is that a lone physician, who happens to be a family friend, is playing with the product.

Kocher says he expects hyped-up marketing to a certain extent as part of the job, but it occasionally crosses the line. "Founders are trying to convince you of their vision, I get it," he says. "But that often leads to [them] getting loose with knowable facts."

Exaggerating claims. Glossing over failures. Fudging numbers. Getting loose with knowable facts. These things are all commonplace in Silicon Valley and other tech hubs, where dozens of startups are selling a dream to investors and the press in the hopes of breaking through the pack. Health-tech entrepreneurs, who raked in more than $4 billion in 2015 alone, are among the worst offenders.

But entrepreneurs say they have good reasons for doing it. Many founders use buzzwords like "Internet of Things" or "patient experience," as they have seen investors flocking to trendy categories. Others have seen their competition exaggerate or cherry-pick the facts, so why shouldn’t they? As one health-tech entrepreneur, who requested anonymity, puts it: "Being honest in Silicon Valley is like being the one member of an Olympic team that isn't on steroids."

I interviewed a dozen operators at health-tech startups and investors to understand the culture of hyperbole: Is it helping or hurting founders? And at what point does making bold claims or fudging facts become an outright lie? For startups in the medical industry, this can result in real or perceived patient harm, as well as investigations and/or regulatory oversight For this reason, I focused on the health-tech space but recognize that hype isn't "sector agnostic," as they say. Here's what I learned.

Where Is The Pressure To Exaggerate Coming From?
Kocher maintains that he’s far more likely to take a second meeting with an entrepreneur that levels with him. After all, he’ll find out anyway about the missteps and challenges if he agrees to finance the company and join the board. And it's far better to hear it from the entrepreneur up front than find out later, which often results in an atmosphere of mutual distrust.

Fellow health investor Lisa Suennen is also on the hunt for straight-shooters. She’s usually able to see through the marketing and hype after decades of investing, but not always. On one occasion, she showed up to an initial board meeting for a portfolio company and saw an unfamiliar data set on the whiteboard. "These numbers were different than the ones I had seen on the pitch deck," Suennan recalls. "They told me that I had obviously been given 'investor data' rather than the 'real operating data'."

But entrepreneurs who have tried being honest with investors say they have been burned. "VCs will give you points for honesty, but they won’t give you money," says one entrepreneur who requested anonymity, as they are currently raising a round. "So we all pick and choose data to show growth."

A twentysomething biotech founder, who also asked to remain anonymous, recalls an angel investor taking the team out to lunch to rewrite all of their bios before a VC pitch. That same founder was also turned down from a financing round for having "too much integrity."....MORE
It was at this point I began laughing uncontrollably 

HT: The Big Picture

What To Read At Your Hamptons Vacation Rental

Following up on "Questions America Wants Answered: Is It Possible To Snag A Last-Minute Vacation Rental In the Hamptons?".
From Capital Spectator:

Book Bits | 28 May 2016

What They Do With Your Money:
How the Financial System Fails Us and How to Fix It

By Stephen Davis, et al.
Summary via publisher (Yale University Press)
Each year we pay billions in fees to those who run our financial system. The money comes from our bank accounts, our pensions, our borrowing, and often we aren’t told that the money has been taken. These billions may be justified if the finance industry does a good job, but as this book shows, it too often fails us. Financial institutions regularly place their business interests first, charging for advice that does nothing to improve performance, employing short-term buying strategies that are corrosive to building long-term value, and sometimes even concealing both their practices and their investment strategies from investors.
Only Humans Need Apply: Winners and Losers in the Age of Smart Machines
By Thomas H. Davenport and Julia Kirby
Review via FT
An IBM executive told a recent conference that when supercomputer Deep Blue was halfway through its 1997 chess match with Garry Kasparov, it made a random move, due to a software bug. Assuming the machine was smarter than it was, Kasparov later made a strategic error that helped hand Deep Blue victory in the match.
Thomas Davenport and Julia Kirby warn that humans could, like Kasparov, cede the future to machines too easily. “Many knowledge workers are fearful,” they write. “We should be concerned, given the potential for these unprecedented tools to make us redundant. But we should not feel helpless in the midst of the large-scale change unfolding around us.”
Who Needs the Fed?: What Taylor Swift, Uber, and Robots Tell Us About Money, Credit, and Why We Should Abolish America’s Central Bank
By John Tamny
Summary via publisher (Encounter Books)
The Federal Reserve is one of the most disliked entities in the United States at present, right alongside the IRS. Americans despise the Fed, but they’re also generally a bit confused as to why they distrust our central bank. Their animus is reasonable, though, because the Fed’s most famous function—targeting the Fed funds rate—is totally backwards. John Tamny explains this backwardness in terms of a Taylor Swift concert followed by a ride home with Uber.
Age of Discovery: Navigating the Risks and Rewards of Our New Renaissance
By Ian Goldin and Chris Kutarna
Summary via publisher (Bloomsbury)
Age of Discovery explores a world on the brink of a new Renaissance and asks: How do we share more widely the benefits of unprecedented progress? How do we endure the inevitable tumult generated by accelerating change? How do we each thrive through this tangled, uncertain time? In Age of Discovery, Ian Goldin and Chris Kutarna show how we can draw courage, wisdom and inspiration from the days of Michelangelo and Leonardo da Vinci in order to fashion our own Golden Age. – See more at: http://www.bloomsbury.com/uk/age-of-discovery-9781472936387/#sthash.5gFRhwhe.dpuf

Questions America Wants Answered: Is It Possible To Snag A Last-Minute Vacation Rental In the Hamptons?

From Penta:

Dream House: This 12-bedroom East Hampton rental property is equipped with a pool house surrounded 
by stone courtyards, covered arbors, and idyllic gardens. The price: $650,000 for the summer.
Still looking for a summer rental in New York’s Hamptons? The wise way to approach the rental market on Long ­Island’s South Fork is, of course, to scout out options in January and secure your dream property early on. But life isn’t ­always tidy, and sometimes last-minute scrambling is a necessity.

The good news is that the late onset of spring delayed many rental decisions, so the available inventory is pretty good. But that doesn’t necessarily translate into a bargain when it comes to the manicured lawns, shingled mansions, and oceanfront villas of iconic Hamptons locales such as Southampton, Amagansett, and East Hampton.

The choicest rental properties in those villages cost “anywhere from $750,000 to $1 million for the summer,” says Paul Brennan, a broker at Douglas Elliman Real Estate. According to brokers’ data, there are about 50 rental properties still available in East Hampton and Southampton appropriate to the high-end Hamptons summer experience.

The best offerings we could find: A 12-bedroom East Hampton Cotswold-inspired estate with horse stables, sunken spa, and mature trees, available for $650,000 for the season—which traditionally stretches from Memorial Day weekend through Labor Day weekend—and an eight-bedroom Southampton cottage with pool and tennis court, still available at $560,000, where, as the listing says, you can “entertain to the sound of the ocean waves.”

Don’t despair. Chances of bagging a pleasant rental at a more reasonable price improve in the hamlets of Water Mill, Bridgehampton, Sagaponack, and Wainscott. Rentals there range from $50,000 to $750,000 a summer, with anything south of Montauk Highway commanding higher prices.

We found two properties at opposite ends of the spectrum that we thought offered good value for the money: an 1812 Wainscott schoolhouse within walking ­distance of the beach for $190,000, and a secluded Ocean Road home in Bridgehampton with a gym, theater, and wine room for $475,000.
North of the highway are Sag Harbor, gathered around a harbor dense with yachts and sailboats, and nearby Shelter Island, with its woods and water views. “Sag Harbor is more of a boaters’
community,” says Dana Trotter, a broker at ­Sotheby’s International Realty, “with rentals that are usually not as expensive.”

Shelter Island, accessible by ferry, “is more of an understated, family-oriented community with quiet money,” notes Douglas Elliman’s Brennan. “You don’t get the overwhelming crowds you do in the Hamptons. It’s much more the way it used to be.”

Hamptons rental prices are determined both by square footage and amenities, which can mean the amount of privacy, the style of the home, and its proximity to golf courses, tennis courts, and the ocean.
“Do you want it to feel like a home or a vacation rental?” Trotter usually asks renters. Beach homes that offer the latest Park Avenue luxuries quickly rise in price.

While summer rentals in the Hamptons are always tight, this year appears to provide marginally more choice than normal. “There is certainly a lot more inventory than there used to be,” says Trotter, largely because the slowdown in sales has many homeowners temporarily renting out homes they want eventually to sell (see “Luxury Second-Home Prices Up 11% in 2015,”Barron’s Penta, March 26)....MORE

"eBay founder backing Gawker’s appeal of Hulk sex tape verdict"

From the New York Post:

Two Silicon Valley billionaires with a history of bad blood are squaring off over Gawker.
Pierre Omidyar, an eBay co-founder, is leading the charge to support Gawker in its appeal of a $140 million judgment awarded to Hulk Hogan, whose lawsuit was bankrolled by rival billionaire and PayPal co-founder Peter Thiel, The Post has learned.

Omidyar’s First Look Media, the online news venture that includes The Intercept, is reaching out to other media organizations to file friend-of-the-court briefs in support of Nick Denton’s Gawker, which could be bankrupted by the Hogan judgment.

“First Look Media is looking into organizing amicus support for Gawker in its legal fight and appeal against Hulk Hogan,” Lynn Oberlander, First Look’s general counsel, exclusively told The Post.
By filing the amicus briefs in support of Gawker, First Look could effectively elevate the trial into a First Amendment rights case by pitting Thiel against dozens of media organizations — many of which are owned by other billionaires.

First Look has expressed support before for Gawker, but that was before Thiel’s involvement in the case was revealed this week in a Forbes story. Now there is renewed interest on Omidyar’s part, sources said.

The history between the two billionaires goes back more than a decade, when Omidyar’s eBay first purchased PayPal, which Thiel co-founded with Elon Musk, the Tesla Motors entrepreneur....MORE
We haven't yet posted Denton's open letter to Thiel which reads as though Denton has lost it, nor have we posted any of the erudite commentary floating around on press freedom, billionaire plutocrat psychology and differences between libel and invasion of privacy claims in U.S. law.
Stay tuned.
For Sale: 1 Gawker Media With Attached Lawsuit Judgement

Friday, May 27, 2016

Yellen Says Rate Hikes Soon As Need More Ammo "In Case Of Shock"

From ZeroHedge:
...Live Feed (The event started at 1030ET with Yellen is due to speak at 1315ET.. though it appears they are running late)...
And this happened...
And then she said...
And this happened...

And so admitting that The Fed needs to raise rates to be able to cut rates has sent stocks lower...


Doctor Uses Heimlich Maneuver, Saves Life

From the Cincinnati Enquirer:
When he heard that a resident was choking, Perry Gaines, maître d’ for the Deupree House dining room, ran toward the table.

Gaines has been trained in the Heimlich maneuver and has performed it at least twice in the two years he has worked at the Hyde Park senior living facility.

When Gaines arrived at the table, Dr. Henry Heimlich, a 96-year-old resident of the Deupree House who invented the famous technique for clearing a blocked airway, was standing behind the woman, ready to perform it.

Typically, a staff member would do it. “But,” Gaines said, pausing, “it is Dr. Heimlich....

HT: MetaFilter

Although the Cincinnati.com story says this was Heimlich's first use of the Heimlich one of the MetaFilter commenters dug up a 2003 story from the BBC that said he had already used it once. The BBC story also said that in some parts of the world the good doctor is known for something else.

EIA Weekly Supply/Demand Report

July futures: $2.172 +0.021
The report quotes June prices which have rolled off.
From the Energy Information Administration:
(For the Week Ending Wednesday, May 25, 2016)
  • Natural gas spot prices fell at most locations outside of the northeastern United States this report week (Wednesday, May 18, to Wednesday, May 25). The Henry Hub spot price fell by 14¢, from $1.91 per million British thermal unit (MMBtu) last Wednesday to $1.77/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the June 2016 contract price fell slightly from $2.001/MMBtu last Wednesday to $1.992/MMBtu yesterday.
  • Net injections to working gas totaled 71 billion cubic feet (Bcf) for the week ending May 20. Working gas stocks are 2,825 Bcf, which is 37% above the year-ago level and the five-year (2011-15) average for this week.
  • According to Baker Hughes data, for the week ending May 20, the natural gas rig count decreased by 2 to 85 and oil-directed rigs remained flat at 318. The total rig count now stands at 404.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 8.5% to $5.49/MMBtu for the week ending Friday, May 20. The prices of all of the fuels making up the composite price increased. Ethane rose by 3.5%, natural gasoline rose by 8.4%, butane rose by 8.8%, isobutane rose by 9.3%, and propane rose by 10.6%....
Nymex near-month prices down. At the New York Mercantile Exchange (Nymex), the June 2016 contract price declined by less than a penny, from $2.001/MMBtu last Wednesday to $1.992/MMBtu yesterday. On the other hand, the 12-month strip, which averages the June 2016 through May 2017 Nymex contracts, rose from $2.535/MMBtu to $2.641/MMBtu over the report week. While the near-month contract price declined, all other prices in the 12-month strip rose during the report week. 
Supply flat. According to data from PointLogic, average total supply for the report period remained flat this week. Dry production was flat, averaging 74 billion cubic feet per day (Bcf/d) for the week, while net imports from Canada declined 1% and accounted for 6 Bcf/d of supply. 
Consumption falls. Average consumption for the period declined by 4%, according to data from PointLogic. This decline was driven by a decrease in residential/commercial consumption, which fell 23% week on week, likely the result of warmer weather. Power burn rose 6% week over week, exports to Mexico remained flat at 3.5 Bcf/d, and industrial consumption fell by 2%....
Mean Temperature Anomaly (F) 7-Day Mean ending May 19, 2016

"Have You Ever Tried to Sell a Diamond?"

Common sense tells us that the only way to increase the value of 
diamonds is to make them scarce, that is to reduce production.

Nothing is forever.
Except, maybe, Neil Diamond.

A topic of endless fascination, a major piece from The Atlantic, February 1982:

An unruly market may undo the work of a giant cartel and of an inspired, decades-long ad campaign
The diamond invention—the creation of the idea that diamonds are rare and valuable, and are essential signs of esteem—is a relatively recent development in the history of the diamond trade. Until the late nineteenth century, diamonds were found only in a few riverbeds in India and in the jungles of Brazil, and the entire world production of gem diamonds amounted to a few pounds a year. In 1870, however, huge diamond mines were discovered near the Orange River, in South Africa, where diamonds were soon being scooped out by the ton. Suddenly, the market was deluged with diamonds. The British financiers who had organized the South African mines quickly realized that their investment was endangered; diamonds had little intrinsic value—and their price depended almost entirely on their scarcity. The financiers feared that when new mines were developed in South Africa, diamonds would become at best only semiprecious gems. 
The major investors in the diamond mines realized that they had no alternative but to merge their interests into a single entity that would be powerful enough to control production and perpetuate the illusion of scarcity of diamonds. The instrument they created, in 1888, was called De Beers Consolidated Mines, Ltd., incorporated in South Africa. As De Beers took control of all aspects of the world diamond trade, it assumed many forms. In London, it operated under the innocuous name of the Diamond Trading Company. In Israel, it was known as "The Syndicate." In Europe, it was called the "C.S.O." -- initials referring to the Central Selling Organization, which was an arm of the Diamond Trading Company. And in black Africa, it disguised its South African origins under subsidiaries with names like Diamond Development Corporation and Mining Services, Inc. At its height -- for most of this century -- it not only either directly owned or controlled all the diamond mines in southern Africa but also owned diamond trading companies in England, Portugal, Israel, Belgium, Holland, and Switzerland. 
De Beers proved to be the most successful cartel arrangement in the annals of modern commerce. While other commodities, such as gold, silver, copper, rubber, and grains, fluctuated wildly in response to economic conditions, diamonds have continued, with few exceptions, to advance upward in price every year since the Depression. Indeed, the cartel seemed so superbly in control of prices -- and unassailable -- that, in the late 1970s, even speculators began buying diamonds as a guard against the vagaries of inflation and recession. 
The diamond invention is far more than a monopoly for fixing diamond prices; it is a mechanism for converting tiny crystals of carbon into universally recognized tokens of wealth, power, and romance. To achieve this goal, De Beers had to control demand as well as supply. Both women and men had to be made to perceive diamonds not as marketable precious stones but as an inseparable part of courtship and married life. To stabilize the market, De Beers had to endow these stones with a sentiment that would inhibit the public from ever reselling them. The illusion had to be created that diamonds were forever -- "forever" in the sense that they should never be resold. 
In September of 1938, Harry Oppenheimer, son of the founder of De Beers and then twenty-nine, traveled from Johannesburg to New York City, to meet with Gerold M. Lauck, the president of N. W. Ayer, a leading advertising agency in the United States. Lauck and N. W. Ayer had been recommended to Oppenheimer by the Morgan Bank, which had helped his father consolidate the De Beers financial empire. His bankers were concerned about the price of diamonds, which had declined worldwide. 
In Europe, where diamond prices had collapsed during the Depression, there seemed little possibility of restoring public confidence in diamonds. In Germany, Austria, Italy, and Spain, the notion of giving a diamond ring to commemorate an engagement had never taken hold. In England and France, diamonds were still presumed to be jewels for aristocrats rather than the masses. Furthermore, Europe was on the verge of war, and there seemed little possibility of expanding diamond sales. This left the United States as the only real market for De Beers's diamonds. In fact, in 1938 some three quarters of all the cartel's diamonds were sold for engagement rings in the United States. Most of these stones, however, were smaller and of poorer quality than those bought in Europe, and had an average price of $80 apiece. Oppenheimer and the bankers believed that an advertising campaign could persuade Americans to buy more expensive diamonds. 
Oppenheimer suggested to Lauck that his agency prepare a plan for creating a new image for diamonds among Americans. He assured Lauck that De Beers had not called on any other American advertising agency with this proposal, and that if the plan met with his father's approval, N. W. Ayer would be the exclusive agents for the placement of newspaper and radio advertisements in the United States. Oppenheimer agreed to underwrite the costs of the research necessary for developing the campaign. Lauck instantly accepted the offer. 
In their subsequent investigation of the American diamond market, the staff of N. W. Ayer found that since the end of World War I, in 1919, the total amount of diamonds sold in America, measured in carats, had declined by 50 percent; at the same time, the quality of the diamonds, measured in dollar value, had declined by nearly 100 percent. An Ayer memo concluded that the depressed state of the market for diamonds was "the result of the economy, changes in social attitudes and the promotion of competitive luxuries." 
Although it could do little about the state of the economy, N. W. Ayer suggested that through a well-orchestrated advertising and public-relations campaign it could have a significant impact on the "social attitudes of the public at large and thereby channel American spending toward larger and more expensive diamonds instead of "competitive luxuries." Specifically, the Ayer study stressed the need to strengthen the association in the public's mind of diamonds with romance. 
Since "young men buy over 90% of all engagement rings" it would be crucial to inculcate in them the idea that diamonds were a gift of love: the larger and finer the diamond, the greater the expression of love. Similarly, young women had to be encouraged to view diamonds as an integral part of any romantic courtship. 
Since the Ayer plan to romanticize diamonds required subtly altering the public's picture of the way a man courts -- and wins -- a woman, the advertising agency strongly suggested exploiting the relatively new medium of motion pictures. Movie idols, the paragons of romance for the mass audience, would be given diamonds to use as their symbols of indestructible love. In addition, the agency suggested offering stories and society photographs to selected magazines and newspapers which would reinforce the link between diamonds and romance. 
Stories would stress the size of diamonds that celebrities presented to their loved ones, and photographs would conspicuously show the glittering stone on the hand of a well-known woman. Fashion designers would talk on radio programs about the "trend towards diamonds" that Ayer planned to start. The Ayer plan also envisioned using the British royal family to help foster the romantic allure of diamonds. An Ayer memo said, "Since Great Britain has such an important interest in the diamond industry, the royal couple could be of tremendous assistance to this British industry by wearing diamonds rather than other jewels." Queen Elizabeth later went on a well-publicized trip to several South African diamond mines, and she accepted a diamond from Oppenheimer. 
In addition to putting these plans into action, N. W. Ayer placed a series of lush four-color advertisements in magazines that were presumed to mold elite opinion, featuring reproductions of famous paintings by such artists as Picasso, Derain, Dali, and Dufy. The advertisements were intended to convey the idea that diamonds, like paintings, were unique works of art. 
By 1941, The advertising agency reported to its client that it had already achieved impressive results in its campaign. The sale of diamonds had increased by 55 percent in the United States since 1938, reversing the previous downward trend in retail sales. N. W. Ayer noted also that its campaign had required "the conception of a new form of advertising which has been widely imitated ever since. There was no direct sale to be made. There was no brand name to be impressed on the public mind. There was simply an idea -- the eternal emotional value surrounding the diamond." It further claimed that "a new type of art was devised ... and a new color, diamond blue, was created and used in these campaigns.... " 
In its 1947 strategy plan, the advertising agency strongly emphasized a psychological approach. "We are dealing with a problem in mass psychology. We seek to ... strengthen the tradition of the diamond engagement ring -- to make it a psychological necessity capable of competing successfully at the retail level with utility goods and services...." It defined as its target audience "some 70 million people 15 years and over whose opinion we hope to influence in support of our objectives." N. W. Ayer outlined a subtle program that included arranging for lecturers to visit high schools across the country. "All of these lectures revolve around the diamond engagement ring, and are reaching thousands of girls in their assemblies, classes and informal meetings in our leading educational institutions," the agency explained in a memorandum to De Beers. The agency had organized, in 1946, a weekly service called "Hollywood Personalities," which provided 125 leading newspapers with descriptions of the diamonds worn by movie stars. And it continued its efforts to encourage news coverage of celebrities displaying diamond rings as symbols of romantic involvement. In 1947, the agency commissioned a series of portraits of "engaged socialites." The idea was to create prestigious "role models" for the poorer middle-class wage-earners. The advertising agency explained, in its 1948 strategy paper, "We spread the word of diamonds worn by stars of screen and stage, by wives and daughters of political leaders, by any woman who can make the grocer's wife and the mechanic's sweetheart say 'I wish I had what she has.'"
De Beers needed a slogan for diamonds that expressed both the theme of romance and legitimacy. An N. W. Ayer copywriter came up with the caption "A Diamond Is Forever," which was scrawled on the bottom of a picture of two young lovers on a honeymoon. Even though diamonds can in fact be shattered, chipped, discolored, or incinerated to ash, the concept of eternity perfectly captured the magical qualities that the advertising agency wanted to attribute to diamonds. Within a year, "A Diamond Is Forever" became the official motto of De Beers. ...

HT: Alpha Ideas

Making OPEC and DeBeers look like glee clubs, the tinsel trade maintains a brutal price discipline that would be the envy of the Sinaloa or the Worldwide Parsley Producers cartels....
9331 100C Purple Front

Dollar climbs, traders await Yellen speech for Fed clues

Commodities as a whole are fractionally weaker.
From Reuters:
The dollar index rose on Friday, on track for its strongest monthly performance since last November amid expectations the Federal Reserve may raise rates in coming months and investors awaiting fresh guidance from the head of the U.S. central bank.

The index .DXY was up 0.1 percent at 95.259, having pulled back from Wednesday's two-month peak of 95.661, with month-end rebalancing flows by asset managers likely to limit the gains, traders said. Holidays in Britain and the U.S. are likely to curtail volumes on Monday.

The dollar is still up 2.3 percent this month, among the top performing currencies, after a string of Fed officials raised expectations for a hike in interest rates as early as June.

"We will see some consolidation in the dollar after the recent gains with expectations of a June hike still in play," Nomura currency strategist, Yujiro Goto, said.

"Next week is a big one with U.S. non-farm payrolls and ISM (Institute for Supply Management) data, so investors are awaiting for more data," Goto said.

Fed Chair Janet Yellen is due to speak at an event hosted by the Harvard University at 1715 GMT. Her speech comes after a slew of Fed policymakers from John Williams to Bill Dudley and James Bullard all sounded relatively hawkish.

"I'm not sure how concerted this whole thing has been. If it's all kind of planned or if it's just individual members speaking," Nordea Bank head of trading, Jesper Bargmann, said, referring to the Fed officials' comments....MORE 

Volkswagen To Invest Up To 10 Billion Euros In New Battery Factory

From The Telegraph:

VW 'to invest £8bn in battery factory' in a bid to reinvent itself as electric carmaker 
Volkswagen is reportedly to invest up to €10bn (£7.6bn) in a major new battery factory as it attempts to reposition itself as a leader in the electric car market.

The move is part of a bid by VW to reinvent itself in the wake of the damaging emissions-rigging scandal.
The company had already announced ambitious plans to sell one million electric and hybrid vehicles a year by 2025 and to invest more in batteries.

It is now understood that Matthias Müller, the chief executive of VW Group, is to put plans for a massive new battery factory before the company’s supervisory board next month.

“We want a big hit, which will put us at the forefront of the industry,” a company source told Germany's Handelsblatt newspaper.
A spokesman for VW described the report as “speculation”.

But there is no doubting VW’s drive to corner a major share of the electric market as it tries to restore its image after the diesel emissions sandal, which will cost the company billions in recalls, fines and litigation fees.

Earlier this year, Mr Müller vowed to “make electric cars one of VW’s new hallmarks”.
If it goes ahead with plans for a battery factory, VW will be following the lead of the US electric carmaker Tesla, which is currently building its own “Gigafactory” in Nevada.

Together with Panasonic, Tesla is investing up to $5bn (£3.4bn) in the facility. Once operational, Elon Musk, the Tesla chief executive, says it will produce more batteries a year than were made worldwide in 2013.

The rationale behind car makers building their own battery factories is to give them independence from the Asian manufacturers which currently dominate the market....MORE
However, as we saw yesterday the battery makers are very dependent on Asian supply chains:
Why the CIA Reads The Financial Times (and you should too) Tesla and Cobalt