Tuesday, February 20, 2018

Och-Ziff: Dirty Deeds, Not Dirt Cheap (OZM)

These are some nasty, nasty playas.
From Bloomberg::

Och-Ziff's Plea Deal May Be Upended With Restitution Claim
  • Investors challenge deal to end U.S. charges over African mine
  • Och-Ziff paid $413 million in 2016 to end U.S. bribery probe
An investor group is demanding as much as $600 million in restitution from Och-Ziff Capital Management Group LLC over lost mining rights in a move that might upend the hedge fund’s deal to settle U.S. charges that it was involved in a sprawling African bribery conspiracy.

The request Tuesday from 50 investors in Africo Resources Ltd. raises doubts over whether Och-Ziff, which has $33 billion under management, can put the yearslong corruption saga behind it. U.S. District Judge Nicholas Garaufis will now have to consider whether to order Och-Ziff to pay up or set a hearing to investigate Africo’s claims.

An Och-Ziff unit pleaded guilty in September 2016 to participating in a bribery conspiracy to help acquire mining assets in several African countries, including the Kalukundi copper and cobalt mine in the Democratic Republic of Congo that Africo had exclusive rights to. Och-Ziff agreed to pay $412 million to resolve investigations by prosecutors and regulators.
But in another snag, a $213 million criminal penalty the hedge fund paid the Justice Department had already been deposited with the U.S. Treasury, instead of being held in escrow as prosecutors agreed, a lawyer for the investors said.

"The Department of Justice has abdicated its legal obligations," a lawyer for Africo shareholders said in a memo to the court. Instead it puts “its own interests -- and those of the defendant -- ahead of victims."

Garaufis is preparing to sentence the hedge fund. He sharply rebuked prosecutors earlier demanding to know why only one person was charged in the sprawling bribery probe while the hedge fund got a deal under which the charges will be dismissed in three years if it abides by the agreement.

"I’m sick and tired of lawyers from white-shoe law firms marching into my courtroom and getting a deferred-prosecution agreement for their clients," Garaufis said. "We have a law, so someone should go out and enforce it."...MORE
Last trade: $2.555-0.035 
In March 2017 with the stock at $2.16 we mentioned: "Barring a meltdown in the wider market the stock is probably getting close to a price where the bottom-feeders will gather."
Here's the recent action via FinViz:

OZM Och-Ziff Capital Management Group LLC daily Stock Chart
And here we are again.

Also at Bloomberg:


And many more including a major story from Institutional Investor
Och-Ziff Hedge Fund Settled U.S. Corruption Charges, Now Investors Wonder Where Their Money Went
And a couple pieces on financing Mugabe's Zimbabwe torturers, use the 'search blog' box if interested.

How to Know When Active Management Performs Best

From Advisor Perspectives:
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
  • Active equity fund performance depends on the stock picking skill of the investment team as well as current market conditions.
  • Recent academic research confirms that returns to stock picking skill rises in tandem with increased stock return cross-sectional dispersion and skewness, along with greater market volatility.
  • Active equity opportunity (AEO) is estimated using these measures to show how active the emotional crowds are at driving stock return dispersion.
  • Returns-to-skill is strongly influenced by the current market environment as captured by Active Equity Opportunity.
  • The impact of AEO on stock picking is largely independent of where we are in the business cycle.
  • Returns-to-skill varies positively with the degree to which a fund is truly active, as measured by conviction, tracking error and size of assets under management.
  • It may be beneficial to allocate more to stock picking funds and less to market exposure funds as AEO rises.
  • When AEO is low, it still does not make sense to invest in closet indexers, since, while they outperform their truly active counterparts, their average alpha remains negative.
At the core of the active-passive debate is the question of whether active equity managers are skilled enough to cover costs. A large number of studies show the average fund underperforming a passively managed portfolio, revealing that stock-picking skill is on average insufficient to offset fees.

On the other hand, many studies demonstrate truly active funds, as contrasted to closet indexers, do outperform. Truly active funds are those with high active share, low R-squared with respect to the fund’s benchmark, smaller AUM (generally less than $1 billion), strategy consistency and large positions in best-idea stocks, among other identified fund characteristics. Unfortunately, distribution incentives strongly encourage funds to grow excessively large and become closet indexers, leading to the average industry underperformance, as closet indexers far outnumber truly active funds.

In recent years, however, many truly active funds have underperformed as well. This begs the question of whether the returns to stock-picking skill varies over time. Indeed, there is considerable anecdotal evidence that stock picking is effective in certain market environments and not in others....

I'll stop here to make a quick point. The author of this piece, C. Thomas Howard, holds a BS in mechanical engineering from the University of Idaho, an MS in management science from Oregon State University, and a PhD in finance from the University of Washington.
He's a Professor Emeritus at the University of Denver.
And he should have met grandmother.

She advised the young people that nine times out of ten when you say 'begs the question' you actually mean raises the question and her opinion of you would decline with each misuse.
And if you used decimate to mean anything other than 10%, well you might as well just start slinking away. She was a sharp-tongued woman and not shy about pointing out when someone was wrong on the pre-internet.

Hey Gang, Let's Do a Tontine!

A quick search of the blog (somewhat surprisingly) turned up very few tontine references with 2013's "William Shakespeare: Annuity Beneficiary" being the most relevant to today's link:
More accurately annuitant and more accurately still annuity-tontine-hybrid annuitant. But I didn't think anyone but our actuary readers would click an "annuity-tontine-hybrid annuitant" headline....
If anyone beyond the actuaries is still with me, here's a more interesting story from Dan McCrum at FT Alphaville:

Someone is wrong on the internet: tontine tokens
Tontines are an idea which occasionally bobs up in the debate about how the world can save for retirement. Also known as death pools, they help address longevity by dispersing the savings of the dead to those still clinging on.

For instance, here's a paper suggesting a continuously liquidating mutual fund as a modern update. Tontines have been popular in the past as there is a lottery-like quality to surviving into very old age.

As insurance products, however, they had problems with fraud, along with concerns about the incentives to boost payouts by helping fellow members off the mortal coil. Tontines were largely banned in the US a century ago, hundreds of years after the Brits outlawed them.

Defined benefit pension systems essentially internalise the death pool process, but a switch to individual retirement accounts raises a problem of what happens when people run out of money. Annuities, which provide a lifetime income purchased from an insurance company, can be expensive.

Maybe technology could help, which is usually the point when people for whom Blockchain is the answer to all questions chime in.

Which brings us to the Tontine Trust, which appears to have appropriated the Vulcan salute "live long and prosper" among the grab bag of hopes and dreams used to justify a mooted initial coin offering of Ton$.

Problems start with various inappropriate uses of the present tense, as if the tontine trusts are already in existence. Here's a breezy video from the how it works section:...
... "TonCards can be used at more than 40m merchants worldwide". This is wrong. The aspiration is issuing banks which belong to the Visa and/or Mastercard networks will issue TonCards at some point in the future....
....MUCH MORE and the comments reflect well on the informed, erudite and good-looking audience.

We do have another semi-relevant tontine mention, August 2017's "Hey Kids, Wanna Do An Initial Coin Offering But Need Working Capital Until the ICO?":
This will not end well....
... I think I'd be more comfortable entering into a tontine with a bunch of homicidal cannibals.
And the Hey Gang/Hey Kids trope?
-Babes in Arms, 1939
Mickey Rooney, Judy Garland
Ms Garland did another movie that year that is probably more familiar to our younger readers, something about a Wizard.

Capital Markets: "Dollar Trades Higher, but Stocks Challenged at Key Chart Point"

From Marc to Market:
The dollar is finding better traction today, building on the upside reversal seen before the weekend. The news stream has been light and it seems like primarily an issue of positioning rather than a change in sentiment or the consensus narrative. The focus has shifted from monetary policy and idea that the ECB and BOJ are exiting their extraordinary monetary policy to return of the twin deficit problem in the US.

One of the twins, the budget deficit occupies center stage in the US today. It is not so much the deficit as the paying for it. That is the US Treasury will raise a boat load of money today. It will issue $96 bln in three- and six-month bills, and $55 bln in a four-week cash management bill. It will also sell $28 bln of two-year notes. In the next two days it will raise another $80 bln in other note sales.

The anticipation of this supply has pushed short-term rates higher, but it has yet to appear as a material force in the cross-currency basis swaps. The US debt market appears to have been building in a concession ahead of the new supply. The yield of the entire coupon curve is about three basis points higher. Global yields are mostly firmer. Sweden is a notable exception.

Despite one of the most aggressive monetary policies, strong growth and a large current account surplus, the Riksbank has been unable to create inflation. Today, Sweden reported a 0.8% decline in January CPI, which was a bit more than expected, and pushed the year-over-year rate to 1.6% from 1.7%. The market had expected a small increase. The underlying rates, which uses fixed mortgage interest rates, fell 0.9% (median in the Bloomberg survey was for a 0.7% decline) and the year-over-year rate eased to 1.7% from 1.9%. This is the slowest underlying rate since March 2017. The krona is the weakest of the major currencies today, losing 1.1% against the dollar and 0.6% against the euro.

The Australian dollar is slipping to a new four-day low. Support is seen in the $0.7855-$0.7880 band. The minutes from the RBA's recent meeting failed provide new insight, and the Australian dollar's weakness seems to be a function of the US dollar's broader recovery. Inflation is expected to increase only gradually, and while household debt is elevated, low rates help prices and employment.

The German ZEW survey slipped. The measure of the current situation eased to 92.3 from 95.2 and the expectations component fell to 17.8 from 20.4. On one hand, the German economy continues to motor along. On the other hand, political uncertainty lingers, and perhaps more importantly, the DAX fell almost 12% from January 23 peak to the low on February 9. The recovery so far has been rather flat, not event reaching a 38.2% retracement of the sudden drop.

Indeed, the heavier tone in the European equity markets yesterday spilled over in to Asia. The MSCI Asia-Pacific Index ended a six-day rally to close nearly 0.9% lower. It recovered nearly 50% of its loss from late January before moving lower today. Of note, disappointing HSBC earnings seemed to cut short the recovery in the Hang Seng, which finished 0.8% lower. Foreigners were sellers of shares in the region....

How Denmark Got to Denmark: The Role of Landed Elites in Development

From Chicago Booth's ProMarket blog:
For most people the idea of landed elites conjures up images of aristocrats sipping tea while enjoying the proceeds of the labors of the peasants on their land. New research on Denmark suggests, however, a quite different story—one in which these elites in fact played a crucial role for development, and ultimately enabled the empowerment of the peasant class through agricultural cooperation.
In a lighthearted manner, Francis Fukuyama once described the issue facing developing countries as the problem of “getting to Denmark,” a metaphor for a society characterized by wealth, the rule of law, good governance, and related virtues. More recently, senator Bernie Sanders declared in the 2016 presidential primaries that “we should look at countries like Denmark,” and even president Donald Trump was recently reported to be in favor of more Scandinavian (specifically Norwegian in this case) immigration. Outside the world of politics, Denmark is perhaps best known for the concept of “hygge” (portrayed as a sort of cozy candlelit sense of security and happiness), and for often being at the top of the list of the world’s happiest countries. But if we all want to get to Denmark, we might wonder how Denmark actually got to Denmark?

For economists and historians, the answer has much to do with a rapid modernization of agriculture a century and a half ago, when peasant producers captured an important share of export markets, making them rich and giving them increased political power to boot.

Today Danish agricultural products can be found all over the world, and Denmark’s current status as an “agricultural superpower,” dominated by massive firms such as Arla (a dairy cooperative), is often traced back to developments in the late nineteenth century. At that time a modern dairy industry based on a new technology, the steam-powered automatic cream separator, made it possible to use milk which had been transported over long distances to be processed in a central production facility, and voluntary associations of Danish peasants, the cooperatives, sprang up to take advantage of this possibility. Within a decade hundreds of cooperative creameries had spread throughout the whole country. In fact, immigrant Danes also played an important role for modernizing North American dairying, bringing the first automatic cream separators to the United States and Canada, and setting up cooperatives (not completely incidentally, the modern cooperative Land O’Lakes had a plant in Denmark, Wisconsin, until 2014).
Massive increases in productivity followed, production boomed, Denmark captured a large share of the important UK market for butter and other agricultural products, and witnessed rapid economic catch-up with the leading economies of the day, as traditional suppliers of agricultural goods such as Ireland and the Netherlands lost market share.
This Danish success is usually set within the context of the American “grain invasion” from the 1870s, when cheap exports of American grain flooded Europe, promoting a backlash of protectionism. Denmark, like the United Kingdom, chose to remain open, however, using the cheap grain as fodder for increased animal production. Thus, modern Denmark emerged based on a democratic, cooperative, and liberal countryside, providing something of a role model to other agricultural countries around the world. It also achieved this in just a few years. The following map illustrates the speed with which the cooperatives spread, and plots the location of the cooperative creameries in 1890, just eight years after the establishment of the first....MORE

Monday, February 19, 2018

Oak Ridge National Laboratory's Report On China's Fastest Supercomputer in the World

Sunway TaihuLight is the computer ORNL will surpass later this year with the new Summit system, more than doubling the speed of the Sunway TaihuLight.
However....China is already planning an exascale machine, five times faster than Summit, capable of a billion billion calculations per second.
This piece is a personal bookmark I'll probably be referring back to. 

From Oak Ridge National Laboratory:

June 24, 2016
Report on the Sunway TaihuLight System
The Sunway TaihuLight System was developed by the National Research Center of Parallel Computer Engineering & Technology (NRCPC) , and installed at the National Supercomputing Center in Wuxi (a joint team with the Tsinghua University, City of Wuxi, and Jiangsu province) , which is in China's Jiangsu province. The CPU vendor is the Shanghai High Performance IC Design Center. The system is in full operation with a number of application s implemented and running on the system. The Center will be a public supercomputing center that provides services for public users in China and across the world. The complete system has a theoretical peak performance of 125 .4 Pflop/s with 10,649,600 cores and 1.31 PB of primary memory . It is based on a processor , the SW26010 processor, that was designed by the Shanghai High Performance IC Design Center. The processor chip is composed of 4 core groups (CGs) , see figure 1 , connected via a NoC , see figure 2, each of which includes a Management Processing Element (MPE) and 64 Computing Processing Elements (CPEs) arranged in an 8 by 8 grid. Each CG has its own memory space, which is connected to the MPE and the CPE cluster through the MC. The processor connects to other outside devices through a system interface (SI).

Each CPE Cluster is composed of a Management Processing Element (MPE) which is a 64 - bit RISC core which is supporting both user and system modes, a 256 - bit vector instructions, 32 KB L1 instruction cache and 32 KB L1 data cache, and a 256KB L2 cache. The Computer Processing Element (CPE) is composed of an 8x8 mesh of 64 - bit RISC cores, supporting only user mode, with a 256 - bit vector instructions, 16 KB L1 instruction cache and 64 KB Scratch Pad Memory (SPM)....
...MUCH MORE (24 page PDF)

January 29
"China set to launch its new supercomputer"
NVIDIA watches, some commentary after the jump...
January 11
With the Summit Supercomputer, U.S. Could Retake Computing’s Top Spot (NVDA)
September 2017
"The Astonishing Engineering Behind America's Latest, Greatest Supercomputer"

And many more, including:
June 2016

"Simultaneous harvest failures in key regions would bring global famine, says the Met Office"

We're probably a couple years from this concern even becoming a possibility so there's no immediacy and additionally the choice of the U.S. and China as the location of the crop failures is a bit problematic, based as much on ease of modeling as on the probability of the scenario unfolding.
Agricultural catastrophe could just as easily strike via a combination of cool/damp in Ukraine and western Russia along with drought in India.

You'll hear more over the next few years but the point to be made right now is: We have just experienced 30-some years of near-perfect conditions for industrial scale agriculture and are at risk of complacently forgetting the lesson of Tennyson's "In Memorium".*

From The Guardian, July 15, 2017:

Simultaneous harvest failures in key regions would bring global famine, says the Met Office 
Maize, rice, wheat: alarm at rising climate risk to vital crops

Governments may be seriously underestimating the risks of crop disasters occurring in major farming regions around the world, a study by British researchers has found.

The newly published research, by Met Office scientists, used advanced climate modelling to show that extreme weather events could devastate food production if they occurred in several key areas at the same time. Such an outcome could trigger widespread famine.

The scientists, led by Chris Kent, of the Met Office, focused their initial efforts on how extreme weather would affect maize, one of the world’s most widely grown crops. Heat and drought were the prime risks, although flooding was also included in the analysis.

The group found there is a 6% chance every decade that a simultaneous failure in maize production could occur in China and the US – the world’s main growers – which would result in widespread misery, particularly in Africa and south Asia, where maize is consumed directly as food.

“The impact would be felt at a global scale,” Kent told the Observer. “This is the first time we have been able to quantify the risk. It hasn’t been observed in the last 30 years, but the indications are that it is possible in the current climate.”

An example of the kind of disaster that could occur is provided by the maize harvests that failed last year in Africa. Communities in Zambia, Congo, Zimbabwe, Mozambique and Madagascar were affected and six million people were left on the brink of starvation. A joint failure of China and America’s maize harvest would have a far greater impact.

Having studied the risks facing maize production, the group is now following up this work by studying climate impacts on the world’s other staple crops – in particular rice, wheat and soya beans – in order to assess how weather extremes could affect their production.

According to the UN Food and Agriculture Organisation, maize, rice and wheat together make up 51% of the world’s calorie intake. Billions of people rely on these crops for survival. Any disruption to their production would have calamitous consequences.

The trouble is that crop-growing methods and locations have changed considerably over time, as has the climate and the probability of extreme events, Kent told the Observer. “This means the number of relevant observations to the present-day growing of stable crops has been reduced, and that limits our ability to have useful estimates of the risks to the growing of these crops.”

To get round this problem, the team ran 1,400 climate model simulations on the Met Office’s new supercomputer to understand how climate might vary in the next few years and found that the probability of severe drought was higher than if estimated solely from past observations. The scientists concluded that current agricultural policies could considerably underestimate the true risk of climate-related shocks to maize growing and food supply.

The particular risk outlined by the study envisaged simultaneous catastrophic disruptions in China and the US. In 2014 total world production of maize was around 1 billion tonnes, with the US producing 360 million tonnes and China growing 215 million. If production in these two countries were hit by simultaneous extreme weather events, most likely droughts, more than 60% of global maize production would be hit....MORE
Here's the paper via the Institute of Physics:

Using climate model simulations to assess the current climate risk to maize production

*Fifty-sixth stanza of Tennyson's "In Memoriam":
Man her last work, who seem'd so fair,
Such splendid purpose in his eyes,
Who roll'd the psalm to wintry skies,
Who built him fanes of fruitless prayer,

Who trusted God was love indeed
And love Creation's final law -
Tho' nature, red in tooth and claw
With ravine, shriek'd against his creed -
Much of the world, including large populations in the developed world, are only a few weeks (paychecks) removed from that nature, red in tooth and claw.

Lest We Forget, In April 2017 Platts Forecast Lithium Supply Would Outweigh Demand by 2018

This recollection was triggered by a story that crossed a few days ago. First up, from Platts:

Lithium supply to outweigh demand by 2018, cobalt to remain tight: CRU
Dublin (Platts)--26 Apr 2017 952 am EDT/1352 GMT
Lithium supply was expected to outweigh demand as early as next year, UK-based consultancy CRU's Rebecca Gordon said Wednesday, while the cobalt market should remain tight well into the next decade on continued supply shortness.

While massive growth in battery demand was set to see consumption of both metals soar in coming years, new lithium supply was expected to match demand by 2018, reaching a peak of 25% of total supply by 2022, Gordon told a Minor Metals Trade Association meeting in Dublin.

"The 2016 lithium cost curve shows why prices had to rise so sharply," Gordon said, referring to lithium carbonate and hydroxide spot prices of over $10,000/mt in 2017, having doubled in less than 12 months on rising expectations of a demand boom from battery metals and tightness in supply.

"By 2020, the picture has changed, with brine expansions and new hard rock production keep prices in check and $6,500-7,000 the new cost level."

By that time, China's brine resources in Tibet and Qinghai were expected to come online, reducing unit costs, while spodumene resources in Sichuan and lepidolite resources in Jianxi were "committed and probable", Gordon said.

Even modest demand forecasts see annual lithium output growing to 500,000 mt by 2020 from around 200,000 mt currently....MUCH MORE
And the story that triggered this stroll down Memory Lane? From the Financial Times, February 16:

Sale of $5bn lithium stake to test electric car hype
PotashCorp plans to sell a big stake in Chile’s SQM, a key supplier of the metal

When Canadian fertiliser company Potash Corp acquired shares in Chile’s SQM almost 20 years ago, the latter’s lithium business appeared an afterthought. Controlled by Julio Ponce, the well-connected son-in-law of Chile’s former dictator, Augusto Pinochet, SQM was known as a fertiliser company.

However, the then obscure lithium business is why the 32 per cent stake is now valued at $4.7bn. Lithium has hitched a stunning ride on the wave of interest in electric cars, making it one of the world’s hottest commodities. SQM’s lithium business generates about 60 per cent of the profits for the company, which is in talks with Elon Musk’s Tesla over a deal to supply lithium, a key ingredient in electric car batteries. It is against this backdrop that Potash is being forced by regulators to sell the stake as a condition of its merger with rival Canadian fertiliser producer Agrium.

While only a handful of companies are likely to compete for the stake, the eventual price will be an important measure of how seriously the hype around electric cars is being taken. “It’s a good barometer of where lithium is today,” Simon Moores, founder of London-based consultancy Benchmark Mineral Intelligence, says. “Anyone investing $5bn has to invest for the long term, on a 10- to 20-year horizon, and so there’s no doubt you have to be extremely bullish on lithium.” ...

FT Alphaville's Alexandra Scaggs Writes Like a Boy

Thus sayeth HackerFactor's gender guesser. Using a sample from Alexandra's "Someone is wrong on the internet, the 'decline of men' edition" and being careful to excise the quotes from Tyler Cowen, the analyzer says:

Total words: 366

Genre: Informal
  Female = 568
  Male   = 808
  Difference = 240; 58.72%
  Verdict: Weak MALE
Weak emphasis could indicate European.

Genre: Formal
  Female = 321
  Male   = 569
  Difference = 248; 63.93%
  Verdict: MALE

We tried two other analyzers, Genderanalyzer.com and the analyzer at the Stevens Institute of Technology. Unfortunately the former kept giving an error message and the latter 503'd with 'Service Temporarily Unavailable'.

The results from Hacker Factor are in line with those we found for Ms Scaggs' boss in 2014's
 "Alphaville's Izabella Kaminska Writes Like a Boy (but is kind to the elderly and robots)"

The World's Largest Art Auction: "The Collection of Peggy and David Rockefeller"

What Is Killing Frogs Around the World? (hint: not what you've been told)

Of course I don't know what you've been told, and being presumptuous is a bad habit on a few different levels but I'm guessing you haven't been told this:

From West Hunter:

Plague of Frogs
Starting in late 80s, herpetologists began noticing that various kinds of frogs were declining and/or disappearing. There was & is a geographical pattern: Wiki says “Declines have been particularly intense in the western United States, Central America, South America, eastern Australia and Fiji.”

Many were hard to understand in terms of human impact. “For example, the Golden toad (Bufo periglenes) endemic to Monteverde, Costa Rica, featured prominently. It was the subject of scientific research until populations suddenly crashed in 1987 and it had disappeared completely by 1989.[9] Other species at Monteverde, including the Monteverde Harlequin Frog (Atelopus varius), also disappeared at the same time. Because these species were located in the pristine Monteverde Cloud Forest Reserve, and these extinctions could not be related to local human activities.”

For a few years the herpetologists were concerned yet happy. Concerned, because many frog populations were crashing and some were going extinct. Happy, because confused puppies in Washington were giving them money, something that hardly ever happens to frogmen. The theory was that amphibians were ‘canaries in a coal mine’, uniquely sensitive to environmental degradation.
Possibly frogs were being killed by an increase in UV radiation (from CFCs). Of course you could always put out a fucking ultraviolet photometer and measure the UV anywhere and anytime you wanted, but that would be the easy way out. Why do that when you could be paying graduate students to play with frogs?

In 1993, people discovered an odd fungus [Batrachochytrium dendrobatidis] infecting frogs in Queensland. Since then it has been linked to many dramatic population declines in “western North America, Central America, South America, eastern Australia, East Africa (Tanzania) and Dominica and Montserrat.” Some species it bops, others it exterminates. Frog species with few offspring and high parental investment, such as mouth-breeding frogs, seem particularly vulnerable. It works like an STD, which can propagate when population density is low. Frogs congregate in ponds to mate, which allows transmission, as long as the frogs mate at all.

It took some time for herpetologists to admit that this chytrid fungus is the main culprit – some are still resisting. First, it was a lot like how doctors resisted Semmelweiss’ discoveries about the cause of puerperal fever – since doctors were the main method of transmission. How did this fungus get to the cloud forests of Costa Rica? On the boots of herpetologists, of course.

The second problem is Occam’s butterknife: even though this chytrid fungus is the main culprit, it’s just got to be more complicated than that. Even if it isn’t. People in the life sciences – biology and medicine – routinely reject simple hypotheses that do a good job of explaining the data for more complex hypotheses that don’t....MORE

Happy (belated) New Year: CLSA's Feng Shui Index 2018

From CLSA:
Who let the dogs out?!
Woof, woof-woof  
Calling all stargazers - prick up your ears
As is tradition, our annual CLSA Feng Shui Index offers an alternative look at what's in store for you and the Hang Seng in 2018, more for your pleasure than profit, but you never know, you may just get lucky!

Like astrologists summoned in the West by politicians and lesser mortals, Feng Shui masters are valued in the Orient by those looking to foretell the future. If you're running a hedge fund, no doubt you'll take our sorcerer's view of fortunes in the Year of the Dog with no more than a wag of the tail, but curiosity if not superstition may get the better of you.

Scroll down to sniff out all manner of forecasts for the year ahead. Peering into the polished doggy bowl, we reveal your zodiac's health, wealth, love and career stars, speculate on what awaits some celebrities, suggest a good place to kennel and, most importantly, predict the Hang Seng Index's monthly dog path and the auspiciousness of particular days.
Some predictions - All the thrills and spills
UN scientists introduce edible straws, bottles, cups and shopping bags to combat pollution • Blue-collar provincial workers drive China's consumer market to stratospheric highs • Chinese ecommerce players ramp-up blockchain to track transactions in their supply chains • Australia wins the FIFA World Cup • Canines object to pejorative and sexist terms "dog" and "bitch", insisting on gender-neutral "hound" • North Korea sells all its nukes at a premium to Nuclear Nonproliferation Treaty members • Dog streaks across pitch, running off with the ball, at opening match of FIFA World Cup in Russia • Saudi Arabia allows women to drive, beginning June 2018 • Chinese government announces “No Eating of Dogs in the Year of Dog Ordinance” • Bitcoin hashing power drops to 1/1000 of its former strength • Theresa May hounded out of office • South America goes to the dogs • Shipping accidents abound • England contraindicated for logistics/traffic issues • India hit by domestic health issues

And here's our forecast!
CLSA Feng Shui Index, 2018
On Sunday, 4 February, the Earth Dog marks his territory. Again, we attempt to plot the pattern and relative magnitude of the HSI's monthly movements in the year ahead using a Fortune Scale. The spirits forbid us from associating ourselves with any number masquerading as a scientifically determined HSI target! So how will we fare this year?

Sunday, February 18, 2018

Meanwhile in the Pacific: "Japan – Underwater Supervolcano Stirring to Life"

First up, an FT-style headline:
Underwater supervolcano could erupt without warning and kill 100 million people after scientists find a 6-mile wide lava dome growing off the coast of Japan
Just kidding. 
Wary yet curious reader undoubtedly knows that is definitely not the Financial Times and recognizes tabloid-style, in this case the Daily Mail, Feb. 13.
  • Japanese researchers have found evidence of a giant dome containing lava
  • The dome lies within the mostly submerged Kikai Caldera south of Kyushu Island
  • A researcher says the lava dome could kill up to 100 million people if it erupts
  • But the risk of a caldera eruption hitting Japan is just 1% in the next 100 years
A submerged volcano off the coast of Japan that erupted 7,300 years ago could be preparing to make a comeback.  

Scientists have discovered evidence of a giant dome of lava in the Kikai volcano's collapsed magma chamber.

They believe it contains about 32 cubic km (7.68 cubic miles) of magma, and distortions on its surface suggest the dome is growing.

Currently the dome is around  6.2 miles (10 kilometers) wide and 1,968 feet (600 meters) tall. 
Scientists say an eruption could take place without warning, and if it does, it could kill as many as 100 million people and trigger a 'volcanic winter'....MORE
Here's the paper published online by Nature, February 9th:

Giant rhyolite lava dome formation after 7.3 ka supereruption at Kikai caldera, SW Japan
Published online:

Kikai submarine caldera to the south of the Kyushu Island, SW Japan, collapsed at 7.3 ka during the latest supereruption (>500 km3 of magma) in the Japanese Archipelago. Multi functional research surveys of the T/S Fukae Maru in this caldera, including multi-beam echosounder mapping, remotely operated vehicle observation, multi-channel seismic reflection survey, and rock sampling by dredging and diving, provided lines of evidence for creation of a giant rhyolite lava dome (~32 km3) after the caldera collapse. This dome is still active as water column anomalies accompanied by bubbling from its surface are observed. Chemical characteristics of dome-forming rhyolites akin to those of presently active small volcanic cones are different from those of supereruption. The voluminous post-caldera activity is thus not caused simply by squeezing the remnant of syn-caldera magma but may tap a magma system that has evolved both chemically and physically since the 7.3-ka supereruption.
Supereruptions leading to the huge caldera collapse are rare but extremely hazardous events, and also have severe global impacts such as ‘volcanic winter’1,2. Many of these supervolcanoes repeat supereruptions in their multi-million year histories3,4,5,6,7. Although the volcanic activity is relatively quiet during the intervening periods between supereruptions, the post-caldera activity should provide a key to understanding the evolution of magma-plumbing system in the whole caldera cycle. The reason for believing so is that dynamic activities in this period such as formation of resurgent domes, i.e., uplift of the caldera floor by extensive magmatic intrusions, and volcanic cones may represent processes of not only calming down from the climactic eruption but also preparation for the next supereruption....

For orientation, here's the map from the Kobe University press release showing the location of the caldera just off the southernmost main island, Kyushu: 


And a slightly more tabloid-ish image from Photovolcanica:

Climateer Line of the Day: Elon's Relationship With Reality Edition

Today's winner of the prestigious CLoD is the engineer-creator of WhereIsRoadster.com:
...After the launch, Pearson started modeling where the car could be in space, but his calculations didn’t match the orbit Musk had released. How did he feel when he found out he was right and Elon Musk was wrong? “I was just relieved to know that I wasn’t doing anything critically wrong,” Pearson says.
“Elon Musk is a visionary man, incredibly far forward, but there’s a reality distortion field when it comes to him.”
...much more at The Verge: "Track Elon Musk’s Tesla Roadster in space with this aptly named website"

Consequences, Intended and Otherwise: "Make The Rest of the World Great Again"

From the Council on Foreign Relations:

Trump’s Tax Success Is at the Expense of His Trade Agenda
It looks like a combination of tax cuts and spending increases will raise the U.S. fiscal deficit by about 2 percentage points of GDP (that’s the number Krugman used; Goldman’s US economics team puts the increase in the fiscal deficit between fiscal 2017 and fiscal 2019 at 1.7 percent of GDP). The IMF’s standard coefficient relating changes in the fiscal balance to changes in the external balance would imply that the U.S. current account deficit will increase by about a percentage point of GDP—so rise to around 4 percent of GDP.

There are a few reasons to think that this might be a bit high.

The U.S. is globally speaking, a relatively closed economy. Imports have increased at about a quarter of the pace of domestic demand over the course of the recovery from the global (or north Atlantic) crisis. So the external spillovers from a U.S. fiscal stimulus might be smaller than the global norm. *
A high portion of the tax cut will go toward buybacks, special dividend payments, and the like, and a high portion of those payments may be saved not spent. This isn’t a fiscal stimulus designed for maximum impact on demand.

And, well, the IMF’s coefficients have a whole lot of implicit assumptions baked into them—assumptions that may not hold this time. In most cases a fiscal loosening changes the stance of monetary policy, and those changes in the stance of monetary policy in turn drive some change in the exchange rate. But, if the Fed doesn’t end up tightening more, or if the dollar doesn’t in fact appreciate as the Fed tightens, the impact of the fiscal expansion on the trade deficit may be smaller than the simple application of the IMF’s model would predict.

But there are a couple of factors that could work the other way too.

The closer the economy is to operating at capacity, the more the demand created by the stimulus may bleed out to the rest of the world. That is arguably what happened in q4 of 2017. Domestic demand growth accelerated, with the contribution from demand to GDP growth rising from around 2.5 percent to above 3.5 percent. But an unusually big chunk of that was spent on imports—over 50 percent. **
Contributions to U.S. GDP Growth: Demand Versus Exports
If that pattern continues, The U.S. would get stuck with the debt while the United States’ big trading partners would get the stimulus. A poorly timed fiscal expansion thus could end up making China, Korea, Japan, Germany, and the other big exporting economies great.
Aside from trade there is an “income” channel. Or more specifically, a “higher interest rate on a big stock of external debt” channel....

HT: the attached note says FTAV twitter sidebar Feb-16 but I am at a loss to say whose tweet, apologies to the tipster.

"India may get thrown out of MSCI Indices"

It's a few steps between here and there but is a possibility.

Via Alpha Ideas, Feb. 16:
MSCI Inc. (NYSE: MSCI), a leading provider of research-based indexes and analytics, announced today that it is closely monitoring developments related to the concerted announcement by three Indian stock exchanges, including the two principal exchanges, of the imposition of anti-competitive measures restricting the accessibility of the Indian equity market.

MSCI is evaluating the measures’ potential impact on existing financial products and the future accessibility of the Indian equity market for international institutional investors more generally.
In a clearly negative development for the accessibility of the Indian equity market for international institutional investors, the exchanges’ announcement made on February 9, 2018 would impose, following the expiration of contractual notice periods, a set of restrictions on the use of traded price data inconsistent with the practices of any other market in MSCI’s Emerging Markets Index series and could result in an unprecedented disruption of trading in financial products in markets around the world.

Based on the exchanges’ press release, we understand that the exchanges do not seek to impose a precipitous or disorderly wind down of the various products that would be affected in many markets around the world.

Nonetheless, given the breadth of the application of the changes referred to in the announcement, we believe that if the changes are put into effect, the result will be disruptive and harmful to international institutional investors in Indian equities whether accessing the market onshore or offshore....