Month: September 2019

While streaming content has displaced all forms of physical media as the preferred medium for sonic consumption, nostalgia-driven audiophiles have driven Vinyl sales through the roof – at least compared to CDs. 

According to the RIAA’s 2019 mid-year revenue report published by Rolling Stone, LPs are on pace to outsell CDs this year, making them the most profitable form of non-streaming music for the first time since 1986.

Vinyl records earned $224.1 million (on 8.6 million units) in the first half of 2019, closing in on the $247.9 million (on 18.6 million units) generated by CD sales. Vinyl revenue grew by 12.8% in the second half of 2018 and 12.9% in the first six months of 2019, while the revenue from CDs barely budged. If these trends hold, records will soon be generating more money than compact discs. –Rolling Stone

That said, vinyl accounted for just four percent of total music revenues in the first half of 2019, while paid subscriptions to streaming services accounted for 62% of industry revenues according to the report. 

“We welcome [the growth in vinyl],” said Warner Records co-chairman and CEO, Tom Corson. “It’s a sexy, cool product. It represents an investment in music that’s an emotional one. [But] it is a small percentage of our business. It’s not going to make or break our year. We devote the right amount of resources to it, but it’s not something where we have a department for it.”

Rolling Stone notes that the resurgence in vinyl has been a boon for rock groups in particular. “The Beatles sold over 300,000 records in 2018, while Pink Floyd, David Bowie, Fleetwood Mac, Led Zeppelin, Jimi Hendrix, and Queen all sold over 100,000.”

Opining on why vinyl sucks and the weird phenomenon of hipsters buying records is a 2016 article from Home Theater Review.

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So what’s the hype about vinyl these days? Vinyl is part of the cliché world of hipsters. If you don’t know what a hipster is, I might suggest you don’t read any further–as your world is likely better not knowing about this phenomenon. Those of us who have been to Brooklyn, Portland, or Silver Lake (and practically anywhere else in the country) in recent years can tell you that hipsters are a group of people who follow a certain “we’re different” vibe, yet ironically they tend to follow many of the same trends. The men grow lumberjack beards, and they drive electric cars when their quirky bike has a flat. They enthusiastically eat Quinoa and kale and report to like it. The men wear berets (not raspberry or the ones you find in a second-hand store) and carry trendy messenger bags. The girls are apt to tattoo any and every part of their body and sometimes embrace hairstyles like “grandma hair”–where one bleaches out all of the color of one’s hair and then dyes it gray, silver, or blue. Don’t forget, any card-carrying hipster has his or her pair of thick-framed Warby Parker glasses.

On the plus side, hipsters love music, which is just fantastic. Live music–specifically, music festivals like Coachella and Bonnaroo–draw hipsters from all over the world to flaunt their style.

What’s a head-scratcher about this new breed of music lover is the idea that, in every other aspect of their lives, they rock cutting-edge, high-resolution digital technology. They can’t look away from their HD smartphones for any meaningful length of time. They’ve made the video-game industry bigger in terms of top-line sales than the motion-picture business. They love the potential of virtual reality, yet they are also the ones behind this resurgence in vinyl.

It’s time for people who love music and have a taste for great-sounding audio to teach these young whippersnappers about HD music–because vinyl is a standard-definition, low-resolution format. Here, specifically, is why vinyl sucks.

Dynamic Range
Vinyl has a dynamic range of about 65 to 69 dB. In the days when vinyl ruled the world, much energy went into mastering vinyl releases to have better (or, at least, better perceived) dynamic range. If you go into a recording studio, mic a snare drum, and then hit it as hard as you can, you will record something in the 120- to 125-dB range. Vinyl reproduces roughly half of those dynamics. Compact Discs do drastically better in dynamic range, while HD files can reproduce ALL of the dynamics of a snare drum.

Noise
Many listeners find the stereotypical sound of vinyl to be comfortable and reassuring. That “warmth” is because of second-degree harmonic distortion created by the stylus in the groves. This distortion is what keeps one from hearing all the pristine sound recorded on the master tape. Analog master tape in the studio doesn’t have this kind (or volume) of distortion. The cracks and pops heard in vinyl come from flaws in the actual vinyl, as well as wear and dirt on the record. Hardcore vinyl lovers go to great lengths to keep the records clean and protected, which is wise on their part. The sad news is that, unlike a high-resolution digital file, vinyl will degrade over time as it’s played.

My question is, given the amount of noise and distortion coming from an age-old source, why invest in a great, audiophile-quality amp or preamp? In effect, one is feeding it with a distortion-laden source component with poor dynamic range. It’s tantamount to pumping 50-octane fuel into your new Lamborghini Aventador. Perhaps it’s time to try out the higher-grade audiophile fuel, even if it costs a few bucks more, so that you can realize the potential of your music playback system.

Authored by Philip Giraldi via The Strategic Culture Foundation,

Certainly, there are many things that President Donald Trump can rightly be criticized for, but it is interesting to note how the media and chattering classes continue to be in the grip of the highly emotional but ultimately irrational “Trump derangement syndrome (TDS).”

TDS means that even the most ridiculous claims about Trump behavior can be regurgitated by someone like Jake Tapper or Rachel Maddow without anyone in the media even daring to observe that they are both professional dissemblers of truth who lie regularly to enhance their professional resumes.

There are two persistent bogus narratives about Donald Trump that are, in fact, related.

The first is that his campaign and transition teams collaborated with the Russian government to defeat Hillary Clinton. Even Robert Mueller, he of the famous fact-finding commission, had to admit that that was not demonstrable. The only government that succeeded in collaborating with the incoming Trumpsters was that of Israel, but Mueller forgot to mention that or even look into it.

Nevertheless, Russia as a major contributing element in the Trump victory continues to be cited in the mainstream media, seemingly whenever Trump is mentioned, as if it were demonstrated fact. The fact is that whatever Russia did was miniscule and did not in any way alter the outcome of the election. Similarly, allegations that the Kremlin will again be at it in 2020 are essentially baseless fearmongering and are a reflection of the TDS desire to see the president constantly diminished in any way possible.

The other narrative that will not die is the suggestion that Donald Trump is either a Russian spy or is in some other, possibly psychological fashion, controlled by Russian President Vladimir Putin. That spy story was first floated by several former senior CIA officers who were closely tied to the Hillary Clinton campaign, apparently because they believed they would benefit materially if she were elected.

Former CIA Acting Director Michael Morell was the most aggressive promoter of Trump as Russian spy narrative. In August 2016, he wrote a New York Times op-ed entitled “I Ran the CIA. Now I’m endorsing Hillary Clinton.” Morell’s story began with the flat assertion that “Mrs. Clinton is highly qualified to be commander in chief. I trust she will deliver on the most important duty of a president – keeping our nation safe… Donald J. Trump is not only unqualified for the job, but he may well pose a threat to our national security.”

In his op-ed, Morell ran through the litany of then GOP candidate Trump’s observed personality and character failings while also citing his lack of experience, but he delivered what he thought to be his most crushing blow when he introduced Vladimir Putin into the discussion. Putin, it seems, a wily ex-career intelligence officer, is “trained to identify vulnerabilities in an individual and to exploit them. That is exactly what he did early in the primaries. Mr. Putin played upon Mr. Trump’s vulnerabilities… In the intelligence business, we would say that Mr. Putin had recruited Mr. Trump as an unwitting agent of the Russian Federation.”

How can one be both unwitting and a recruited agent? Some might roll their eyes at that bit of hyperbole, but Morell, who was a top analyst at the Agency but never acquired or ran an actual spy in his entire career, goes on to explain how Moscow is some kind of eternal enemy. For Morell that meant that Trump’s often stated willingness to work with Putin and the nuclear armed state he headed was somehow the act of a Manchurian Candidate, seen by Morell as a Russian interest, not an American one. So much for the presumed insider knowledge that came from the man who “ran the CIA.”

The most recent “former intelligence agents’” blast against Trump appeared in the Business Insider last month in an article entitled “US spies say Trump’s G7 performance suggests he’s either a ‘Russian asset’ or a ‘useful idiot’ for Putin.” The article cites a number of former government officials, including several from the CIA and FBI, who claimed that Trump’s participation at the recent G7 summit in Biarritz France was marked by pandering to Putin and the Kremlin’s interests, including a push to re-include Russia in the G-7, from which it was expelled after the annexation of Crimea.

One current anonymous FBI source cited in the article described the Trump performance as a “new low,” while a former senior Justice Department official, labeled Trump’s behavior as “directly out of the Putin playbook. We have a Russian asset sitting in the Oval Office.” An ex-CIA officer speculated that the president’s “intent and odd personal fascination with President Putin is worth serious scrutiny,” concluding that the evidence is “overwhelming” that Trump is a Russian asset, while other CIA and NSA veterans suggested that Trump might be flattering Putin in exchange for future business concessions in Moscow.

Another recently retired FBI special agent opined that Trump was little more than “useful idiot” for the Russians, though he added that it would not surprise him if there were also Russian spies in Trump’s inner circle.

The comments in the article are almost incoherent. They come from carefully selected current and former government employees who suffer from an excess of TDS, or possibly pathological paranoia, and hate the president for various reasons. What they are suggesting is little more than speculation and not one of them was able to cite any actual evidence to support their contentions. And, on the contrary, there is considerable evidence that points the other way. The US-Russia relationship is at its lowest point ever according to some observers and that has all been due to policies promoted by the Trump Administration to include the continuing threats over Crimea, sanctions against numerous Russian officials, abrogation of existing arms treaties, and the expansion of aggressive NATO activity right up to the borders with Russia.

Just this past week, the United States warned Russia against continuing its aerial support for the Syrian Army advance to eliminate the last major terrorist pocket in Idlib province. Once against, Washington is operating on the side of terrorists in Syria and against Russia, a conflict that the United States entered into illegally in the first place. Either Donald Trump acting as “the Russian agent” actually thinks threatening a Moscow that is pursuing its legitimate interests is a good idea or the labeling of the president as a “Putin puppet” or “useful idiot” is seriously misguided.

Bidding wars for homes in Seattle, San Jose, and San Francisco have crashed in the past year, reflecting an alarming national trend, according to a new report from Redfin.

The report found that the national bidding-war rate in August was 10.4%, down from 42% a year earlier. The rate printed at the lowest level since 2011.

At the start of 2018, the national bidding-war rate was 59%, then plunged as homebuyers became uncomfortable with sky-high housing prices, increasing mortgage rates, and economic uncertainty surrounding the trade war. The housing market started to cool in late 2018, as the competition among homebuyers collapsed by 4Q18, this is an ominous sign for the national housing market that could soon face a steep correction in price.

Even with eight months of declining mortgage rates in 2019, bidding-wars among homebuyers continue to drop. This is somewhat troubling because the government’s narrative has been declining rates will boom housing, but as of Wednesday, mortgage applications continue to fall. Homebuyers aren’t coming off the sidelines, and there’s too much uncertainty surrounding the economy with recession risks at the highest levels in more than a decade.

“Despite remaining near three-year lows, mortgage rates have failed to bring enough buyers to the market to rev up competition for homes this summer,” said Redfin chief economist Daryl Fairweather. Recession fears have been enough to spook some would-be buyers from making the big financial commitment of a home purchase. But assuming a recession doesn’t arrive this fall or winter, consumers will likely adjust to the new ‘normal’ of continued volatility in the stock and global markets, and the people who need and want to make a move will take advantage of low mortgage rates.”

As for one of the hottest real estate markets in the country, that being San Francisco, the bidding-war rate was 31% in August, down from 73.5% a year earlier. The lack of demand has certainly cooled housing prices, now expected to fall 1% YoY.

The rate in San Jose was 10.3% in August, down from 77% a year earlier, and in Seattle, another hot city for real estate, it saw its rate at 9.4%, down from 37.8% last August.

“Competition in the Seattle area has certainly slowed down since the second half of 2018. Last year, five out of five offers I submitted faced competition; now, it’s one in five,” said local Redfin agent Michelle Santos.

“Now, for desirable homes, competition is still fierce, and the winning offer is one that’s above the list price and waives contingencies. At the same time, average homes sit on the market for quite some time before they get any offers.”

With the rapid decline of competition among homebuyers and a flood of inventory entering the market, real home prices are starting to correct in major cities. Real price change over the last 12 months is falling in Seattle, San Francisco, and New York, according to new CoreLogic Case-Shiller Home Price Index data.

With competition among homebuyers evaporating in a very short period of time, this could mean a downturn in the real estate market is imminent.

Authored by Nicholas LePan via VisualCapitalist.com,

The world has experienced a decade of growth fueled by record-low interest rates, a burgeoning money supply, and historic debt levels – but the good times only last so long.

As the global economy slows and eventually begins to retract, can precious metals offer a useful store of value to investors?

Part 1: The Start of a New Cycle

Today’s infographic comes to us from Endeavour Silver, and it outlines some key indicators that precede a coming gold-silver cycle in which exposure to hard assets may help to protect wealth.

Bankers Blowing Bubbles

Since 2008, central bankers around the world launched a historic market intervention by printing money and bailing out major banks. With cheap and abundant money, this strategy worked so well that it created a bull market in every sector — except for precious metals.

Stock markets, consumer lending, and property values surged. Meanwhile, the U.S. Federal Reserve’s assets ballooned, and so did corporate, government, and household debt. By 2018, total debt reached almost $250 trillion worldwide.

Currency vs. Precious Metals

The world awash in unprecedented amounts of currency, and these dollars chase a limited supply of goods. Historically speaking, it’s only a matter of time before the price of goods increases or inflates – eroding the purchasing power of every dollar.

Gold and silver are some of the only assets unaffected by inflation, retaining their value.

Gold and silver are money… everything else is credit.

– J.P. Morgan

The Perfect Story for a Gold-Silver Cycle?

Investors can use several indicators to gauge the beginning of the gold-silver cycle:

1. Gold/Silver Futures

   Most traders do not trade physical gold and silver, but paper contracts with the promise to buy at a future price. Every week, U.S. commodity exchanges publish the Commitment of Traders “COT” report. This report summarizes the positions (long/short) of traders for a particular commodity.

   Typically, speculators are long and commercial traders are short the price of gold and silver. However, when speculators and commercial traders positions reach near zero, there is usually a big upswing in the price of silver.

2. Gold-to-Silver Ratio Compression

   As the difference between gold and silver prices decreases (i.e. the compression of the ratio), history suggests silver prices can make big moves upwards in price. The gold-to-silver ratio compression is now at high levels and may eventually revert to its long-term average, which implies a strong movement in prices is imminent for silver.

3. Scarcity: Declining Silver Production

   Silver production has been declining despite its growing importance as a safe haven hedge, as well as its use in industrial applications and renewable technologies.

4. The Silver Exception

   Silver is not just for coins, bars, jewelry and the family silverware. It stands out from gold with its practical industrial uses which account for 56.1% of its annual consumption. Silver will continue to be a critical material in solar technology. While photovoltaics currently account for 8% of annual silver consumption, this is set to change with the dramatic increase in the use of solar technologies.

The Price of Gold and Silver

Forecasting the exact price of gold and silver is not a science, but there are clear signs that point to the direction their prices will head. The prices of gold and silver do not accurately reflect a world awash with cheap and easy money, but now may be their time to shine.

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Don’t miss another part of the Silver Series by connecting with Visual Capitalist.

As China executes on its “Belt and Road” global trade scheme, more than 130 countries who have either committed to or expressed interest in the $600 billion initiative have been hard at work expanding their infrastructure to accommodate Beijing’s ambitious plan. 

And while President Trump has been pounding the table in an ongoing US-China trade war, progress made on Belt and Road threatens to reduce US leverage over Beijing – putting US allies such as Israel, which extended a 25-year offer for the operation of the Haifa terminal to state-controlled Shanghai International Port Group – in a tricky position, according to Bloomberg‘s Ivan Levingston. 

With national elections approaching on Sept. 17, Prime Minister Benjamin Netanyahu can ill afford to alienate the Trump administration on its signature international issue. Trump has endeared himself to Netanyahu by transferring the U.S. Embassy from Tel Aviv to Jerusalem and recognizing Israeli sovereignty in the disputed Golan Heights. Netanyahu reciprocated by naming a new Golan settlement after Trump and praising the American leader for, among other things, quitting the Iranian nuclear accord. “Over the years, Israel has been blessed to have many friends who sat in the Oval Office, but Israel has never had a better friend than you,” Netanyahu told the president during a March trip to the White House. An October Pew study found that 69% of Israelis had confidence in Trump’s performance as president, and many of Netanyahu’s campaign ads prominently feature the U.S. leader. –Bloomberg

Of note, China is currently Israel’s second-largest trading partner with around $11.5 billion in annual transactions in 2018, according to the report. 

Meanwhile, the United States has pressed Israel to create a buffer with China in the interest of national security – which would look something like the Committee on Foreign Investment in the US (the same one that rubber-stamped Russia’s purchase of 20% of America’s Uranium). 

“Israel and Israeli companies are quickly coming to the realization that it’s going to be difficult to sustain business as usual in work with China while keeping the United States as the primary partner,” said Daniel Shapiro, Barack Obama’s US ambassador to Israel. 

Economic ties between Israel and China date to 1979, before China had formally recognized the Israeli state. Israeli billionaire Shaul Eisenberg brokered a secret meeting between representatives that led to Israeli arms sales to China. Diplomatic relations were formalized in 1992. In the early 2000s, the U.S. successfully pressured Israel to cancel a sale to China of its Phalcon radar system, as well as parts for the armed Harpy drones it had already sold them. But the Sino-Israeli relationship recovered. In the past few years, Chinese investment in the country’s tech sector has increased sharply, reaching about a quarter of all funds raised by Israeli tech companies in the third quarter of last year, data from the Israeli high-tech tracker IVC Research Center show. –Bloomberg

Netanyahu as recently as October hailed Israel and China’s relationship as a “natural partnership” while hosting Chinese VP Wang Qishan at a meeting of the Israel-China Joint Committee on Innovation Cooperation in Jerusalem – which sparked tremendous backlash among US officials, including just-fired national security adviser John Bolton and his ‘friend,’ Secretary of State Mike Pompeo – who threatened to limit how much intelligence the US shares unless they establish boundaries with China. 

The Haifa seaport in particular has been a cause for concern because of its proximity to a harbor used occasionally by the U.S. Navy’s Sixth Fleet. Although the two facilities are separated by a breakwater and an older commercial port, the U.S. Senate passed a defense spending bill that includes a provision expressing “serious security concerns” about the development. Zhan Yongxin, China’s ambassador to Israel, pushed back with an op-ed in Israeli daily Haaretz in August, arguing that “the win-win cooperation between China and Israel” ought to be “respected.” –Bloomberg

“Using Chinese contractors to build some of our infrastructure is very important for Israel because there are very few infrastructure builders in the world,” said Netanyahu’s top economic adviser, Avi Simhon. “If we have additional competition for these projects, that could save us many billions of dollars.” 

Because of course, saving billions in the near-term is more important than screwing over your closest ally in the long term!

Bloomberg‘s bottom line: Whether or not Netanyahu prevails in his bid for reelection, Israel’s economy will remain dependent on China’s continued investment, potentially alienating the U.S.