US Troops in Poland After Russian Separatists Kill Pol in Ukraine

One hundred and fifty American
paratroopers from the 173rd Infantry Brigade Combat
Team landed in Poland today and an additional 450 soldiers are
set to arrive and begin conducting military exercises in Estonia,
Latvia and Lithuania by next Monday.

“It’s a very tangible representation of our commitment to our
security obligations in Europe, and the message is to the people of
those countries and to the alliance that we do take it seriously,”

Defense Department Press Secretary Rear Adm. John Kirby.
“We’re looking at trying to keep this rotational presence
persistent throughout the rest of this year.”

to Politico, the White House is considering
piling on even more sanctions against Russia for its role in
destabilizing Ukraine. 

A group of diplomats including Secretary of State John Kerry met
in Geneva last week and hammered out an agreement to “de-escalate”
the crisis in Ukraine. Six days later, the situation has only
gotten worse.

Yesterday, a Ukrainian politician, Vladimir Rybak, and another
man were found dead near the separatist-occupied city of Sloviansk.
The Ukrainian government alleges that
separatists “tortured to death” the two men, prompting
the government to resume the “anti-terrorist” operation it was
conducting before the Geneva agreement.

And, there’s a growing list of people being taken hostage by
militant separatists. Simon Ostrovosky, an American journalist with
Vice was briefly
after a press conference with a self-proclaimed
“people’s mayor” of Sloviansk.

Several pro-Russian separatist leaders have previously said that
they will not back down until there is a referendum on the
secession of eastern regions of Ukraine.

Read more Reason coverage of Ukraine here.

from Hit & Run

This Is “Why” Caterpillar Is Trading At Two-Year Highs

Moments ago CAT stock touched 52 week highs, or a level not seen since April 2012. Why? The chart below which shows Caterpillar dealer retail sales by region surely has something to do with it. With global sales sliding again now that the third consecutive dead cat bounce is over, and dumping the most since February of 2013 or 12% from a year ago, when sales had in turned dropped 11% from 2012, driven by a collapse in Asian-Pacific, Latin American and EMEA sales, all of which crashed by more than 20%, we can only assume the company is well on its way to an epic collapse in its top and bottom lines as well.

And since this is nothing short of the bizarro, insane new normal, it is only a matter of time before the crash in retail sales sends the stock to plus infinity.

via Zero Hedge Tyler Durden

Looking Back at Hollywood’s Pre-Code Era

Over at The Toast, Mallory Ortberg takes
a tour
through Hollywood’s pre-Code era, recommending movies
left and right—some of them because they’re good, some of them
because they’re weird and interesting even if they aren’t exactly
“good” in any normal aesthetic sense. To give you the flavor,
here’s her list of “Less Well-Known Remakes”:

The Hulk is horny.The Letter, 1929—SLUTTIER

Dr. Jekyll and Mr. Hyde, 1931—SLUTTIER

Mädchen in Uniform, 1931—LESBIANER THAN

The Maltese Falcon, 1931—GAYER AND
good, though. I mean, it doesn’t ask us to believe that
Mary Astor is a femme fatale who has had sex, so that gives it a
leg up on the John Huston version, but still. Only worth watching
as a comparison to the classic. And I don’t think being as overt
about sexual matters makes much of a difference—it’s still
incredibly clear that Bogart and Astor bone, that Joel
Cairo is super-mega gay, and that Gutman is giving it to poor
Wilmer in the 1941 remake.)

The Broadway Melody, 1929—Really, really
bad production values, but a lot of fun if you’re a Singin’ in
the Rain
completist and want to hear the full version of “The
Wedding of the Painted Doll.”

The pre-Code era came to an end for a few reasons, the most
underappreciated of which is the threat of federal censorship.
Thomas Doherty described that process in this
classic Reason article (and I’ve touched on the topic a
or two
myself); it’s a still-relevant lesson in the ways busybodies can
clamp down on eccentric creativity.

For more on this chapter of Hollywood history, check out
Doherty’s book
Pre-Code Hollywood
, which is a great read. And since I
was writing about the Army-McCarthy hearings
, lemme add that one of the best discussions I’ve seen
of that soap opera is in another Doherty book,
Cold War, Cool Medium
. Check that one out too.


from Hit & Run

Russia Warns West “Remove Forces”; Begins Military Exercise On Ukraine Border

UPDATE: Dutch fighter jets were scrambled after Russian bombers approached Dutch airspace; the Russian planes turned away

With both sides appearing to have entirely un-de-escalated and the truce deal now a thing of the past (besides a few hundred Dow points), the Russians are speaking up today – and are not happy:


And, on the heels of Turchynov’s official restart of the so-called anti-terrorist operation, Russia is calling on Ukraine to pull back military from Ukraine’s southeast… and rattles its sabre by undertaking a military exercise on the border.


Bloomberg reports,

Russia is surprised by distorted interpretation of Geneva accord from govts of Ukraine, U.S., RIA Novosti reports, citing Russia’s Foreign Ministry.




Russia says Ukraine, U.S. closing eyes to provocations by right-wing extremists: RIA


Russia still believes partners are serious about resolving crisis in Ukraine: RIA

and in addition


All of this sets the scene for an important set of meetings next week…

Russia ready to host EU, Ukraine energy officials in Moscow or consider other cities for talks, Russian Energy Ministry spokeswoman Olga Golant says by phone.


Golant confirms EU Energy Commissioner Guenther Oettinger invited Russia to gas talks


Slovakia planning talks on use of gas pipeline in reverse to supply Ukraine on Apr. 28 in Bratislava, Eustream pipeline operator spokesman Vahram Chuguryan says by phone

So to sum it all up:

  1. The truce deal is dead
  2. Russia blames Ukraine/West for breaking deal and misunderstanding it
  3. Ukraine/West blame Russia for not unilaterally pulling back its forces
  4. Russia is warning Ukraine to pullback military from Russia-held southeast Ukraine (“or there will be retaliation”)
  5. Russia is rattling its sabre by military exercises on the Ukraine border (after US sends another warship into the Black Sea)
  6. Against all this tension, gas pipeline talks are set to begin shortly.

Still buying the fucking dip on the back of Ukraine ‘calming down’?

via Zero Hedge Tyler Durden

Twitter’s Take on #MyNYPD Not Exactly What NYPD Hoped For

It’s always a bit entertaining to watch misguided social media
moves backfire. But there’s a particular poetic justice when the
moves are made by conceiveable villains like politicians or J.P.
Morgan or…the New
York City Police Department
(NYPD). On Tuesday, the @NYPDnews
people on Twitter to post photos of themselves with
officers, using the hashtag #MyNYPD. You can probably imagine how
this went …. 

After a few friendly posts, the response quickly shifted to
folks using the #MyNYPD
to highlight police brutality and abuse. 

: You might not have known this, but the NYPD
can help you with that kink in your neck. #MyNYPD

50 years of #NYPD brutality on minority youth. Bet you won’t
feature this on your Facebook. #myNYPD @NYPDnews

NYPD Deputy Chief Kim Y. Royster tried to put a positive spin on
things. “The NYPD is creating new ways to communicate effectively
with the community,” she said in a short statement. “Twitter
provides an open forum for an uncensored exchange and this is an
open dialogue good for our city.”  

problem, I have a photo wit 4! RT @NYPDnews Do you have a photo w/
a member of the NYPD? Tweet us & tag it #myNYPD

For a while on Tuesday the #MyNYPD hashtag was among the top 10
trending topics on Twitter, not just for New York City but around
the world, according to
The New York Times

way they are trained to twist your neck!! : This lady #MyNYPD is
stronger than Superman

An unnamed “law enforcement source”
told the New York Post
 that the department
didn’t think it through, because “who uses Twitter? The younger
generation who have had bad interactions with the Police
Department.” Yes, clearly only those pesky millenials have had bad
run-ins with the cops … 

about featuring this one of the #NYPD with the 84yo man they
brutalized for jay walking? #myNYPD @NYPDnews

@OccupySPb: @OccupyWallStNYC
Arresting the old man for writing “Peace to the World” against
Russian invasion in Ukraine #MyNYPD 

from Hit & Run

Who Made More, Facebook VCs or Its Founder: The True Cost of the VC Preferred Stock Control Premium

So, I’m off to the races to raise money for UltraCoin, my uber-disruptive startup, and I come across the resistance of certain parties to take common stock. Now, the standard in the professional VC community is to take preferred stock with a stack of anti-dilutive measures, control premiums and liquidation preferences. VCs and their lawyers say this is the only way to do it because it protects them on the downside and allows them to maintain control of their investment and manage dilution on the upside. Basically, the say, it a hedge. I have some very prominent, very successful and experienced investors coming in doing the right thing. The reason is because they “get it”. My task is to educate the rest. 

Marc Andreesen characterized VC start-up stock as an out-of-the-money call option on the success of the company. Well, I agree with this in part. The founders common stock is more like an OTC ATM call, or warrant, on the success of the company. The preferred stock, which is what most VCs go for, is more akin to a straddle consisting of an ATM long-dated OTC call paired with a long dated ATM put. This put is not free. It’s not even cheap, and it is not as necessary if the deal is properly sourced and underwritten.

Now, I’m not the typical Fintech entrepreneur. I’m a little older than most, I’m probably better than forensic valuation than the vast majority (see Who is Reggie Middleton?), and I’m more than willing to point out when and where I think the establishment is doing something wrong. “Because everyone else is doing it” or “Because that’s the way we’ve always done it” are not acceptable reasons.

Case in point, the preferred stock myth. Let’s address the reasons given for demanding preferred stock.

  1. It protects them on the downside – This is true, but venture capital is a very high risk, high return asset class. Its much more additive to the risk/reward proposition to manage downside risk primarily through the investment selection and underwriting process, ex. spend your resources selecting and vetting the best management team and investment prospect rather than trying to manage downside before you even get a stab at the upside. Think about the groom that puts more time into the pre-nup than he does into finding out what his bride to be is actually about.  
  2. They say, it a hedge. Well, in the investment world hedges aren’t free. They have a real cost and the determination of the effectiveness of any hedge has to take into consideration the cost of said hedge. If it’s too expensive then the risks of the hedge may well outweigh the rewards. This is particularly true for investments that go well from a capital appreciation perspective.
  3. It allows them to maintain control of their investment and manage dilution on the upside and downside. The energies, time and resources dedicated to and consumed by the competition to gain and maintain control and proportionate share in a company materially detracts management from running the company as well as pitting multiple factions (equity holding management, common shareholders and founders, Series A, B, C [& X, Y and Z] shareholders and executives) against each other. If there was one uniform, common share class these factions could be fighting for the betterment of the company as a whole versus the betterment of their own individual positions (often to the detriment of fellow security holders and management and/or the company as a whole).  

These costs and detriments are real. Let’s take the case of the very successful example of Facebook’s VC funding and eventual IPO. Who do you think made more money in this deal, the founders/original common shareholders or the VCs who chose the preferred/hedged/put-call straddle route?

Just to make things interesting, I included one of the most prominent of Facebook’s VCs in on the discussion via Twitter: 

The True Cost of the VC Control Premium  Here is the spreadsheet that generated the chart. Feel free to play with it yourself. Hopefully, more people will realized the value of going after a strong management team with a strong product amongst a disruptive opportunity. Focus more on the attainment of reward. Proper reward underwriting is its own risk management.



via Zero Hedge Reggie Middleton

Explaining The Horrendous Home Sales Report: It Snowed Everywhere But In The Northeast

This is our best attempt at playing clueless propaganda cheerleaders also known as economists:

Q. Why did new home sales crash in all regions except the traditionally coldest, wettest, and snowiest Northeast, where sales rose?

A. Uhm, because it obviously snowed everywhere except in the Northeast.

And there you have it: spin 101 for braindead zombies and vacuum tubes.


And for those confused about the current state of the “housing recovery”, here is a longer-term chat:

Source: Bullshit Bureau

via Zero Hedge Tyler Durden

New Home Sales Collapse To 8 Month Lows

New Home Sales collapsed 14.5% month-over-month to its lowest since July 2013. A mere 384k versus 450k expectations is the biggest miss since July. So much for the Spring buying season… This is a 7 standard deviation miss against the smart economists’ estimates! Whocouldanode that when the free-money sponsored fast money leaves the game that real people with real debt and real wages are simply priced out of buying a new home? Supply of unsold new homes jumps to 6 months, its highest since Oct 2011 (as once again the visible hand’s interference has produced yet another mal-investment boom as the ‘if we build it, they will come’ builders face an ugly reality).



The Economists nailed it… (Deutsche’s Joe Lavorgna was above consensus at 460k)



Charts: Bloomberg

via Zero Hedge Tyler Durden

A. Barton Hinkle: A Constitutional Case for Gay Marriage

When liberals and conservatives argue they
often talk past each other, deploying arguments that seem like
winning ones to them but that the other side views as irrelevant or
unimportant. So the Cato Institute has done a great service by
filing a brief in Virginia’s gay marriage case that makes a
conservative argument for the liberal position. What’s the
argument? In short, writes A. Barton Hinkle, the Constitution’s
Equal Protection Clause demands equal treatment for same-sex

View this article.

from Hit & Run