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Authored by Majid Rafizadeh via The Gatestone Institute,

• Can you imagine making a joke and facing death as a result?
• "During his interrogation, Sina was told that if he signed a confession and repented, he would be pardoned and let go," said the source in an interview with CHRI on March 21, 2017. "Unfortunately, he made a childish decision and accepted the charges. Then they sentenced him to death." "Later he admitted that he signed the confession hoping to get freed," said the source. "Apparently the authorities also got him to confess in front of a camera as well." — Center for Human Rights in Iran (CHRI).
• When the Islamists gain power, they immediately create their own "judiciary system" in order to "legitimize" their implementation of sharia law. In fact, the judiciary system is used less as a tool for bringing people to justice, and more as a tool to suppress freedom of speech and of the press.

To radical Islamist groups, Islam is not a religion which all are free to pursue; it is a weapon. It is the most powerful tool that can be wielded with manipulative skill to control entire populations. Beneath their fierce rule, every aspect of daily life is dictated. What is worn, what is eaten, what you say and what you write are all scrutinized; violations of these stringent laws are met with extreme punishments. Can you imagine making a joke and facing death as a result? Can you imagine the constant fear of doing the wrong thing, saying the wrong thing, when you have seen people beaten, stoned, or killed in the street for nothing more than a mild transgression?

Freedom of speech and press are the Islamists' top enemies. They are targeted on a regular basis, making it difficult or impossible for the truth to be revealed to the world. While others may take their privacy for granted, the people living under this kind of tyranny must think about everything they say and do. Sometimes even the bravest of souls turn away in the face of such intimidation. Can it really be as restrictive as described? Yes, and far worse than you can imagine.

Sina Dehghan, 21, for example, was arrested by Iran's Islamic Revolutionary Guard Corps (IRGC) when he was 19 for "insulting Islam". Charges were brought against him for insulting the Prophet Muhammad on the messaging app LINE.

According to the Center for Human Rights in Iran (CHRI):

"During his interrogation, Sina was told that if he signed a confession and repented, he would be pardoned and let go," said the source in an interview with CHRI on March 21, 2017.

 

"Unfortunately, he made a childish decision and accepted the charges. Then they sentenced him to death." "Later he admitted that he signed the confession hoping to get freed," said the source. "Apparently the authorities also got him to confess in front of a camera as well."

Such a sentence may seem like madness, but in fact there is a cold and calculated pattern to these actions. When extremist Muslims gain power, they immediately create their own "judiciary system" in order to "legitimize" their implementation of sharia law. This judiciary system is, in fact, used less as a tool for bringing people to justice, and more as a tool to suppress freedom of speech and freedom of the press. Once this silence is ensured, they are able to oppress the entire society, restrain any budding opposition, imprison and torture innocent people and sentence thousands to death.

Sina Dehghan, 21, has been sentenced to death in Iran for "insulting Islam". There are many people like him in Iran who are currently imprisoned, tortured on a daily basis, or awaiting their execution for "insulting Islam", "insulting the prophet", "insulting the Supreme Leader" — the examples are endless. (Image source: Center for Human Rights in Iran)

By imprisoning, torturing and hanging idealistic and rebellious young people, the ruling politicians and the Islamist judiciary system are using them as an example to send a message to millions of people that they will not tolerate anyone who opposes their religious or political view.

Radical Islamist groups have been using the same tactic in other nations to impose fear and shock in the public. They aim at silencing people and making them subservient. Once they have control, they will stop at nothing to keep it.

For the Islamists, once you submit to their religion, your freedom of speech and of the press belong to Allah. Your only job is to exercise silence and obedience, and follow your religious leader, imam, sheikh, or velayat-e faqih ("guardianship of the Islamic jurist").

As the Center for Human Rights in Iran pointed out:

"Security and judicial authorities promised Sina's family that if they didn't make any noise about his case, he would have a better chance of being freed, and that talking about it to the media would work against him," added the source. "Unfortunately, the family believed those words and stopped sharing information about his case and discouraged others from sharing it as well." "Sina is not feeling well," continued the source. "He's depressed and cries constantly. He's being held in a ward with drug convicts and murderers who broke his jaw a while ago."

For the ruling Islamists, it does not matter if you have been a loyalist all your life. If you speak up or oppose them just once, you will be eliminated. As CHRI quoted one source: "He was a 19-year-old boy at the time (of his arrest) and had never done anything wrong in his life."

One of Dehghan's co-defendants, Mohammad Nouri, was also sentenced to death for posting anti-Islamic comments on social media. Another co-defendant, Sahar Eliasi, was sentenced to seven years, and later the sentence was reduced to three years.

What does the term "anti-Islamic" mean exactly in an Islamist judiciary system? If it carries a death sentence, you might assume that the parameters of the law would be well outlined. However, that is not the case. For the ruling Islamists, the term "anti-Islamic" is completely ambiguous and subjective, and can relate to anything that opposes their view or their power. What might seem like an innocent remark, could change a life forever.

If they are such violent and oppressive people, you might wonder how they are ever able to gain power. They do this through manipulation, charm and countless false promises.

Some radical Islamists, before they gain power, promise people equality, justice, peace, and a far better life. They appeal to the young, to the traditional, and to the hopeful. But once they seize power, they close an iron grip around any and all freedoms, available to their people — in particular freedom of speech.

Once radical Islam has gained power, established its own judiciary system, or infiltrated the legal system with its sharia law, no one is capable of criticizing the government or the political establishment. In a social order ruled by radical Islam, the government is Islam; the government is the representative of Allah and the Prophet Muhammad. Ruling politicians who decide the laws are "divine" figures supposedly appointed by God. They are not to be questioned.

There are many people like Sina Dehghan who are currently imprisoned, tortured on a daily basis, or awaiting their execution for "insulting Islam", "insulting the prophet", "insulting the Supreme Leader" — the examples are endless. The issue is that we do not hear about these cases. Some media outlets refuse to report on them in order to appease the Islamic Republic of Iran — just further proof of how coercive their power can be. The only way to reduce it — and the oppression and slaughter of so many people — is to bring attention to the human rights abuses conducted under the Islamic banner of religious "legitimacy " and "authenticity".

This type of tyranny is a danger, not just for those enduring it, but for the world.

via http://ift.tt/2ooGy3F Tyler Durden

Dear Readers,

I owe you an apology. I made a mistake. I am writing this letter in the first person, because I made the mistake.

Let me explain what happened. I wrote software to calculate the gold basis and cobasis (and of course silver too). The app does not just calculate the near contract. It calculates the basis for many contracts out in the distance, so I can see the whole picture. I developed a model for the fundamental price, based on the basis. My software calculates this, too (spoiler alert: the reported fundamental prices were high).

I have long since debugged it. It works reliably. So reliably, that every day I pored over the results, but I no longer checked the inputs and intermediate steps of the calculation. Now, in retrospect, I realize that I should have.

The root cause is simple. For as far back as I have ever seen, the symbol for a future has been a two-letter code for the commodity + a one letter for the month and one digit for the year. For example, gold is GC. December is Z. And 2017 is 7. So the December gold contract is “GC Z7”. Silver is SI, so December silver is “SI Z7”.

I did not expect my realtime quote provider to change year codes for contracts in 2018 and beyond. No longer is it one digit for year—8 in this case. Now it requires two digits. So the December 2018 gold contract is “GC Z18”. Even now that I have looked, I do not find any announcement of this change. I am not even sure it is an official COMEX change, or just a quirk of one quote provider.

This error was compounded because my software was not programmed to notify me of a problem. In software, the only thing worse than a failure in a system that is used in production is a silent failure that goes unnoticed, and hence goes uncorrected. This failure was unnoticed.

Before I get to the impact, I want to discuss how we will make sure this does not happen again.

My team and I have been working hard on a new website, and the centerpiece will be our ongoing data science work in the precious metals markets. We will publish about 45 graphs, with daily updates. Obviously, this is driven by a much more sophisticated software system than my humble application.

The new software is developed by one of the best coders in the world (not me, I’m rusty after not coding full-time in almost 15 years). Rudy Mathieu worked for my last company, a software company called DiamondWare.

Rudy has built a hardened, enterprise-grade software system (now undergoing extensive testing), and when it encounters an error, it does not fail silently. It is constantly checking the status of all key components, and has a dashboard so we can monitor how the software and the server running it are doing. It emails us if anything goes wrong. It will instantly detect problems, such as a change in the year code or even the Spanish Inquisition, which nobody expects (sorry, just a bit of humor).

For years, I have been publishing a unique view into the markets. Our new site takes it a thousand times further. I expect that it will become an essential tool for anyone who uses or trades gold. We need to ensure it is as reliable as clockwork.

I promise to make it so.

Back to the question: what was the net effect? My software was not able to calculate a basis for gold or silver contracts maturing in 2018 or beyond. However, my fundamental price model relies on them. Its accuracy began to suffer starting around last August. This error continued to grow in magnitude. As of last week’s Report, the fundamental price of gold was overstated by about $175, and silver’s fundamental by $2.30.

The correct fundamental prices as of Friday March 31 were about $1,260 and $16.70.

Interestingly—and this is important—the gold-silver ratio fundamental was robust to this error. The value stated in last week’s report, 75.75, was almost perfect. It was off from the revised estimated fundamentals by 0.2. I say revised and estimated, because I went back over the time period where I have incomplete data and derived what I need. The result is good enough for horeshoes and hand grenades, as we say in America (but it has higher uncertainty).

There is a bigger lesson here. Monetary Metals focuses on the ratio (which we trade in our fund), because it is less error-prone, more accurate, and less risky than trading either metal against the dollar.

OK… The bottom line is that on March 31, the corrected gold fundamental was above the market price, though not nearly so far above as I had reported it. It was about 1.4% over the market price (I reported 15.6% last week).

As an aside, my friend Pater Tenebrarum at Acting Man blog wrote about the disparity between the fundamental drivers that he monitors, and the fundamentals I reported. He is right in thinking that demand for physical is not going ballistic yet.

Though as you will see in the graphs below, the fundamental price has indeed been rising since mid to late December (as I have been correctly reporting), from a low of around $1,115 to $1261 at the end of March.

The correct silver fundamental price is below the market price. My commentary actually stands up pretty well, in light of the correct data. Even while I erroneously reported a silver fundamental running up to about $19, I have not been enthusiastic about silver. I haven’t “trusted” it enough to encourage a big silver trade, nor called for a major price move. I think there were two reasons.

One, obviously, the nearer-term contracts which I monitor are accurate. They did not show the kind of moves I would expect to see if the market for physical metal was getting so tight. The error only occurred for contracts in 2018. Two, the fundamental gold-silver ratio was correctly calling for a higher market ratio.

Below, I include graphs of the fundamental prices for both metals. The correct values will be overlaid with the ones I have been calculating. So you can see where it went off the rails, and by how far it deviated.

There is one last thing, which I am reluctant to discuss now, before we are ready to launch. Yet it is germane.

Monetary Metals has licensed market data from Thomson Reuters. When the new charts go live, they will be based solely on this data. This data is of better quality than the data from the realtime quote provider I have been using. And we have developed some very sophisticated algorithms that allows us to extract the maximum signal with the least noise, far superior to what my little app does with the data from my current provider.

The new basis and fundamental prices will not line up perfectly with the old data series. One reason is that the bid-ask spread is tighter. By the nature of the math to calculate the basis, tighter spread means a higher basis and higher cobasis.

That said, I am confident of two things. One, the new data is more accurate. And two, the old data set has served well in showing the big picture (notwithstanding the error I corrected this week).

We will look at the only true picture of supply and demand in the gold and silver markets. But first, the price and ratio charts.

The Prices of Gold and Silver

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. Last week, we asked if the downward-moving gold-silver ratio had hit a line of support. It seems it did, as it moved up sharply on Friday.

The Ratio of the Gold Price to the Silver Price

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

The Gold Basis and Cobasis and the Dollar Price

Not much change in the scarcity of gold (i.e. the red line, the cobasis) while the price moved up slightly. Our calculated fundamental price is up $30, to about $1,290.

Let’s take a look at two graphs. Both show enough time to see where the error began to creep in, and where it ends. They are May 3, 2016 through March 31, 2017.

The first is the continuous gold basis, with the erroneous line overlaid with the corrected. As you can see, the erroneous basis was lower (indicating, falsely, lower abundance) and the erroneous cobasis was higher (indicated higher scarcity).

The Reported and Corrected Gold Basis and Cobasis

The second is the market price of gold, overlaid with the erroneous and corrected fundamental prices.

The Reported and Corrected Gold Fundamental Prices

The erroneous one takes off for the stars. The corrected value is much closer to the market price, though a bit above.

Now let’s look at silver.

The Silver Basis and Cobasis and the Dollar Price

We switched from the May to the July contract, as the May contract is in the process of being rolled (where traders must close positions in May and if they want to keep their positions, open a July or farther-out contract).

There is a small decrease in the basis and increase in cobasis, along with a falling price this week. And our fundamental price is up 14 cents, to just under $16.85. Yes, alas, that is more than a buck under the market.

Here are the same extra two graphs for silver.

The Reported and Corrected Silver Basis and Cobasis

The Reported and Corrected Silver Fundamental Prices

You can see here that there are two salient features. One, the fundamental has been rising for about a month longer than gold, though from a much more volatile bottom ($12.39). Two, the fundamental is way below the market price.

© 2017 Monetary Metals

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A last minute budget negotiation late Friday pretty much ensures that New York will be the first state to offer ‘tuition-free’ public higher education to its entitled snowflakes.  The $163 billion state budget agreement includes the Excelsior Scholarship, which covers tuition for any New Yorker accepted to one of the state’s community colleges or four-year universities, provided their family earns less than $125,000 a year.

Of course, for politicians, ‘free’ is just a nice way of saying they’re about to jam more taxes down the throats of working Americans to cover the cost of services they may or may not use personally.

 

The scholarship program will be phased in over three years, beginning for New Yorkers making up to $100,000 annually in the fall of 2017, increasing to $110,000 in 2018, and reaching $125,000 in 2019. Nearly 1
million families will qualify for the scholarship.

It is a last-dollar program, meaning the state would cover any tuition left over after factoring in federal Pell Grants and New York’s Tuition Assistance Program. Students must be enrolled in college full time and take at least 30 course credits a year, though those facing hardships can pause and restart the program or take fewer credits.

As the Washington Post points out, the program is expected to cost New York taxpayers $163 million in its first year and, like all other entitlements, will only grow over time. 

Proposed by Gov. Andrew M. Cuomo in January, the scholarship taps into one of the Democratic Party’s most popular ideas and advances a bipartisan movement to lower the cost of college that is taking shape across the country.

 

“Today, college is what high school was — it should always be an option even if you can’t afford it,” Cuomo said in a statement Saturday. “With this program, every child will have the opportunity that education provides.”

 

Not much changed from the initial proposal, including the $163 million estimated cost for the first year of the program, though there were concessions to win over lawmakers. Award recipients attending community college now have to remain in New York for two years after graduation, while those at state universities must stay for four years. Private universities, whose leaders said the plan would undermine their schools, will see an increase in state tuition assistance funding.

Of course, the irony of the situation is that, like many misinformed liberal entitlement programs, throwing more money at U.S. universities only serves to exacerbate the underlying problem of bloated, out-of-control college budgets.  But, on the bright side, America’s snowflakes will have yet another pool of money on which they can rely to fund their hedonistic, binge-drinking filled spring break trips to Cancun. 

via http://ift.tt/2onLgyG Tyler Durden

John McCain was on Face the Nation today, getting his neocon on, discussing the next steps that needed to be taken in Syria — dealing with Assad.

He approved of the President’s strikes — calling it a good ‘first step.’ But, he wants MOAR — accusing both Syria and Russia of war crimes, in addition to blaming Assad for the rise of ISIS. You cannot make this stuff up.
 

“And I think it was important. But it is now vitally important we develop a strategy, we put that strategy in motion, and we bring about peace in the region. And that obviously means that there has to be a cessation of these war crimes.
 
John, dropping, using chemical weapons is a war crime, but starving thousands of people in prisons is also. Barrel bombs which indiscriminately kill innocent civilians, precision strikes done by Russians on hospitals in Aleppo are war crimes as well.
 
So there’s a lot of war crimes that are taking place. And another area — aspect of this that I do not agree with the secretary is that you have to just concentrate on ISIS.
 
We will take Mosul. We will take Raqqa. And we better have strategies as to how to handle those places once we have won it. But they are not disconnected from Bashar al-Assad and the al Qaeda and the war crimes that have been taking place.
 
You can’t — to a large degree, Bashar al-Assad, by polarizing the Syrian people, have also given rise to ISIS and al Qaeda. So they are both connected. And I believe that the United States of America can address both at the same time. We can walk and chew gum.
 
We have the capability to do both. And, yes, we want a negotiated settlement, but the only way that that will happen is if it is not in their interests to continue what they have been successful at for over eight years. And that is why I thought, symbolically and psychologically, the president’s action was very important, but now we better follow it up. And, by the way, we should have cratered the runways.”

 
Seemingly ignoring the fact that ISIS and US backed ‘rebels’ in the region are responsible for the majority of civilian deaths in Syria, McCain carried on as if Assad was merely bombing civilians and not actually in the midst of a long, drawn out, civil war — which was started by ISIS. McCain wants the U.S. military to set up a ‘safe zone’ in Northern Syria.
 

“And also, when you see these crimes that are being committed, they are horrifying. John, I also believe that a grieving mother whose child has been killed isn’t too concerned whether it is a chemical weapon or a barrel bomb. He is still slaughtering people. And we may stop the chemical weapons.
 
But we have also got to stop the other indiscriminate, inhumane war crimes that are being committed as well. And that means, obviously, trying to set up some kind of safe zone, so that these refugees can have a place where they can be. And, also, that would help with the refugee flow issue.”

 
In response to President Trump’s strike on the Syrian airbase, McCain thinks we should’ve done more.
 

“Well, I think the fact that we acted was very important, and I support the president’s action.
 
And I have been told that there was some recommendations to take out all six places that the Syrian air force operates out of. But now that they are flying again, basically, within 36 hours is not a good signal.
 
But I would point out, taking out their — all their support facilities doesn’t let them fly with any consistency. But it — the signal that they are able to fly almost right away out of the same facility indicates that I don’t think we did as thorough enough job, which would have been cratering the runways.
 

McCain is fucking crazy. http://pic.twitter.com/t7bzYJUD4I

— The_Real_Fly (@The_Real_Fly) April 10, 2017

 
And somebody will say, well, then they can fill in the runways. Yes. And we can crater them again too.”

Has it ever dawned on McCain and the other neocons in America that maybe, just maybe, Russia would respond to our attacks on their ally, in an effort to protect Russian soliders on the ground? Has the concept of ‘mutually assured destruction’ gone by wayside somehow — the ultimate quagmire which has kept America out of a war with Russia for the past 70 years?

Content originally published at iBankCoin.com

via http://ift.tt/2oQ4Zs5 The_Real_Fly

For months now we’ve warned, as have many prominent Republican legislators, that Obamacare is on the verge of collapse (see “Obamacare On “Verge Of Collapse” As Premiums Set To Soar Again In 2017“). 

It’s not that shocking really as the fundamental concept behind the legislation made it doomed from the start.  The idea was that, out of an abundance of compassion for their elders, young, healthy millennial families would fork up $10s of thousands of dollars each year to purchase health insurance they didn’t really need.  Those premiums would then be used to subsidize care for the elderly who consume more than their “fair share,” to quote Obama.

Unfortunately, the basic math skills of our young millennials turned out to be better than the Obama administration had planned for and they figured out they were better off just paying the Obamacare tax to the IRS than paying the larger Obamacare ‘tax’ associated with buying a service they never use.  This “adverse selection bias” left risk pools way worse than insurers planned, which drove premiums even higher, which forced even more young people to ditch their insurance and the cycle will continue until the system ultimately fails.

In fact, as we pointed out last week, Knoxville, TN could be ground zero for the Obamacare explosion as it’s 40,000 residents live in a county that has been left with no healthcare options for the 2018 plan year after Humana pulled out of exchanges there.

And, with the fate of Obamacare all but sealed, you can imagine our shock to learn that several House Republicans are now apparently warming up to the legislation.

One such person is Patrick McHenry of North Carolina who says that any efforts of the Trump administration to lure votes from the Freedom Caucus by relaxing rules to allow insurance providers to charge people with pre-existing conditions higher premiums would be a “bridge too far” for some more moderate Republicans.  Per The Hill:

Rep. Patrick McHenry (R-N.C.), the GOP’s chief deputy whip, said Wednesday that the Freedom Caucus’s calls for states to be able to apply for waivers to repeal pre-existing condition protections are “a bridge too far for our members.”

 

Those ObamaCare protections include what is known as community rating, which prevents insurers from charging higher premiums to people with pre-existing conditions, and guaranteed issue, which prevents insurers from outright denying coverage to them.

 

McHenry spoke in personal terms about the importance of keeping in place those Affordable Care Act (ACA) provisions, contained in Title I of the law.

 

“If you look at the key provisions of Title I, it affects a cross section of our conference based off of their experience and the stories they know from their constituents and their understanding of policy,” McHenry said.

 

“My family history is really bad, and so my understanding of the impact of insurance regs are real, and I believe I’m a conservative, so I look at this, understand the impact of regulation, but also the impact of really bad practices in the insurance marketplace prior to the ACA passing,” he continued. “There are a lot of provisions that I’ve campaigned on for four election cycles that are part of the law now that I want to preserve.”

Meanwhile, other Republicans are also supporting ObamaCare’s expanion of Medicaid and the so-called “minimum coverage” mandate that, among other things, requires men to pay for maternity benefits…and while it may now be customary for our snowflakes to “choose” their own gender, we’re pretty sure that biology doesn’t actually work that way. 

Many Republicans from states that accepted ObamaCare’s expansion of Medicaid are supporting keeping it.

 

A group of Republican senators, including Sen. Cory Gardner (R-Colo.), the chairman of Senate Republicans’ campaign arm, last month objected to a draft of the House GOP repeal bill because it did not “provide stability and certainty for individuals and families in Medicaid expansion programs or the necessary flexibility for states.”

 

The House bill would effectively end the Medicaid expansion starting in 2020. Rep. Chris Smith (R-N.J.) warned that change “affects so many of our disabled individuals and families, and the working poor.”

 

Republicans had long derided ObamaCare’s “essential health benefits,” which mandate 10 health services that insurance plans must cover. They have said, for example, that men should not be forced to pay for plans that cover maternity care.

 

But now some Republicans are speaking up in favor of those requirements, including the chairman of the powerful Appropriations Committee, Rep. Rodney Frelinghuysen (R-N.J.).

 

“In addition to the loss of Medicaid coverage for so many people in my Medicaid-dependent state, the denial of essential health benefits in the individual market raise serious coverage and cost issues,” Frelinghuysen wrote in a statement last month announcing he would oppose the House GOP repeal bill.

 

House Republicans even touted an amendment on Thursday that they said would bring down premiums by the government helping to pay for the costs of high-cost enrollees. That program is very similar to one that already existed in ObamaCare, called “reinsurance.”

Of course, it’s looking increasingly likely that former House Speaker John Boehnor was right about Republicans and healthcare all long when said that the idea of a quick repeal and replace was just “happy talk….Republicans never ever agree on health care.”

via http://ift.tt/2pj0S3L Tyler Durden

Ahead of what we hope will be a relatively quiet week following the juggernaut from the past 7 days, we present readers with another excerpt from the latest weekly note from Eric Peters, CIO of One River, which is not only appropriate in the context of recent observation by UBS, involving the sudden collapse of the global credit impulse, but far more importantly, may be critical for those who are in the business of timing key market inflection points.

From Weekend Notes by Eric Peters

“The change of change is now negative,” said the CIO.

 

“Global growth is still rising, but the rate of improvement is slowing,” he explained. “Same holds true for global inflation, oil prices, copper, iron ore. Credit growth is slowing in the US, Europe, Japan, China.”  If these things were all contracting, we’d plunge into recession, but we’re not there. We’re simply at the point in the cycle where the rate of acceleration is slowing – which is both evidence of a pause, and a precondition for every major turn.

 

“The last time we had a major shift in the change of change was a year ago.” In Jan/Feb 2016, China was imploding. Commodity prices were tanking with equity markets, the dollar soared alongside volatility. Then China unleashed explosive credit stimulus, while the Fed blinked, guiding forward interest rates dramatically lower.

 

Within a short time, the change of change turned positive. Which is not to say things immediately accelerated, it’s just that they started contracting more slowly. And that marked the time to buy.

 

“Pretty much everything that happened in 2016 can be explained by two things; China and oil prices,” he said. “Literally, that’s it.”

 

China’s stimulus-induced rebound and the oil price recovery is all that mattered.

 

“Brexit was a joke. Trump was a joke. In fact, the only real significance of those events was that they provided investors with opportunities to jump on board the reflation trade at back near Q1 prices.” The reflation trade quietly began in the Q1 collapse, and accelerated off the extreme post-Brexit summer lows in global interest rates.

 

“That’s what made last year remarkable. Even investors who missed the first opportunity, had two chances to make a lot of money.” You see, that reward is usually reserved for those who act on the first signs of a change in the change of change.

Summary: as Peters helpfully points out, the change of change – that “green light” to buy risk one year ago when it flipped positive – is now negative. Or, as UBS summarized it simply in just one chart several weeks ago…

via http://ift.tt/2nS9qh5 Tyler Durden

Authored by Mish Shedlock via Mish Talk,

Benedict Evans, a blogger who works for a venture capital firm that invests in technology, has an interesting article on the shift to electric and self-driving vehicles.

Please consider snips from Cars and Second Order Consequences by Benedict Evans.

There are two foundational technology changes rolling through the car industry at the moment; electric and autonomy. Electric is happening right now, largely as a consequence of falling battery prices, while autonomy, or at least full autonomy, is a bit further off – perhaps 5-10 years, depending on how fast some pretty hard computer science problems get solved.

 

Both electric and autonomy have profound consequences beyond the car industry itself. Half of global oil production today goes to gasoline, and removing that demand will have geopolitical as well as industrial consequences. Over a million people are killed in car accidents every year around the world, mostly due to human error, and in a fully autonomous world all of those (and many more injuries) will also go away.

 

However, it’s also useful, and perhaps more challenging, to think about second and third order consequences. Moving to electric means much more than replacing the gas tank with a battery, and moving to autonomy means much more than ending accidents.

 

Electric Discussion

In regards to electric, Evans points out 150,000 gas stations while noting cigarette purchases and snacks are the way most of those stores make their money.

What happens to those stations?

On September 29,2015, Elon Musk said Tesla Cars Will Reach 620 Miles On A Single Charge “Within A Year Or Two,” Be Fully Autonomous In “Three Years”.

How’s that prediction working out?

On March 30, 2016, Bloomberg noted Tesla Model 3 Electric Car Seen Getting 225 Miles Per Charge and we are not there yet. Business insider a month later suggested a range of 215 miles.

Quartz reports Tesla’s cheaper, more powerful battery cell is the perfect embodiment of its factory model.

 

Supercharging

A Tesla presskit says their “Supercharger network covers major routes in North America, Europe, and Asia Pacific. There are more than 3,000 Superchargers worldwide.”

Their click here link for Supercharger locations turn up “404 page not found”.

Tesla says their Supercharger can “replenish a half charge in about 30 minutes.” Why not state a quarter charge in 15 minutes or a 16th of a charge in 3.75 minutes?

If a gas fill-up takes up to 4 minutes, then via Supercharger you will only need to stop 16 times as often for a long trip.

Am I missing something here?

It would be one hell of a lot easier if there was a quick and easy way to slide one battery pack out and another into its place.

 

Home Batteries

Evans notes …

“More speculatively (and this is part of Elon Musk’s vision), it is possible that we might all have large batteries in the home, storing off-peak power both to charge our cars and power our homes. Part of the aim here would be to push up battery volume and so lower their cost for both home storage and cars. If we all have such batteries then this could affect the current model of building power generation capacity for peak demand, since you could complement power stations with meaningful amounts of stored power for the first time.”

 

Long Distance Woes

Large home batteries do not solve long distance travel.

There either needs to be much greater battery capacity, much faster charging, or a way to quickly swap batteries.

I suppose one could simply swap vehicles every 200 miles but that seems like quite a nuisance.

For those who drive back and forth to work, or only drive within a city, electric works.

But why have a car at all if that’s all you do? Fleets of self-driving cars will work quite nicely vs the cost of one of these babies.

 

Autonomy Discussion

Per Evans …

The really obvious consequence of autonomy is a near-elimination in accidents, which kill over 1m people globally every year. In the USA in 2015, there were 13m collisions of which 1.7m caused injuries; 2.4m people were injured and 35k people were killed. Something over 90% of all accidents are now caused by driver error, and a third of fatal accidents in the USA involved alcohol. Looking beyond deaths and injuries themselves, there is also a huge economic effect to these accidents: the US government estimates a cost of $240bn a year across property damage itself, medical and emergency services, legal, lost work and congestion (for comparison, US car sales in 2016 were around $600bn). A similar UK analysis found a cost of £30bn, which is roughly equivalent adjusted for the population. This then comes from government (and so taxes), insurance and individual pockets. It also means jobs, of course.

 

Even simple ‘Level 3’ systems would cut many kinds of accident, and as more vehicles with more sophisticated systems, moving up to Level 5, cycle into the installed base over time, the collision rate will drop continuously. There should be an analogue of the ‘herd immunity‘ effect – even if your car is still hand-driven, my automatic car is still much less likely to collide with you. This also means that cycling would become much safer (though you’d still need to live close enough to where you wanted to go), and that in turn has implications for public health. You might never get to zero accidents – the deer running in front of a car might still get hit sometimes –  but you might get pretty close.

I am in complete agreement with the above. And with that is where it gets very interesting.  Evans has given this a lot of thought.

if you have no collisions then eventually you can remove many of the safety features in today’s vehicles, all of which add cost and weight and constrain the overall design – no more airbags or crumple zones, perhaps.

 

As more and more cars are driven by computer, they can drive in different ways. They don’t suffer from traffic waves, they don’t need to stop for traffic signals and they can platoon –  they can safely drive 2 feet apart at 80 mph.

 

Parking is another way that autonomy will add both capacity and demand. If a car does not have to wait for you in walking distance, where else might it wait, and is that more efficient?

 

So, the current parking model is clearly a source of congestion: some studies suggest that a double-digit percentage of traffic in dense urban areas comes from people circling around looking for a parking space, and on-street parking ipso facto reduces road capacity. An autonomous vehicle can wait somewhere else.

 

If you remove the cost of the human driver from an on-demand trip, the cost goes down by perhaps three quarters. If you can also remove or reduce the cost of the insurance, once the accident rate has fallen, it goes down even further. So, autonomy is rocket-fuel for on-demand. This makes it much easier for many more people to dispense with a car, or only have one, or leave their car at home and take an on-demand ride for any given trip.

 

Do you end up with reduced bus schedules? Do marginal bus-routes close, pushing people onto on-demand who might not otherwise have used it – if they can use it? Does a city provide, or subsidise, its own-demand service to replace or to supplement buses in lower-density areas? Does your robotaxi automatically drop you off at a bus stop on the edge of high-traffic areas, unless you pay a congestion charge?

 

Then, of course, there are the drivers. There are something over 230,000 taxi and private car drivers in the USA and around 1.5m long-haul truck-drivers.

 

Does an hour-long commute with no traffic and no need to watch the road feel better or worse than a half-hour commute stuck in near-stationary traffic staring at the car in front? How willing are people to go from their home in a suburb to dinner in a city centre on a dark cold wet night if they don’t have to park and an on-demand ride is cheap?

 

In 2030 or so, police investigating a crime won’t just get copies of the CCTV from surrounding properties, but get copies of the sensor data from every car that happened to be passing.

 

More Questions than Answers

There is much more in the article. It’s worth a closer look.

Evans raises far more questions than he answers. Yet, I think the question list is just beginning.

My timeframe for long-haul driving jobs vanishing has not changed. I still say it starts 2021-2022 at the latest.

 

How Many Jobs?

All Trucking says “There are approximately 3.5 million professional truck drivers in the United States, according to estimates by the American Trucking Association. The total number of people employed in the industry, including those in positions that do not entail driving, exceeds 8.7 million.”

I may have over-estimated the number of long-haul jobs that vanish. However, I may have under-estimated the add-on effects.

One should presume autonomous vehicles change cities as much as cars did. That’s just a starting point for thinking about this

— Benedict Evans (@BenedictEvans) September 19, 2016

 

If a truck can be on the road 24 hours instead of 11, how many trucks so we need? How many people servicing trucks do we need?

Opportunity for short-haul drivers with smaller trucks will vanish as well. How quickly?

Package delivery by drone is going to happen, especially smaller packages in rural areas. How Quickly?

For now, the savings on long-haul trucking are the greatest, and the obstacles the least, so I see no need to change my belief this will begin in a major way within a 2021-2022 timeframe.

The competition is so massive, all of the above things will happen much faster than most realize.

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By Chris at http://ift.tt/12YmHT5

“What about investing in hard assets like diamonds?”

I get asked this sometimes so figured I’d cover it here.

I wrote the below piece some years ago and it answers the question about whether diamonds should be treated as a store of value in an investor’s portfolio.

The word monopoly has its roots in the Greek words monos (single) and polein (to sell). It first appeared in Aristotle’s Politics where Aristotle describes how in Greece in the 6th century BC the philosopher Thales of Miletus cornered the local olive press market:

“Thales, so the story goes, because of his poverty was taunted with the uselessness of philosophy; but from his knowledge of astronomy he had observed while it was still winter that there was going to be a large crop of olives, so he raised a small sum of money and paid round deposits for the whole of the olive-presses in Miletus and Chios, which he hired at a low rent as nobody was running him up; and when the season arrived, there was a sudden demand for a number of presses at the same time, and by letting them out on what terms he liked he realized a large sum of money, so proving that it is easy for philosophers to be rich if they choose.”

Historically one of the most interesting and controversial monopolies is arguably that of the diamond market in recent times.

Throughout history the supply of diamonds has been very scarce. So much so that it was very difficult even for the creme de la creme of society to get hold of these little stones.

Things, however, started to change in the late 19th century when diamonds were found in South Africa and a lot of supply suddenly flooded the market. The price of what had been valuable only due to its scarcity was bound to tumble. To prevent this taking place, in 1888, a cartel with all the movers and shakers of the diamond mining world was formed under the name De Beers. And oh, what a cartel it has proved to be.

Once the supply of the diamonds was under their control, they had to take care of the other side of the equation – the demand.

To do this they joined forces with an advertising agency N. W. Ayer & Son to impact “social attitudes of the public at large” and thereby channel American spending toward larger and more expensive diamonds instead of “competitive luxuries”, as they put it.

To prevent any price fluctuations caused by selling the diamonds they had to convince the masses to hold onto them and not to “trade”. This is where the motto “diamonds are forever” was born. With a sophisticated advertising and PR campaign they turned diamonds into epitomes of eternal romance and love. In the next few decades, sales of diamonds in the US increased a hundredfold. Not bad, right?

However, it didn’t end there.

They then proceeded to expand to other global markets. In Japan they literally turned a 1,500 year old Japanese marriage tradition upside down as the number of men giving diamond engagement rings to their women rapidly increased in a mere 14 years. Let me tell you, changing Japanese cultural norms is no small task, and yet today Japanese men purchase diamonds for their brides as readily as Americans or Europeans.

Whenever a new diamond deposit was discovered in the world De Beers rushed in and bought it to minimize fluctuations in diamond prices. They had been relatively successful at that until the very end of the 20th century. At the turn of the century some of the diamond producer countries decided to bypass De Beers’ distribution channels and alternatives began to hit the market.

Determining the validity of a diamond takes an expert, and these days even the experts struggle to tell an artificial diamond from a natural one. The average man on the street hasn’t a hope in Hell of knowing the difference.

There are two alternatives to diamonds I’m aware of: moissanite and cubic zirconia, and neither of them have defects, which incidentally is one means of identifying fake from real diamonds. Synthetic diamonds have also been created in labs for decades now and these diamonds are indistinguishable from real diamonds because they are, in fact, diamonds. They are also produced at an absolute fraction of the price of real diamonds.

For anyone who does a little research they’ll find that diamonds are clearly as rare as macaroni cheese and if they’re not rare, they’re not valuable. Certain diamonds, such as graded diamonds, are somewhat rare, but diamonds themselves are certainly not rare. Even if we pretended for a minute that yes, diamonds are rare, we’re faced with the problem that artificial diamonds can be created by the boatload for next to nothing.

Diamonds aren’t liquid, either. Try selling a diamond back to Joey the jeweler and you’ll find that typically Joey will pay between 75% and 80% of the purchase price if the diamond wasn’t bought from his store and isn’t verifiable. In fact, many jewelers won’t buy a diamond back unless you’ve previously purchased that same diamond from them and have the documentation to prove it. Even then, they’ll typically only do a trade in, whereby you buy another higher priced diamond and trade your old diamond in.

In my book, diamonds are a terrible investment. Not rare, not liquid, and not valuable.

That’s my opinion, which is clearly not shared by the world at large. It’s the perception of rarity that matters. Not unlike the perception of safety afforded JGBs, US Treasury bonds, and EU bonds, people value these assets because they are perceived to be valuable. They’re not, but that’s beside the point… until, well… until it isn’t.

How come people buy Rolex watches when many of the fake versions today are indistinguishable from the real ones and, according to a number of jewellers, function just as well? Why do people buy Coca Cola, paying more than any number of the cola versions out there which cost less and have the same amount of disgusting ingredients? How is it that diamonds, which are not rare, and which can be produced for a fraction of the cost, sell for such ridiculous prices?

The answer seems to be that the con job pulled off by arguably THE most successful marketing campaign in corporate history lives on. 15 years ago, De Beers controlled about 80% of the market but that figure has now fallen below 40%. I’m simply surprised that their hold on the market has lasted as long as it has. An exceptional feat. Well done, chaps.

A good friend of mine who is a successful real estate agent likes to say that the key to a sale is ensuring that the woman is pulled over the line. A man will rarely buy a home his wife doesn’t like. I think the same is probably true of diamonds. Try telling your fiance that you bought her a synthetic diamond engagement ring and, “Oh, honey, aren’t you glad I saved a couple of grand?” See how well that goes down.

– Chris

PS: Don’t forget to share this article if you liked it, and if you hated it, don’t forget to send it to everyone you know telling them how bad it is. Have a great weekend!

“A diamond is forever.” — N.W. Ayer & Son Agency

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While there was much fanfare over last week’s summit at Mar-A-Lago between the presidents of the US and China, the tangible results to emerge from what was the year’s most important political meeting, aside for a few photo ops, were few and far between. That may change, at least for purely optical purposes, after a report in the Financial Times that China will “offer concessions” to the US to avoid a trade war, including better market access for US financial sector investments and beef, after the nation’s leaders decided last week in Florida they needed results on trade talks within 100 days.

That said, as the FT itself concedes, “the two concessions on finance and beef are relatively easy for Beijing to make“, especially since one wonders which US firms are in a rush to enter the “bubble-bust” Chinese financial markets which as we described two weeks ago, are persistently on the edge of collapse- not to mention a banking system which has at least $6 trillion in bad debts – and only ever greater government intervention in the form of various Beijing backstops have kept afloat.

In any case, for those brave enough to rush after Chinese financial “bargains”, they will now be allowed to hold majority stakes in securities and insurance companies which at present they can not do. The country’s largest companies in these sectors, such as Citic Securities and China Life Insurance, have achieved enormous scale which as the FT notes “makes them formidable competitors for new entrants to the market.” Which once again begs the question: which private investor would want to compete with the Chinese government which is the de facto owner of all financial enterprises in China?

It is also the case that while US companies are invited to invest domestically, this would result in the creation of more Chinese jobs and perhaps boost China’s current account, without actually benefiting US-Sino trade relations.

Additionally, the FT reports that China is also willing to end a ban on US beef imports that has been in place since 2003, “and buy more grains and other agricultural products as it seeks to reduce tensions stemming from the $347bn annual trade surplus in goods that it enjoys with its biggest trading partner.”

Putting the relatively modest market in context, the US currently exports roughly $6 billion in beef around the world, with Japan, the biggest import market, accounting for about a quarter. It is unclear how big the potential Chinese market would be, and whether it could compete with other foreign importers. That said, the FT notes that “beef exporters have complained about the lingering Chinese ban on US imports, which was introduced after a BSE scare in the US herd.”

The bottom line: “while a comprehensive Sino-US investment treaty remains a distant prospect, both sides are hoping to achieve a number of smaller trade deals in the coming three months.” The real take home message, however, is that if China’s concessions are only aimed at finance and agriculture, is that China will – at least for the time being – not touch its 25% auto tariffs, arguably the most controversial issue in Chinese-US trade relations.

US officials are pressing their Chinese counterparts to lower their current 25 per cent tariff on automotive imports. Beijing in return would like greater protection for Chinese investment in the US, which tripled last year to more than $45bn, and also for Washington to relax restrictions on the sale of certain high-tech products to China. The Chinese government may simply commit to buy more US imports in the same way that Japan did in the 1980s.

Then there is the issue of steel exports, a long-running topic of contention between the two countries: here, too, China is not budging.

“We’re not going to export a whole lot of steel to China,” said Chad Bown of the Peterson Institute.  Thanks to a state-directed investment stimulus unleashed in the wake of the global financial crisis, Chinese steelmakers now produce more steel than the rest of the world combined. With the Chinese economy now growing at its slowest pace in a quarter century, reduced demand at home has led to a surge in steel exports, causing global prices to collapse.

Still, with Trump’s economic successes few and far between, the president will gladly take any “concessions” the Chinese offer, even if it means little in the grand scheme of trade relations between the two nations.

* * *

Meanwhile, in a separate report, Axios reported that the Trump administration is preparing an executive order that would probe “unfair” product dumping from foreign companies and could result in tariffs on a wide range of products.  Here is what Axios’ Jonathan Swan said he has learned so far:

• Steel and aluminum will be targeted.
• Other products, including household appliances, could be targeted as well.
• If the investigations result in new import duties it could make some consumer goods more expensive and could hurt the stock prices of American companies that rely on cheap steel imports. A good number of American manufacturing companies, however, could benefit from this hit to their low-cost competitors.

A White House official was cited as saying this investigation is part of Trump’s effort to protect American jobs and end unfair trade practices like dumping and foreign government subsidization.

“The administration will use the results of that investigation to determine the best path forward, which could potentially include everything from no action at all to the levying of supplemental duties,” the White House official said. “But whichever action we take will be informed by the results of the investigation and not by predetermined conclusions.”

Axios further adds that Wilbur Ross is the point man on this executive order, which could arrive as early as late April. “But there’s no point getting too wedded to that timeline, because Trump has slowed the pace of executive actions and this is an especially sensitive one: If it’s clumsy, foreign trading partners could see this as the first shot in a trade war.“

Keep in mind this EO would only lead to a probe, no definitive action yet. So putting it in context, if the investigation does lead to penalties on foreign trading partners, “it will be seen a big win for Steve Bannon, Stephen Miller, Peter Navarro, and other economic nationalists in Trump’s orbit. Given the Syria strikes and Bannon’s demotion from the NSC, their clout has appeared to diminish. The Goldman wing, meanwhile, will likely oppose aggressive trade moves.“

Which, disappointingly, is what the Trump narrative in recent days has boiled down to – which camp is winning, the “nationalist” or the “Goldman” one. For now the score is firmly for the latter.

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Authored by Nick Cunningham of OilPrice.com,

The global market for LNG is changing quickly, spurred on by new sources of supply from U.S. shale.

U.S. natural gas production surged over the past decade, as fracking opened up a wave of new gas supply. That wave led to a glut and a crash in prices long before shale drillers did the same for oil. The U.S. was sitting on massive volumes of gas that routinely traded as low as $2 or $3 per million BTU (MMMBtu).

At the same time, Asian consumers – mainly Japan, South Korea and increasingly China – paid a hefty premium to import gas, with prices spiking close to $20/MMBtu following the Fukushima meltdown in 2011 that left Japan painfully short of functioning electricity capacity.

That presented U.S. gas companies with a straightforward arbitrage opportunity – export cheap American gas to Asia, selling it for a much higher price. The race to build LNG export terminals was on.

But by the time the first LNG export terminal in the U.S. came online in 2016, the gas market was radically changed. On the demand side, Japan – the largest LNG importer in the world – was no longer desperate for gas imports in the same way that it was back in 2011 and 2012. New renewable energy, a monumental efficiency campaign, and a greater reliance on coal cut into gas demand. China’s gas demand has also grown slower than expected.

 

The effects on the supply side of the equation are arguably much more significant. LNG export capacity around the world has surged in recent years, hitting 340 million tonnes per annum (mtpa) in 2016, up from 278.7 mtpa at the end of 2011, an increase of 20 percent. New megaprojects have come online, including Chevron’s Gorgon LNG project in Australia. A whopping 879 mtpa of new export capacity has been proposed for the future, although much of that probably won’t be constructed now that the market is oversupplied.

Surging supply and disappointing demand caused prices to come down from their peaks. Spot prices in East Asia – the Platts JKM marker – hit $19.42/MMBtu in March 2014. By 2016, Japan only paid an average of $7/MMBtu for imported LNG, or around one-third of the prices from three years ago. Spot prices for May 2017 delivery are now trading below $6/MMBtu.

The glut of LNG today is upending long-standing trade practices. LNG has historically been traded on long-term contracts at prices linked to the price of crude oil. The volume of LNG traded had once been limited, so there wasn’t much of a true market price for the product. Fixing cargoes to the price of crude oil became a common practice. The crash of crude oil in 2014, not coincidentally, also helped push down the prices of LNG.

Now, with so much supply on hand, the market is no longer favorable to sellers. But the U.S. is just beginning to ramp up. Cheniere Energy brought the first LNG export terminal online last year on the Gulf Coast. Other projects are under construction and by the end of the decade, the U.S. could be the third largest LNG exporter in the world behind only Australia and Qatar. By 2035, the U.S. is expected to pass them to become the largest LNG exporter in the world.

“As U.S. exports ramp up, we’re going to see even more flexibility with more people trying to buy and trade volumes. The old models of stable long-term contracts will really have to change,” Zhi Xin Chong, a gas analyst for Wood Mackenzie Ltd., told Bloomberg. “We’ve already seen the impact of U.S. LNG on contract trends, with more destination flexibility coming into play.”

Contracts used to not only have long time horizons, but would also prohibit buyers from reselling cargoes, limiting the development of a true market for LNG. That is changing, and the more reselling and spot purchases, the more liquid (no pun intended) the market will become.

But just because new U.S. suppliers are adding competition does not mean that American LNG is the most competitive. At one point it was – cheap Henry Hub prices competed favorably to high-priced LNG in Asia, particularly when oil traded at $100 per barrel. But spot LNG prices in Asia are now lower than some of the American LNG contracts.

For example, Indonesia’s Pertamina is contracted to buy LNG from Cheniere Energy at Henry Hub prices, plus 15 percent, plus a fixed $3.50/MMBtu fee, according to Bloomberg. When the deal was negotiated in 2013, that equated to something like $8/MMBtu – much better than the $18/MMBtu that LNG traded at the time. However, with spot prices down below $6/MMBtu, Pertamina is now trying to get out of its contract.

Buyers are demanding that these age-old contract practices be scrapped. JERA Co., a partnership between Japanese utilities Chubu Electric Power and Tokyo Electric Power, is the world’s largest buyer of LNG. JERA formed a common front with Korea Gas Corp. and China National Offshore Oil Corp to establish a buyer’s club in March to force changes in the LNG market. It is sort of the opposite of OPEC – a buyer’s cartel meant to influence prices and dictate contract terms. JERA is expected to sign a deal with France’s Total, which would see flexible volumes delivered based on spot prices.

But fixed prices and multi-year contracts are not going away entirely – they may just be shifting to lower prices and shorter terms. The former head of Cheniere Energy, Charif Souki, recently offered Japanese customers five-year contracts fixed at $8/MMBtu from an LNG export terminal on the U.S. Gulf Coast beginning in 2023, a contract much shorter than in yester-year when they spanned decades. Now head Inc., Souki is confident his capacity will sell out.

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