another site
Tomorrow at 9 p.m., join us at
Hit&Run or on our
Facebook page as Reason staffers live tweet analysis, jokes,
useful links, and more during the president’s State of the Union
address.
And don’t forget to check back for Peter Suderman’s annual SOTU
drinking game.
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Rejoice! Your federal
government overlords are kindly permitting tech companies to
provide you a little bit more transparency about their requests for
user data. It’s not a whole lot more information, but it’s
something.
The Department of Justice and Office of the Director of National
Intelligence put out a
joint statement that will cause your brain to supply the sound
of a Peanuts teacher while you’re trying to read it (or maybe
that’s just me). One relevant paragraph:
This action was directed by the President earlier this month in
his speech on intelligence reforms. While this aggregate data was
properly classified until today, the Office of the Director of
National Intelligence, in consultation with other departments and
agencies, has determined that the public interest in disclosing
this information now outweighs the national security concerns that
required its classification.
Translation: “What we’re doing is extremely legal and for
national security, but if it will make you paranoid jerks happy, we
will put everybody’s lives at risk of terrorism to give you a
little bit more information. And no, Edward Snowden still isn’t a
whistleblower.”
Deputy Attorney General James Cole wrote the
letter (pdf) explaining the proposed changes in how tech
companies will be permitted to reveal federal requests for user
data. The restrictions on detailing National Security Letters will
not change, alas. They will still have to be counted in vague
factors of 1,000. But tech companies will also be able to reveal
numbers of FISA court-approved orders for content or
“non-content” (metadata) and the number of customers targeted for
gathering of content and for “non-content” (metadata), again all
rounded to the thousands.
In addition, there will be a six-month delay for publishing the
information, and, more importantly, a two-year delay in allowing
any transparency when the feds start ordering companies to provide
data from new platforms, products and services they hadn’t been
snooping before. So users who jump ship to new social media or
communication systems online may not know for a while whether the
feds are getting info from or about them.
The feds are also offering a transparency alternative that
allows tech companies to provide more accurate numbers in exchange
for being less transparent about what the requests were for. So a
tech company could instead detail how many customers and how many
orders they’ve gotten in bands of 250, rather than 1,000, but they
would not be able to separate out the super-secret National
Security Letters from requests for metadata.
No, there’s nothing in the letter that suggests any sort of
scaling back of mass data collection.
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Submitted by Charles Gave and Louis Gave via Evergreen Gavekal,
With emerging markets in panic mode, investors are bound to be reminded of the enduring observation, first made by a 19th century British businessman named John Mills, that: “Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal in hopelessly unproductive works.” With that in mind, investors seem happy to link the ongoing emerging market sell-off to either a) China’s large capital misallocation triggered by the 2008-11 credit boom or b) the Federal Reserve’s promise to start tapering last May, followed up now by the real thing. But could there perhaps be another explanation?
As everyone knows, the US dollar is still the world’s reserve currency. If/when the Fed maintains negative real rates for an inordinately long period of time, fewer and fewer people choose to save in US dollar and the currency heads lower. However, the dollar does not go down forever. When the exchange rate becomes between one or two standard deviations undervalued on a purchasing parity basis, it stops falling, if only because foreigners start loading up on US assets (Brazilians buying condos in Miami, Russians in New York city, etc.). Still, as long as real rates in the US are negative, the Fed, for all intents and purposes, is signaling that it does not want the dollar to rise and so it duly remains undervalued—an undervaluation which amounts to a “false price.” Combine this “false price for the currency” with the “false price in the cost of capital,” and the odds of a considerable misallocation of capital go through the roof. As to misallocation due to dollar undervaluation, this chiefly occurs through three mechanisms:
First, a weak dollar leads to a fall in the value of investments made outside of the US. Such investments would have been perfectly profitable but for dollar undervaluation; meanwhile, marginally profitable activities which should have disappeared in the US do not, lowering overall productivity as US “zombie” companies survive.
The second effect is a huge “improvement” in the US trade balance, usually with a lag of roughly three years. Since 2006, the US current account deficit has narrowed by nearly 4 percentage points of US GDP—for countries on the other side of this “improvement,” this adjustment can be painful.
The third effect is more complex. The dollar is the world’s reserve currency, which means the US is the only country in the world which has no foreign trade constraint. However, as we reviewed in our recent book (see Too Different For Comfort), this also means that the US current account deficit needs to grow if global trade is to expand. Indeed, if the US starts to export fewer dollars, then someone, somewhere will find he is unable to finance his trade. The US current account deficit is the monetary base of world trade and a reduction in the US current account deficit is thus equivalent to a massive monetary tightening for the rest of the world. It is for this last reason that we spend so much time monitoring the growth of central bank reserves held at the Fed; for as long as these are expanding, there are few reasons to fear a hiccup in the global trade architecture. However, as soon as central bank reserves start to shrink, then countries running large current account deficits and/or large budget deficits may find pushing more debt through the system challenging. Excluding China, reserves at the Fed are contracting in real terms.
Which brings us to what is unfolding today. The point that we have made for the past six months is that, within the emerging market space, there were clear weak spots but also countries in positions of strength. At times when central bank reserves are shrinking, the weak spots are always the countries running large current account deficits (Turkey, South Africa, Brazil, India…) or attempting to defend fixed, or artificially high, exchange rates in order to cushion the domestic financial industry silly enough to borrow in a foreign currency (Ukraine, Argentina…). Meanwhile, other emerging markets are plodding along, which helps explain why markets as diverse as the Philippines (still recovering from the most powerful Typhoon ever recorded), Indonesia (feeling the brunt of China’s more muted coal demand), Pakistan, Sri Lanka or Vietnam are all up for the year. Even Thailand is flat year to date, despite a violent political crisis.
In the meantime, we are left to ponder whether the years of the Fed following “euthanasia of the rentier” and “beggar thy neighbor” policies are now coming home to roost? After all, it’s all well and good for the Fed to hope for an increase in US “net exports,” but if the end result is to trigger a collapse in global trade (a distinct risk now that the previously fast growing economies of Latin America, Turkey, Ukraine etc., are hitting the wall while China, Indonesia and India slowing down), then it will look as if the Fed will have sown the seeds for the emerging market growth slowdown. In other words: did the Fed just do to the faster growing, deficit-generating, emerging markets what the Bundesbank did to the rest of euroland? If so, then maintaining some exposure to yield instruments in portfolios makes ample sense—if only as protection against growth expectations across emerging markets continuing to be ratcheted down—along with global trade, profits and risk appetite
via Zero Hedge http://ift.tt/1frslW7 Tyler Durden
So much for the only silver lining in Q4 and Nasdaq leadership from AAPL. Moments ago AAPL reported results which beats on the top and bottom-line, reportined revenues of $57.6 billion in line with the expected $57.5 billion, and EPS beating modestly at $14.50 vs Exp. $14.07 mostly thank to the retirement of 46 million diluted shares from a year ago. However the good news ended here, with the one thing the market was focusing on – iPhone sales – missing badly, as the company only sold 51 million iPhones in the quarter of the 5S release, compared to expectations of 54.7 million. Additionally, Apple also guided to lower revenues than the street had expected, and is now seeing $42-44 billion in the next quarter compared to consensus estimates of $46.1 billion and for all those calling for the demise of the US consumer – you may be right: AAPL Americas revenue declined by 1% from a year ago, when AAPL also had a new product launch. Is AAPL’s largest market starting to say “meh”?
Putting all this together, and the stock is down about 5% in the after hours session as the market is less than happy with yet another quarter of AAPL. But nobody is less happy than Carl Icahn who is now underwater on his latest $1 billion in widely trumpeted on Twitter AAPL purchases.
Breaking down AAPL’s results visually: Revenues.
Margins:
And most importantly, the breakdown by component sales:
Finally the one thing Carl Icahn will be fixated on – cash and marketable securities – rose by $12 billion in the quarter.
via Zero Hedge http://ift.tt/1jCejGr Tyler Durden
In 1986 Congress prescribed a 20-year
mandatory minimum sentence for drug distribution when “death or
serious bodily injury results from” consumption of the drug. Today
the Supreme Court unanimously
ruled that the penalty applies only when the drug was a
necessary or independently sufficient factor in the injury or
death. The justices
rejected the government’s argument that it’s enough for the
drug to be a constributing factor.
The case involved an Iowa drug dealer named Marcus Barrage, who
sold one gram of heroin to Joshua Banka, “a long-time drug user,”
on April 14, 2010. Banka injected the heroin during “an extended
drug binge” that included several other substances. He died the
next day, and his blood tested positive not only for morphine
(which is what heroin becomes after injection) but also for
oxycodone (Percocet), alprazolam (Xanax), and clonazepam
(Klonopin). In other words, Banka had consumed four different drugs
that cause respiratory depression, which was what killed him.
A forensic toxcicologist who testified at Barrage’s trial
“could not say whether Banka would have lived had he not
taken the heroin”; instead he concluded that the heroin “was a
contributing factor.” A medical examiner likewise “described the
cause of death as ‘mixed drug intoxication,'” with each drug
“contributing.” The judge told the jury that was enough, and the
jury convicted Barrage of supplying a drug that
resulted in Banka’s death, thereby triggering the 20-year mandatory
minimum. The U.S. Court of Appeals for the 8th Circuit upheld the
conviction. Overturning that decision, the Supreme Court said the
government had to show that the heroin supplied by Barrage was a
“but-for cause of death,” meaning Banka would not have died had he
not injected it.
Any legal theory that holds someone else responsible for
the reckless behavior that led to Banka’s death seems dubious to
me, rather like holding a distiller responsible for the death of a
college student who dies after chugging a bottle of whiskey.
So it counts as an improvement that the Court has made
that sort of case harder to argue. How much harder? According to
data from the Drug Abuse Warning Network, the vast majority of
“drug-related deaths” involving opiates or opioids also involve one
or more other drugs. Justice Antonin Scalia, who
wrote the majority opinion in
Burrage v. U.S., nevertheless argues that “but-for
causation is not nearly the insuperable barrier the Government
makes it out to be.” He cites a couple of cases where the
prosecution managed to prove that a given drug was a necessary
factor in a user’s death even though it was not the only substance
consumed. But given how common drug combinations are in so-called
overdose deaths, today’s ruling surely makes imposing the 20-year
mandatory minimum considerably more difficult—a development that
should be welcomed by critics of draconian drug
penalties.
One can imagine situations in which a drug seller might
legitimately be held responsible for a customer’s death—if he
misrepresents the product’s potency, for example, or substitutes a
more dangerous drug for the one the buyer thinks he is getting. But
that sort of thing is much more likely to happen in the black
market created by prohibition than in a legal market. When was the
last time you bought a bottle of vodka that turned out to be
methanol instead of ethanol, or 160 proof instead of 80? The
penalty at issue in this case can be seen as a way for drug
warriors to deflect responsibility for the hazards they
create.
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In 1986 Congress prescribed a 20-year
mandatory minimum sentence for drug distribution when “death or
serious bodily injury results from” consumption of the drug. Today
the Supreme Court unanimously
ruled that the penalty applies only when the drug was a
necessary or independently sufficient factor in the injury or
death. The justices
rejected the government’s argument that it’s enough for the
drug to be a constributing factor.
The case involved an Iowa drug dealer named Marcus Barrage, who
sold one gram of heroin to Joshua Banka, “a long-time drug user,”
on April 14, 2010. Banka injected the heroin during “an extended
drug binge” that included several other substances. He died the
next day, and his blood tested positive not only for morphine
(which is what heroin becomes after injection) but also for
oxycodone (Percocet), alprazolam (Xanax), and clonazepam
(Klonopin). In other words, Banka had consumed four different drugs
that cause respiratory depression, which was what killed him.
A forensic toxcicologist who testified at Barrage’s trial
“could not say whether Banka would have lived had he not
taken the heroin”; instead he concluded that the heroin “was a
contributing factor.” A medical examiner likewise “described the
cause of death as ‘mixed drug intoxication,'” with each drug
“contributing.” The judge told the jury that was enough, and the
jury convicted Barrage of supplying a drug that
resulted in Banka’s death, thereby triggering the 20-year mandatory
minimum. The U.S. Court of Appeals for the 8th Circuit upheld the
conviction. Overturning that decision, the Supreme Court said the
government had to show that the heroin supplied by Barrage was a
“but-for cause of death,” meaning Banka would not have died had he
not injected it.
Any legal theory that holds someone else responsible for
the reckless behavior that led to Banka’s death seems dubious to
me, rather like holding a distiller responsible for the death of a
college student who dies after chugging a bottle of whiskey.
So it counts as an improvement that the Court has made
that sort of case harder to argue. How much harder? According to
data from the Drug Abuse Warning Network, the vast majority of
“drug-related deaths” involving opiates or opioids also involve one
or more other drugs. Justice Antonin Scalia, who
wrote the majority opinion in
Burrage v. U.S., nevertheless argues that “but-for
causation is not nearly the insuperable barrier the Government
makes it out to be.” He cites a couple of cases where the
prosecution managed to prove that a given drug was a necessary
factor in a user’s death even though it was not the only substance
consumed. But given how common drug combinations are in so-called
overdose deaths, today’s ruling surely makes imposing the 20-year
mandatory minimum considerably more difficult—a development that
should be welcomed by critics of draconian drug
penalties.
One can imagine situations in which a drug seller might
legitimately be held responsible for a customer’s death—if he
misrepresents the product’s potency, for example, or substitutes a
more dangerous drug for the one the buyer thinks he is getting. But
that sort of thing is much more likely to happen in the black
market created by prohibition than in a legal market. When was the
last time you bought a bottle of vodka that turned out to be
methanol instead of ethanol, or 160 proof instead of 80? The
penalty at issue in this case can be seen as a way for drug
warriors to deflect responsibility for the hazards they
create.
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Pop singer and public nuisance
Justin Bieber was arrested last week by the Miami Beach Police.
While the the #FreeBieber and #DeportBieber camps of the
Twitterverse were clashing harder than Ukrainians in the streets of
Kiev, information that contradicted the police report began to
trickle out. Now, Miami-Dade County appears to have quietly
dropped several of the charges against Bieber.
Last Thursday, Bieber was pulled over while driving a rented
Lamborghini. He was allegedly participating in a drag race with
rapper Khalil Shareif. The police report
states that the cars were moving at about “55-60 mph” in a 30
mph residential zone. An officer pulled the singer over and
“immediately smelled an odor of alcohol eminating (sic) from the
driver’s breath and bloodshot eyes. The driver had slow deliberate
movements and a stuper (sic) look on his face.”
Beiber repeatedly asked, “Why did you stop me?” and “What the
fuck did I do?”
After disregarding repeated instructions that he keep his hands
visible, the singer was arrested and charged with driving under the
influence, driving with an expired license, and resisting arrest
without violence.
A spokesman for department later added new details
during a press conference, claiming that “during the investigation,
Mr. Bieber made statements that he had consumed some alcohol, and
that he had been smoking marijuana, and consumed some prescription
medication.”
Yet, various reports and inconsistencies indicate that the cops
may have fudged some information.
The Huffington Post
highlights a few errors with police report. It “has marked
‘Known’ when it comes to ‘Indication of alcohol influence’ but
‘Unknown’ is the box checked regarding drug influence. So had
Bieber informed the police what he was on, they didn’t put it down
as such.” The Post also points out that the department had
a few other (less egregious) errors, such as marking Bieber as an
American citizen and mistaking his birthplace as Toronto instead of
London, Ontario.
The Miami Herald
writes that “Bieber’s breath test did not show any substantive
alcohol use. He blew .014 and .011, well below the legal limit.”
This raises some questions about whether Bieber’s car really reeked
of alcohol. As Reason‘s
Jacob Sullum and
Scott Shackford have covered in the past, police don’t always
accurately identify smells.
TMZ claims that “the place where Justin and Khalil rented the
cars attached a GPS device that also tracks speed,” and that “5
blocks before cops noticed them they were going 34 MPH in a 30 mph
zone. Blocks later, they were steady at 27 mph.” A surveillance
video released by CBS Miami corroborates this,
showing an underwhelmingly slow “drag race” and police
pursuit.
Several sources have noted that the case information listed on
the Miami-Dade County Clerk of Courts website lists
the charge of resisting arrest. This indicates that the county is
not pursuing the DUI and expired license charges.
For a different angle on Justin Bieber at Reason, read
Shikha Dalmia’s
article on immigration and watch Paul Detrick’s video
below:
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Pop singer and public nuisance
Justin Bieber was arrested last week by the Miami Beach Police.
While the the #FreeBieber and #DeportBieber camps of the
Twitterverse were clashing harder than Ukrainians in the streets of
Kiev, information that contradicted the police report began to
trickle out. Now, Miami-Dade County appears to have quietly
dropped several of the charges against Bieber.
Last Thursday, Bieber was pulled over while driving a rented
Lamborghini. He was allegedly participating in a drag race with
rapper Khalil Shareif. The police report
states that the cars were moving at about “55-60 mph” in a 30
mph residential zone. An officer pulled the singer over and
“immediately smelled an odor of alcohol eminating (sic) from the
driver’s breath and bloodshot eyes. The driver had slow deliberate
movements and a stuper (sic) look on his face.”
Beiber repeatedly asked, “Why did you stop me?” and “What the
fuck did I do?”
After disregarding repeated instructions that he keep his hands
visible, the singer was arrested and charged with driving under the
influence, driving with an expired license, and resisting arrest
without violence.
A spokesman for department later added new details
during a press conference, claiming that “during the investigation,
Mr. Bieber made statements that he had consumed some alcohol, and
that he had been smoking marijuana, and consumed some prescription
medication.”
Yet, various reports and inconsistencies indicate that the cops
may have fudged some information.
The Huffington Post
highlights a few errors with police report. It “has marked
‘Known’ when it comes to ‘Indication of alcohol influence’ but
‘Unknown’ is the box checked regarding drug influence. So had
Bieber informed the police what he was on, they didn’t put it down
as such.” The Post also points out that the department had
a few other (less egregious) errors, such as marking Bieber as an
American citizen and mistaking his birthplace as Toronto instead of
London, Ontario.
The Miami Herald
writes that “Bieber’s breath test did not show any substantive
alcohol use. He blew .014 and .011, well below the legal limit.”
This raises some questions about whether Bieber’s car really reeked
of alcohol. As Reason‘s
Jacob Sullum and
Scott Shackford have covered in the past, police don’t always
accurately identify smells.
TMZ claims that “the place where Justin and Khalil rented the
cars attached a GPS device that also tracks speed,” and that “5
blocks before cops noticed them they were going 34 MPH in a 30 mph
zone. Blocks later, they were steady at 27 mph.” A surveillance
video released by CBS Miami corroborates this,
showing an underwhelmingly slow “drag race” and police
pursuit.
Several sources have noted that the case information listed on
the Miami-Dade County Clerk of Courts website lists
the charge of resisting arrest. This indicates that the county is
not pursuing the DUI and expired license charges.
For a different angle on Justin Bieber at Reason, read
Shikha Dalmia’s
article on immigration and watch Paul Detrick’s video
below:
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via IFTTT
I’ll be on the Alan
Nathan radio show tonight at 5pm ET, talking about
tomorrow night’s State of the Union address and the huge
opportunity it presents for President Obama to pile more broken
promises on us. If you like your president, you can keep him, for
three more years. Tune in on the radio, or click here to listen online.
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During the first minute of trading on January 27, 2014 there were wild price swings in at least 11 stocks: symbols BKH, GEB, HAYN, UBSH, WSBC, FLIC, EFF, GABC, BBOX, SP and TPZ. We know this because about 90 minutes later, Nasdaq canceled trades in these symbols citing the clearly erroneous transaction rule 11890(b). However, as Nanex shows in its usual great (and imperceptible to the SEC) detail, these trades appear anything but erroneous… we can only imagine who the market-maker algo belonged to that the Nasdaq canceled all of these trades…Goldman?
Un-Clearly Erroneous
During the first minute of trading on January 27, 2014 there were wild price swings in at least 11 stocks: symbols BKH, GEB, HAYN, UBSH, WSBC, FLIC, EFF, GABC, BBOX, SP and TPZ. We know this because about 90 minutes later, Nasdaq canceled trades in these symbols citing the clearly erroneous transaction rule 11890(b).
Pursuant to rule 11890(b), NASDAQ, on its own motion, will cancel all trades executed between 9:30:00 and 09:31:00 that were 10% or greater from the prior day’s consolidated close for the stocks listed below. This decision cannot be appealed. MarketWatch has coordinated this decision with other UTP Exchanges. The stocks affected are as follows: "BKH" at or above $58.66, "GEB" at or above $23.29, "HAYN" at or above $57.26, "UBSH" at or above $26.37, "WSBC" at or above $32.08, "FLIC" at or above $44.70, "EFF" at or above $20.13, "GABC" at or above $31.41, "BBOX" at or above $31.30, "SP" at or below $23.03 and "TPZ" at or above $27.88. NASDAQ will be canceling trades on the participant’s behalf.
Looking closely at the trade and quoting action, we can't help wondering how (other than by price) these trades were clearly erroneous. The trades were within the NBBO (National Best Bid/Offer) which means the highest bid and lowest ask from any of the 10 stock exchanges. Do we need more exchanges? Or is there another problem here?
1. BKH Trades and NBBO (National Best Bid/Offer) spread.
Starting about 2 minutes before market open, the ask prices (sell orders) start walking up from $53.85 all the way to $88.20!
2. BKH Bids and asks color coded by reporting exchange and NBBO.
Ask prices from multiple exchanges all march higher!
3. WSBC Trades and NBBO (National Best Bid/Offer) spread.
The Best Ask was significantly higher, and the best bid was significantly lower just seconds earlier.
4. WSBC Bids and asks color coded by reporting exchange and NBBO.
via Zero Hedge http://ift.tt/1n95F2q Tyler Durden