Saturday, March 4, 2017

"The End Of Moore's Law" and "Beyond the Moore’s Law Cliff: The Next 1000X"

A twofer. First up, MIT Emeritus Professor and iRobot co-founder Rodney Brooks at his personal blog:

The End of Moore’s Law
I have been working on an upcoming post about megatrends and how they drive tech. I had included the end of Moore’s Law to illustrate how the end of a megatrend might also have a big influence on tech, but that section got away from me, becoming much larger than the sections on each individual current megatrend. So I decided to break it out into a separate post and publish it first. Here it is.

Moore’s Law, concerning what we put on silicon wafers, is over after a solid fifty year run that completely reshaped our world. But that end unleashes lots of new opportunities.
Moore, Gordon E., Cramming more components onto integrated circuits, Electronics, Vol 32, No. 8, April 19, 1965.

Electronics was a trade journal that published monthly, mostly, from 1930 to 1995. Gordon Moore’s four and a half page contribution in 1965 was perhaps its most influential article ever. That article not only articulated the beginnings, and it was the very beginnings, of a trend, but the existence of that articulation became a goal/law that has run the silicon based circuit industry (which is the basis of every digital device in our world) for fifty years. Moore was a Cal Tech PhD, cofounder in 1957 of Fairchild Semiconductor, and head of its research and development laboratory from 1959. Fairchild had been founded to make transistors from silicon at a time when they were usually made from much slower germanium.

One can find many files on the Web that claim to be copies of the original paper, but I have noticed that some of them have the graphs redrawn and that they are sometimes slightly different from the ones that I have always taken to be the originals. Below I reproduce two figures from the original that as far as I can tell have only been copied from an original paper version of the magazine, with no manual/human cleanup.

The first one that I reproduce here is the money shot for the origin of Moore’s Law. There was however an equally important earlier graph in the paper which was predictive of the future yield over time of functional circuits that could be made from silicon. It had less actual data than this one, and as we’ll see, that is really saying something.

This graph is about the number of components on an integrated circuit. An integrated circuit is made through a process that is like printing. Light is projected onto a thin wafer of silicon in a number of different patterns, while different gases fill the chamber in which it is held. The different gases cause different light activated chemical processes to happen on the surface of the wafer, sometimes depositing some types of material, and sometimes etching material away. With precise masks to pattern the light, and precise control over temperature and duration of exposures, a physical two dimensional electronic circuit can be printed. The circuit has transistors, resistors, and other components. Lots of them might be made on a single wafer at once, just as lots of letters are printed on a single page at one. The yield is how many of those circuits are functional–small alignment or timing errors in production can screw up some of the circuits in any given print. Then the silicon wafer is cut up into pieces, each containing one of the circuits and each is put inside its own plastic package with little “legs” sticking out as the connectors–if you have looked at a circuit board made in the last forty years you have seen it populated with lots of integrated circuits.

The number of components in a single integrated circuit is important. Since the circuit is printed it involves no manual labor, unlike earlier electronics where every single component had to be placed and attached by hand. Now a complex circuit which involves multiple integrated circuits only requires hand construction (later this too was largely automated), to connect up a much smaller number of components. And as long as one has a process which gets good yield, it is constant time to build a single integrated circuit, regardless of how many components are in it. That means less total integrated circuits that need to be connected by hand or machine. So, as Moore’s paper’s title references, cramming more components into a single integrated circuit is a really good idea.

The graph plots the logarithm base two of the number of components in an integrated circuit on the vertical axis against calendar years on the horizontal axis. Every notch upwards on the left doubles the number of components. So while 3 means 2^3 = 8 components, 13 means 2^{13} = 8,192 components. That is a thousand fold increase from 1962 to 1972.
There are two important things to note here....MUCH MORE
And from the high performance computing (supercomputing) mavens at Inside HPC, Feb. 24:

Beyond the Moore’s Law Cliff: The Next 1000X
In this video from the 2017 HPC Advisory Council Stanford Conference, Subhasish Mitra from Stanford presents: Beyond the Moore’s Law Cliff: The Next 1000X.

Professor Subhasish Mitra directs the Robust Systems Group in the Department of Electrical Engineering and the Department of Computer Science of Stanford University, where he is the Chambers Faculty Scholar of Engineering. Prior to joining Stanford, he was a Principal Engineer at Intel Corporation. He received Ph.D. in Electrical Engineering from Stanford University.

Prof. Mitra’s research interests include robust system design, VLSI design, CAD, validation and test, emerging nanotechnologies, and emerging neuroscience applications. His X-Compact technique for test compression has been key to cost-effective manufacturing and high-quality testing of a vast majority of electronic systems, including numerous Intel products. X-Compact and its derivatives have been implemented in widely-used commercial Electronic Design Automation tools. The QED and IFRA techniques, created jointly with his students, have shown outstanding results in overcoming critical bottlenecks in post-silicon validation and debug for several commercial hardware platforms, and have been characterized as “breakthrough” in a Research Highlight in the Communications of the ACM (CACM)....MORE, including the video.

Eurozone Inflation: Looking for the Overshoot

From FT Alphaville, March 2:

Snap AV: This inflation is headline, the other one is far away
From Capital Economics, with our emphasis:
February’s rise in euro-zone consumer price inflation put it in line with the ECB’s 2% price stability ceiling for the first time since January 2013, but underlying price pressures remain subdued. The increase in headline harmonised CPI inflation, from 1.8% to 2.0%, was in line with the consensus forecast and left the rate at its highest in over four years. But the pick-up entirely reflected higher energy and food inflation while the core rate was unchanged at just 0.9%.
And from ING:

Eurozone inflation is making a come-back....

Friday, March 3, 2017

Natural Gas: EIA Weekly Supply/Demand Report

Front futures 2.8130 up 0.0090.
From the Energy Information Administration:
Prices up across the Lower 48 states. Most price points outside the Northeast saw prices increase by less than 10¢ this report week (Wednesday, February 22 to Wednesday, March 1). The Henry Hub spot price rose 7¢ from $2.53/MMBtu last Wednesday to $2.60/MMBtu yesterday. At the Chicago Citygate, prices increased 9¢ from $2.59/MMBtu last Wednesday to $2.68/MMBtu yesterday. Prices at PG&E Citygate in Northern California rose 1¢, up from $3.06/MMBtu last Wednesday to $3.07/MMBtu yesterday. The price at SoCal Citygate also rose 1¢, up from $2.82/MMBtu last Wednesday to $2.83/MMBtu yesterday.

Northeast prices see largest rises. At the Algonquin Citygate, which serves Boston-area consumers, prices went up $1.05 from $2.19/MMBtu last Wednesday to $3.24/MMBtu yesterday. This rise occurred yesterday, as weather forecasts predicted cooler weather in the Northeast. From last Wednesday to Tuesday, Algonquin prices were more stable and averaged $2.18/MMBtu.
At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased 26¢ from $2.10/MMBtu last Wednesday to $2.36/MMBtu yesterday. Tennessee Zone 4 Marcellus spot prices advanced 8¢ from $1.93/MMBtu last Wednesday to $2.01/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania rose 13¢ from $2.08/MMBtu last Wednesday to $2.21/MMBtu yesterday. Similar to changes at Algonquin Citygate, these increases occurred primarily during yesterday’s trading.

March contract expires; April contract rises slightly. At the Nymex, the March 2017 contract expired Friday at $2.627/MMBtu, up 4¢ from last Wednesday. The April 2017 contract increased to $2.799/MMBtu, up 10¢ from last Wednesday to yesterday. The price of the 12-month strip averaging April 2017 through March 2018 futures contracts climbed 14¢ to $3.140/MMBtu.

Supply falls slightly. According to data from PointLogic, the average total supply of natural gas decreased by 1% from the previous week. The supply decrease was driven by a decrease in net imports from Canada, which were 15% below the previous week. Dry natural gas production remained constant week over week. More broadly, in December 2016, production decreased year to year from the same month in 2015, and annual production for 2016 was down 2.2% from 2015 levels.

Demand increases. After falling for the past three weeks, total U.S. consumption of natural gas increased 8% this report week over the previous week, according to data from PointLogic. Power burn climbed by 9%, industrial sector consumption increased by 2%, and residential and commercial consumption increased by 12%. Natural gas exports to Mexico decreased 2% week over week.
U.S. LNG exports. Natural gas pipeline deliveries to the Sabine Pass liquefaction terminal averaged 1.5 Bcf/d for the report week, 31% lower than in the previous week. Four vessels (combined LNG-carrying capacity of 14.1 Bcf) departed Sabine Pass last week, and one vessel (LNG-carrying capacity of 3.8 Bcf) is currently loading at the terminal. In February, 15 cargoes were exported from Sabine Pass (carrying an estimated 51.8 Bcf of LNG), matching the previous record of 15 cargoes exported in January, with an estimated LNG export volume of 51.5 Bcf.
more price data

Storage: Continued unseasonably mild temperatures during the week result in weekly net injections for the first time in February. Net injections into storage totaled 7 Bcf, compared with the five-year (2012–16) average net withdrawal of 132 Bcf and last year's net withdrawal of 67 Bcf during the same week. This is the first time that weekly net injections have ever been reported in February on a national level. There have been three other occasions when net injections have been reported during the peak heating demand months (December–February) in the 23-year history of the weekly working gas estimates. All of those occasions occurred in December. The largest net injection during the peak winter months was 27 Bcf, for the week ending December 4, 1998. The other net increases were close to zero—1 Bcf and 2 Bcf, for the weeks ending December 30, 2005 and December 7, 2012, respectively. Warmer temperatures throughout the week for most of the Lower 48 states contributed to decreased heating demand for natural gas and lower withdrawals from storage. Working gas stocks total 2,363 Bcf, which is 295 Bcf more than the five-year average and 187 Bcf less than last year at this time....

"Peso Surges, Dollar Tumbles After Wilbur Ross Comments"

From ZeroHedge:
The Mexican Peso surged back below 20/$ this morning after new Commerce Secretary Wilbur Ross comments on the potential for peso recovery in a "sensible" NAFTA deal. Along with comments on Germany and Euro weakness, Ross also sent the USD index markedly lower (after 5 straight days higher).
Ross said...
“The peso has fallen a lot mainly because of the fear of what will happen with Nafta. I believe that if we and the Mexicans make a very sensible trade agreement, the Mexican peso will recover quite a lot,"
And the peso ripped...MORE

"Yellen and Jobs Report Last Two Hurdles to US Hike"

The dollar index has given up yesterday's gain, 101.90 last, down .31. Here's the 5-minute chart via FinViz:

From Marc to Market:
The US dollar is narrowly mixed as Yellen's speech in Chicago is awaited.  The greenback's three-day advance against the euro and four-day advance against the yen is at risk.  Sterling, however, is lower for the sixth session,  following the weaker than expected service PMI (53.3 vs. 54.5 in January and 54.1 expected).  

The dollar-bloc currencies, where speculators in the futures market had gone net long, continue to underperform.   The dollar-bloc along with sterling are the weakest of the major currencies today.  On the week, the Canadian and New Zealand dollars have lost about 2.5%, while the Australian dollar is off 1.6% and has broken out of the month-long $0.7600-$0.7700 range that had largely confined the price action.  

If Yellen (or Fischer) want to push against expectations for a hike on March 15, today may be the last opportunity.  This seems unlikely, given the recent comments by Dudley, but also Governors Brainard and Powell.  There appears to have been a relatively sudden change in the official rhetoric, and it has been seemingly without exception.  

We had thought the word cues in the minutes ("fairly soon") did not imply March, given the previous signals before the December 2015 and December 2016 hikes.  We thought June was too far but thought May was more promising and had the added advantage of giving the Fed greater degrees of freedom.  The Fed will eventually need to have the flexibility to raise rates at half of its meetings that forecasts are not updated, and there is no press conference scheduled.  

An important part of the shift in the rhetoric of Fed officials is that the rate hike is not tied to any specific trigger, such as stronger data or more improvement in the labor market.  The general economic conditions and proximity to the full employment and price stability goals are sufficient, and officials are simply looking for appropriate opportunities.  The broader context, including stronger world growth and a stable dollar (which eased on a broad trade-weighted basis in both January and February), is also conducive.  

The failure to raise rates would be potentially more destabilizing that raising rates.  Investors, seeing the rising prices and improving labor market (with weekly jobless claims at new cyclical lows) would wonder at least two things:  What does the Fed know that we don't and is the Fed slipping behind the curve?   It does not seem as if Fed officials have let expectations build to such a degree (nearly 90% by Bloomberg's calculation and almost 80% in the CME's estimate) without delivering....   

Thursday, March 2, 2017

When the Time Comes, Will You Be Ready To Rebuild Civilization?

Yes you will !!
With the Global Village Construction Set:

You'll be able to extract alumina from clay to electrolyze into aluminum to make darn near anything, grow, harvest, mill and bake your own food, harvest and refine biofuels, turn trees into houses, build a still, communicate with radios and much much, more!
"In a post-apocalyptic world, which task would you assign the highest priority? Locating a sustainable food source, re-establishing a functioning government, procreating, or preserving the knowledge of mankind?" *
But first, from Project Chesapeake, a quick overview:

Could You Rebuild Civilization?
Most people would agree that when disaster strikes, what you know is one of the most important things you will have to work with. Your knowledge base is the one thing you can carry with you wherever you go. It will allow you to create items from locally available materials and improve your situation, whatever it may be. It is this mindset that many preppers use to improve their chances if the unthinkable should happen.

But lets take this mindset a step further. What would you be capable of doing if a global catastrophe happened? One such as a pole shift that destroys much of the infrastructure, knowledge and people that know how to build things and how they work. Would you be able to recreate some of the things you would need to rebuild society if you had to start from scratch with only your knowledge to guide you?

I like to play a mental game sometimes to help me understand just how much I actually know so I can identify what I need to learn. One scenario I use is to imagine that I am suddenly left in a destroyed world. What complex system could I recreate that would help me utilize many of the technologies I have lost? One system I use is the aircraft carrier. That may sound strange but just think of all of the various systems that comprise of that one ship.

While you may not be able to recreate all of the systems in their current form you can retain the knowledge to build primitive versions of those systems. You may not have the ability to build microprocessors but you can build vacuum tubes. You may not be able to recreate the telephone but you can build a telegraph set. You may not be able to build a nuclear reactor but you can build a wood fired steam engine. You may not be able to build a GPS unit but you can build a sextant and compass.

All of the technology we have today was built on the foundation of previous technologies we once used. Even if you do not understand current technologies, knowing how antiquated equipment worked gives you a base of knowledge you can build on. The following are some of the technologies it is helpful to know if you ever need to recreate them from scratch.
How to identify iron ore in rocks and refine it into cast iron and steel
How to weld or rivet steel plates together
How to build a boat or large ship
How to build a simple steam engine fueled by wood
How to build a propeller for a ship
How to make oil lamps and fuel for them
How to make a basic light bulb
How to make copper wires
How to make a simple telegraph set
How to make a basic battery
How to make a basic radio set or crystal radio
How to make vacuum tubes for radios
How to build a simple airplane or glider
How to build a simple generator
How to build a crossbow
How to build a flintlock rifle
How to make gunpowder
How to make glass
How to make paper
How to build a water wheel for power
How to build basic machining tools such as a lathe or milling machine
How to build a water pump
How to build a saw blade to cut lumber
How to make lead pencils or ink
How to make cloth
How to build a still
How to build a compass
How to build a mechanical clock
How to navigate by the stars or sun
How to make a camera or tin type
How to make camera film
How to make a telescope or binoculars
If this list seems overwhelming, that is the idea, and this is a small list. Most people do not realize how much technology we use on a daily basis and most have no clue how any of it works. If they were suddenly cast out into the wilderness, they would likely revert to caveman living if they survived at all.... 
*The second of Sheldon Cooper's three barriers, 'Each more daunting than the last.'
  Big Bang Theory-Series 3 Episode 22 – The Staircase Implementation
Daunting? Sure it is. If it were easy everyone would be rebuilding civilizations. As The Economist put it in their prepper issue, while apparently channeling Gloria Gaynor:

The Economist: "When civilisation collapses, will you be ready?"
From The Economist:
Preparing for the apocalypse
I will survive
AFTER “the Crunch”—the total collapse of the global economy—trade seized up...
At first I was afraid
Readers have always enjoyed scaring themselves with post-apocalyptic yarns...
I was petrified
Jason Charles, an affable African-American fireman in New York....
But I grew strong
Preppers love this sort of debate. Mr Rawles’s blog carries endless discussions of the merits of different ham radios or types of body armour...
So that's the setup.

And here's the payoff, from Open Source Ecology:
The Global Village Construction Set (GVCS) is a modular, DIY, low-cost, high-performance platform that allows for the easy fabrication of the 50 different Industrial Machines that it takes to build a small, sustainable civilization with modern comforts. We’re developing open source industrial machines that can be made at a fraction of commercial costs, and sharing our designs online for free.
The GVCS in itself consists of many other Construction Sets – as we build not individual machines, but construction sets of machines. As an example, the Fabrication Construction Set component can be used to build any of the other machines. Our goal is lifetime design, and low maintenance so only a few hours of maintenance per year are required to keep any machine alive.

We have built the first machine in 2007 – the Compressed Earth Brick Press. Since then, we have been moving forward steadily, improving the performance and production efficiencies of our machines. We have achieved a landmark One Day production time of the Compressed Earth Brick Press in 2012, and we intend to bring down the production time down to 1 day for each of the other machines. In 2013, we used our tractor, brick press, and soil pulverizer to build a comfortable home – the Microhouse....MORE 
But that's not all! Here's the "Open-sourced blueprints for civilization" TED talk:
Using wikis and digital fabrication tools, TED Fellow Marcin Jakubowski is open-sourcing the blueprints for 50 farm machines, allowing anyone to build their own tractor or harvester from scratch. And that's only the first step in a project to write an instruction set for an entire self-sustaining village (starting cost: $10,000). 
You read that right, get started for as little as ten thousand dollars. 

The information provided in GVCS (and Climateer Group) webinars and accompanying material is for informational purposes only.  It should not be considered civilizational or societal advice.  You should consult with a technologist or other qualified professional to determine what may be best for your individual needs. 
Past success in not a guide for future civilization performance
GVCS (and Climateer Group) do not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any survival decision without first consulting his or her own survival advisor and/or deity and conducting his or her own research and due diligence. To the maximum extent permitted by law, GVCS (and Climateer Group) disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any deaths or other losses. Your mileage may vary, close cover before striking, not all civilizations thrive, good luck.

"Netflix has built a DIY personal trainer that will make you earn your binge-watching"

As foretold by the Sibyl (of London, not Delphi or other branch offices):

Cybersecurity dispatches: Managing the IoT poltergeist threat
Imagine the scene in the not too distant future.

An Uber self-driving electric car has just dropped you home. Your front door has recognised your face, and your fingerprint has authenticated that it’s definitely you. You get into your house, not a key in sight, kick off your shoes, and happily discover that the 3D printing feature in your fridge has already printed the food you plan to consume for dinner. All the appliances you need are on. And everything you don’t need is off, nice and efficiently saving power.

You decide to treat yourself to a quick 30-minute Netflix holographic update, only to get a nudge from your wearable tech that you’ve still got a 10 minute exercise deficit to meet your daily exercise quota. It’s a problem because you happen to have signed up to the extreme health management option which shuts down ApplePay access — without which Netflix won’t work — if you fail to meet your objectives. You quickly get busy on your smart-grid connected treadmill (which conveniently sells off the energy produced by your system back into the grid).

When all of a sudden… your utility door flings open and your iRobot Roomba begins singing Daisy, Daisy....MORE....
Yes, that was Ms Kaminska, showing off back in 2014.

Here's today's headline story from Quartz:
Netflix, the tech company that enabled a generation of couch potatoes to “Netflix and chill,” has released instructions for a Netflix-themed personal trainer that connects to your streaming-video account.

The device, which can be made at home, connects to your phone or tablet via Bluetooth and uses an accelerometer to monitor your activity while you work out, according to the company’s instructions. You’ll need some hardware (pdf) and technical know-how to put the device together—such as how to work a printed circuit board.

But once you’ve built it, you can indicate how hard you want to workout, and whenever you fall below that threshold, the device will pause or mute the music on your phone or tablet to share inspirational audio messages from a Netflix character of your choosing.

Unbreakable Kimmy Schmidt’s Kimmy Schmidt will tell you, “You can stand anything for 10 seconds. Then, you just start on a new 10 seconds.” And Queen Elizabeth’s character from The Crown will proclaim, “A revolution must come from within.” Titus Andromedon, Frankie Bergstein, Pablo Escobar, Maria Bamford, and BoJack Horseman are a few of the other characters you can select as your at-home drill sergeant.

If you stop exercising completely, Netflix will stop playing, too. It will automatically pause the video—in lieu of more motivational messaging—until you start moving again. That functionality appears to work with iOS devices, according to the instructions....MORE
I knew why the Roomba was singing Daisy but no one cared, it was just trivia.
And speaking of trivia, how many of the Sibyls can you name? Michelangelo will get you started:
                          The Delphic Sibyl                                                       The Libyan Sibyl   
                       Sistine Chapel, Rome                                                 Sistine Chapel, Rome  

Harvard Law School Forum...."The 100 Most Overpaid CEOs: Are Fund Managers Asleep at the Wheel?"

From the Harvard Law School Forum on Corporate Governance and Financial Regulation:
According to the Economic Policy Institute,
“CEO pay grew an astounding 943% over the past 37 years, greatly outpacing the growth in the cost of living, the productivity of the economy, and the stock market, disproving the claim that the growth in CEO pay reflects the ‘performance’ of the company, the value of its stock, or the ability of the CEO to do anything but disproportionately raise the amount of his pay.”
For the past two years, we have highlighted the 100 most overpaid CEOs of S&P 500 companies, and the votes of large shareholders, including mutual funds and pension funds on their pay packages. 
What has changed since the first report? Not much. Executive pay has continued to increase. Although mutual funds and pension funds are doing better at exercising their fiduciary responsibility by more frequently voting their proxies against some of the most outrageous CEO pay packages. Of the mutual funds with the largest changes in voting habits from last year, all of them opposed more of the pay packages than they had the prior year. 
As we noted in our prior reports, the system in place to govern corporations has failed in the area of executive compensation. Like all the best governance systems, corporate governance relies on a balance of power. That system envisions directors representing shareholders and guarding the company’s assets from waste. It also envisions shareholders holding companies and executives accountable. 
This governance system comes from a time when it was assumed that unhappy investors would simply sell their stakes if sufficiently dissatisfied with the governance of a company. It reflects a time when there were fewer intermediaries between beneficial holders and corporate executives. However, today more and more investors own shares through mutual funds, often investing in S&P 500 index funds. Individual investors are not in a position to sell their stakes in a specific company. The funds themselves are subject to a number of conflicts of interest and to what economists refer to with the oxymoronic-sounding term “rational apathy,” to reflect the expense of oversight in comparison to a pro rata share of any benefits. 
Today, those casting the votes on the behalf of shareholders frequently do not represent the shareholders’ interests. 
CEO compensation as it is currently structured does not work; rather than incentivize sustainable company growth, compensation plans increase disproportionately by every measure. Too often CEOs are rewarded for mergers and acquisitions instead of improving company performance. As noted in the Financial Crisis Inquiry Report, “Those [compensation] systems encouraged the big bet—where the payoff on the upside could be huge and the downside [for the individual executive] limited. This was the case up and down the line—from the corporate boardroom to the mortgage broker on the street.”2 We note that the downside, which could include such features as environmental costs, may be limited for the individual, and instead borne by the larger society. 
Paying one individual excessive amounts of money can lead people to make the false assumption that such compensation is justified and earned. It undermines essential premises of capitalism: the robust ‘invisible hand’ of the market as well as the confidence of those who entrust capital to third parties. Confusing disclosure coupled with inappropriate comparisons are then used to justify similar packages elsewhere. These systems perpetuate and exaggerate the destabilizing effects of income inequality, and may contribute to the stagnating pay of frontline employees. 
As the report is now in its third year, we have the ability to look back and see what happened to the companies identified in our report two years ago. We’ve been saying the most overpaid CEOs under-deliver for shareholders. In examining this data from the following two years of our report, we have found dramatic results—not only does the group of 100 most overpaid CEO companies of the S&P 500 underperform the S&P 500 by 2.9 percentage points, but the firms with the 10 most overpaid CEOs underperformed the S&P 500 index by an amazing 10.5 percentage points and actually had a negative return, reducing the actual value of the companies’ shares by 5.7 percent. In summary, the firms with the most overpaid CEO’s devastated shareholder value since our first report published in February 2015....MORE, including 50 page PDF: "The 100 Most Overpaid CEOs: Are Fund Managers Asleep at The Wheel?"

When Machines Won’t Learn: " Facebook shifts away from AI…" (FB)

Chatbots anyway.
The rest of Facebook's artificial intelligence push seems to be going into hyperdrive to keep up with Google, Baidu, Microsoft, Amazon and the thousand other companies and labs trying to figure out where this all ends up.

From The Register:

Confirmed: Facebook shifts away from AI… and like a miracle, the bots start working
Facebook has revamped its Messenger bot platform that allows businesses to engage with the app's massive audience – and the story is a lesson for anyone looking for practical applications of the AI and machine learning hype.

If you believe the evangelists, "new advances in AI" will allow businesses to restructure their support and sales operations, and maybe even their business models.

Via a chatbot interface, the AI would take care of work a human would do. Mark Zuckerberg implied as much when he introduced Facebook’s bot platform only last April to great fanfare, in a move hailed as part of an AI arms race.

The "Fourth Industrial Revolution" of white-collar automation was almost here.

But reports that Facebook has scaled back the fashionable emphasis on machine learning and AI after encountering a high failure rate have turned out to be true. And British entrepreneur Syd Lawrence, whose company worked closely with Facebook on the changes, thinks Facebook has been wise to move away from an emphasis on AI.

"The whole AI hype is horrifically off the mark," he told us. "Whereas these things can be really useful and powerful. But they're certainly not AI. We're way away from AI being really useful."
Lawrence, CEO of The Bot Platform, is an early access partner for the Facebook platform, and employs some former Facebook staff.

"The whole conversation around AI and even the term chatbots is all horribly wrong," says Lawrence. "I really hope we can put AI chatbots to rest. No one wants to talk to a chatbot." If that sounds odd from a company at the bleeding edge of the chatbot hype, then it needs an explanation....MORE

"Bitcoin’s 'creator' races to patent technology with gambling tycoon"

From Reuters:
A computer scientist and an online gambling fugitive have joined forces in a land grab for intellectual property related to bitcoin and blockchain.

SYDNEY/SINGAPORE - The man who last year made global headlines by claiming to be Satoshi Nakamoto, the creator of bitcoin, is working with a fugitive online gambling entrepreneur to file scores of patents relating to the digital currency and its underlying technology, blockchain.
Craig Wright, the Australian computer scientist who made the Satoshi claim, has the backing of Calvin Ayre, a wealthy Canadian entrepreneur, according to people close to Wright and documents reviewed by Reuters. Ayre has been indicted in the United States on charges of running online gambling operations that are illegal in many U.S. states – an accusation he rejects.

Wright’s expertise combined with Ayre’s support make a potentially formidable force in shaping the future of bitcoin and blockchain, the ledger technology that underlies digital currencies. Wright and his associates have lodged more than 70 patent applications in Britain and have plans to file many more, according to documents and emails reviewed by Reuters and sources with knowledge of Wright’s business. The patents range from the storage of medical documents to WiFi security, and reflect Wright's deep knowledge of how bitcoin and blockchain work.

Their total compares with 63 blockchain-related patents filed globally last year and 27 so far this year by multinationals from credit card companies to chipmakers, according to Thomson Innovation.
Neither Wright nor Ayre would comment for this story on their business relationship, details of which are revealed here for the first time, or their goals. But their interest in bitcoin and blockchain highlights two key trends.

First, an increasing number of entrepreneurs believe blockchain, which can circumvent the need for big financial intermediaries, will challenge traditional payment systems. Various banks are investing large sums to explore how blockchain could revolutionise payment systems and cut costs. Bitcoin involves sending payments directly, securely and potentially anonymously between two people's digital wallets, whereas all mainstream transactions, including those using intermediaries like Paypal and credit card lenders, run through banks and usually require named accounts and verification.
Second, blockchain has the potential to defy authorities trying to enforce borders and national regulations – and it already does so in areas such as online gambling. In internet chatrooms some online gamblers say that using bitcoin enables them to disguise their identity and transactions.
The confidentiality conveyed by the currency is one source of its popularity. Bitcoin hit a record high this week, partly because of speculation that the first bitcoin exchange-traded fund is set to receive U.S. regulatory approval. After a sharp rise this year, the cryptocurrency reached more than $1,200 per bitcoin.

Ayre said last year that he saw a “growing convergence” of bitcoin and online gambling, according to the website Documents reviewed by Reuters show Wright’s links to online gambling go back decades and that bitcoin grew out of code originally developed with gambling in mind. Early bitcoin code, seen by Reuters and analysed by a computer coding consultant with no ties to Wright or any blockchain-related project, contains unimplemented functions related to poker....MUCH MORE 

Currencies: "Dollar Remains Bid"

The last two weeks action via FinViz:
102.03 +.25
And from Marc to Market:
The US dollar is bid against the major currencies as the combination the increased expectation of a Fed rate hike and the President's commitment to fiscal stimulus buoys sentiment.  The dollar-bloc, where speculators in the futures market, have grown a net long position, are leading the move. 

The Australian dollar is the best performer this year, but is the worst today, giving back 0.75%.  It has repeatedly tested the $0.77000 area, and today's disappointing trade figures and ideas that iron ore prices may have peaked (after a 70% rally over the past eight months) has helped spur the pullback toward the lower end of the range (~$0.7600).  The January trade balance was a third of the A$3.8 bln expected. 

The dollar is extended its gains against the yen for the fourth consecutive session.  It is the longest advancing streak since around the US election last November.  The greenback is now at two-week highs to approach the upper end of its range since the middle of January seen in the JPY115.00-JPY115.60 area.  The drivers seem clear.  Rising US rates (and spread over Japanese rates) and rising equities.  The US 10-year yield is also rising for its fourth consecutive session.   

The S&P 500 has risen in four of the last five sessions.  Its 7% gain, year-to-date coming into today's session, is easily the most within the G7.   Japan's Topix has a three-day streak in tow.   A note of caution is in order.  The Topix gapped higher to its best level since late 2015, but the initial upside momentum could not be maintained and the close was on the lows.  Wednesday's high, about 0.6% lower than the close (~1554) will be important in tomorrow's price action. 

European bourses are struggling.  Minor losses are being recorded....MORE

Ed Yardeni: "Buffett’s Rules & Ratios"

From Dr. Ed's blog, March 1:
In a CNBC interview on Monday, Warren Buffett, the Oracle of Omaha, declared that stocks are “on the cheap side.” He has played the Trump rally by putting another $20 billion into the stock market since Election Day. Stocks are cheap, he said, because interest rates remain very low. This suggests that Buffett is betting both on and against Trump. He obviously made a very good decision not to let his personal politics get in the way of joining the animal spirits rally since Election Day. Warren Buffett is a long-time Democrat who supported Hillary Clinton, but he says he agrees with President Donald Trump on some issues—including homeland security as a top priority, boosting economic growth, and increasing the incomes of more Americans who have been hurt by globalization.

Yet, Buffett seems to be betting that interest rates won’t go up much anytime soon. In other words, he isn’t convinced that Trump will succeed in stimulating the economy very much with fiscal policy. He said that Republican leaders will probably have to scale back their tax reform ambitions because their current plan is too complicated to pass Congress, especially if they intend to do something on this by August: “I think complexity will give way to speed.” He expressed skepticism that the Republican tax plan will be revenue-neutral “without the craziest dynamic scoring in the world.” He also said that he doubts that the border adjustment tax (BAT) will see the light of day.

I agree with Buffett on the revenue-neutrality issue. The plan that the administration is outlining suggests a guns-and-butter fiscal approach with more defense spending, no cuts in entitlements, and lower tax rates. It’s hard to see how this won’t lead to higher bond yields, especially if the Fed starts increasing the federal funds rate at a pace closer to normal. (I am still forecasting that the US Treasury 10-year bond yield will range between 2.00%-2.50% during the first half of this year and 2.50%-3.00% during the second half of this year.)

In his interview, Buffett told CNBC on Monday that mixing politics and investment strategies would be a “big mistake.”...

A Day In The Life: A Thousand Chicks in Crowland Lincolnshire

Continuing our poultry parade.
From Modern Farmer:

A Thousand Chicks Found Dumped in England
The Royal Society for the Prevention of Cruelty to Animals continues its investigation into how and why nearly 1,000 day-old chicks recently ended up in a field in Crowland, near Peterborough, in Eastern England.

Passersby heard loud chirping and spotted what RSPCA inspector Justin Stubbs described as a “sea of yellow” in a field on February 17. RSPCA officers were called to the scene and with the help of volunteers rounded up the baby birds and put them in boxes. According to the animal welfare organization, the chicks came from a commercial hatchery located nearby and may have been dumped by a third party. The producer, which wasn’t named by the RSPCA, is “fully cooperating and assisting the RSPCA with their investigations.”...MORE

Questions America Wants Answered: "Which came first: the chicken or the egg?"

From NewStatesman:

This long-running debate tells us something important about science and ourselves.
lutarch was born a Greek and became a Roman. He was a priest in Delphi, where he served the temple of Apollo, but he was also a man of the world: a magistrate, an archon, an ambassador and even a celebrity of sorts, known across the Greek-reading world for his philosophical ponderings and biographies of emperors. He had a thick head of hair and an almost eerily symmetrical face – at least, the bust of him at the Archaeological Museum of Delphi, dating back to the second or third century, presents him that way. His marble forehead is dirty with what looks like ancient mud. Here he is serious, even sullen, and deep in thought.

This is the expression I imagine on his face when his friend Alexander the Epicurean, during a meal one day, asked him “that perplexed question, that plague of the inquisitive. Which was first: the bird or the egg?” Today, we are more specific about which bird – it’s a chicken we’re talking about – but that extra bit of detail hasn’t helped to settle the debate once and for all. Sylla, another friend dining with Plutarch and Alexander, suggested that “this little question” had far-reaching ramifications; indeed, it gestured towards the matter of “whether the world had a beginning”.

A few centuries earlier, Aristotle had fudged an answer, concluding that all creatures (including, therefore, chickens) had their first being in spirit, and anyway-what-if-both-chicken-and-egg-have-always-existed-did-you-ever-consider-that? Plutarch presented both arguments – that the egg was first as “it begets and contains everything”; and that the chicken was first because creation, in the very beginning, was “vigorous and perfect, was self-sufficient and entire”.

It’s a simple question and it should have a simple answer. Or so John D Morris at the Institute for Creation Research argued in a 2005 blog post, which channelled (without mentioning him) the 16th-century Italian naturalist Ulisse Aldrovandi and his insistence that “the hen did not come from the egg but from nothing”, because the “sacred books” said so. Morris wrote, in a somewhat unnecessarily strident tone:

According to the Creator of chickens, and the author of the Record of their origins, chickens came first. It was on the Fifth Day of Creation Week that He created “every winged fowl after [their] kind” (Genesis 1:21) complete with the DNA to reproduce that kind. Then He “blessed them, saying, Be fruitful, and multiply” (v.22) using that DNA. For the chickens this meant lay chicken eggs. Problem solved.

Although it’s hard to argue against anyone citing “the Creator of chickens” as a source, evolutionary biologists have largely backed the notion of the egg’s priority. Luis Villazon, a science writer at the BBC’s Focus magazine, summarised the Darwinian position as follows:...

Wednesday, March 1, 2017

Rybolovlev’s Losses Don’t Overshadow Christie’s Solid Sale

From Art Market Monitor:

Berthe Morisot, Femme en Noir (600-800k) 2m GBP 
This summary of the market coverage is available to AMMpro subscribers. Subscribers get the first month free on monthly subscriptions. Feel free to cancel at any time before the month is up. Sign up for AMMpro here.
The press covering the art market has become dangerously fixated on the market's health. Every story obsesses over the drop in sales volume while the surrounding economies continue to heal from a decade of macro-economic turmoil. The February sales in London are unlikely to give those outside of the art market a definitive statement on the market's future prospects. Last night's sales of Impressionist, Modern and Surrealist art in London, nonetheless, may start putting that question behind us.

Ermanno Rivetti at The Art Newspaper gathered the numbers and demonstrated that the trend line isn't always down:

The mood was high at Christie’s last night after the total haul for the evening’s Impressionist & Modern and Surreal auctions—£136.9m with fees and a high combined sell through rate of 92%—showed a 45% increase on results this time last year.

That doesn't mean the market always goes up, either. The current fixation among journalists is indulging in schadenfreude over Dimitry Rybolovlev's losses....MORE
If interested see also:
WTH Is Up With Rybolovlev? "A $100 Million Mystery: A Russian, His Art, and His Big Losses" 
Oprah Said to Snag $150 Million Selling Klimt to Chinese Buyer
Big Money: What Geneva’s Art King Lost in Battle with Russian Billionaire 
Big Money: "What Did Sotheby’s Know And When Did They Know It"

Dirty deeds, not dirt cheap.
It's pretty well established that the punishment for an agent's breach of the duty of loyalty to his principal is death.
At least in Russia at any rate  
Art: War Between the 'Freeport King' and the Oligarch and How Dmitry Rybolovlev Made a Quick $300 Million
"Oligarchs and Orchestras: Inside Luxembourg’s Secretive Low-Tax ‘Fortress of Art’ Warehouse"
The Power of Potash: Russian Billionaire Part of Record Deal For Trump Mansion

Among the female impressionists, Morisot is more famous but Marie Bracquemond is probably the most interesting:
Under the Lamp, Private Collection 1887

"Travis Kalanick is Uber's biggest asset, and now its biggest liability"

A piece at FT Alphaville today reminded me that the wider media is beginning to take notice of what Ms. Kaminska was writing about two-three years ago. Here she is again.
From FT Alphaville:

When life imitates art, Uber CEO edition
Travis Kalanick, the adversarial CEO of Uber who sees every day as a fight for survival that justifies mercenary corporate tactics, has had to issue a company-circulated apology. It follows a dash-cam video taken by one of his drivers revealing him to be insensitive and patronising, and out of touch with the reality of the failings of his own business model.

In the video, Kalanick is seen lecturing an Uber driver about the driver’s inability to meet financial commitments, which the driver blames on Uber not allowing drivers to charge high enough fees to cover basic costs like car loan payments, and which falsely lured them into taking these commitments on the notion they would be earning as much as $20 per hour.

“Some people don’t like to take responsibility for their own shit. They blame everything in their life on somebody else. Good luck!” he tells the driver.

This after noting (quelle surprise) that:...MUCH MORE
And from Business Insider via Yahoo Finance:
Uber would not exist without Travis Kalanick.

He wasn't the one to come up with the idea for it or even its first CEO. But there's no doubt that Kalanick was the one to take the company from a seed of an idea for a car service and to craft it into the most valuable private technology "startup" — if you can even call it that — that it is today.

Often, that meant springing into battle against whatever stood in the company's way, whether it was the "a**hole named taxi," as Kalanick once referred to his foes in the taxi industry, or the city regulators that have tried to block his business at every turn.

Kalanick's aggression, dedication, and scrappiness built Uber. But now those same traits threaten to tear it down.

In the last week alone, Uber was the subject of a former engineer's high-profile allegations of sexual harassment and a subsequent New York Times investigation detailing a litany of ugly behavior. The company was publicly rebuked by one of its most famous investors, and then accused of using stolen technology, and sued, by another big investor.

That's a bad week for any company, but for Uber the string of challenges has exposed a dangerous reality that threatens to derail the $69 billion company's path to an IPO: The company no longer enjoys the benefit of the doubt from many of its customers, the media or the general public. 
Given the fractured state of the company's reputation, this could well be the tipping point
A big reason for that is because of the reputation it's earned over the years under Kalanick's leadership, and some observers now believe any resolution to Uber's current crisis will have to involve a change with the 40-year-old Kalanick.

"If I were on the board, I would find a way to get rid of him," said Michael Barnett, a business and management professor at Rutgers University. That may not be a realistic scenario in the eyes of many industry insiders, but it's clear that the company has to make some kind of change if it wants to regain the credibility it needs for the business to continue to thrive.

A compounding crisisThis isn't the first time Uber's faced a string of corporate public relations disasters, but it's the first time it's brought the company to a tipping point.

Twice in the last month the company has had to update the automated messages it sends users when they delete their accounts, appending special entreaties asking for forgiveness. The first was during the #DeleteUber movement when more than 200,000 people deleted their accounts in a weekend — an uptick so dramatic that Uber had to build an entirely new system to handle it. This past week, Uber had to update the message again to tell users just how badly it was hurting in wake of the accusations of a sexist work culture at the company.

For a company to be in a crisis the situation needs to fit three criteria, according to NYU professor Irving Schenkler, who specializes in corporate reputation:
  1. It has to be occupying senior management to the detriment of the rest of the business.
  1. It may have financial implications for the company.
  1. It may affect the company's reputation in the eyes of important stakeholders. 
Uber has checked off all three boxes — more than once.

The current season of crises kicked off in December when Uber brashly opted to put its self-driving cars on San Francisco streets without the proper permits and was forced to back down by California regulators.

The showdown with the California DMV represented the first to dent Uber's carefully rebuilt image that centered around "celebrating" the cities it operates in. The #DeleteUber campaign — an unexpected and viral backlash to Kalanick's involvement with the Trump administration — further bruised customer trust of the company and showed that the backlash could actually take a toll on the business.

Now, the sexism scandal is internally affecting all levels of the organization as the company tries to rebuild trust with its own employees. It also lost the public support of some of its earliest investors. In a public blog post, Mitch and Freada Kapor, early investors in the company, publicly shamed Uber for allowing a "toxic" culture in the workplace and questioned whether Uber's pledged investigation into the incidents was actually independent enough.

Arianna Huffington, an Uber board member, pledged to hold the company's "feet to the fire" as it investigates claims of sexism in the workplace.
Then Google, another one of its investors, sued Uber for intellectual property theft and patent violations over its self-driving cars.

It fits into a pattern Schenkler has seen during company turmoil. "Companies with reputational risks or vulnerabilities will often encounter heightened scrutiny and compounding problems when a crisis surfaces," he told Business Insider.

"Uber's cascade of accusations reminds me of the sequence in Orson Wells' film, The Lady from Shanghai, where toward the send, at every turn, Wells' character sees his reflection in an unending set of mirrors," Schenkler said.

"The heightened glare directed at the company and the CEO may well augur a change in the C-Suite. Given the fractured state of the company's reputation, this could well be the tipping point, and an opportunity to head off consumer departures in favor of competitor."

Big moves, or a big axeUber is now facing a reputational crisis the likes of which it hasn't seen since 2014. Back then, Uber could manage its way out of it with less harm to the business.

That was the year of the infamous interview with GQ where Kalanick called the service "boob-er" since it helped attract women, and a French office ran an ad campaign to pair riders with "hot chick drivers." During the same period, Uber was  investigated for privacy violations after it used the service's controversial "God View" feature to track the whereabouts of a BuzzFeed reporter and an Uber exec suggested digging up dirt on critical journalists. On the business side, a leaked playbook showed just how far the company had gone to sabotage Lyft. Meanwhile, hundreds of angry drivers protested in the streets against the company's treatment.

None of these ordeals slowed Uber as its business and valuation continued to expand at a breathtaking pace.

But Uber is not the only game in town anymore, with Lyft's rival ride-hailing service now a viable substitute for Uber customers, says Barnett.

"People will start to switch over. Once they go over to Lyft, there’s no good reason for them to come back to Uber," he said.

Barnett compared it to Walmart trying to right its workers pay issues after Target came along. Companies can get away with it when they're the only option, but not when there's a comparable service.

That's why the trust deficit Uber has built-up over the years is especially problematic....MORE

"Japanese yen driven by TIPS yields"

This is an interesting correlation although I'm not sure which direction the causation, if any, flows.
From the Asia Times' Daily Brief:
The biggest trade-off in world markets at the moment: as the price of risk hedges in the dollar falls, the Japanese yen rises.
As real US interest rates rise, the Japanese yen rises with them. As the price of risk hedges in the dollar falls (TIPS prices move inversely with yields), the price of the Japanese yen rises as well. That’s the biggest trade-off in world markets at the moment. 
As it says on the label, brief

Target Inc. Blows Up, Florida Man Not Involved (TGT)

Following on Feb. 17's "Florida Man Conspires To Blow Up Target Stores To Crash Stock (TGT)".
From Bloomberg: 

Target Plunges Most in Eight Years
Target Corp. became a retail phenomenon -- and a stock market darling -- with a rare mix of hip products and bargain prices.

Whether the company can stick to that playbook is now in doubt.
Target stunned investors on Tuesday by abruptly announcing that it would move prices further down market, into the realm of its No. 1 rival, Wal-Mart Stores Inc., and accept lower profit margins as a result.

The news sent Target shares tumbling 12 percent, the most in more than eight years, and underscored the challenges confronting retailers caught between the twin juggernauts of American discount king Wal-Mart and online giant Inc.
Tuesday’s move, coming after years of stagnant growth, represents a risk to Target’s long-held objective of wooing more affluent shoppers -- an approach that won the company its faux French nickname, Tar-zhay. While cutting prices may draw more people in the door, it also may alienate consumers seeking a more upscale retail experience.

To hold onto those shoppers, Target will refurbish more than 600 stores and open about 100 smaller shops in cities and college campuses by 2019. It’ll also introduce a dozen new store brands in areas like apparel and homegoods, trying to replicate the success it’s had with labels like the Cat & Jack kids’ fashion line.

Style Focus
Chief Executive Officer Brian Cornell sought to reassure investors that Target isn’t abandoning the cheap chic formula that made it famous. Instead, Target will try to move away from the steep promotions it used to win back shoppers following its data breach in 2013 to focus on keeping prices low every day, Cornell told reporters Tuesday. The company still will prioritize delivering on the “style-side of the equation,” he said.

“Our plan right now is to make sure we don’t take our eyes off of the importance of quality, design and innovation in our stores and with our brands, but we also need to make sure we’re continuing to deliver the value the guest is looking for,” Cornell said. “We have to do both -- it’s always going to be a challenge to keep the right balance in place.”

Still, the judgment in the stock market was swift. Target’s share price plunged the most since December 2008, even after Cornell’s remarks.

‘Better Path’
“We are stunned -- we thought they were going the other way, with higher-margin stuff,” said Brandon Fletcher, an analyst at Sanford C. Bernstein & Co. “There is a better path, and we want to know why they stepped off into the wild.”...

$58.77 at the close Tuesday down $8.14 (12.17%)
We do have some Florida news:

Agricultural Commodities: "AM markets: soy rises, as traders read between Trump's lines"

Last Chg
Corn 376-0 +2-2
Soybeans 1044-2 +8-4
Wheat 451-0 +7-2

From Agrimoney:

February 28, 1983 brought one of the biggest television audiences in history, witnessing the final episode of M*A*S*H which was watched by well over 100m people.
Wind forward 34 years, and the speech by Donald Trump, the US president, to Congress last night may not have attracted quite the same figures overall, but was a must-view for grain traders, corn and soybean farmers, crushers, ethanol producers etc.
The allure of the speech was that it might contain a clue as to Mr Trump's biofuel policy, after a day of wild trading on corn and soybean markets.
Futures were sent soaring by rumours that the new president had signed an executive order which would result in raised biofuel demand, only to pare gains on White House denials.
"Do we know anything for certain? No! Did the market trade headlines and rumours today? Heck yes!" said Joe Lardy at CHS Hedging, as the sector awaited Mr Trump to take the podium.
Not so simple?
Unfortunately for ag, the speech offered no clarification on any reforms to US biofuels policy.
There was no mention of energy, corn, biofuels or blending, let alone of whether the US actually is to raise to 15%, from 10%, the mandated proportion of ethanol which must be mixed into gasoline – as one version of market rumour had it on Tuesday.
In fact, a boost to the ethanol blend might not be quite so easy.
"It is my understanding that any change to the Renewable Fuel Standard would require approval from the EPA which normally involves a public comment period or potentially and act of Congress," CHS Hedging's Joe Lardy said.
To judge by the deadline misses on previous EPA deals on ethanol, with biofuels a complex and emotive topic, swift resolution would indeed appear difficult....MORE

Currencies: "Greenback Bounces, More Fed than Trump"

Dollar Index 101.84 up 0.72.
From Marc to Market:
The much-anticipated speech by US President Trump was light on the details that investors interested in, like the tax reform, infrastructure initiative, and deregulation.  There appears to be an agreement to repeal the national healthcare, but there is no consensus on its replacement. 

The gains in the US dollar appear to be more a function of shifting expectations of Fed policy than new clarity on fiscal policy.  By Bloomberg's calculation, there is now an 82% chance the Fed hikes in two weeks.  Our interpolation puts the odds at 74%.  New York Fed President Dudley's remark that an increase in rates has become "more compelling" was the catalyst.  

Seven Fed officials are still set to speak this week.  Governor Brainard speaks after the US markets close today.  Although she is not part of the Fed's leadership core, her insight last year, and particularly the importance of the international settings, was important.  On Friday, both Fischer and Yellen speak.  Given the proximity of the March 15 FOMC meeting, it would be the last significant opportunity to try to shape market expectations.   

The US dollar is stronger against all the major currencies but the Australian dollar.  News that Australia's economy expanded 1.1% in Q4 16, among the strongest quarterly performances in the past five years lent support to the Aussie, which continues to encounters offers around $0.7700.   It found bids near $0.7640, which need to be absorbed before it can test the lower end of the recent range near $0.7600.  

The story behind Australia's recovery after the contraction in Q3 was a dramatic (9.1%) improvement in the terms of trade, due to the rise in iron ore and coal prices.  This, in turn, seems to be a function of the stabilization of the Chinese economy.  News earlier today showed that Chinese manufacturing PMI is rising to 51.6 in February from 51.3 in January.  Output, new orders, and business expectations improved.  The non-manufacturing PMI slipped to 54.2 from 54.6.  

The dollar briefly traded below JPY112 yesterday and now is trading near JPY113.65.   Japan did report stronger than expected Q4 capex (3.8% vs. 0.8% expectations), and record corporate profits in Q4.  However,  the weight on the yen appears to be emanating from the rate differentials, and in particular the rise in US yields.  The 10-year premium to be garnered in the US over Japan stands near 2.36% today.  It finished last week near 2.24%.   Yesterday, the dollar recorded a bullish hammer candlestick pattern and the follow through buying today, has lifted the greenback to test the JPY113.70 area, which corresponds to a 61.8% retracement of the dollar's slide from February 15's test on JPY115 to yesterday's low near JPY111.70, near the lows seen in the first half of February. The JPY115.00 would be the next target if the JPY113.75 can be overcome.  

The February eurozone manufacturing PMI ticked down from the flash (55.5) to 55.4, but it is still better than the 55.2 January reading and is the highest since the time series began in early 2014.  The minor lower revision seems to stem from German where the flash manufacturing reading of 57.0 was revised to 56.8.  Separately, Germany reported a somewhat larger than expected fall in unemployment (-14k rather than -10k)....MORE