en How To Set Up Your Own Bitcoin/Ethereum IRA <p><a href=""><em>Authored by Eric Falkenstein via Falkenblog,</em></a></p> <p><strong>For the past&nbsp;couple of centuries&nbsp;technology empowered the state, put more things under its control. </strong>They have ultimate custody of all your financial assets, and custody is nine-tenths of the law. <strong>You simply can&#39;t hold $1M in financial assets in a form where &#39;The Man&#39; can grab it if he finds you an enemy of the state, which in many states includes righteous men.</strong></p> <p><a href=""><img height="325" src="" width="600" /></a></p> <p>But like so many things the effect is not linear, in that<strong> now technology is putting power back in individuals. </strong>We can now take classes online, and be evaluated objectively via tests, making Universities less important. We no longer have a handful of news sources, but a spectrum that allows us to choose among vastly different interpretations of the same data. And we have digital currencies, which exploit cryptography innovations aligned with processing power to<strong> create ways of assigning credits more efficiently than fiat currency.</strong></p> <p><strong>The essence of money is not that it is backed by something intrinsically valuable we can hold. Once &nbsp;we severed its link to gold and silver, it still &#39;worked.&#39; </strong>I would not have predicted that in 1900. Money works because people accept it, and the <strong>large network effects of everyone accepting it make it indispensable,</strong> because it avoids the &#39;<a href="">double coincidence of wants</a>.&#39; Bitcoin was created by geeks who were incented to invest their technical skills into mining and developing the network, and as these highly productive people began to accumulate these assets, they appreciate its value. Since highly productive people appreciate these assets, they are valuable because they can be translated into purchasing the services of such people. Thus, initial coin offerings (ICOs) allow people to fund new businesses focused on blockchain technology because the same people creating these businesses are fine with getting paid in &#39;tokens&#39;, something that would be hard to convince for your average person.</p> <p><strong>Long term, I see much wealth going off the fiat grid into cryptocurrencies, because as we&#39;ve seen throughout history, governments eventually run out of other people&#39;s money, leaving only expropriation via inflation or outright takings</strong> (see &#39;<a href="">Fragile by Design</a>&#39;). Anticipating this, getting your money into something the government can&#39;t seize is important, and cryptocurrencies allow you to do this. If a government tries to prohibit bitcoin, those with large bitcoin accounts will simply move to someplace that accepts it, like Singapore, and a country filled with those who appreciate and have a lot of bitcoin will tend to prosper. So unless the world governments can enforce a worldwide compact with over a hundred players, bitcoin will succeed, and I&#39;m sure most smart countries will ultimately allow general digital currency use reluctantly, to avoid such a brain drain.</p> <p><strong>While I love Bitcoin, Ethereum is better because it builds contracts into the same blockchain, which creates greater functionality.</strong> If you go to Reddit, you&#39;ll see more development in &#39;Go&#39;, a cutting edge software language, in Ethereum projects, and there are already more wikis on GitHub for Ethereum projects than Bitcoin projects, so I&#39;m confident that Ethereum will surpass Bitcoin in market cap someday, especially once they move to proof-of-stake (sometime next year).</p> <p>Since 2014, one has been able to put Bitcoin into IRAs (see <a href="">here</a>), though IRAs are so highly regulated, finding how to do this is non-trivial. <strong>So I thought I would move some of my 401k into cyber currencies such as Ethereum (you can do BTC too, but I&#39;ll use ETH as the example). &nbsp;Most 401ks and IRAs do not allow you to do this directly, and BitcoinIRA charges 10% to set up a Bitcoin IRA.</strong> I don&#39;t blame them for charging this much, as it&#39;s difficult, and as there&#39;s an 80% premium to NAV with the Bitcoin Investment Trust (<a href="">GBTC</a>), investors are clearly willing to pay extra to avoid the complexities involved in directly owning them (eg, try to explain this to your parents).</p> <p><strong>The problem is that no IRA custodian can translate USD into ETH the way they can move your USD into a mutual fund. You have set up an account at a&nbsp;cybercurrency&nbsp;exchange to do that, and most exchanges do not handle IRA transactions. </strong>The new regulated&nbsp;bitcoin&nbsp;exchanges have very small staffs relative to the number of customers, and so have automated most of their support function. Thus, if you have a question (&#39;how can I buy BTC for my IRA on your exchange?&#39;), you&#39;ll get an auto-bot answer using an algorithm that finds the best fit your keywords. These are irrelevant to unorthodox questions, and follow up questions just lead to more pointless&nbsp;autobot&nbsp;answers.</p> <p>The humans, alas, are rarely better, basically doing the same thing with their meat-based neural nets by looking at their FAQs and copy and pasting answers from there. At Coinbase, if you follow up your question after not hearing anything for 3 days, they will assume you have changed your question, so it moves it to the back of their queue. Thus I had an issue where my question was never answered because every couple of days I would write, &#39;is anyone there?&#39; which would put me back at the bottom of the queue, and my question was thus unanswered (and funds frozen) for 3 weeks.</p> <p><u><strong>It took me a while to find the companies that allow this directly.</strong></u> It&#39;s not straightforward, however, as Kingdom Trust clearly stumbled into this capability, and they gave me a bunch of contradictory information, all standard confusion. &nbsp;I&#39;m sure they and others will figure this all out eventually, but by the time it becomes easy to invest in digital currencies, the incentive will be a lot lower. &nbsp;So, <strong>be patient, it will happen, but just about every step takes at least a day.</strong></p> <p><span style="text-decoration: underline;"><strong>Here&#39;s how you set up a cybercurrency IRA:</strong></span></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>1) Go to <a href="">Kingdom Trust</a>, an IRA custodian based in Kentucky. &nbsp;Rollover your IRA/401k there, informing them you plan to hold ETH or BTC in your IRA.</p> <p>&nbsp;</p> <p>2) Set up an account at <a href="">Genesis</a>&nbsp;(not Gemini). You will need a clear picture of your driver&#39;s license you can email them, and a digital photo of a recent utility bill (w/in 3 months).</p> <p>&nbsp;</p> <p>3) Once approved at Genesis, you to open a <a href="">BitGo</a> account, as this exchange stores your initial wallet after the Genesis trade.</p> <p>&nbsp;</p> <p>4) Ask Kingdom Trust for an &quot;Investment Directive For Digital Currency&quot; form.</p> <p>&nbsp;</p> <p>5) Once you have this form, request a trade at Genesis, so that if you have $100K USD, ask them to buy as much as possible with that (it&#39;s called RFQ--request for quote--on the Genesis portal). You will get back a confirmation with the amount of USD paid for X units of ETH. You then &#39;accept&#39; that on the Genesis site.</p> <p>&nbsp;</p> <p>6) You then immediately fill out the Kingdom Trust &quot;Investment Directive&quot; form, which includes wire instructions to send your IRA money to Genesis&#39;s bank account at Silvergate Bank (see <a href="">here</a>), and your trade terms from Genesis, which includes how many ETHs were bought and for what USD price. You will need to sign the Kingdom Trust Investment Directive digitally, so add the PDF plug-in that allows digital signatures. Do this early in the morning, as even then it takes a day for them to instantiate the wire.</p> <p>&nbsp;</p> <p>7) Kingdom Trust then gives you a wallet address from your BitGo account. You then go your Genesis portal and click on your earlier RFQ trade. Click on the blue box to the left of this, and under Buyer Actions put in the ETH address that Kingdom Trust gives you. Send your ETH to the BitGo wallet address Kingdom Trust gives you.</p> <p>&nbsp;</p> <p>For Bitcoin, this is ultimately put into a multi-sig wallet. For ethereum, they do not have this capability yet&nbsp;but are working on it, so your money stays at an address at BitGo under Kingdom Trust&#39;s control. &nbsp;After that, Genesis is basically out of the picture.</p> <p>&nbsp;</p> <p>Fees: Genesis charges 1.5% for their service, which is implicit in the price paid relative to the market price. You have to pay Kingdom Trust $50 to open the account, $40 for the wire, and a $250 annual fee.</p> </blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="782" height="423" alt="" src="" /> </div> </div> </div> Bitcoin Bitcoin Blockchain centuries technology Coinbase Cryptocurrencies cryptography Digital currency E-commerce Economics of bitcoin Ethereum Finance Legality of bitcoin by country or territory Money pdf Proof-of-stake Tue, 22 Aug 2017 18:29:58 +0000 Tyler Durden 602111 at Lebanese Army Finds ISIS Anti-Aircraft Missile Cache: Could Passenger Jets Be Hit? <p><strong>Does ISIS have the capability of taking out a civilian passenger jet?</strong> According to an alarming new report by Reuters the answer appears to be&nbsp;<strong>yes.</strong></p> <p>The Islamic State has long been rumored as in possession of surface-to-air missiles, and now it appears a US ally is providing ground level confirmation of what might be a worst case nightmare scenario come true. The Lebanese Army has recently been engaged in a fierce campaign to root out ISIS terrorists from the Arsal border pocket - a northeast region of Lebanon bordering Syria which has seen fighting rage since 2014. As we <a href="" target="_blank">previously reported</a>, the operation is receiving some level of assistance from US special forces advisers as well as coordination from Hezbollah, while at the same time the Syrian Army is attacking from the Syrian side of the border in the Qalaman mountains.</p> <p>On Monday, <a href="" target="_blank">Reuters</a> issued the following report based on official statements of the Lebanese Army:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Lebanon's army found<strong> anti-aircraft missiles among with a cache of weapons in an area abandoned by Islamic State militants,</strong> it said on Monday. </p> <p>&nbsp;</p> <p>The arms cache also included mortars, medium and heavy machine guns, assault rifles, grenades, anti-tank weapons, anti-personnel mines, improvised explosive devices and ammunition.</p> </blockquote> <p>Not only did Lebanon's army - which is working under the advisement of the Pentagon for the operation - confirm ISIS possession of anti-aircraft missiles, but last week it reported to have uncovered a similarly stocked Nusra (al-Qaeda in Syria) cache as well. According to the same <a href="" target="_blank">Reuters report</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>A Hezbollah offensive last month forced militants from the Nusra Front group, formerly al Qaeda's official Syrian branch, to quit an adjacent enclave on the border for a rebel-held part of Syria. </p> <p>&nbsp;</p> <p>On Friday, the Lebanese army said <strong>it had discovered surface-to-air missiles in a weapons cache left by the Nusra militants</strong> in an area captured by Hezbollah and then taken over by the army.</p> </blockquote> <p>Such anti-aircraft missiles, commonly called MANPADS ("man-portable air-defense system": heat seeking shoulder fired missiles capable of hitting targets flying at anywhere between 10,000 and 15,000 feet), have appeared on the Syrian battlefield in recent years in the hands armed opposition groups supported by the West and Gulf states, including various <a href="" target="_blank">FSA and Islamist factions</a> like&nbsp;Ansar al-Islam Front (operating in the south) and Ahrar al-Sham (operating in the north of Syria).</p> <p>These groups have at various times filmed and demonstrated themselves to be in possession of externally supplied MANPADS, which are believed by analysts to have entered Syria in <a href="" target="_blank">multiple waves</a> via <a href="" target="_blank">different routes and external sponsors</a>, including <strong>old Soviet models shipped out of Libya, Chinese FN-6's provided by Qatar, and through NATO member Turkey's porous border with Syria.</strong> Some supplies were also likely gained through opposition takeovers of Syrian government storehouses as well as ISIS seizures of Iraqi government bases and equipment.</p> <p><a href=""><img src="" width="500" height="263" /></a></p> <p><em>MANPADS are heat seeking shoulder fired missiles capable of hitting targets flying at anywhere between 10,000 and 15,000 feet. Image source: <a href="" target="_blank">Activist Post</a></em></p> <p>A 2016 report from the Syrian monitoring news site South Front entitled, <a href="" target="_blank">MANPADS: From the FSA to ISIS and Al-Qaeda</a>, demonstrated the elaborate steps external state sponsors of the Syrian armed opposition took in concealing their role in introducing the missile systems to the conflict:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Since the reveal of&nbsp;Fn-6 anti-aircraft missile&nbsp;in the hands of the Free Syrian Army, speculations and warnings emerged on the danger of empowering non-state forces with such advanced mobile weapons.</p> <p>&nbsp;</p> <p>While many saw that empowering the FSA with weapons like these is of no perilous consequences, others had ample doubts and worries. </p> <p>&nbsp;</p> <p>The theory behind the proliferation of those Chinese manufactured weapons <strong>is that Qatar purchased them from the Sudan military stockpiles and transferred them with the cooperation of Turkey into Syria</strong>, and specifically into Deir Ezzor, Aleppo, Idlib, and Lattakia in addition to Homs’s northern countryside and Qalamoun.</p> </blockquote> <p>South Front further <a href="" target="_blank">detailed</a> instances of documented ISIS and al-Qaeda possession of the FN-6 system in Iraq, Syria, and Lebanon - and concluded (like innumerable other reports) that it was only a matter of time before ISIS and other terror groups would become the main beneficiaries of the bulk of advanced missile systems which were being handed out in Syria. The New York Times as early as 2013, for example, <a href="" target="_blank">reported Qatar's sending MANPADS into Syria</a>&nbsp;and discussed the likelihood of these going straight to Al-Qaeda. The report bluntly stated, "The missiles, American officials warned, could one day be used by terrorist groups, some of them affiliated with&nbsp;Al Qaeda, to shoot down civilian aircraft."</p> <p>Meanwhile, hawks in Congress have at various times over the course of the 6-year long war&nbsp;<a href="" target="_blank">argued</a> for openly supplying so-called "moderate" opposition factions in Syria with US made Stinger missiles. Though it's unknown for sure whether US sourced Stingers ever made it to Syria as part of the <a href="" target="_blank">CIA's covert program</a>, sporadic <a href="" target="_blank">reports</a> of Stingers in the hands of anti-Assad fighters have surfaced over the years.&nbsp;</p> <p><strong>But the threat of such weapons taking out civilian passenger jets is very real, as history proves. </strong>The US Department of State counted that 40 civilian aircraft have been hit by MANPADS since the 1970s, which includes the complete downing of 28 civilian airliners resulting in over 800 fatalities. The State Department's <a href="" target="_blank">official report on MANPADS and civilian aircraft</a> provides the following partial list of attacks on civilian aviation:</p> <ul> <li><strong>March 12, 1975:&nbsp;</strong>A Douglas C-54D-5-DC passenger airliner, operated by Air Vietnam, crashed into Vietnamese territory after being hit by a MANPADS. All six crew members and 20 passengers were killed in the crash.</li> <li><strong>September 3, 1978:&nbsp;</strong>An Air Rhodesia Vickers 782D Viscount passenger airliner crash landed after being hit by a MANPADS fired by forces from the Zimbabwe Peoples Revolution Army. Four crew members and 34 of the 56 passengers were killed in the crash.</li> <li><strong>December 19, 1988:&nbsp;</strong>Two Douglas DC-7 spray aircraft en route from Senegal to Morocco, chartered by the U.S. Agency for International Development to eradicate locusts, were struck by MANPADS fired by POLISARIO militants in the Western Sahara. One DC-7 crashed killing all 5 crew members. The other DC-7 landed safely in Morocco.</li> <li><strong>September 22, 1993:</strong>&nbsp;A Tupolev 154B aircraft operated by Transair Georgia was shot down by Abkhazian separatist forces, crashed onto the runway and caught fire, killing 108.</li> <li><strong>April 6, 1994:&nbsp;</strong>A Dassault Mystère-Falcon 50 executive jet carrying the Presidents of Rwanda and Burundi and its French flight crew was shot down over Kigali, killing all aboard and sparking massive ethnic violence and regional conflict.</li> <li><strong>October 10, 1998:</strong>&nbsp;A Boeing 727-30 Lignes Aeriennes Congolaises airliner was downed over the Democratic Republic of the Congo jungle by Tutsi militia, killing 41.</li> <li><strong>December 26, 1998:</strong>&nbsp;A United Nations-chartered Lockheed C-130 Hercules transport was shot down over Angola by UNITA forces, killing 14.</li> <li><strong>January 2, 1999:</strong>&nbsp;A United Nations Lockheed L-100-30 Hercules transport was shot down by UNITA forces in Angola, killing 9.</li> <li><strong>November 28, 2002:</strong>&nbsp;Terrorists fired two MANPADS at an Arkia Airlines Boeing 757-3E7 with 271 passengers and crew as it took off from Mombasa, Kenya. Both missiles missed.</li> <li><strong>November 22, 2003:</strong>&nbsp;A DHL Airbus A300B4-203F cargo jet transporting mail in Iraq was struck and damaged by a MANPADS. Though hit in the left fuel tank, the plane was able to return to the Baghdad airport and land safely.</li> <li><strong>March 23, 2007:</strong>&nbsp;A Transaviaexport Ilyushin 76TD cargo plane was shot down over Mogadishu, Somalia, killing the entire crew of 11.</li> </ul> <p>With the Lebanese Army's alarming announcement that it has recovered MANPADS previously in the possession of ISIS, and with such dangerous weapons systems remaining&nbsp;ubiquitous in rebel-held parts of Syria, <strong>we hesitate to ponder the nightmarish scenario:</strong> <strong>is it only a matter of time before ISIS downs a civilian passenger jet?</strong></p> <p>International weapons inspectors should be allowed access to the recovered ISIS stockpile and weapons should be traced to their sources and countries of origin. As has been effectively <a href="" target="_blank">demonstrated a number of times before</a>, it is very possible to obtain <a href="" target="_blank">definitive answers</a> concerning how these missiles made it into the hands of ISIS in the first place.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="790" height="415" alt="" src="" /> </div> </div> </div> Ahrar al-Sham Al-Nusra Front al-Qaeda Ansar al-Islam anti-Assad Anti-Shi'ism army Boeing Central Intelligence Agency Congress Department of State FN-6 Free Syrian Army Free Syrian Army FSA Hezbollah Hizballah Iraq Iraqi government Irregular military Islam Islamic State of Iraq and the Levant Lebanese Army Lebanon's army Man-portable air-defense system New York Times North Atlantic Treaty Organization Pentagon Politics Politics of Syria Reuters Somalia Syrian army Syrian government Terrorism Turkey Tutsi militia U.S. Department of State United Nations United States Agency for International Development War Zimbabwe Peoples Revolution Army Tue, 22 Aug 2017 18:10:00 +0000 Tyler Durden 602118 at Young Facebook Users "Less Engaged" As Demographic 'Time Bomb' Looms <p>While Mark Zuckerberg is busy espousing virtues on Universal Basic Incomes, the deep divide in America, free-speech &#39;control&#39;, and what being president means; his billion-dollar-baby social network may have a problem.</p> <p><a href=""><img alt="" src="" /></a></p> <p><strong>This year, the world&rsquo;s largest social network will see a decline among teen users in the U.S.</strong>, <a href="">according to a forecast by EMarketer.</a> It&rsquo;s <strong>the first time the research company has predicted a fall in Facebook usage for any age group</strong>.</p> <p><a href="">Vanity Fair notes</a> that for years Facebook has faced a lingering problem with one of its core constituencies: <strong><em>teenagers, the most fickle tech demographic, don&rsquo;t think it&rsquo;s cool.</em></strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Facebook, to its credit, saw the phenomenon coming: in a 2013 earnings call, then Chief Financial Officer David Ebersman acknowledged that teens were logging off the social network in growing numbers.</p> <p>&nbsp;</p> <p><strong>&ldquo;We did see a decrease in daily users, specifically among younger teens,&rdquo; Ebersman said. And the problem hasn&rsquo;t gone away. </strong></p> <p>&nbsp;</p> <p>According to a 2014 survey conducted by Piper Jaffray, Facebook use among teenagers ages 13 to 19 dropped from 72 percent to 45 percent. In 2015, teens left Facebook because they found it &ldquo;meaningless&rdquo;.</p> </blockquote> <p><strong>For a company that relies, in part, on converting young adoptees into lifetime users, a teen exodus could create a demographic time bomb</strong>.</p> <p>However, <a href="">a new report from eMarketer </a>suggests that <u><strong>Facebook&rsquo;s 12- to 17-year-old user base in the U.S. will decrease by 3.4 percent this year - the first time eMarketer has predicted a decline among any age group in Facebook usage</strong></u>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Its <strong>estimates for Facebook users who are 18 to 24 years old &ldquo;will grow more slowly than previously forecast, too,&rdquo; </strong>according to the firm.</p> <p>&nbsp;</p> <p>Even worse, there&rsquo;s now a group of children the firm calls<strong> &ldquo;Facebook-nevers,&rdquo; who are becoming tweens and skipping Facebook entirely</strong>.</p> </blockquote> <p>Oscar Orozco,&nbsp;a forecasting analyst at eMarketer,&nbsp;<a href="">told Bloomberg</a>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<strong>Teens and tweens remaining on Facebook seem to be less engaged - logging in less frequently and spending less time on the platform,</strong>&rdquo; Orozco said.</p> <p>&nbsp;</p> <p>&ldquo;<u><strong>At the same time, we now have Facebook-nevers,</strong></u> many children aging into the tween demographic that appear to be overlooking Facebook altogether, yet still engaging with Facebook-owned Instagram.&rdquo;</p> </blockquote> <p>Leaving us to ask just one question... <strong>Did Facebook just peak?</strong></p> <p><a href=""><img height="282" src="" width="600" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1063" height="500" alt="" src="" /> </div> </div> </div> Blog hosting services Computing David Ebersman EMarketer Facebook Mark Zuckerberg Social information processing Social Issues Social media Social networking services Software Technology World Wide Web Tue, 22 Aug 2017 17:50:00 +0000 Tyler Durden 602119 at Twice As Many Americans Think Confederate Monuments “Should Remain In All Public Spaces” ... <p>A new Reuters/Ipsos opinion poll finds <a href="" target="_blank" title="finds">finds</a> that twice as many Americans want to keep Confederate monuments in public spaces as want to remove them:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The Aug. 18-21 poll found that <strong>54</strong> <strong>percent</strong> of adults said Confederate monuments &ldquo;should <strong>remain</strong> in all public spaces&rdquo; while <strong>27</strong> <strong>percent</strong> said they &ldquo;should be <strong>removed</strong> from all public spaces.&rdquo; Another 19 percent said they &ldquo;don&rsquo;t know.&rdquo;</p> </blockquote> <p>Postscript: Whatever you think, please don&#39;t fall for the old <a href="">divide-and-conquer dog-and-pony show.</a></p> Belief Ipsos Knowledge Opinion poll Political science Public opinion Reuters Tue, 22 Aug 2017 17:45:38 +0000 George Washington 602127 at Could This be the Beginning of the End for Facebook? <p><a href="">Via The Daily Bell</a></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">“Facebook is for old people,” I was told by a 17-year-old last week in San Francisco at the&nbsp;<a href="" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">Startup Societies Summit</a>.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">He doesn’t use the social media platform. He’s right too. About half a million fewer teens aged 12-17 will&nbsp;<a href="" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">use Facebook</a>&nbsp;this year compared to last year.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Facebook depends on older people for its advertising revenue. But it needs to get users while they are young in order to keep them coming back to the social media website when they are older.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Facebook may be busy cooking up ways to attract the younger crowd, but they will inevitably fail at doing so. It is too late. If I am being told by a teenager that Facebook is for old people, the company probably suffers from an insurmountable branding problem among teens.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">If parents are on Facebook, kids aren’t interested.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"><span style="box-sizing: border-box; font-weight: bold;">It’s not time to dig Facebook’s grave just yet.</span></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Instagram is the preferred alternative to Facebook among youngsters. And Facebook owns Instagram.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">But Facebook and Instagram are totally different platforms. On Instagram, you share pictures. Sure, you can write a caption and use some hashtags. And plenty of people still share memes. But it is not the personal information clearinghouse that Facebook is… or was.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Facebook is struggling with how to get people to share more personal things on their website. That was the main feature for a while, and probably what made Facebook popular. But now people are moving towards sharing more images, memes, and videos… things you can do on Instagram, Youtube, and Snapchat.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Ironically Facebook’s attempts to compete with other platforms helped depersonalize it. The&nbsp;<a href="" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">engagement&nbsp;</a>which made it popular is in the process of evaporating.</p> <blockquote style="box-sizing: border-box; padding: 10px 20px; margin: 0px 0px 20px; font-size: 17.5px; border-left: 5px solid #eeeeee; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"><p style="box-sizing: border-box; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px;">…sharing of original, personal content on Facebook&nbsp;declined by 21% between mid-2014 and mid-2015,&nbsp;and by 15% between April 2015 and April 2016, according to the&nbsp;<em style="box-sizing: border-box;"><a href="" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">Information</a></em>.</p> <p style="box-sizing: border-box; font-size: 16px; line-height: 24px; padding-bottom: 8px;">Facebook addressed this decline in the sharing of personal content as “<a href="" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">context collapse</a>.” As users’ networks ballooned and their feeds became crowded with an ever growing pool of links and&nbsp;multimedia&nbsp;content from brands, who could blame them for not sharing? What’s the point of writing on a friend’s Timeline or posting a status update when it won’t be seen?</p> </blockquote> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">For me, Facebook is basically just a directory. People I have met and want to network with are added as friends, and then if I need to contact them, I can always send them a Facebook message.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">It is also considered necessary to have Facebook pages for businesses or websites. This just adds to the impersonal feeling. People are seeing Facebook as more of an advertising machine, and less as an online&nbsp;social club. They are seeing more news–sure sometimes with their friends’ terrible opinions thrown in–and less about how their friends are feeling.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"><span style="box-sizing: border-box; font-weight: bold;">Facebook needs to know how you are feeling… it is how they advertise to you.</span></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">And this highlights why owning Instagram&nbsp;might not be enough for Facebook’s business model. Yes, they will still be alive as a company. But being alive isn’t the same as being an advertising powerhouse.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">The reason Facebook is such a good way to advertise is because of the data. They know your “likes” and dislikes. They know what time you are most likely to click, and when you just want to be shown a cute cat video.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">In&nbsp;<a href="" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">Zuckerberg’s quest for world domination</a>, Instagram just cannot deliver.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Facebook is in the power game by manupulating emotions, and making you feel a certain way. Facebook actually&nbsp;<a href="" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">performed a study</a>&nbsp;which manipulated the emotions of over 600,000 users in January 2012. For a week, they showed some people only negative news and status updates, and others only positive stories.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">What the targetted users went on to post corresponded with whether or not they were being shown negative or positive things. They even were more likely to post emotional status updates when shown friends’ emotional updates. When they were shown mundane, boring posts, they were more likely to refrain from posting at all.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Facebook basically demonstrated that they can shape your worldview based on the information they throw into your feed.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">But Instagram is different. On Instagram, you don’t have “friends.” You can follow someone, and they can follow you back. But they don’t have to. You can have one way follows. And it isn’t that easy for the other person to tell if you follow them, except at the very beginning, or by tediously looking through their follow list.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Sure, Instagram could serve up, or withhold certain images. But it is easy to unfollow friends who are posting stupid political memes without them ever knowing. People want to see beautiful places, architecture, animals, and pictures of friends.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">It is a photo platform. Most of the time I don’t even read the description. Most of the time I scroll right past an image with words on it. Yes, they are still going to advertise to me, but my brain immediately recognizes it as an advertisement. They can only go so far without taking me out of the experience. In Facebook, that is all part of the experience, and it is relatively seamless.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"><span style="box-sizing: border-box; font-weight: bold;">So is Facebook going the way of the dinosaurs?</span></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Probably not anytime soon. But I would be surprised if their influence didn’t shrink significantly over the next decade. They are not immune to industry disruption.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Even mighty behemoths of companies are not as safe as they might think. Remember MySpace?</p> Computing Digital media Facebook Facebook Stories Fail Hashtag Instagram Mark Zuckerberg Photo sharing Social media Social networking services Software Technology Web 2.0 Tue, 22 Aug 2017 17:42:49 +0000 TDB 602125 at The Latest Red Flag For U.S. Shale <p><a href=""><em>Authored by Nick Cunningham via,</em></a></p> <p><strong>The U.S. shale industry has had a rough few weeks,</strong> with a growing number of reports suggesting that the industry is facing much more financial trouble than many analysts had expected. Now, a new report adds <strong>further evidence to the notion that shale is losing its luster</strong> in a $50 per barrel market, with <strong>producers forgoing shale in favor of older wells.</strong></p> <p><strong>U.S. shale was thought to be the most competitive source of oil out there, </strong>and indeed the industry appears to be ramping up production at today&rsquo;s prices. Shale had adapted to a $50 per barrel market, producers had streamlined operations to make them almost resemble an assembly line, and in a volatile and unpredictable market, the short-cycle nature of shale drilling made it one of the least risky options for drillers.</p> <p>But in just a few weeks&rsquo; time, <strong><em>investors are starting to <a href="">ask major questions</a> about the viability of shale drilling at such a large scale.</em></strong></p> <p>A couple of notable things have occurred in the past month or so. Pioneer Natural Resources, a top Permian producer, raised concerns when it told investors that its Permian shale wells were coming up with a <a href="">higher natural gas-to-oil ratio than expected</a>, a potentially worrying sign. The company also reported that it had trouble with some of its wells, forcing it to delay some completions.</p> <p>Separately, Goldman Sachs reported that top investors are souring on U.S. shale E&amp;Ps, with poor performances leading investors to search for ways to &ldquo;reallocate capital&rdquo; <a href="">elsewhere in the energy space</a>. <u><strong>That is big red flag for the shale industry,</strong></u> which is still struggling to consistently post profits despite the highly-touted cost reductions over the past few years.</p> <p><strong>But the newest sign of trouble comes from the Wall Street Journal, which just reported that more oil producers are shunning shale drilling and using their scarce dollars to reinvest in older conventional wells.</strong> &ldquo;As crude prices languish under $50 a barrel, and with increasing costs for land, labor and infrastructure, some shale fracking operations are starting to look expensive,&rdquo; the <a href="">WSJ reported</a>.</p> <p><strong>The WSJ says that although Wall Street has showered the shale industry with billions of dollars in capital, and although that has led to a surge in oil production, shale producers by and large are still not profitable. At today&rsquo;s prices, the WSJ says, &ldquo;most producers are losing money on every barrel they pump.&rdquo;</strong></p> <p>As a result, some oil companies are returning to <em>conventional wells &ndash;</em> long thought to be much less attractive today than new shale drilling &ndash; and trying to tap them again to squeeze out more oil. The cost to drill a conventional well is a fraction of that for a shale well &ndash; $1 million per well versus upwards of $8 million. But those types of wells, in many cases, were taken offline decades ago during periods of low oil prices and declining production.</p> <p>However, technology has advanced quite a bit since some of these older wells were last online. A couple of companies profiled by the WSJ are tapping old wells outside of Los Angeles, Fresno, and in Oklahoma, Louisiana and parts of Texas. These wells produced a handful of barrels per day, but tapping them again with new drilling techniques allow drillers to squeeze out something like 100 barrels per day, a profitable play considering the low investment required.</p> <p><strong>One company told the WSJ that the old well essentially breaks even at $15 per barrel.</strong></p> <p>Part of the problem for U.S. shale is that it is showing some bubble-like symptoms. Land prices have soared in the Permian as so many top shale producers shifted their resources to West Texas in the past few years. Even the oil majors started to scale down their billion-dollar investments in places like Canada&rsquo;s oil sands, or major LNG export terminals, or offshore drilling, instead reallocating capital to the Permian.</p> <p>While land prices are inflated, the supply of oilfield services has also tightened significantly. A shortage of fracking crews and other equipment and services has also contributed to higher production costs as well as delays.</p> <p>The result is rising costs for shale at a time when production problems are also starting to crop up. All the while a long list of companies are still not profitable, despite succeeding in boosting production.</p> <p><strong>The contrarian strategy, then, seems to be returning to old conventional wells, even small ones, and trying to eke out a few more barrels.</strong></p> <p><strong><em>With all of that said, retapping old wells probably won&rsquo;t lead to a rush of new supply since we are stilling talking about relatively small numbers. But it&rsquo;s a striking development that some ancient wells are getting a second look by companies falling out of love with U.S. shale.</em></strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="503" height="263" alt="" src="" /> </div> </div> </div> Business Crude Geology Geology of the United States goldman sachs Goldman Sachs Hydraulic fracturing Oil sands Oil well Oklahoma Petroleum Petroleum geology Petroleum industry Petroleum production Shale gas Shale gas in the United States Synthetic fuels Wall Street Journal West Texas Tue, 22 Aug 2017 17:36:39 +0000 Tyler Durden 602115 at A Furious China Responds To Latest Sanctions: Demands "U.S. Immediately Correct Its Mistake" Or Suffer Retaliation <p>Less than 4 hours ago, <a href="">the US Treasury announced </a>that in the the latest set of actions targeting North Korea's "WMD program", among the entities sanctioned would be several Chinese and Russian companies and individuals. We said that "what this latest round of sanctions will achieve, is to further anger Beijing and the local population." Well, we didn't even have to wait all day for China to respond on the next morning as it traditionally does, and according to Reuters citing an embassy spokesman, Beijing was so furious with the US "provocation" it scrapped its own protocol of waiting during a "cooldown" period, and instead ripped right back, "urging" the U.S. to "immediately correct its mistake"' of sanctioning Chinese firms over North Korea, to avoid impact on bilateral cooperation. </p> <p>Since the US will not "correct its mistake", either "immediately" or at any time, China will have no choice but to escalate, in the process making any credible diplomacy involving North Korea impossible, forcing" America's hand when it comes to North Korea, now that the diplomatic option is out of the picture. </p> <p>And virtually assuring that there is <em>no hope </em>for a diplomatic resolution of the North Korean crisis, earlier today a North Korean envoy to a UN disarmament forum <strong>refused to negotiate its nuclear program, accusing the US and South Korea of using joint military drills to carry out “an aggressive war scenario” and “a secret operation” against the North’s leadership.</strong></p> <p>“The DPRK will never place its self-defense nuclear deterrence on the negotiating table or step back from the&nbsp; path it took to bolster the national nuclear force,” a North Korean diplomat stated at the UN disarmament forum in Geneva, as cited by Reuters.</p> <p>A North Korean envoy to a UN disarmament forum has refused to negotiate its nuclear program, accusing the US and South Korea of using joint military drills to carry out “an aggressive war scenario” and “a secret operation” against the North’s leadership.</p> <p>“The DPRK will never place its self-defense nuclear deterrence on the negotiating table or step back from the&nbsp; path it took to bolster the national nuclear force,” a North Korean diplomat stated at the UN disarmament forum in Geneva, as cited by Reuters.</p> <p>The comment follow a statement by the state-run KCNA news agency on Monday according to which “the situation on the Korean Peninsula has plunged into a critical phase due to the reckless north-targeted war racket of the war maniacs." Meanwhile, Pyongyang has again threatened to strike the US base in Guam, which it earlier promised to attack if “provoked” by Washington.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1600" height="900" alt="" src="" /> </div> </div> </div> China Deterrence theory Foreign relations of North Korea Guam International relations Korean conflict national nuclear force North Korea North Korea North Korea–South Korea relations North Korea–United States relations Nuclear program of North Korea Nuclear proliferation Politics Reuters state-run KCNA news agency U.S. Treasury United Nations Tue, 22 Aug 2017 17:22:10 +0000 Tyler Durden 602124 at BTFD Or Is This Time Different? <p><a href=""><em>Authored by Lance Roberts via,</em></a></p> <p>Since the end of the financial crisis, each market decline has been met with support by the Federal Reserve either through <em>&ldquo;verbal accommodation&rdquo;</em>&nbsp;or directly through&nbsp;<em>&ldquo;monetary interventions.&rdquo;</em></p> <p><a href=""><img class="alignnone size-full wp-image-22939" height="350" src="" width="600" /></a></p> <p>Not surprisingly, investors have become <em>&ldquo;trained&rdquo;</em> each <em>&ldquo;dip&rdquo;</em> in the market is a reason to <em>&ldquo;buy&rdquo;</em> even in the areas with the least fundamental quality.&nbsp;<strong>The perception of <em>&ldquo;risk&rdquo;</em> has been entirely eliminated which has once again brought about a sense <em>&ldquo;this time is different.&rdquo;&nbsp;</em></strong>Of course, this is not unusual as we have seen it at each major bull market peak throughout history.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span style="color: #993300;"><em>&ldquo;But Lance, the Fed&rsquo;s balance sheet has been flat since the end of QE-3, but the markets continue to rise. So, that is clearly a sign of a recovering economy and earnings at work.&rdquo;&nbsp;</em></span></p> </blockquote> <p>Not so fast.</p> <p>The Fed&rsquo;s ongoing <em>&ldquo;reinvestment program&rdquo;</em> has been very successful at facilitating support precisely when it seems to be needed most.</p> <p><a href=""><img class="alignnone size-full wp-image-22940" src="" style="width: 600px; height: 348px;" /></a></p> <p>Of course, as noted above, global Central Banks have also been extremely accommodative of support asset markets as well.</p> <p><a href=""><img class="alignnone size-full wp-image-20516" src="" style="width: 599px; height: 253px;" /></a></p> <p>This is nothing new, just a reminder this isn&rsquo;t <em>&ldquo;your father&rsquo;s market,&rdquo;</em> and assuming the market is functioning based on underlying fundamentals is a bit short-sighted, to say the least.</p> <p>The problem, however, comes when the Fed begins to stop those reinvestment processes. As shown above, where support has been previously provided to offset potential declines, such support will no longer be available. Such will eventually return the view of the markets back to the fundamentals. It is there we find more troubling issues.</p> <p>The table below from Goldman Sachs shows a variety of measures of current valuation. With the exception of Free Cash Flow, every other measure suggests investors are <em>&ldquo;over paying for playing&rdquo;</em> currently.</p> <p><a href=""><img class="alignnone size-full wp-image-22944" src="" style="width: 600px; height: 360px;" /></a></p> <p>Economically, the metrics also suggest that we are very near the end of the current bull market cycle. The chart below shows the percentage change in inflation, GDP, employment and interest rates leading up to each of the last two recessionary breaks in the market.</p> <p><a href=""><img class="alignnone size-full wp-image-22945" src="" style="width: 600px; height: 818px;" /></a></p> <p>Importantly, note that falling inflationary pressures tend to have an adverse effect on economic growth. This suggests, just as it did both times previously, the recent uptick in economic growth will likely prove to be very transient.</p> <h2><u><strong>So, Do I &ldquo;BTFD&rdquo; Or What?</strong></u></h2> <p>As I stated <a href="" rel="noopener" target="_blank">two weeks ago:</a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span style="color: #993300;"><strong><em>&ldquo;My best guess currently is &ndash; probably. But not yet.&rdquo;</em></strong></span></p> </blockquote> <p>I also stated two reasons for why we should wait:</p> <ol> <li><span style="color: #993300;"><em>Bull markets don&rsquo;t typically end when the mainstream media is &ldquo;peeing down both legs&rdquo; over the 1.5% drop on Thursday.&nbsp;</em></span></li> <li><span style="color: #993300;"><em>The bullish uptrend remains intact and &ldquo;fear&rdquo; gauges remain confined to a downtrend.</em></span></li> </ol> <p>The chart below goes back to the beginning of the bull market advance following the 2012 correction. Notice that while the market remained in the QE backed bullish advance, volatility remained confined to a downtrend with the brief exception the&nbsp;<em>&ldquo;taper tantrum&rdquo;</em>&nbsp;in October 2014.</p> <p><a href=""><img class="alignnone size-full wp-image-22946" src="" style="width: 600px; height: 541px;" /></a></p> <p><strong>However, notice the bottom part of the chart.</strong></p> <p>Following the 2011&nbsp;<em>&ldquo;debt ceiling debate&rdquo;</em>&nbsp;correction, the bull market resumed with the help of the Federal Reserve interventions as noted above. <strong>However, beginning in 2014, that trend became negative as the&nbsp;<em>&ldquo;momentum&rdquo;</em>&nbsp;of the advance began to stall as the Federal Reserve withdrew its direct liquidity interventions into the markets. </strong>Eventually, that deterioration in price momentum led to a bigger correction and a break of the <em>&ldquo;bullish trend&rdquo;</em> in late 2015 and early 2016.</p> <p><strong>Currently, the market has triggered a short-term <em>&ldquo;sell signal,&rdquo;</em>&nbsp;which suggests the corrective process is not yet completed.</strong> Therefore, investors are wise to remain a bit more cautious currently until markets re-establish a more <em>&ldquo;bullish footing.&rdquo;</em></p> <p><a href=""><img class="alignnone size-full wp-image-22948" src="" style="width: 600px; height: 451px;" /></a></p> <p><a href="" rel="noopener" target="_blank">Hedge Fund Telemetry</a> sent out a very interesting note on Monday which supports my suspicions:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>&ldquo;Sentiment has decreased to 40% bulls for the S&amp;P 500 (the lowest since 11/16/16 when it was increasing from a low of 10% the day after the election).</strong> &nbsp;It&rsquo;s now firmly below the midpoint level support. &nbsp;This partial eclipse of the bulls only has seen the S&amp;P drop about 2.50%. Could there be a &ldquo;catch down scenario&rdquo; in price? (Price accelerating to the downside) Very possible. <strong>I&rsquo;ve been cautious of late (a little more cautious than usual) due to the weak seasonality, divergent sentiment, and some overbought indicators on major indexes.</strong>&nbsp;<strong>Today I&rsquo;m making the case for more downside risk.</strong>&nbsp;There are some very basic indicators that are not yet oversold and in some sentiment factors not even close to other bottoms. <strong>I would continue to reduce risk across portfolios.&nbsp; </strong></em></p> <p>&nbsp;</p> <p><em>This chart shows the % of stocks within the SPX above the 20, 50, and 200 day moving averages and targets for when the market is oversold. <strong>The middle one % above the 50 day is the most important and it&rsquo;s only at 40% above and a move to 20% is a better place to look for a bottom.</strong>&nbsp;Note, I&rsquo;ve been showing the negative divergences for weeks now.&rdquo;&nbsp;</em></p> </blockquote> <p><a href=""><img class="alignnone size-full wp-image-22952" src="" style="width: 600px; height: 567px;" /></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;Here&rsquo;s a simple momentum chart that also has diverged. &nbsp;<strong>I think a date with the 200 day is likely again&rdquo;</strong></em></p> </blockquote> <p><a href=""><img class="alignnone size-full wp-image-22951" src="" style="width: 600px; height: 356px;" /></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;This chart shows Rydex Mutual Fund data. Historically bottoms have been made with % of bearish assets spiking and cash levels increasing. This hasn&rsquo;t happened at all yet.&rdquo;</em></p> </blockquote> <p><a href=""><img class="alignnone size-full wp-image-22950" src="" style="width: 600px; height: 623px;" /></a></p> <p>As stated, it may be prudent to employ some patience before taking any further action on the equity side of the ledger. <strong>However, in the short-term, the bullish bias remains <em>&ldquo;alive and well&rdquo;</em>&nbsp;which keeps portfolios cautiously allocated to equity risk.</strong></p> <h2><u><strong>The Biggest Risks</strong></u></h2> <p>It is not just the same&nbsp;<em>&ldquo;deterioration&rdquo;</em>&nbsp;in the underlying technicals giving us caution.</p> <p>While the market does remain confined within its overall bullish uptrend, the<strong>&nbsp;<em>&ldquo;bulls&rdquo;</em>&nbsp;should not continue to ignore the mounting risks of valuations, deterioration of reported EPS growth, weak revenue growth, slowing economic growth and fading realities of positive legislative agenda coming to fruition.&nbsp;</strong></p> <p>It is the last part of that sentence that is most prevalent.</p> <p>As Ray Dalio noted<a href="" rel="noopener" target="_blank"> on Monday:</a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>&ldquo;Politics will probably play a greater role in affecting markets than we have experienced any time before in our lifetimes but in a manner that is broadly similar to 1937.</strong></em></p> <p>&nbsp;</p> <p><em>History has shown that democracies are healthy when the principles that bind people are stronger than those that divide them, when the rule of law governs disputes, and when compromises are made for the good of the whole &mdash; and that democracies are threatened when the principles that divide people are more strongly held than those that bind them and when divided people are more inclined to fight than work to resolve their differences.&nbsp;<strong>Conflicts have now intensified to the point that fighting to the death is probably more likely than reconciliation.</strong></em></p> <p>&nbsp;</p> <p><em><strong>In other words, the majority of Americans appear to be strongly and intransigently in disagreement about our leadership and the direction of our country. They appear more inclined to fight for what they believe than to try to figure out how to get beyond their disagreements to work productively based on shared principles.&rdquo;</strong></em></p> </blockquote> <p>Those divides are also weighing on Washington D.C. where the&nbsp;ongoing partisan conflict between the Republicans and Democrats has stalled the ability for progress to be made on any legislative front. As Congress returns to Washington after their summer recess here is the immediate list of work that must be accomplished.</p> <ul> <li><strong>Debt Ceiling Limit Increase</strong> <em>(50% chance of a Government shutdown currently)</em></li> <li><strong>2018 Budget</strong> &ndash; <em>(Will most likely be resolved by another &ldquo;continuing resolution&rdquo; that increases government spending by 8% annually.)</em></li> <li><strong>Tax Reform</strong> &ndash; <em>(There is a small possibility tax reform will be passed in the House but will die in the Senate)</em></li> <li><strong>Tax Cuts</strong> &ndash; <em>(Tax cuts will be proposed at 20-25%, overall plan will fall short of expectations and likely fail passage in the Senate.)</em></li> <li><strong>Infrastructure Spending</strong> &ndash; <em>(Has the best chance of being passed but will likely face a tough uphill battle.)</em></li> <li><strong>Health Care Repeal / Replace</strong> &ndash; <em>(DOA)</em></li> </ul> <p>This is THE problem for the market which has priced in massive earnings growth expectations based on tax cuts and reforms. Without the Affordable Care Act being repealed, any tax cuts or reforms passed by legislative action will have to clear $900 billion just to offset the taxes that weren&rsquo;t repealed previously. This alone with negate much of the economic benefit from the legislative agenda.</p> <p>Furthermore, considering that all legislative action has to be passed through <em>&ldquo;reconciliation,&rdquo;</em>&nbsp;the Republican controlled Senate faces a tough battle with only has a 52-vote margin currently. With the ability to only lose two votes, and all agenda items required to be <em>&ldquo;revenue neutral,&rdquo;</em>&nbsp;<strong>this makes the passage of tax cuts/reforms even MORE difficult than the failed attempt at trying to repeal/replace the ACA.</strong></p> <p>There is a reason there has not be &ldquo;tax reform&rdquo; passed since Reagan was in office.</p> <p><strong>In other words, the risk of disappointment is extremely high.</strong></p> <p>In recent years, <em>&ldquo;market tantrums&rdquo;</em> have been short-lived and have provided opportunistic entry points for increasing equity related exposure.&nbsp;<strong>However, EVERY TIME is DIFFERENT, so it is always important to NEVER ASSUME the outcome will be the same as the last.&nbsp;</strong></p> <p>In our portfolios,&nbsp;<strong>we continue to wait</strong>&nbsp;<strong>for</strong>&nbsp;<strong>confirmation the current sell-off has abated before adding additional risk exposure to portfolios. </strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="825" height="465" alt="" src="" /> </div> </div> </div> Behavioral finance Business Central Banks Congress Debt Ceiling Economy Fail Federal Reserve Finance Financial markets Foreign exchange market goldman sachs Goldman Sachs Investment Market sentiment Market trend Money Moving Averages Ray Dalio Relative strength index Rydex S&P S&P 500 Senate Stock market Technical analysis US Federal Reserve Volatility Washington D.C. Tue, 22 Aug 2017 17:13:58 +0000 Tyler Durden 602114 at Norway Government Forces Sovereign Wealth Fund To Buy $100 Billion More In Stocks "To Safeguard The Country's Riches" <p>As <a href="">we reported</a> late last year, the <strong>Norwegian government ordered its Sovereign Wealth Fund to increase its equity allocation to 70% to try and paper over what&rsquo;s expected to be a 70 billion kroner ($11.1 billion) drawdown</strong> &ndash; the first in the fund&rsquo;s history.</p> <p>That money was needed to plug a budget hole created by falling oil prices, and it seems the brilliant minds at the Norwegian Ministry of Finance and the Norges Bank figured they could easily recoup the fund&#39;s losses by upping its risk exposure. <strong>Indeed, they&rsquo;ve already raised the fund&rsquo;s expected average annual real return to 2.5 percent over 10 years and to 3.5 percent over 30 years, compared with 2.1 percent and 2.6 percent previously. </strong></p> <p><a href=""><img alt="" src="" style="width: 500px; height: 282px;" /></a></p> <p>Eight months later, the MoF is still planning to make the shift, which <strong>would result in it buying about $100 billion in global stocks,</strong> though prices have risen considerably in the interim. <strong>Despite the fund&rsquo;s rush to raise its 10-year earnings forecast, fund officials said worries about a near-term market slump played &ldquo;little part&rdquo; in their investing plans,&quot; </strong>according to <a href="">Bloomberg. </a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<strong>Norway&rsquo;s $970 billion wealth fund has been ordered to raise its stock holdings to 70 percent from 60 percent in an effort to boost returns and safeguard the country&rsquo;s oil riches for future generations.</strong> Any short-term view on growing risks will play little part, according to Trond Grande, the fund&rsquo;s deputy chief executive.</p> <p>&nbsp;</p> <p>&lsquo;We don&rsquo;t have any views on whether the market is priced high or low, whether bonds and stocks are expensive or cheap,&rsquo; he said in an interview after presenting second-quarter returns in Oslo on Tuesday. <strong>The decision to add stocks &lsquo;was made at a strategic level, on a long-term expected excess return that we&rsquo;re willing to take risk to achieve. And parliament has said that they wish to spend some time to phase in that increase.&rsquo;&rdquo;</strong></p> </blockquote> <p>According to data cited by <a href="">Bloomberg,</a> <strong>the fund held 65.1 percent in stocks, 32.4 percent in bonds and 2.5 percent in properties during the second quarter. Its mandate is now to keep about 70 percent in stocks, 30 percent in bonds, with about 7 percent in real estate that&rsquo;s now separate from the main portfolio.</strong></p> <p>However, Grande says he&rsquo;s keeping a &ldquo;close eye&rdquo; on market indicators.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;It doesn&rsquo;t lead to anything in concrete terms, other than the fact that we&rsquo;re keeping a close eye on the indicators that could indicate whether there&rsquo;s a risk there, and what they&rsquo;re saying,&rdquo; Grande said. <strong>&ldquo;Some risk indicators have actually not shown underlying risk -- take growth for example. So you should be a little cautious when the skies are all blue.&rdquo;</strong></p> </blockquote> <p>While the fund has said little about its investment preferences, Bloomberg reports that the fund has recently been expanding into emerging markets.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;Owning 1.3 percent of global stocks, the Norwegian fund largely follows indexes but is allowed some active management of its portfolio. It has been expanding more into emerging markets and recently got permission to raise its stock holdings after Norway last year started withdrawing cash from the fund for the first time.&rdquo;</p> </blockquote> <p>Sovereign wealth funds have like Norway&#39;s have benefited immensely from a virtuous cycle of central bank buying. <strong>So perhaps Norges Bank Deputy Governor Egil Matsen, the official in charge of the fund&rsquo;s oversight, has some special insight into the thinking of central bankers, the primary engineers of the global post-crisis market rally.&nbsp; </strong></p> <p><a href=""><img alt="" src="" style="width: 500px; height: 273px;" /></a></p> <p>Central bankers like Thomas Jordan and his colleagues at the Swiss Central Bank, <strong>which earlier this month revealed itself as the<a href=""> &ldquo;mystery buyer&rdquo; </a>that kept US stocks afloat during the second quarter while retail and institutional investors headed for the exits.</strong></p> <p><a href=""><img alt="" src="" style="width: 500px; height: 302px;" /></a><br />&nbsp;</p> <p>Whatever it is, the rest of us will have to wait to find out.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1143" height="620" alt="" src="" /> </div> </div> </div> Bond Business Economics Economy Government Pension Fund of Norway Great Recession Institutional Investors Ministry of Finance Norges Bank Norges Bank Norway Norway Norwegian government Real estate Sovereign Wealth Fund Stock market crashes Swiss National Bank Time Tue, 22 Aug 2017 16:55:28 +0000 Tyler Durden 602113 at Cryptocurrency Hedge Fund Returns 2,129% YTD <p>We'll preface this post by saying we have never heard of the <a href="">Alternative Money Fund</a> - which "Specializes in Returning Freedom and Value" - and very well may never hear of it again, however it is notable for two things: i) it is a "hedge fund" invested entirely in cryptocurrencies and ii) it has allegedly generated a 2,129% return YTD, making it the best performer in hedgeco's ranking of asset managers YTD.</p> <p>The "fund's" own description is similar to what one would find in any traditional asset manager, with one exception of course: it does not invest in traditional securities at all, only cryptos:</p> <ul> <li>30 or so names in the portfolio</li> <li>discretionary, not systematic</li> <li>technically driven bottom-up, primary.</li> <li>fundamental research, secondary</li> <li>performance not directly correlated to the price of bitcoin. Good addition for Bitcoin holders.</li> </ul> <p>It also writes that it is "committed to provide exceptional returns through an actively managed portfolio of blockchain assets. With the emergence of Bitcoin, Altcoins and this exciting new technology has created a new asset class for investors." The fund also notes that its "trading strategy does NOT use leverage or margin. Returns are reported monthly and capital accounts may be increased or redeemed each month."</p> <p>So far so good; when one reads further in, some "lingo" red flags start to emerge:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The volatility associated with the cryptographic verification and game theoretic equilibrium, these blockchain-based digital assets create valuable opportunities in an actively traded portfolio. </p> </blockquote> <p>Hmm, "cryptographic verification and game theoretic equilibrium" may sound exciting but it's what one would say when scrambling for sophisticated words to sound intelligent, in other words what Fed presidents do every single day. </p> <p>Reading through the full presentation reveals much more such language (which probably would be a sufficient red flag) although the most remarkable feature of the fund, as noted, is its performance.</p> <p><a href=""><img src="" width="500" height="344" /></a></p> <p>Through August, the fund claims to be up 2,129%. That puts it at the top of's 2017 league table.</p> <p><a href=""><img src="" width="500" height="296" /></a></p> <p>Its holdings:</p> <p><a href=""><img src="" width="500" height="419" /></a></p> <p>Back to the red flags: this is how the fund defines its marketing:</p> <ul> <li>Marketing is done by word of mouth, internet, hedge fund databases, 3rd party marketers, and other sources.&nbsp;</li> <li> Distribution of the marketing material will be done by face-to-face meetings with potential investors and funds. Mail-outs, business cards and phone calls to friends and family and others will also be done. </li> <li>We are not planning on getting too aggressive with this plan, more organic growth is desired.</li> <li>The managing member very active on: Facebook, Angellist, Instagram, Medium, Twitter, and more </li> <li>Customized email from, business cards, etc. </li> <li>Returns will be posted on the Hedgefund Indices</li> </ul> <p>Red flags aside, we wonder how long before many more such "hedge funds" crop up, all having generated returns (whether real or fabricated) that traditional hedge funds can only dreams of, and how long before the more naive elements in the investing community rush to flood them with capital in hopes of "getting rich quick" with 4 digit annual returns, creating yet another <span style="text-decoration: line-through;">ponzi</span> active asset manager bubble even as traditional long/short and numerous other legacy investors, struggling to outperform the S&amp;P, slowly disappear? </p> <p>The fund's "<a href="">presentation materials</a>" for those curious are below, and the good news for the overly gullible: as the fund notes, "currently there are no fees for the first<br /> $500k under management"</p> <p><iframe src=";view_mode=scroll&amp;access_key=key-Aemlq9Efn1QU9gSxndjF&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="723" height="497" alt="" src="" /> </div> </div> </div> Alternative Money Fund Asset allocation Bitcoin Bitcoin Blockchains Cryptocurrencies ETC Financial technology Hedge fund Investment management Twitter Twitter Volatility Tue, 22 Aug 2017 16:40:14 +0000 Tyler Durden 602120 at