Friday Thought

Hello all! I am still alive and very well. Work is going great and about my only complaints are the Patriots and the beginning of Fall (which leads to the evil winter). Hope you are all well. Saw a great piece today and it inspired some thoughts.

Deflationary Forces of Automation/Robotics vs. Never Ending Fed Printing
"Mish" Shedlock had a post up today that I could relate to. Regular readers will know the topic well:
Can the Fed Fight Droids and Win? Apple's SIRI, Driverless Trucks, What's Next? Riveting Video: Are Droids Taking Our Jobs?

As always Mish does a great job. A snippet:

The Fed cannot defeat droids. Unfortunately, the Fed does not understand it is exacerbating the problem. Sadly, the Fed does not even understand the nature of the forces it is fighting.

Read the whole thing.

Now because I have worked in an ultra competitive industry (biotech/pharma) I know the move towards automation is happening. It is accelerating. It is something that WILL happen, not may.

But let's back off a minute and say it MAY happen. 

The US Fed is ready, willing, and able for the moment to spend maybe upwards of 2 Trillion dollars to lower the unemployment rate by 2-3% over the next.......well, we will see I guess. Never got a real number from them. To do this and really believe it the Fed must:

1.) Think the lack of jobs is still due to demand side issues, even though spending has not dropped among consumers and rejects the structural idea of job losses going forward

2.) Is not really concerned with jobs as their primary motivation for unlimited QE

For a perspective, consider:

Two Trillion dollars is 2,000,000,000,000 which would create for 1 year 40,000,000 (Forty Million) $50k a year jobs or 4 million of them for a decade time span!

Mind boggling.

Ben Bernanke is willing to spend that kind of money in the face of something he likely cannot control and only influence on the margin.

Think about it.

Have a good night.

The Dole Air Race and DNA Data Storage

It's been another crazy busy week! Summer is running away from me this year. Hope all is well with all of you.

Came across a couple of extra cool things today, so I thought I would pass them along.

DNA as Mass Data Storage?
I have worked extensively with about every DNA manipulation technique there is over the past 14 years. I never even thought about this one! Via iO9:
Soon You'll Be Backing up Your Hard Drive Using DNA
A snippet:

At theoretical maximum, one gram of single stranded genetic code can encode 455 exabytes of information. That's almost half a billion terabytes, or 4.9 * 1011 GB. (As a point of reference, the latest iPad tops out at 64 GB of storage space.) DNA strands also likes to fold over on top of themselves, meaning that, unlike most other digital storage media, data needn't be restricted to two dimensions; and being able to store data in three-space translates to more free-space.

There are some drawbacks of course and the article clearly covers them (no random access, not re-write able) but as a storage solution it's mind boggling. Take a stroll on over and check it out.

The Dole Air Race 
I always start my day looking at the Wikipedia "This Day in History Section". Never know what you may find.

The Dole Air Race was an airplane race sponsored by James Dole of Hawaii (yes, the pineapple king) and it was to be run from California to Hawaii. The entire story is a must read and I was going to do a write up. Turns out I did not have to.

Patricia Hysell, author of the ultra great site Little Bits of History, was all over it today:

August 16, 1927: The Dole Air Race begins. Lindberg had flown across the Atlantic and inspired by this feat, James D. Dole offered a prize for the flying across the Pacific. Since that ocean is so much larger, the trip would only cover from Oakland, California to Honolulu, Hawaii. The flight would cover 2,400 miles. The first team to accomplish this would receive $25,000 and the second place team would take $10,000. That would be ~$311,000 and $124,000 respectively in today’s currency.

Now if that's all that happened I would not include it. It's a shocking tale! Please take a trip on over and read the whole thing. A reader left a comment on the article, I cannot vouch for the truth of it, but would be nuts if true!

Wikipedia entry:
The Dole Air Race

Have a good night.

Summer Storm Entertainment

For the second year in a row, there are actual tornado warnings for Massachusetts! I guess you never know. A special Friday Night Entertainment post is on tap, unless I get blown away.

I don't have much to say market wise. I don't watch it much (no time!) but my 2 cents just looking at the charts I like and a few other things is that this run is about out of gas absent serious ECB/Fed action. Volume is dead and people are waiting now.

Friday Night Entertainment
Let me see what I can find.

Amazing and Cool Science
I had heard of such a thing, but I spent a bit of time looking at the phenomena of Quorum Sensing lately. What is that? Well, via Wiki:

Quorum sensing is a system of stimulus and response correlated to population density. Many species of Bacteria use quorum sensing to coordinate gene expression according to the density of their local population. In similar fashion, some social insects use quorum sensing to determine where to nest. In addition to its function in biological systems, quorum sensing has several useful applications for computing and robotics.

It's a fascinating interaction. Short version is that many genes and their products may only be switched "ON" if a certain population density is reached. The signal molecules are often potent and powerful gene regulators.

Of course, you must know the Mars Rover Curiosity landed this week on the Red Planet! Looking forward to all kinds of new pictures and experiments going forward. Gale Crater:

see more Dropping The Science

Picture Pages
Visuals do make things easier.

Dexter Cox is a future serial killer I think:

see more Very Demotivational
Oh my.

I am calling THE TOP in "Batman" mania (time stamped): 
see more Parenting Fails

Movie Night
A few tips on what to see this weekend.

A better new era comedy was "Anchorman: The Legend of Ron Burgundy". Here we learn about the cologne 'Sex Panther'; 60% of the time, it works every time to get you a date:


An early Quentin Tarantino film, "The 4 Rooms", was pretty good if bizarre. The final segment is a classic though, and thus here is the "Zippo Bet" scene:

Nice.

Rock Blogging
Bringing the tunes so you don't have to look since 2007.

I ran across this post on YouTube while I was looking for cool covers of various songs. How about 25 famous riffs? Well Kelly Rosenthal plays them all and it's great (except for a Beatles song):

GREAT Lenny Kravitz cover. She does "The Trooper" too! @SayChanceMusic on Twitter.

I am a late in life KISS fan, and I really appreciate how good they are live. Try out "Tears are Falling" from 2004:

They are wonderful live.

Of course the best band I have ever seen live is Iron Maiden. Live from Donnington 1992 "Be Quick or be Dead":


Will it be an all live night? Maybe. Check out this haunting live show of "Zombie" by The Cranberries:

Just wonderful. A MUST see so please do.

Screw it, only bands that can be great live on the show tonight. That is the most important thing.

Depeche Mode "Personal Jesus" live in Barcelona 2009:

Saw them that year, just unreal. I used to know a certain C-T Hilltopper that loved this band.

If you are easily excited, you may want to skip a Rage Against the Machine live showcase of "Bullet in the Head":

YES!!!!!

From a Tokyo concert, The Clash and "London Calling":

Saweet!

Last call! Get a lighter, a beer, and significant other and get ready!

It's not live, but from the film "Walk The Line" I just cant stay away from "It ain't Me Babe":


Have a good night.

When Technical Analysis Works

Happy Friday everyone! Enjoy the weekend, but first a little comic relief.

When Technical Analysis Works
When done right and done well, technical analysis is an amazing tool. While I was not trading this week, I have to say my annotated chart below called every move exactly right (check all the lines please) and mastery of the art only seems impossible. In a volatile week, see how it's done chumps (click for larger view):

Leave applause in the comments. Thanks.

Have a good night.

Call it What it is: Obscene

Yes, I am alive! Still learning a lot at work and making things happen. Thanks to all the faithful that still drop on by from time to time.

Call it What it is: Obscene
I don't get too much time anymore to really get into the nuts and bolts of things market wise. I tend not to do anything less than 100% and I cannot be active in markets right now. Most of the summer that has been a good thing.

I still follow market currents and keep an eye on the big picture. I have not liked what I have seen at all in many respects. Today I saw three posts that I feel demand your attention and I did not want to miss a chance to get more eyeballs on these important works.

The economy in the US is slowing down (again?) and worldwide it's getting worse too. Why is that you may ask after all the intervention and once (then twice, then three...) in a lifetime Central Bank "operations" since 2009? Simply, because they don't address any of the structural issues. Deflationary forces, deleveraging, and insolvency cannot be fixed by artificial rates and fake money stuffed into holes. I think one could argue that the early attempts did stop the worst of the bleeding and bring calm, but here in 2012, in spitting distance of market highs, the calls for more QE, LRTO, and bubble gum get louder everyday. Something is messed up.

Joshua Brown always seems to find a way to say what I want to say but cannot. Today's post titled "Nothingtown" nails every point I have tried to make for a long time, and yet does not come off as a rant or angry, just some truth bleeding out:

"Because this is Nothingtown.  Nothing helps anyone except for the people who don't really need any help at all.  You think the Fed buying an  extra $200 billion worth of Monopoly properties with Monopoly money is going to find it's way to single moms hustling to pick up part-time work or laid-off office drones who've been replaced by Salesforce.com?"

There is more in the post, so please read the whole thing.

Years and trillions of dollars have been spent and lost, lost I tell you, fighting the last war instead of getting ready for the future.

Knight Capital Group had a spectacular algo based crash this week, and now the firm looks towards going bust (via Zero Hedge). An entire firm at risk for a few minutes of a mistaken trade program.

More market issues?

Leigh Drogen covers an MONSTER point today in a post titled "Why Fidelity Dumping Facebook is Such a Disastrous Signal for the Market" and it is required reading:

"But now things have changed. Facebook came public at 100B, other high growth tech companies aren’t coming public at less than 5B, some north of 10B. Airbnb is an amazing example of a company which 15 years ago would be public by now, but they likely won’t come public at less than 10B either.
Fidelity has no shot, and investors in Fidelity mutual funds don’t have one either."

Hit the link and read the rest.

My friend BC Lund makes a great point and it fits in with why I reject sentiment readings now and just don't believe what people say, only what they do. In "5 Ways You can Combat High Frequency and Algorithmic Trading" Brian has this nugget:

"It used to be that trading a breakout from a traditional chart pattern was the money.  But then everybody in town traded the breakout, and HFT’s took advantage of that and trading the false breakout became the money.  But now, trading the breakout in the original direction of the pattern after the false breakout is the money."

Yes, the "fakeouts" now have become the norm. Though I imagine something new is on the way.

(**Note: I do not speak for the writers above and do not take my summation paragraph below to be anything they believe or endorse.)

Where I think things are now is a financial system that has cornered the Central Banks because of two reasons. One, the only thing the Fed and ECB can seemingly influence is the stock market. Everything else eludes their control, as it always was going to be when it mattered. Thus, knee jerk easing and blustering speeches are trotted out during any market sneeze and stock prices dictate policy. This is bad enough.

Point two is that markets, with full knowledge of reason One above, have resorted to almost train-robbery like behavior (Facebook?) with the full knowledge nothing can really be done about it anyway. They are the only game in town.

Exit policy? How can one exit such an arrangement I ask? It is obscene.

Some may read this and see me as a negative thinker. Some may label me a "Gloom and Doomer" and that's fine. I am anything but. I cannot impress upon you how much I believe in America and Americans (I am iffy on the rest of the World!). All those trillions and all that time lost and given over to people that can only squander it. Given half a chance, leadership, and a clear way forward I have no doubts of our ability to shake off this morass and find our way forward in the future. Will there ever be a chance?

Have a good night.

QE and the Trap of Diminishing Returns

Hello out there! Yes, I am alive. I have been super busy with the new job (love it!) and have taken a long break from posting or market work to be focused on the new gig. I did want to pop in tonight and post a quick chart and some thoughts I have as we could be on the eve of a new round of some kind of Quantitative Easing, Twist, Running Man, or whatever dance move the Fed would like to name it.

QE and the Trap of Diminishing Returns
First off, the chart of SPY and interventions notated (click for larger view):

Some quick points:
-The time from QE/Intervention application to when market faces trouble is getting smaller over time
-The almost fractal like repeat of the pattern is worth noting as the arcs get smaller (three shown above)
-Fed support for market is coming at progressively higher prices
-The time from when SPY closes below the 50 MDA until Fed action is getting compressed (they chartists over there?)

My take away from this chart (been looking at it a bit lately) is that there is considerable interest by the Fed and extension Wall Street in limiting any damage to equity markets. I know, shocking right. I think besides that obvious point what I take away from this is the Law of Diminishing Returns is clearly at work. I could go on and on but seems at this point the setting of a absolute floor under the SPY and a general area of a top end target would be more effective and up front than the current process of trying to calm "panic" when stocks fall.

Long time readers know I am against QE and most market support by the US Fed. By a fortuitous meld of circumstances the kind of support the markets are getting keeps on trucking. My question is how many more and how much more is going to be needed with compression of the price reaction getting smaller?

Have a good night.

BBQ Ribs and Conversation

I am way behind on about 5 emails, some work related reading, market stuff, and yard work. But you know, some times you have to take a minute for yourself, and maybe for someone else. I had maybe the best Sunday in recent memory today and it's well worth skipping out on other stuff to get that.

BBQ Ribs and Conversation
I went to the gym this morning early and worked out for a while. Dreading going to the grocery store, I showered up and resigned myself to supermarket purgatory. While there I saw some great looking ribs, both baby backs and St. Louis spares. I figured, why not smoke some meat? Why not indeed.

I got home and put everything away. I started the lump charcoal fire in the Big Steel Keg and got the ribs prepped and rubbed up. With the temp pegged at 250 degrees, I put the ribs on about 1pm and let it ride. I went in to work to take care of a couple things (remember, work is now like 15 minutes away!) and came home to watch the smoker and drink a few beers.

And today I had company.

I was out back in the yard when my wife decided that smoking meat and drinking beers would be a good idea as well. We hung out, decided on a house color (painting soon) and basically talked. Talked like we have not in some time. Like friends, like partners. It was special and I had a great time. Damn, my wife is drop dead pretty too!

Anyways, my point is don't get so caught up in the day to day stuff and all the things you HAVE to do to a degree that you forget how to just hang out. Had a great day with the wife, and we pretty much just sat out back and gabbed. Was a fine day.

The ribs? Well you tell me, here is the progression: