Saturday, September 23, 2017

Bake Off, craft ale, historical novels: How the financial crash sent us on a headlong retreat into nostalgia

From Prospect Magazine, August 2017:

Rather than getting angry and radical, we’ve become more culturally conservative
It’s Saturday night and there you both are, lounging on the sofa in your his-and-hers slankets, freshly microwaved fish pies balanced on your laps, and the telly muffling, if not quite drowning out, the sound of your neighbours rowing. Again. Because it’s 2008 and along with eating out, divorce is now just another item on a long list of indulgences that the average Briton can no longer afford. But never mind, the two of you are “dining in”, and for a tenner to boot.

Like other money-saving experiences begot by the credit crunch—glamping, for instance—the reality of “dining-in”, Marks & Spencer’s response to straitened times, lags behind its marketing. Just as queuing for a tepid campsite shower is never going to approximate to a spa experience, so a ready meal remains a ready meal—alright, a sequence of ready meals in the case of those multi-course deals with a bottle of Chateau Grande Recession thrown in. Yet as the scale of the greatest economic calamity in living memory revealed itself, this was a charade in which we became willing participants. After all, staying in was the new going out. And with images of queues snaking around crumbling Northern Rock branches still fresh in our minds, joblessness looming, and high-street giants like Woolworths and Comet teetering, who wouldn’t want to hole up and hope that just a few lifestyle tweaks could set things right? A full decade on, the dining-in deal, that innocuous bundle of foil containers, thrift and denial, epitomises many of the impulses that continue to drive our culture, high and low.

Comfort, that was what most of us initially sought. We weren’t going to get it from the news and we certainly weren’t going to get it from economists, wise after the event, but we could find it in abundance at Aldi and Lidl, where we headed en masse to stock up on cut-price, off-brand staples. In America’s Great Depression, it was cigarettes and cinema tickets that bucked the trend, their sales continuing to rise as nearly everything else plummeted. Here in the UK we reached for sweet, fatty snacks after 2007. Maybe some hardwired evolutionary trait was kicking in, insisting we add a little extra padding for the hard times ahead, easing one belt out a notch as we were compelled to tighten another. Our rediscovered appetite was still raging in pinched 2010, when Mary Berry and co debuted a telly contest that allowed us to mainline sugar and butter with a sprinkling of notions of unity and past glory. It wasn’t just any old bake off, it was The Great British Bake Off.

We craved another flavour, too, one that precipitated a spike in sales of dishes like cottage pie and rice pudding: school dinners. Or more broadly speaking, childhood. The basic explanation for our financial pickle was simple enough: we’d spent beyond our means. But in an increasingly secular society, that didn’t seem justification enough for the hardship that was being meted out, especially as technological advances continued to make instant gratification ever more instantaneous. Why couldn’t we just keep borrowing? Or print more money?
“Vintage hits like Dad’s Army—televisual jam roly-poly—were brought back from the dead”
As it turned out, printing more money is exactly what the central bankers in charge actually did. The rest of us, however, without their economics degrees were left feeling like dolts. A dawning awareness of the interconnectedness of global markets only underscored the extent to which our personal, financial, wellbeing had slithered beyond our control. Thus infantilised, we began dressing in “adult” onesies, lapping up film franchises starring superheroes and heroines drawn from graphic novels, and buying “adult” colouring books. (I say buying because I’ve yet to see an adult actually use one, and would like to believe that they go unopened. Please do not disillusion me.)

That mistrust of globalisation also helped fuel locavorism—eating only local food. Was it something about hearing the words “too big to fail” so often that made us newly enamoured of the small? Small-batch coffee, small-batch bourbon, small-batch cigars—they all enjoyed a definite moment.
Meanwhile, we weren’t just comfort eating, we were comfort dressing too. Women began trading high heels for ballet pumps, loafers and Chelsea boots. The woolly hug that is the Christmas jumper was embraced and even made it on to catwalks where it cocooned Burberry and Jil Sander models. By 2012, Topman could be found stocking 34 different designs. And for those of us prudently adopting a wardrobe of trend-proof basics, a new word was conjured up to make us feel edgy: normcore.

That word encapsulated a resurgent desire for shared experience in the face of crisis, just as dining-in, even while it kept us home, hinted at the communal—implying a fixed time and menu. As we tuned into The X-Factor (or Strictly Come Dancing), we could depend on other households around the country tucking into their king prawn linguine (or vegetable moussaka) as they did the same....MORE

Friday, September 22, 2017

"China bans supplies of petroleum products to N. Korea "

From Yonhap News Agency:
(ATTN: ADDS more quotes and details, background info in paras 4, 6-9; ADDS photo)

2017/09/23 13:58

BEIJING, Sept. 23 (Yonhap) -- China on Saturday imposed a limit on the supplies of petroleum products to North Korea and imports of textiles from the country under U.N. sanctions over its nuclear and missile development.

The Chinese Commerce Ministry said it would ban exports of condensate and liquefied natural gas to North Korea and limit textile imports from the North, starting 12 a.m. Saturday.

The ministry, however, made it clear that crude oil is not subject to the ban....MORE
Well it's about time.

"China's Baidu launches $1.5 billion autonomous driving fund"

From Reuters, Sept. 20:
Chinese search engine Baidu Inc (BIDU.O) announced a 10 billion yuan ($1.52 billion) autonomous driving fund on Thursday as part of a wider plan to speed up its technical development and compete with U.S. rivals.

The “Apollo Fund” will invest in 100 autonomous driving projects over the next three years, Baidu said in a statement. 

The fund’s launch coincides with the release of Apollo 1.5, the second generation of the company’s open-source autonomous vehicle software. 

After years of internal development, Baidu in April decided to open its autonomous driving technology to third parties, a move it hopes will accelerate development and help it compete with U.S. firms Tesla Inc (TSLA.O) and Google project Waymo. 

In the latest update to its platform, Baidu says partners can access new obstacle perception technology and high-definition maps, among other features. 

It comes amid a wider reshuffle of Baidu’s corporate strategy as it looks for new profit streams outside its core search business, which lost a large chunk of ad revenue in 2016 following strict new government regulations on medical advertising.

Baidu’s Apollo project - named after the NASA moon landing - aims to create technology for completely autonomous cars, which it says will be ready for city roads in China by 2020....MORE

Guajataca Dam in NW Puerto Rico Has Failed, FLASH FLOOD EMERGENCY

From the National Weather Service:

Some Thoughts On Classical Economics

From Steven Kates (U of Melbourne) at his Law of Markets blog:

Classical theory explained
I’ll be in Canberra for the first three days of next week for the meeting of the History of Economic Society of Australia where I will be giving a presentation on the actual meaning and significance of “classical” economic theory. I am therefore putting up a post from way back in history that I did in 2011, so ancient that Maurice Newman was the Chairman of the ABC and I was still being published at The Drum. The rest of this post is what I said then. But before I get to that, I will put up this quote from a brief article on me [my name even comes first in the article’s title!] which you may find in the latest edition of the Journal of the History of Economic Thought:
“Steven Kates is probably the best-known present-day proponent of the old ‘classical’ macroeconomics of Jean-Baptiste Say, James Mill, David Ricardo, and John Stuart Mill.”
But as I say in the heading in the slide, I am probably the “best-known” because I am probably the only one in existence. It was also, let me assure you, not intended as a compliment. Anyway, here is what I wrote back then.
I have an article up at The ABC’s Drum website where I again look at the statement by the ABC’s Chairman, Maurice Newman, on the value of classical economic theory in comparison with the modern. Here was the full quote from his speech:
We may think we are all Keynesians now, but perhaps contemporary teachings of Keynes are not faithful to the original doctrine, or, maybe, Keynes is now a defunct economist. Perhaps post modernist economics has so captivated our journalists that they have suspended the spirit of enquiry, open-mindedness and scrutiny that an informed democracy so desperately needs.
Under relentless pressure, classical economics has become all but a relic of a bygone era. Yet the work of classical economists most likely holds the solution to today’s economic ills.
The point that Maurice Newman was making was that journalist really ought to take a look at the economic ideas of the classical economists, which using the modern Keynesian definition incorporate every economist before Keynes himself, with the exception of Malthus, Hobson, Major Douglas and Gesell (who these last three are you might very well ask, but this is Keynes’s very own and very short list). As for the rest, they were consigned by Keynes to the dustbin of history, whose theories are only kept alive by a very small band of economists scattered across the world.

In the article, I quote Alfred Marshall, arguably the greatest economist to emerge from the nineteenth century. As I wrote on The Drum, Marshall “was very specific about not mistaking an economic recession for a failure to spend and he very much thought of himself as following in the tradition of the classical economists....MORE
Kates is a bit controversial, I think I saw one Australian refer to him as a 'Neanderthal', but interesting nonetheless.

For Uber, Winter Is Coming (there's another [snow] shoe to drop)

I swore I'd stop with Game of Thrones references after this bit about Albert Edwards expounding his Ice Age Thesis:

Société Générale's Albert Edwards: Winter Is Coming 
Yes, Albert has been forecasting the arrival of the economic ice age since at least 1996 (our links go back to 2010 and probably earlier), but the House Fed has thwarted his House Stark at every turn.
Now he's getting ready to roll but it may be too late for him.
"I fought. I lost. Now I rest. But you, Lord Snow… you'll be fighting their battles forever."
Albert addressing another standing room only investment conference crowd
Okay, that's enough Game of Thrones references for now.
But I can't help it. Plus, I see I left myself some "for now" wiggle room.
From City AM:

After TfL's licence decision, Uber must brace itself for a winter of discontent
TfL’s decision not to renew Uber’s private hire licence may have caught some off guard, but delve deeper into the firm’s ongoing series of operational controversies, and the shock subsides – rapidly.
The tech giant’s outing from the capital was justified by TfL due to its perceived “lack of corporate responsibility” in relation to safety, including concerns over its approach to reporting serious criminal offences and method of obtaining enhanced criminal offences checks.

Looking back over Uber’s past challenges, and subsequent reactions to criticism, it becomes apparent that this time, the firm may find need to find a renewed line of defence. In fact, it is likely that Uber’s perceived laissez-faire attitude towards customer wellbeing could be symptomatic of how the business perceives itself.

Back in October 2016, a group of Uber employees fought, and won, an Employment Tribunal where they demanded to be recognised as workers, rather than self-employed drivers. During proceedings, Uber rejected claims that it should ensure drivers receive holiday pay, sick pay, and the minimum wage, stating that it was a 'technology platform' that facilitates people getting taxis, distancing itself from having overarching responsibility for service users and employees.

However, another area of contention for the firm is its use of software. TfL states that Uber failed to explain how it used 'greyball', a system it has deployed elsewhere to actively stop law enforcement from investigating the company and its drivers - denying them rides. This lack of transparency in the use of data is not akin to the operations of a specialist technology platform.

Today’s woes aside, the eagerly awaited Employment Tribunal appeal hearing is due to take place at the end of the month, and it is my expectation that October 2016’s decision will be upheld. If so, Uber must completely redevelop its employment model or face legal action and disruption to its services UK-wide....MORE

Accounting News Roundup: Big 4 vs. Big Law; SEC Hack And So Much More

From Going Concern:
Big 4 vs. Big Law
Yesterday we learned that PwC would be launching a law firm in the U.S., but that might just the beginning. A recent report from ALM Intelligence states that “Within 10 years, the Big Four could easily become the largest players in the legal industry.” That same report found that nearly two-thirds of law firm leaders were “concerned” or “very concerned” about “alternative legal service providers and accounting firms” and 69 percent of these leaders consider accounting firms to be “a major threat.”

Some law firms couldn’t care less. I doubt anyone at Wachtell is concerned about the Big 4 stealing any of their business. Certain law firms are in another stratosphere when it comes to reputation and brand. Also, I don’t see the Big 4 poaching litigators anytime soon.

No, the Big 4 will focus on their strengths — ubiquity, deep pockets, and willingness to do anything. All of the Big 4 already have attorneys in more countries than any of the global law firms; they have far more resources; and they provide just about any service, short of media buying and human trafficking, although we wouldn’t totally rule out the latter.

Since we’ve been talking about this trend for awhile, now the question becomes: “What’s next?” The answer might obviously be: “World domination,” but it’s not a foregone conclusion....MORE
Also at Going Concern:

Accounting News Roundup: PwC Launching a Law Firm in U.S. | 09.21.17
The New Revenue Recognition Standard Needs a Sexy Nickname, Okay, Sure 

Before Buying into the Idea that Fractional Reserve Banking has Some Sort of Fraudulent Roots, Listen To This Battlecry From A Supermodel

I've mentioned:
I only have two clickbait moves. There's the "Listen to this battle cry from a supermodel" (and variants) move:

"Before You Say You've Never Discriminated Against Someone, Listen To This Battlecry From A Model"
And the "one weird trick" move:
Warren Buffet Uses This One Weird Trick to Be Persuasive* 
I maybe should have gone with Buffet for this George Selgin piece at Cato, Sept. 6:

The “Bagging Rule” – Or Why We Shouldn’t Arrest (All) the Bankers
As our more regular readers know well, every now and then I like to take another stab at debunking the  myth that fractional reserve banking has fraudulent roots. Besides occurring in numerous textbooks, that myth is routinely expounded in the writings and lectures of certain contemporary Austrian School economists. Moreover, as we’ll see, it is occasionally given credence in reputedly scholarly publications by scholars who don’t identify themselves with that school.
It is relatively slow in DC, as I write this, with Congress out of session, and therefore as good a time as any to rejoin the old debate, which I do first by drawing attention to a paper: “Banks v Whetston (1596),” by David Fox, a Cambridge law professor and barrister, and the author of a fascinating legal treatise on Property Rights in Money (OUP, 2008).

A Hum-Drum Case
Although he wrote “Banks v Whetson” for a 2015 volume titled Landmark Cases in Property Law, Fox hastens to explain that the case in question may not really qualify as a “landmark” since “very few lawyers have heard of it and it does not have a strong history of citation in later decisions.” Its significance, so far as he’s concerned, lies on the contrary fact that it was perfectly hum-drum. Because of that, the case supplies a particularly clear illustration of the common law’s ca. 1596 understanding of property rights in money — an understanding which prevailed, according to Fox, “throughout the middle ages and into the early modern period.”...

Blame Overlawyered for the introductory ramble:
Before buying into the idea that fractional reserve banking has some sort of fraudulent roots, consider the common law concepts of detinue, bailment, and debt...
*From that Buffet piece:

...I may have made a mistake with the 'only two moves' intro. Thinking about it we've also used the "blank, blank will shock you" template (and variations):

And then there was the whole Upworthy 'clickbait generator' phase.
Oh, and the "Buzzfeed Story Generator" chapter in the blog's life.
And the search engine optimization fiasco:
And the....where was I?
Think We're Not In A Housing Bubble? 
Maybe You Should Listen To This Angry Child Star.

Here's the Upworthy (style) clickbait generator.

Meanwhile In Rome, A Greek Politician Comments On Journalists: "I'd eat you for joy of vomiting you out"

From ANSA:

"I'd eat you for joy of vomiting you out"- Grillo tells reporters
M5S leader says media put him under siege
(ANSA) - Rome, September 19 - Beppe Grillo, the leader of the anti-establishment 5-Star Movement (M5S), blasted reporters waiting for him outside a Rome hotel on Tuesday, saying they effectively put him under siege.

    "This is kidnapping, I'd eat you just for the pleasure of vomiting you out," the comedian-turned-politician said.

    "Do you feel any shame about the job you do? Do you think the fact that you work for 10 euros a story justifies all this?"

Hey! David Keohane Is Back At Alphaville And He's Got Some Bad News For Uber

Mr. Keohane has been writing some stuff for the paper but this is the first time we've seen him at Alphaville in over a month.
And he's reminded me of one of the best quips ever from the world of diplomacy.

From FT Alphaville:

"Taxi for Uber"
“TfL has today informed Uber that it will not be issued with a private hire operator licence.”

And the quip?
In 1899 American president McKinley appointed an extremely sharp attorney, Joseph Hodges Choate, U.S. Ambassador to the United Kingdom.
One of the stories told about Choate was that at a Duke's dinner party he was standing near the front door when another nobleman approached and mistaking Choate for a butler said "Call me a cab".

When Choate didn't immediately respond the aristocrat said, "Won't you call me a cab, please?"
To which Choate replied "You are a cab".

The aristo took great offence at this and sought out his host to inform him of his impudent servant.
The Duke told his bro-in-peerage Choate was not a butler but rather the ambassador to the Court of St. James.
Mortified, the noble one went back to the ambassador to express his regret for the misunderstanding, to which Choate responded, "Pray, don't apologize, if I had known who you were I'd have called you a hansom cab."

Choate always denied the story, see: The Atlanta Constitution, February 3, 1902 pp5: Choate's Hansom Apology 

Thursday, September 21, 2017

Update On Speculation In the Stock of the Swiss National Bank (SNBN)

This is an extra-special type of lunacy.

From Wolf Street:

Special Pump-and-Dump Scheme Spikes to High Heaven  
 But the Swiss National Bank is just an innocent bystander.
The publicly traded shares of Swiss National Bank (SNBN) rose 5.7% on Thursday and closed at a new high of 4,449 Swiss francs. They have skyrocket 133% since July 19. And that’s just the last two months of an exponential spike. Who’re the lucky ones that own the shares of the SNB?
  • The Cantons: 55.9%
  • Public Cantonal banks: 18.4%
  • Other public institutions: 0.5%
  • Private shareholders: 25.3% (100,000 shares).
With only 100,000 shares being publicly traded on thin volume, it’s easy to drive up the price. Some well-placed hype and a modest amount of buying pressure can trigger big moves that then inspire other speculators to jump in and chase the small number of shares.
From July 19 until August 21, shares jumped by 912 francs, or 48%. Then on August 22, they were hyped in an article in the German daily, Die Welt. Here are some of the nuggets:
  • “The dream of every company: to make money out of nothing.”
  • The SNB “seems to have found the world formula.”
  • “It creates value out of nothing.”
  • “The private saver can participate in the central bank.”....
...The scheme has been going on for a while. This weekly chart shows how these shares soared 168% since April 2017 and 326% since April 2016.

The hype is this: The SNB has become a hedge fund since it decided in January 2015 to print Swiss francs — for which there is huge global demand — and buy mostly bonds and stocks denominated in euros and dollars. The idea is to put a lid on the franc by selling it....

Do read on, the denouement is worthy of Mackay's Extraordinary Popular Delusions and the Madness of Crowds which reminds me of a snappy little paper on the British Railway Mania that we linked to in:
The Time Charles ('Popular Delusions...') Mackay Thought 'This Time it's Different'

We linked to Wolf Street's September 11 piece in "So, Shares of the Swiss National Bank Are Up 89% Since Late July (SNBN)" but because we were three days late getting to it had to put an update in the intro:
Add a couple (dozen) percentage points to all the numbers quoted in this story, it was, after all, written way back on September 11.
SNBN  3,615.00 CHF up 115.00 (3.29%) on the day

"Hi Facebook, Google, we think we might tax your ads instead – lots of love, Europe x"

"Or maybe hold money from online transactions. Either way, we're getting our damn cash"

That's The Register.
Here's more:
More details have emerged on the various plans being considered by European governments to force internet giants like Facebook, Google and Amazon to pay more in taxes, including a levy on internet ads and even withholding money for online transactions.

Following a letter earlier this month from the finance ministers of Europe's largest economies – that argued for a tax on turnover rather than profits – a meeting of all the European Union's 28 finance ministers last week resulted in them agreeing to push the proposal forward, but with additional options.

Next week, those proposals will be formally put to the EU and in a press conference at the European Commission on Thursday, vice president Valdis Dombrovskis launched the "new EU agenda for fair taxation of the digital economy."

"The European Union needs a common and coherent approach when taxing the digital economy," he argued today, adding that the issue is "becoming even more urgent, as a number of EU countries have already introduced unilateral measures."

In a pointed reference to Ireland and the highly favorable tax deal it offers tech companies – which results in them paying tiny amounts of tax in other European countries – Dombrovskis said: "Divergent national approaches can fragment the Single Market and increase tax uncertainty. They can also destabilize the level playing field and open new loopholes for tax abuse and corporate tax avoidance."...MORE

Société Générale's Albert Edwards Is Not Happy

No, not happy at all.
Until he calms down let's not mention I forgot to mark the 9th anniversary of the (second) greatest market call of all time.*

From ZeroHedge:

Albert Edwards: "Citizen Rage" Will Soon Be Directed At "Schizophrenic" Central Banks
Perhaps having grown tired of fighting windmills, it was several weeks since Albert Edwards' latest rant against central banks. However, we were confident that recent developments out of the Fed and BOE were sure to stir the bearish strategist out of hibernation, and he did not disappoint, lashing out this morning with his latest scathing critique of "monetary schizophrenia", slamming all central banks but the Fed and Bank of England most of all, who are again "asleep at the wheel, building a most precarious pyramid of prosperity upon the shifting sands of rampant credit growth and illusory housing wealth."

Follows pure anger from the SocGen strategist:
These of all the major central banks were the most culpable in their incompetence and most prepared with disingenuous excuses. And 10 years on, not much has changed. The Fed and BoE are once again presiding over a credit bubble, with the BoE in particular suffering a painful episode of cognitive dissonance in an effort to shift the blame elsewhere. The credit bubble is everyone’s fault but theirs.
First, some recent context with this handy central bank holdings chart courtesy of Deutsche Bank's Jim Reid which alone is sufficient to make one's blood boil.
For those familiar with Edwards' writings over the years, the gist of his note will come as no surprise: after all, how many different ways can you say that central banks have broken the market, have caused a credit bubble, and will be responsible for the crash when they finally run out of cans to kick.  
In any event, the focus of Edwards' latest note is the resurgent growth in unsecured household credit.
We have written on this topic before in the context of US and UK economic growth only being sustained by sharp declines in household saving ratios. But though I must revisit the issue after the UK?s Guardian newspaper (for non-UK clients it is similar to The New York Times) ran a huge feature on the desperate situation many of the JAMs (just about managing) now find themselves in - see article here.
Edwards points out the increasingly easy terms offered on unsecured consumer debt, i.e., credit cards and notes that he has "heard stories of credit card loan search engines spewing out money on 4 year, 0% teaser loans. What really shocked me is that after having been offered a credit card loan facility via a search engine, one is able to make multiple further self-certified applications and be offered similarly large amounts! Amazingly there was no question about existing debts!"...

*The greatest market call was Robert Rhea in the summer of 1932 but Albert is damn close on the leaderboard. as recounted in 2011's "*****Alert***** Société Générale's Albert Edwards Bearish *****Alert***** (Sept. 6, 2011)":
On September 5, 2008 we posted "Meltdown"-Société Générale" which linked to Albert's research note of a couple days earlier:

***Alert****Economic and equity market meltdown imminent****Alert***

A good call.

On September 7, 2008 Fannie Mae and Freddie Mac were placed into conservatorship.
On September 14, 2008 Merrill Lynch agreed to be acquired by Bank of America.
On September 15 Lehman filed their bankruptcy petition.
On September 16 AIG became a 79.9% subsidiary of the U.S. Treasury.

Within 10 more days the Nation's largest thrift, WaMu was seized and five days later Wachovia gobbled up.

Good times, good times....
And I forgot.

News You Can Use: Are You Tired of the Ads Following You Around As You Move About the Internet?

Not much you can do about it unless you are continually clearing caches but you can influence the ads you see.
Back in 2014 we posted "A Look at the World's First Water-focused Hedge Fund" which, while only containing a passing reference to grit chambers in the introduction:
Since the first Earth Day in April 1970 and more importantly since the establishment of the EPA in December of that year, folks have been trying to make money out of water in the U.S..
Put simply, the returns have not been market-beating.

Because so much of the opportunity was my-little-crony stuff, at the whim of politicians, there was no consistency of growth at a time when other portfolio investments offered very competitive comparisons.
The alternative was to own the cash flow, private equity style, but unless one felt a passion for grit chambers and sludge pans it was pretty pedestrian, utility type ROI....
required I do a quick GOOG search for the largest manufacturer of same.

After an hour of grit chamber ads I asked Siva, a streetwise Hindu boy (Caltech EE) what to do to get rid of them, short of clearing history and cookies and everything, and he said: "Go to one of those artsy-fartsy sites you always visit."

As I started to ask "How do you know what sites I visit?" he disappeared.

I was reminded of this because, after doing the Uber post (below) the computer I was on kept trying to entice me into driving for Uber and I thought: "Hey, what's going on at Sothey's?"

So, after getting to this page,
Yeats: The Family Collection
| | London
There are pretty pictures popping up on every third site visited on that computer.
And Uber still needs drivers. 

"US farmland prices fall again, but decline slows in machinery market"

From Agrimoney:
US farmland prices extended their decline nearly to four years, amid growing strain on farm incomes, a lender survey showed - but the ag equipment market showed signs of slowing its shrinkage.

A US farmland price index compiled by Creighton University showed a reading of 39.6 for September, a 46th month below the 50.0 level which indicates a neutral market.

The figure represented a retreat from the 43.0-point level recorded for August, a three-year high, if continuing the successive monthly record of shrinkage which began in December 2013.

And it came amid evidence of stressed producer finances, with 51% of bankers answering the survey reporting have restructured farm loans, although default levels remained low.

'Still have some cash'
The data contrast with an improved picture on prices in Iowa, at least, revealed last week by a report from the state's chapter of the Realtors Land Institute.

The briefing showed an accelerating recovery in farmland prices in Iowa, the top corn-growing state, showing values rising by 2.0% in the past six months, after a 0.9% rise in the previous half year.

The chapter flagged support to values from the limited supply of land available to buy, adding that many farmers "still have some cash on hand", but acknowledged the headwinds to the market from "continued lower commodity prices" at a time of relatively "high costs" of inputs such as agrichemicals.

The Creighton survey showed an index reading of 39.9 for Iowa this month, below the 50.0 neutral level, and the figure of 42.3 recorded for the state for August.

Past the worst?

However, the Creighton data offered some hope for machinery groups, in giving a reading of 27.4 for sector sales this month....MORE
From the intro to Sept. 8's "In Non-Hurricane Irma News: "Diammonium Phosphate Prices Moved Sideways Last Week"":
I realize we've been a bit obsessive with the hurricane postings but the combination of real tragedy (vs the 21st century B.S. we're force fed every day), the real tragedies happening right now, combined with giant money flows, it's hard to look away.

Regarding the headline, we aren't doing anything with the fertilizer or other agricultural inputs until there is a decisive turn at the base of the pyramid - the actual prices of crops and the cash flows they create.

Until that turn, we'll speculate on ag futures as opportunities pop up but unless we see something along the lines of the El Niño-caused crop failures of the 1870's - 1890's and famines created/exacerbated by corrupt/venal/incompetent politicians and administrators, we're not doing much in the input stuff or implement manufacturers. If we get some robotics/automation trades we'll post.

Alternatively, we keep tabs on reports of ergot outbreaks in Europe should there be hints of the cool-and-damp style famines that quasi-periodically showed up 1315 - 1818. Or potato blight.

So, with that cheery little break, here's Market Realist, Aug 28:...

Alphabet's Waymo Will Let Uber Off the Hook For $2.6 Billion or Cash on Hand

Uber is so used to beating up on city councils and regulators represented by civil service attorneys that they seem a bit wrong-footed when confronted with large dollar lawyering.
Waymo's trial attorney, Quinn Emanuel’s Charles Verhoeven is one of the best intellectual property litigators in the country and watching his interplay with the other side and a very tech-savvy judge is pretty amazing.

His bio page at the firm's website notes in passing "Mr. Verhoeven's record as lead counsel before the Federal Circuit is 23-2."

Alrighty then, on to the story. From Reuters, Sept. 20:

Waymo seeking $2.6 bln from Uber for one trade secret - lawyer
Alphabet Inc’s Waymo unit is seeking about $2.6 billion from Uber for the alleged theft of one of several trade secrets in a lawsuit over self-driving cars, a lawyer for Uber said on Wednesday.

Uber Technologies Inc attorney Bill Carmody disclosed the figure in a hearing in federal court in San Francisco, where both companies are discussing whether a trial in the case will begin next month.
Waymo has asserted claims that Uber stole several of its trade secrets. The total amount of Waymo’s damages request was not publicly disclosed at the hearing on Wednesday. 

Waymo claimed in a lawsuit earlier this year that former engineer Anthony Levandowski downloaded more than 14,000 confidential files before leaving to set up a self-driving truck company, which Uber acquired soon after. 

Uber has denied using any of Waymo’s trade secrets. 

Waymo’s allegations have already led Uber to fire Levandowski, who had directed Uber’s efforts in the nascent yet pivotal field of self-driving cars. A loss by Uber at trial would add to the company’s lengthy list of legal headaches...MORE
Did I forget to mention the $2.6 billion was for just one of the claims?
My bad. There are nine claims that the judge may allow to go forward.
As of the last report released by Uber, they were down to $6.6 billion cash-on-hand which may not be enough.
While Mr. Son at SoftBank circles patiently.

Feb. 22 
Dude's got a problem....  
March 29 
March 31
"In Waymo v. Uber, honing the craft of litigation gamesmanship" (GOOG)
I was going to put something together on Anthony Levandowski's use of the 5th amendment in a civil matter and some of the implications of doing so but didn't get to it. In the meantime here is a look at some high-buck lawyering and tactics of litigators.
April 1
April 4 
The headline/sub-head combo pretty much defines sleazy corruption.... 
April 26 
May 12 
In the Waymo case Uber's bid to make their arguments in private was turned down by the judge overseeing the action but even worse for Levandowski, hizzoner is using his Federal Judgeship powers.*
May 19 
The testimony thus far sure makes a prima facie case that Uber and Levandowski were in cahoots, that there was an actual conspiracy. If that proves to be the case this move is simply thieves falling out....
June 7 
The latter may prove to be the more important ruling so first up Judge Alsup at TechCrunch:
June 15
If I were a late round Uber investor this would be a bit concerning.
We've posted on Kalanick and his "existential" quote, which is one thing, but this is a statement to a Federal Court....
June 25 
June 28 
Aug 15 
Aug. 17 

And a whole bunch of earlier posts on the lead-up to all this in roughly chronological (not reverse chron) order:

Google is spinning off its self-driving car program into a new company called Waymo (GOOG)
"New Patents Hint That Amazon and Google Each Have Plans to Compete with Uber" (AMZN; GOOG) 
Uber Is A Cesspit: Google's Waymo Sues Kalanick's Creation--UPDATED
Waymo Comments On Why They'r Suing Uber
"The Uber Bombshell About to Drop"
"Alphabet’s Waymo asks judge to block Uber from using self-driving car secrets" (GOOG)
Remember that time Uber's Kalanick said having autonomous was crucial to the company's very survival? (a deep dive)
And related:

Night of the Long Knives: "Google Vs. Uber in the Rush To Drive You Around, Driverless" (GOOG)
Uber Bids for Nokia Maps Service to Lessen Google Reliance
"Why Uber Has To Start Using Self-Driving Cars"
Uber Throws Tesla Under the Autonomous Bus
Uber to Buy Self-Driving-Truck Company Otto
"Google’s Car People Diaspora" (GOOG)    

Back When I Had The Ability To Tell A Story—"Europe: Media Face Fines for Improper Use of 'Great Britain'"

That would be five months ago.
Originally posted April 17, 2017:

Apparently with the activation of Article 50 the Slovaks can no longer use the term "Great Britain."
Henceforth it's "Pretty Good Britain".

From The Slovak Spectator:

Media face fines for improper use of 'Great Britain'
The Geodesy, Cartography and Cadastre Authority informed the media that fines can be up to €6600.

Great Britain has triggered article 50, several Slovak media outlets wrote in late March, reporting the launch of Brexit . Now they face fines up to €6600 for doing so because they violated the law, according to the Geodesy, Cartography and Cadastre Authority of the Slovak Republic

In its official letter addressed to several media companies, the authority objects to the use of the term “Great Britain” and demands the use of “The United Kingdom of Great Britain and Northern Ireland” or just “The United Kingdom” instead.

The Sme daily checked official documents from the Slovak Foreign Ministry and found that they also use the term Great Britain in several official documents.

Geographer Slavomír Ondoš told Sme that he feels “a strong shame” for being connected with the authority.

“I cannot comment on the legislative aspect of the problem but I am surprised by the uncivilized manner of [the authority’s] communication,” Ondoš said. “The language is live and is evolving in this globalised world in direct contact with English.”...MORE
The "Pretty Good" line is not original to me.

Some years ago I worked with a Moroccan guy named Raissoulli and upon meeting him asked if he was related to Mulai Ahmed er Raisuli, the turn of the 20th century kidnapper and brigand known in some parts of the territory between the Atlas mountains and the Mediterranean as "The Great Raisuli".

Raissoulli said yes, he was indeed a great-grandson of Raisuli but sadly he didn't think he had inherited any of the piratical swagger, 
"I'm not the Great Raissoulli, maybe the Pretty Good Raissoulli though".

If interested, the autodidact historian (and two time Pulitzer prize winner) Barbara Tuchman wrote a short account of one of Raisuli's crimes/exploits. It begins:
"Perdicaris Alive or Raisuli Dead"
Barbara Tuchman American Heritage, August 1959
Reprinted in "Practising History", Papermac, 1995

On a scented Mediterranean May evening in 1904 Mr. Ion Perdicaris, an elderly, wealthy American, was dining with his family on the vine-covered terrace of the Place of Nightingales, his summer villa in the hills above Tangier. Besides a tame demoiselle crane and two monkeys who ate orange blossoms, the family included Mrs. Perdicaris; her son by a former marriage, Cromwell Oliver Varley, who (though wearing a great name backward) was a British subject; and Mrs. Varley. Suddenly a cacophony of shrieks, commands, and barking of dogs burst from the servants' quarters at the rear.
Assuming the uproar to be a further episode in the chronic feud between their German housekeeper and their French-Zouave chef, the family headed for the servants' hail to frustrate mayhem. They ran into the butler flying madly past them, pursued by a number of armed Moors whom at first they took to be their own household guards.
Astonishingly, these persons fell upon the two gentlemen, bound them, clubbed two of the servants with their gunstocks, knocked Mrs. Varley to the floor, drew a knife against Varley's throat when he struggled toward his wife, dragged off the housekeeper, who was screaming into the telephone, "Robbers! Help!," cut the wire, and shoved their captives out of the house with guns pressed in their backs.

Waiting at the villa's gate was a handsome, black-bearded Moor with blazing eyes and a Greek profile, who, raising his arm in a theatrical gesture, announced in the tones of Henry Irving playing King Lear, "I am the Raisuli!"...
The story was also made into a movie starring Sean Connery, The Wind and the Lion.

"Global macro in one page - Where is that inflation?"

From AMPHI Research & Trading via Disciplined Systematic Global Macro Views, Sept. 10:
Where is that inflation? Central banks have this fixation on 2% inflation as both a goal and a signal. Policies have been structured for the magic 2% and signals for balance sheet action are based on the inflation hitting 2%, yet current inflation has not been able to reach this number....MORE

"The Fed’s forecasts imply a tough (recessionary?) 2020"

Yesterday, along with Cardiff Garcia, Matthew Klein was showing off his  Federal Reserve chops in "Macro Live, Janet Yellen presser edition". Today he's going solo.

From FT Alphaville:
I think it’s a myth that expansions die of old age. I do not think that they die of old age.
–Janet Yellen, December 16 2015

The Federal Reserve released forecasts through the year 2020 for the first time on Wednesday. Those forecasts imply that America’s central bankers will deliberately tighten monetary policy to slow the US economy, possibly to the point of outright recession, by the early 2020s.

Every few months, the Fed polls the members of the Open Market Committee, which sets monetary policy, to ask them how they think real output, unemployment, and inflation will behave under “appropriate monetary policy” for the next several years. They also ask everyone where they think short-term interest rates should be at the end of each year.

There is no way to identify each individual set of forecasts. At least some policymakers think core inflation should be 2.2 per cent in 2019 and 2020, compared to the consensus of 2.0 per cent. Are these the same people who think short term interest rates should be unchanged from their current level in 2020, or are they those who want the policy rate to rise by nearly three percentage points? We currently have no way to know, which makes it difficult to assess how individual central bankers view the underlying forces affecting the economy and how monetary policy should respond.

With that caveat, it is possible to look at the distribution of forecasts to assess how the FOMC as a whole is thinking about the economy. Take a good look at the table below, with our highlights:...MORE

Wednesday, September 20, 2017

NVIDIA Partner Tesla Reportedly Developing Chip With AMD (TSLA; NVDA; AMD)

Today in leveraged WTFs....

From CNBC:
Tesla is working with AMD to develop its own A.I. chip for self-driving cars, says source
  • Tesla is working with AMD to refine its new chip, which will likely reduce its reliance on Nvidia.
  • GlobalFoundries CEO Sanjay Jha said it's working with Tesla on a chip.
  • Tesla has more than 50 employees involved in the project, including chip star Jim Keller.
Tesla is getting closer to having its own chip for handling autonomous driving tasks in its cars.
The carmaker has received back samples of the first implementation of its processor and is now running tests on it, said a source familiar with the matter.

The effort to build its own chip is in line with Tesla's push to be vertically integrated and decrease reliance on other companies.

But Tesla isn't completely going it alone in chip development, according to the source, and will build on top of AMD intellectual property.

AMD shares spiked after CNBC reported that the company is working with Tesla. Shares of the stock ended the day nearly 5 percent higher and continued to climb after hours.

On Wednesday Sanjay Jha, CEO of AMD spin-off GlobalFoundries, said at the company's technology conference in Santa Clara, California, that the company is working directly with Tesla. GlobalFoundries, which fabricates chips, has a wafer supply agreement in place with AMD through 2020.

A more power-efficient purpose-built chip could help Tesla get closer to delivering totally autonomous driving. Tesla CEO Elon Musk promised this year that capability will be available to consumers in 2019....MORE
HT: The Verge

The reason for the incredulous intro line:
Featured Automotive Partners
Tesla Motors and NVIDIA have partnered since the early development of the revolutionary Model S. Today, all Tesla vehicles—Model S, Model X, and the upcoming Model 3—will be equipped with an NVIDIA-powered on-board "supercomputer" that can provide full self-driving capability....

Automotive Partners

NVIDIA is always careful to use "Tesla Motors" in press releases to distinguish from their own line of Tesla GPUs, e.g.

Tesla Motors’ Self-Driving Car “Supercomputer” Powered by NVIDIA DRIVE PX 2 Technology
 so again, huh?

"Dollar Jumps, Yield Curve Dumps As Fed Sends 2Y Yield To Highest Since 2008"

Following up on this morning's "Currencies: Fall Guy", the dollar index is exuberant:
92.26 last, up 0.69
We're still going through  FT Alphaville's "Macro Live, Janet Yellen presser edition", until we get back here are some quick hits from ZeroHedge:

S&P Loses 2,500, Gold Tests $1300 As Fed Flattens Yield Curve
As Yellen's press conference began, Gold and stocks legged lower, taking out $1300 and 2500 respectively..

As we detailed earlier, the dollar spiked higher and the yield curve spiked lower following The Fed's hawkish statement. 2Y yields hit their highest since Dec 2008...

As December rate hike odds jumped to 63%.. so still not completely buying The Fed's plan...

The dollar spiked...

But the yield curve cracked notably flatter... as the long-end was unimpressed.

This is not what The Fed, or the banks, were hoping for. How long before bank stocks wake up?

Initial Cat Bond Reactions To Mexico City and Insurance Exposure for the Earlier Chiapas Earthquake

I mentioned one of the bonds in passing yesterday:
...We'll see if Mexico's oversubscribed FONDEN (El Fondo de Desastres Naturales) bond is wiped out.
It was floated at the end of July.
Here's Artemis with more, Sept. 20:

Mexico City hit by deadly M7.1 quake, causes significant property damage
Mexico has been hit by another major earthquake yesterday. The magnitude 7.1 temblor struck at 18:14:39 UTC (13:14 local) on Tuesday 19th September, with the epicentre near Atencingo in Puebla state, 75 miles from Mexico City. Extensive damage has been reported to buildings and the death toll stands at over 200 this morning.

The earthquake will result in insurance and reinsurance claims given the region it has impacted includes the capital city of Mexico. However, this earthquake at M7.1 is not sufficiently high on the magnitude scale to trouble the IBRD / FONDEN 2017 catastrophe bond.

Buildings have been reported toppled in Mexico City and other towns in the region, pictures and video footage show significant structural damage in the capital.

As of 08:00 UTC the latest reports suggest there have been 216 deaths due to the earthquake, a number which is likely to rise further.

The earthquake struck at a depth of 51km with shaking reported for a number of minutes. The geology of the region means shaking from quakes can be severe and in this case there has been a sideways motion that tore some buildings to the ground.

The BBC reports that 86 of the deaths are from Mexico City itself, with 71 people killed in Morelos state to the south of the capital, 43 reported dead in Puebla state, 12 in Mexico State, 3 in Guerrero and 1 in Oaxaca.

In Mexico City alone there are reports of over 44 locations where buildings have either collapsed or been badly damaged, including a school where the tragic deaths of at least 20 children have been reported, a six storey apartment block, a supermarket and a factory.

The recently issued FONDEN 2017 catastrophe bond, that provides the Mexico government with a $360 million source of earthquake and named storm disaster insurance protection, is likely safe from this quake event.

The FONDEN cat bond was triggered by the 8.1 magnitude quake that struck off the coast of Mexico on September 8th, which is expected to exhaust the $150 million Capital-At-Risk Series 113 tranche of Class A notes which are exposed to earthquakes striking Mexico.

That September 8th earthquake was close to the edge of the parametric trigger box, where as this recent M7.1 quake struck right in the heart of the parametric zone being so close to Mexico City, the area with the highest insurance and reinsurance market penetration in the country.

But at M7.1 this second quake is likely not high enough on the richter scale to trouble the cat bond, which is still going through a calculation process right now, despite the fact this earthquake looks to have been much more severe in terms of damage and impact to lives....MUCH MORE
And on the September 8th quake:

AIR puts M8.1 Chiapas, Mexico quake industry loss at up to $1.13bn
The September 8th magnitude 8.1 earthquake that struck off the coast of Chiapas, Mexico is estimated to have caused an insurance and reinsurance industry loss in a range from MXN 14 billion (US $787m) to MXN 20 billion (US $1.13bn), according to catastrophe modeller AIR Worldwide.

It’s a relatively high toll for an earthquake which damaged many rural areas and coastal towns in the region, high enough that some reinsurance capital support may be called on, particularly by commercial insurance providers.

The earthquake was the highest magnitude earthquake to affect Mexico in a century and has triggered the World Bank supported IBRD / FONDEN 2017 catastrophe bond’s earthquake tranche of notes. This cat bond tranche has been priced for a total loss by the market, as investors expect the full $150 million will pay out....MORE

International Energy Agency Commentary: "Looking for balance in the oil market"

From the IEA, Sept. 20:
There is more than one way to look at oil-market balances. The IEA uses a straightforward approach: supply minus demand, which we report in the monthly Oil Market Report as “Total stock changes and Miscellaneous.” Part of the calculation can be easily explained by changes in OECD stocks, floating storage and oil in transit. The remaining “miscellaneous to balance” is less clear. This element, which implies unreported non-OECD stock changes, has come under scrutiny recently particularly as Chinese crude-oil balances have risen to unprecedented levels.

The following commentary expands on the analysis we provided in the September issue of the Oil Market Report, where we took a close look at our “miscellaneous to balance” and drew a distinction between crude oil and product balances to have a clearer view of oil market developments.
The world oil market appears to have returned to balance this year, thanks to a substantial stock draw in the second quarter. As global demand exceeded supply, our balances in 2Q17 implied a 0.9 million barrels a day (mb/d) decline in inventories, the first draw since 4Q13. Somewhat counter-intuitively, the price of Brent was $4/bbl below the first quarter.
In 2Q17, refined product markets drew nearly 1 mb/d of stocks, as refining activity lagged demand growth. The OECD refined product stocks drew by 0.3 mb/d, implying a 0.6 mb/d draw from non-OECD countries. There is no comprehensive non-OECD stocks data to confirm this, however non-OECD total demand grew by 1.1 mb/d year-on-year in 2Q17 while refining throughput was flat. A 0.6 mb/d draw was close to the 0.5 mb/d implied build in 1Q17, so the stock draw would have been technically possible.

Forecasts of refinery runs and demand for 3Q17 and 4Q17 imply continued refined product stock draws. Even in 3Q17, when global headline oil balances show an oversupply of 0.4 mb/d, refined products are forecast to draw by a counter-seasonal 0.4 mb/d, in part due to the hurricane outages in the US Gulf Coast. The draw accelerates in 4Q17 and is double the size of our headline total oil balances....MUCH MORE, leading to the penultimate comment:
...In our view, the Chinese crude balance is price dependent. While it obviously contributed to the market equilibrium, it would be illogical for us to incorporate an assumption of Chinese implied stock builds in our forward-looking balances....

Anything New With the Ubester? Ah Yes: "Uber Faces Widespread Asia Bribery Allegations Amid U.S. Criminal Probe"

But of course.
We would expect nothing more, and accept nothing less.
'Tis Uber.

From Bloomberg:
  • An Uber employee is said to have paid Jakarta police
  • Law firm investigating possible quid pro quo in Malaysia
Uber Technologies Inc., facing a federal probe into whether it broke laws against overseas bribery, has embarked on a review of its Asia operations and notified U.S. officials about payments made by staff in Indonesia, people with knowledge of the matter said.

As the Justice Department looks into a possible criminal case, Uber is working with law firm O’Melveny & Myers LLP to examine records of foreign payments and interview employees, raising questions about why some potentially problematic business dealings weren’t disclosed sooner, said the people, who asked not to be identified because the details are private.

Attorneys are focused on suspicious activity in at least five Asian countries: China, India, Indonesia, Malaysia and South Korea. For instance, Uber’s law firm is reviewing a web of financial arrangements tied to the Malaysian government that may have influenced lawmakers there, the people said.

Uber said it’s cooperating with investigators but declined to comment further. Wyn Hornbuckle, a Justice Department spokesman, declined to comment.

Late last year, Uber had a run-in with Indonesia police over the location of an office in Jakarta providing support to local drivers, people with knowledge of the events said. Police officers said the space was outside city zoning for businesses, so an employee decided to dole out multiple, small payments to police in order to continue operating there, the people said. The transactions showed up on the employee’s expense reports, described as payments to local authorities....MORE
Regarding the headline, although this blog doesn't get very political I think we know how to.
We  can actually draw on some half- assed decent theoretical and more importantly, practical politics. In the case of Uber, Alinsky's Rules for Radicals #5 is always good for grins and giggles:
"Ridicule is man's most potent weapon." There is no defense. It's irrational. It's infuriating. It also works as a key pressure point to force the enemy into concessions.
We also used to work rule #13:
"Pick the target, freeze it, personalize it, and polarize it." Cut off the support network and isolate the target from sympathy. Go after people and not institutions; people hurt faster than institutions.
But with Kalanick gone that's back in the toolbox until another focus presents itself.

We really, really dislike big companies that play politics the way Uber does.

And Some Good News Out Of Mexico

Since the collapse of the schoolhouses in China's Great Sichuan Earthquake in 2008, folks who have to pay attention to this stuff dread reports of building collapses in general and schools in particular.
In the China quake, of the 87,000 killed at least 5,000 (official account) to 10,000 (parent's figures) kids were killed in their schoolrooms.

That's why we were watching for news of the schools in the Mexico earthquake. The very early reports were that the Enrique Rebsamen school in Mexico City and another, unnamed, school in Puebla had collapsed. There are quite a few deaths in the Capital but the Puebla story was in error, the second school building was actually located in Jojutla in neighboring Morelos state and the AP is reporting:
....Buildings also collapsed in Morelos state, including the town hall and local church in Jojutla near the quake's epicenter. A dozen people died in Jojutla.

The town's Instituto Morelos secondary school partly collapsed, but school director Adelina Anzures said the earthquake drill held in the morning came in handy.

"I told them that it was not a game, that we should be prepared," Anzures said of the drill. When the quake came, she said, children and teachers rapidly filed out and nobody was hurt....

Insurance: "Is 'Hurricane Fatigue' Set to Continue?"

From Risk Management Solutions' blog:
The midway point of the Atlantic hurricane season has just passed, and despite a relatively tame start, we have already witnessed two major U.S. hurricane landfalls — Harvey and Irma — in quick succession. It is the first calendar year on record where two hurricanes of Category 4 strength or greater have made landfall in the contiguous U.S. To add insult to injury, Maria has quickly intensified and is expected to be the fourth major hurricane of the season as it tracks through the Leeward Islands, an area left devastated by Irma less than two weeks ago.

With 13 named storms, seven hurricanes, and three major hurricanes, we have already met the National Oceanic and Atmospheric Administration (NOAA) definition of an above-average full Atlantic hurricane season. It is understandable that many in the insurance industry may be suffering from “hurricane fatigue” well before the calendar flips over to October.

But we should not be too surprised by this year’s activity. In August, NOAA elevated its 2017 hurricane season forecast originally issued in May, warning that this season had the potential to be extremely active. Several other seasonal forecasting agencies, such as Colorado State University and Tropical Storm Risk, also increased their May outlook reports during early August to call for a more active season.

It appears that these forecasts of an above-average season are increasingly being validated, with favorable conditions set to continue. With these forecasts in mind, what does the remainder of the 2017 hurricane season have in store?

Increased Chance of a Late Season La Niña
From October 1, hurricane activity tends to reduce, with an average of two to three named storms occurring before the official end of the season on November 30.
Table 1. October and November Atlantic hurricane climatology. Source: NOAA National 
Centers for Environmental Information, State of the Climate
However, the latest forecasts suggest we might see an active end to the season due to the influence of one of the primary drivers of seasonal activity in the Atlantic — the El Niño-Southern Oscillation (ENSO). My colleague, Christopher Allen, recently provided a detailed overview of the discovery and dynamics of ENSO, the planet’s largest source of natural climate variability.
ENSO remains in a neutral state at present, but equatorial sea surface temperatures in the central and eastern Pacific have been observed to be slightly below average during the last month. Similarly, sub-surface temperature anomalies have become increasingly negative in recent months. These cooler temperatures may signal cool-neutral or La Niña ENSO conditions in the coming months, favoring decreased Atlantic wind shear and offering a healthy environment for basin cyclogenesis.

Operational ENSO guidance favors cool-neutral conditions through the fall, but some models predict the formation of La Niña. In response, the Climate Prediction Center issued a La Niña Watch, indicating an increased chance of La Niña formation in the near term.
Figure 1. Summary of ENSO forecasts issued in September 2017. Source: NOAA
Although other climate signals can drive hurricane variability, historical late season cool-neutral ENSO phases have produced above-average activity in the latter months of the season. Weak La Niña conditions observed at the end of last season contributed to the formation of three major hurricanes in October and November....MORE
If interested see also yesterday's "Hurricanes, La Niña and Wind Strength"
"Investors taking more risk with cat bonds"