If A Bear Wore A GoPro


bearcubsIf a bear awoke from hibernation and stumbled out of the woods one day in search of food wearing a GoPro Hero he might, if he’s lucky, find a swarm of feral bees, but probably imported Europeans.

Bears will not only eat honey — they’ll eat the bees and the real prize — bee larvae and emerging brood.

Bees are social in nature. The old saying of if you don’t bother them, they won’t bother you is true. Nothing makes a colony of bees more pissed and go on the attack than having their hive broken apart — even if it’s for their own good — in this case v. mite roll testing and pulling excess honey.

A bear would without question endure the stings of the bees and gorge himself on honey. Like the honey badger a determined bear just wouldn’t give a shit. And the ensuing scene would be beautiful chaos, but not so much for keepers who don’t have an electric fence with multiple strands guarding the ever precious liquid gold held inside.

Price Matters, but Facebook Whining Is Forever


July 23, 2014 —  As Facebook rolls into earnings after the close I still chuckle about last month’s anger over a 2012 psychological study done on users emotions and the aggregation of personal data feeds. Facebook is expected to post $0.32 EPS and revenue of $2.81 billion and this quarter it’s all about how well they did or didn’t monetize mobile.

Facebook would not be Facebook without the daily dose of “I’m outraged because….” It’s the cool thing to do on Facebook, being outraged just for the hell of it. To generate page views, or likes, or sympathy, or conversation because people are “bored” at work. Outrage starts and culminates with this belief among rabid FB outraged users that together they can change the natural order of things thus renouncing the notion of “the way shit works.” Particularly monetary policy circa 2008.

Back in January 2012 Facebook data scientists altered the news feeds of 689,003 users with two parallel experiments conducted. Negative emotional content was hidden from the news feeds for one half with a flood of happy, good vibes, cuddle-all-the-stray-kitten news stories; and the other half had positive news stories suppressed with news feed stories such as Peter Schiff still-calling-the-next-market-crash-since-2008 dominating their news feeds.

Facebook has run these social experiments since inception to quantify online information diffusion among its user base. Twitter data is the same way, it’s collected and analysed. That will likely never change. But because users feel they are “lab rats” that’s when the wrath and furor of FB user erupted over Facebook conducting experiments with aggregated news feeds without users consent.

If you are a user of Facebook, then you are the part of the product. There are two options: if you are that insecure deactivate your Facebook account, or don’t let stuff like this upset you, I mean it’s the internet for crying out loud.

Facebook for all the bitching, has given users added controls over their personalized filters on news feed aggregation with the ability to unfollow “friends” from news feeds without un-friending. Facebook continues to tweak the user experience for the benefit of users and shareholders, which has outperformed the market this year.

So despite the constant crying targeted advertising has always been the name of the game even as social media users construct self-reinforcing/afirming filters.

Facebook will keep running experiments they just won’t shout it from the hills. Where else will users go? Back to Myspace or AOL chat?

In a social media world – particularly Facebook – all about clicks, and ad revenue, and mobile ad monetization, and the Kardashian sisters posting FB owned Instagram pics daily. It’s getting eyeballs to the screens and getting users out of their sycophantic universes engaged. In the words of Google’s Eric Schmidt, “The power of individual targeting—the technology will be so good it will be very hard for people to watch or consume something that has not in some sense been tailored for them.”

Should editors set the agenda for public discussion? Or do they simply help curate the best content, blog posts, or “BREAKING NEWS” out there and use size 80 font for “info you need to know now” with each “news” story an individual page for more clicks. (Business Insider and Buzzfeed are notorious for this).

It’s always been about the money, Facebook understands this, users do not. Everyone feels they are entitled to riches and attention and still go about venting their problems, complaints, wishes, and grandest aspirations on Facebook. But the truth is, no one has time for all that shit. Because the winners are rolling in the dough as the rest are scrounging around trying to make a dollar out of fifteen cents.

Some will say that our personal relationships change us far more than any “information” or FB news feed status’ we consume, so maybe we should really be talking about connecting people and not content.

For social media companies like TWTR and FB it’s a battle between the privacy of their respective social media users and the ambitions of corporations with that user data.

For users just because you have have something to bitch about on Facebook, doesn’t mean anybody wants to listen to it, or that anybody cares.

Filter that.

The Buzz About Bees: Don’t Blame The Farmers


IMG_2614Miami — Yesterday there was an op-ed in the NYT about colony collapse disorder and honey bee colonies, blaming excessive cultivation, monoculture, chemical use, and habitat destruction for the demise of European honey bees.

There has been a great deal of talk in the media recently about CCD, and the death of honey bees and life without them. Whole Foods Market tells us without bees, breakfast would be bland, lunch would be limited, and dinner would be dismal.

Last month President Obama created a task force to address the issue of honey bee health and other pollinators. The federal budget calls for $50 million to enhance research at the USDA, issue public-private grants, and double the number of acres in the Conservation Reserve Program.

The NYT author makes many assertions such as, “colonies dying in huge numbers — about one-third of hives collapse each year,” even though this contradicts the most recent USDA winter survey of US managed colonies losing 23.2 percent, down from 30.5 percent in 2012-2013.

According to the Food and Agriculture Organization of the United Nations, managed honey bee colonies have rebounded. Yes, typically every winter you get 15 to 20 percent die in a given apiar,y off but the numbers are consistent with a rebound in the number of bees.

European Union Beehives 2012 11965007
United States of America Beehives 2012 2624000
European Union Beehives 2011 11851378
United States of America Beehives 2011 2491000
European Union Beehives 2010 11457687
United States of America Beehives 2010 2692000
European Union Beehives 2009 11331199
United States of America Beehives 2009 2498000
European Union Beehives 2008 11597026
United States of America Beehives 2008 2342000

Winston further extrapolates a study done by his lab at Simon Fraser University in which, “farmers who planted their entire field would earn about $27,000 in profit per farm, whereas those who left a third unplanted for bees to nest and forage in would earn $65,000 on a farm of similar size.”

He does not state how many acres the sample farms were. He does not link to the data or study for a reference. NYT readers are to take his claims at face value.

According to the author “vast acreages of single-crop fields lack diverse flowering plants” well that is stating the obvious, the world has to eat. We have 7.2 billion hungry mouths to feed and world population projected to increase by 1 billion over the next 11 years, and reach 9.6 billion by 2050. That many people on the planet obviously requires farm land, and mono-cropping, and pesticides, and herbicides.  As long as farmers set crops they will use biological, insect and disease treatment technology applied to seeds.

Winston, without any reference, states: “a typical honeybee colony contains residue from more than 120 pesticides.”

Again, where is the data? As published in the New York Times, there is no data to support this claim, which readers deserve.

According to the USDA’s Pesticide Data Program, pesticide residues exceeding the EPA’s tolerance was detected in 0.53 percent (63 samples) of the total samples tested (11,893 samples). Fresh and processed fruit and vegetables accounted for 86.1 percent of the total 12,546 samples collected in 2012. How much of these pesticides are actually in beehives remains unclear, but it doesn’t stop the screams of bee apocalypse.

Bloodcurdling screams of “pesticides are the problem” time and time again are blamed for honey bee health. With 4 common subclasses listed below.

  • Herbicides – used for the control of weeds and other plants.
  • Insecticides – used for the control of insects (Hessian Fly in wheat, Earworm, root aphids in corn as examples).
  • Fungicide – used for the control of fungi.
  • Nematocide – used for the control of parasitic worms.

You have to really wonder why famers literally spend tens of thousands of dollars on pesticides if they are proven to be ineffective or simply don’t work.

One has to ask is this all BigAG, Monsanto, Dupont, Bayer, and GMO crops fault? Hardly. Don’t blame the farmers. In 2011, 408 million acres in the United States were used for crop production. In 2011, 84 million acres of corn were harvested, 73.8 million acres of soybeans, 55.7 million acres of hay, and 45.7 million acres of wheat was harvested. Corn, soybeans and wheat are all self-pollinated crops. World production of wheat this year is projected at 705.2 million tons.

This still does not stop the cries for the EPA to ban all neonics or Monsanto being the root of all evil. The regulatory approval process often requires that the AG industry fund studies by independent researchers. The industry has no control over design of the studies or reporting of results. But yet the fact that BigAG funded the study will be cited as a reason for doubting it. It is absolutely diabolical.

Winston blames monoculture. When you grow large fields or orchards of fruit or nuts — apples, blueberries, peaches, almonds, natural pollinators can only pollinate a small percentage of the flowers, which is why we need the honey bees. He correctly points out that commercial beekeeping puts a tremendous amount of stress on colonies. Yet it’s what keeps the beekeepers in business at $150 a hive to the almond grower.

Uncapped honey

Uncapped honey

Every year from Valentines Day until March more than 1.5 million of the nations 2.4 million commercially managed bee colonies are trucked into California’s San Joaquin Valley to pollinate the almond trees. It truly is quite the sight. Without the bees, there are no almonds.

It takes over 1.5 million colonies of bees to pollinate 840,000 bearing acres of almond trees, which produced 2 billion pounds of nuts in 2013. Almonds are California’s number one state agricultural export in 2012 valued at $2.5 billion. 3 billion bees produce $2.5 billion in added value to California’s economy… not bad.

Honey bee on mustard plant

Honey bee on mustard plant

Winston implores America’s farmers to plant a variety of wild plants alongside their vast fields of corn, wheat, and soybeans. There are also calls for Almond growers to apply fungicides in late afternoon or evening as almond pollen is released in the morning and bees forage the pollen fairly quickly. There is no challenge issued to all the “environmental experts” out there who drive their Prius’ and Teslas and are very smug about their carbon footprint and contributions to nature.

On the same token there is no challenge to America’s homeowners associations. You know, just for arguments sake, the obnoxious amount of “wasted land” on half acre to an acre lots mandated by HOA’s that requires perfectly manicured fescue grass — which absolutely has zero nutritional value to honey bees for nectar or pollen.

White oak hydrangea

White oak hydrangea

Winston also challenges our “regulatory authorities” that they require studies on how exposure to low dosages of combined chemicals may affect human health before approving compounds. Fact is, there is a glaring lack of reliable data as most lab analyses are conducted near the detection limit allowed by the EPA and for only few crops.

The point is simple: if we are going to blame the farmers, blame the AG companies, blame crop science corporations — which have vastly improved crop yields over the years, or blame neonics, then we should also blame ourselves.

It’s not easy being a bee. It is relentless hard work. Bees in the summer will literally work themselves to death, living an average of just one month. Bees also face a multitude of viruses, pests, and pathogens — including but not limited to: Acute Bee Paralysis Virus (ABPV), Israel Acute Paralysis Virus (IAPV), Deformed Wing Bee Virus (DWV), American Foul Brood (AFB), Chalkbrood, Nosema, Varroa Destructor, Tracheal mites, Small hive beetles, and Waxworms.

They don’t fly when it rains or when its cold which is why preparing a hive for overwintering is of critical importance.

IMG_2600Winter is the most difficult time for bees. This is the time of year most losses occur either though ignorance or bad management – hives that are left to the own typically do not survive winter. Either the beekeeper has stolen winter stores (honey), did not perform proper fall disease and pest management, or left the hive unprotected from the elements and then wonders why they have a dead hive come spring.

Honey extraction and starvation go hand in hand. Bees need between 80 to 100 pounds of honey to make it though the winter. There is nothing sadder than opening a hive in spring and finding a dead pile of bees because too much honey was taken from the hive by a beekeeper.

Wet hives are a big resounding NO. Condensation and bees don’t mix. Bees can tolerate cold temperatures but they can not tolerate moisture in the hive. Other factors contributing to honey bee health are nutrition of gathered pollen (aka bee bread), stock improvement (genetics of the queen bee – a weak queen going into winter has a 50/50 chance of not surviving — thus the importance of re-queening), and pest/disease management as noted above.

Winston says chemical use and habitat destruction eventually destroy the very organisms that could be our partners and that we have to maintain a balance with nature. Broadly casting “chemical use” is a bit of a stretch. Try feeding the world on 100% organic it is impossible to accomplish.

Made possible by bees

Made possible by bees — yes my hives :)

So while we can all drive around in our eco friendly Prius’ and bash on the “un-sustainability” of modern agriculture blaming the tireless working farmers of America blame Monsanto, Bayer, Dupont, or wonder who will save the bees — they keep working, foraging the fields for pollen and nectar; just as the farmer runs combines picking wheat and soybeans long into the night. And they never stop. Because survival of the colony is all that matters.

Because like it or not it truly is a bees’ world. We just live in it.


The Problem With EU Banks

Zurich July 10, 2014 – New worries. “Rekindled euro fears.” Same old story recycled du jour. Espirito Santo International, the parent holding company of Banco Espírito Santo, delayed interest payments on some ST debt securities. Now questions have been asked about accounting irregularities at the former. Small wonder.

Same old story. New “worries” about the EZ financial system and its vulnerabilities to shocks — weather is be missed debt payments, or prolonged deflation — or lack of transparency on the corporate structure of a privately owned holding company.

Will this be the camel that breaks the camels back, causing mass hysteria and panic around global markets?

For the macro following crowd, the banksters-are-at-it-again-crowd, sure. For the price action crowd, unlikely — as its just another day on planet earth, and all this EZ / EU is just useless noise.

Already this year European banks have been laggards. Deutsche Bank, Barclays, BNP Paribas, Societe Generale, Credit Sussie, among others have struggled. FICC revenue across the board has been absolutely horrendous. FICC and bond trading desks continue to close up shop, and turn focus towards investment banking, catching the M&A wave.

ECB President Mario Draghi in June announced the suspension of the sterilization of the ECB’s SMP and introduced a series of targeted LTROs amassing €400 billion — in an effort to support bank lending.

Draghi encouraged countries within the EZ to continue to do structural reforms, and work down debt. Draghi noted that LTRO counter-parties would be entitled to borrow at the first seven percent of the total amount of their loans to the euro area non-financial private sector, excluding loans to households for house purchases.

There is only so much the ECB can do to battle deflation. The euro zone is already working against demographics that aren’t in their favor. There’s only so much those “rekindled euro zone fears” can do to restore confidence in the EU when seemingly there is none.

Bank lending facts don’t change in good times or in bad. Banks make loans to make profit. No bank, at least a well-managed one, is going to dish out cash Oprah Winfrey style, there has to be some ROI on the loan.

  • Banks that are capital impaired and damaged do not lend.
  • Banks rocked by allegations involving its dark pool typically par back.
  • Banks that are told to recapitalize and wind down balance sheet risk don’t lend to high-risk persons, or high-risk SMEs.
  • Negative interest rates can be viewed as a tax on bank reserves.
  • Banks facing penalties on an unknown scale from regulators, the US DOJ, et al do not lend.
  • Banks in the periphery, where LTROs are specifically targeted, are unlikely to increase lending to SMEs, and already over-indebted individuals.
  • Most European banks are bent on slimming down their balance sheets. Likewise, businesses facing lagging sales, falling prices, and stagnant wages don’t borrow or hire.
  • Businesses that are over-indebted don’t borrow from banks.
  • Businesses that don’t trust the banks do not borrow from banks.
  • Businesses that don’t believe there will be an increase in sales do not borrow from banks.

High debt – both sovereign and personal. High unemployment. Weak economic growth. Deflation. The preverbal “wall of worry” that’s always been there.

Carry on.

China Manufacturing PMI Hits 50.7

Frankfurt — The official HSBC China Manufacturing PMI posted 50.7 in June, up from 49.4 the prior month — signaling the first improvement since December 2013. A reading above 50 is “expanding” while printing below 50 is contraction. China hobbles along.

The official purchasing managers index hit 51 in June, up from 50.8 in May.

Output rose for the first time since January with the rate of growth the quickest since November 2013. According to those surveyed, improving market conditions helped boost sales.

Manufacturing employment decreased, but at a slower rate. New orders increased to 51.8 in June, at the fastest pace since March 2013, now at  a 15 month high — meanwhile export orders fell, meaning the uptick was domestic demand driven.

Releases are of course to be taken with a grain of salt — as every uptick is viewed as “signs of life” and every downtick viewed as an impending “collapse.”

PMI expanding is a good thing with emphasis on stronger demand; fiscal and monetary policy will likely remain accommodative in China.

That said, there are – as always – downside risks with China’s wobbly housing market. New home prices fell for the second straight month in June, as property developers cut prices. The average new-home price fell 0.5% in June from May, and prices fell 0.3% in May from April.

Beijing average new home prices fell 0.6% from May. In May PBOC urged commercial banks to increase and prioritize lending to first-time home buyers. This suggestion by the PBOC comes at a time when commercial banks with operations in China are increasingly cautious about lending to developers or home-buyers.

Chalk it up to tighter financing conditions in the back half of 2013 (my opinion) –property overbuilding, and increased developer leverage — which made the housing supply/demand picture murky.

The HEAT Must Win Game 4

LeBronMiami, FL — Down 2-1 to the San Antonio Spurs, the Miami Heat must win game 4 tonight or face nearly impossible odds of repeating as NBA champions.

Tuesday night the Heat got obliterated and embarrassed at home losing 111-92 in a game in which the Spurs offensive execution was nearly perfect; in a flawless display of beautiful team basketball the Spurs scored 71-points in the first-half, on 75.8 percent shooting.

Kawhi Leonard scored a career-high 29 points and outplayed “the greatest player on the planet,” in LeBron James – who scored 22 points, had 7 turnovers, and looked tired all game.

But it wasn’t just James who had a bad game. Chris Bosh who had scored 18-points in game 1 and 2 was limited to just 12 touches, scoring 9 points on 4-4 shooting. Bosh must be more involved offensively if the Heat expect to have any hopes of tying the series up at 2-2. Nine points from the starting center of the defending champion Heat is unacceptable.

Against the Spurs, the margin for error is ever so slim. Tuesday night the Heat weren’t out in transition. They had defensive miscues, they didn’t guard the rim — they got beat off the dribble letting Tony Parker and Lenard drive into the paint at will. They had lazy close-outs to perimeter shooters. They had late rotations. They came out with no sense of urgency or intensity. That might be fine against crappy inferior Eastern Conference teams, but against the Spurs – the Western Conference Champions – a half-assed game, with lackadaisical effort on both ends of the court is not going to cut it. Not in these Finals.

The Heat must play all 48 minutes. But they have their work cut out of them.

The Spurs are disciplined. They have reliable perimeter shooting in Danny Green, Kawhi Leonard, Manu Ginobili, Patty Mills, and Tony Parker. They have superior offensive execution. They have the greatest power forward in NBA history in Tim Duncan. They are relentless and team oriented. They have role players who set up when they are needed most. The Spurs bench is outscoring the Heat bench 100-55 in the Finals.

Through three games, the Spurs as a team are shooting 53.3 percent from the field. Four Spurs players are shooting better than 59 percent through the first three games. Tiago Splitter (8 for 12, .667), Tim Duncan (20 for 31, 64.5 percent), Danny Green (14 for 22, .636 percent) and Kawhi Leonard (16 for 27, 59.3 percent).

MarioTroubling for the Heat, Mario Chalmers has been anything but super in this series and for much of the playoffs (6.4 points playoff avg). Tuesday night the starting point guard was 0-for-5 shooting scoring just two points and racking up 4 fouls. In the Finals, he is averaging just 3.3 points on 25% shooting. Chalmers has more fouls (12) than points (10) in the Finals.

If the Miami Heat are to win tonight, Chalmers must bounce-back offensively and stay out of early foul trouble. Backup PG Norris Cole is not built for big minutes and he is also struggling offensively. Chalmers and Cole are a combined 7-for-27 shooting in the Finals, including 2 for 11 on three-pointers.

Apart from Ray Allen – with 36 points – in three games, the rest of the Heat bench has only managed a pathetic 19 points combined. Cole, Allen, and Birdman are the only Heat reserves getting minutes. Battier, Haslem, Beasley, and Oden sit on the bench and rot with time.

Bench production favors San Antonio in this series by miles. The Heat roster is too top heavy relying on James, Bosh and Wade to carry the load. And when any of the Big Three have an off night offensively? Forget about it…

No team has even come back to win the NBA championship when down 3-1, and scrapping the 2-3-2 format it would be an insurmountable challenge to win 3 straight and 2 in San Antonio if the Heat do drop game 4. Tonight is must-win for the Heat.

LeBron1The bench must be productive. The tandem of Cole and Chalmers must contribute. The defense has to be there matching the Spurs with every step. No possessions off. No lazy close-outs. No giving up wide open 3’s. The Heat’s lack of depth has been glaring these Finals. With no production from the bench, sans Ray Allen, it places too much of a burden on the big 3, Lebron James specifically.

The NBA playoffs are where reputations are made. Some players wilt under the pressure while others thrive on it. The truly great ones have the inner drive that just won’t let them let down — to do it night in and night out, and year in and year out – carrying the hopes, dreams, and high-expectations of an entire city on their back.

We need you Rio.

Win, or lose, don’t go out like this.

Ester George On The Path to Normal

June 3, 2014 — Kansas City Fed President Ester George today gave a speech, “The Path to Normalization” in Breckenridge, Colorado today.

Stating her views on the economy: gradually returning to normal; businesses reluctance in terms of capital spending; tight fiscal policy, consumer borrowing increasing, and the high cost of college tuition.

George stated it would be appropriate to raise the federal funds rate sooner than consensus and at a faster pace. George’s concern of course is what many have been concerned about: incentivizing financial markets and participants to “reach for yield” – duly noted by John Hussman – posing risks to growth over the long run.

George also noted the elevated unemployment rate of 6.3 percent and vaguely touched on “adjusting the stance of policy” and tools such as IOER, and the level of reserves in the banking system – used to bring the fed funds rate to its target – again a very vague “target.”

As Ester George observes, today, the Federal Reserve’s balance sheet is approaching $4.5 trillion. Banks hold about $2.7 trillion in reserves, compared to only around $10 billion prior to the crisis.

“I think allowing the balance sheet to decline due to “passive runoff,” which stops reinvesting the maturing securities, prior to the first rate hike is appropriate. As the outlook improves, this modest step would begin the normalization process and is in line with the 2011 principles. Unless there is a major change in the outlook, I see abiding by principles that the FOMC reaffirmed last year as important. Central banks should make efforts to follow through on their plans, otherwise they risk losing credibility.”

All of which are concerns and the Fed “sending the appropriate signals and communicating” tightening policy – something that a few market participants have gotten wrong which only exacerbate instability.

Reserve draining and how the Fed goes about execution will pose much greater challenges – in my view. As NY Fed President Dudley noted in a May 21, 2014 speech. Specifically, the massive footprint the overnight RRP facility will have in terms of volume.

“The Path to Normalization” all revolves around reserve draining, a daunting task for the Fed and the banks now inextricably linked to reserve draining. All in a chaotic tango smattering of commercial banks, money market funds, and the Fed – working to reestablish much tighter control of the fed funds rate, and other market rates – rates that are under direct control of the Fed.

Weather the economy moves back toward more-normal conditions, or how the outlook shapes up ISM screw up notwithstanding, monetary policy and the challenges of meaningfully hiking the funds rate – something I don’t see happening in 2014-15 – is anything but normal.