From Tragedy to Business Models

The tragedy of San Antonio this week got us started thinking in some unusual ways as we looked at causes of – and future implications – of human trafficking.

People will go to great lengths to move to new areas.  Maybe there’s a business model in that?

Toss in the ChartPack and some headlines, and it’s all a mid-week brain-food stew.

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Housing RIPS!

Just in from S&P/CoreLogic:

NEW YORK, JULY 25, 2017 – S&P Dow Jones Indices today released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices. Data released today for May 2017 shows that home prices continued their rise across the country over the last 12 months. More than 27 years of history for these data series is available, and can be accessed in full by going to www.homeprice.spdji.com. Additional content on the housing market can also be found on S&P Dow Jones Indices’ housing blog: www.housingviews.com.

YEAR-OVER-YEAR   The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.6% annual gain in May, the same as the prior month. The 10-City Composite annual increase came in at 4.9%, down from 5.0% the previous month. The 20-City Composite posted a 5.7% year-over-year gain, down from 5.8% in April.

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Seattle, Portland, and Denver reported the highest year-over-year gains among the 20 cities. In May, Seattle led the way with a 13.3% year-over-year price increase, followed by Portland with 8.9%, and Denver overtaking Dallas with a 7.9% increase. Nine cities reported greater price increases in the year ending May 2017 versus the year ending April 2017.
The below charts compare year-over-year returns for Seattle and Portland with different ranges of housing prices (tiers). Upon tier level analysis from 2011 to present, both Seattle and Portland’s year-over-year returns show housing prices in the high tier to be the most stable while housing prices in the low tier are the most volatile.

Let’s look at the price chart:

S&P/CoreLogic then offers this…

ANALYSIS
“Home prices continue to climb and outpace both inflation and wages,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Housing is not repeating the bubble period of 2000-2006: price increases vary across the country unlike the earlier period when rising prices were almost universal; the number of homes sold annually is 20% less today than in the earlier period and the months’ supply is declining, not surging. The small supply of homes for sale, at only about four months’ worth, is one cause of rising prices. New home construction, higher than during the recession but still low, is another factor in rising prices.
“For the last 19 months, either Seattle or Portland OR was the city with fastest rising home prices based on 12-month gains. Since the national index bottomed in February 2012, San Francisco has the largest gain. Using Census Bureau data for 2011 to 2015, it is possible to compare these three cities to national averages. The proportion of owner-occupied homes is lower than the national average in all three cities with San Francisco being the lowest at 36%, Seattle at 46%, and Portland at 52%. Nationally, the figure is 64%. The key factor for the rise in home prices is population growth from 2010 to 2016: the national increase is 4.7%, but for these cities, it is 8.2% in San Francisco, 9.6% in Portland and 15.7% in Seattle. A larger population combined with more people working leads to higher home prices.”

Futures holding Dow +102 after data release…

Fed Meeting

The Federal Reserve meeting gavels in this morning and tomorrow afternoon (2 PM’ish EDT) we will hear their decision.  Frankly, though, we are not expecting an increase.  Instead, we will be looking for a Fed Statement that will encourage, rather than discourage markets.  The Fed, by all appearances is open to more market gains (and needs them) to keep sopping-up the additional “money” being created as we noted in Monday’s discussion of the H.6 Money Stocks report.  Pedal to the metal, Janet…you go girl.

Irrational Consumerism

Here we go, once again, with another fine example of how the American Consumer has pretty much no senses whatsoever.

We’re reading reports like this one that the 2018 Ford Mustang will be able to hit 0-60 speeds in less than 4 seconds.  While that’s grand – for an ICE-powered rig, we note that the Porsches have already been there and the Tesla as I recall was in the 3.6 second range.

In a world of “specialization” we may have to bracket our thinking about cars:  Whether front-engine ICE (Mustang), rear-engine ICE (Porsches), or EV’s (Tesla).

In a world where the fastest highway speeds are 80 MPH, we wonder why anyone would pony up for more than economical transport (Nissan Versa, for example) or a luxury ride (like our old Lexus),

But given than Rachel Maddow is at the top of the TV ratings game now, the tastes and wisdom of the American Consumer have been called seriously into question….AGAIN.

The Daily Bash

Got another full load.  Now that the NE liberal press has managed to convince turncoat (mislabeled) repubnicians to pass on a $12-billion freebie for insurance companies, they’re on to the next target:  Attorney General Jeff Sessions.

Here’s an article for example hinting that Texas senator Ted Cruz might be named as Session’s replacement.  And that gives the CNN Trump Bask Department the chance to run Cillizza: Trump’s public bullying of Sessions is embarrassing.

I’m not sure how they figure:  Sessions wasn’t forthcoming and should not have recused himself…

Meantime, one of extremely bright readers offered this in our Comments section this morning:

George, last week you referenced an article about Sessions resurrecting the civil forfeiture laws, now I’m reading that Sessions is tying violence to marijuana and will be targeting grow operations even in states where its legal. Its to be rolled out July 27. Interesting timing on the forfeiture news last week. I wonder how states that are reaping huge tax revs from legal mj are going to act?

Enter: Reason #2 to bounce Sessions.  The Base doesn’t care if someone has a “recreational joint” (in the north) or “huffs a hogleg” (in the south).  If otherwise law-abiding, tax-paying, where’s the distinction between a joint and “two buck chuck?”  OK, one causes cirrhosis while the other has anti-cancer cannabinoids…  Illegal weed is at the base of the border coyote trade, too.

Sessions is edging toward sounding like a defender of the booze lobby status quo…

We note there is something of a well-rutted road from Constitutionalist to conservative republican, to office holder, to political leadership, to political sell-out.

The only way we can see Sessions redeeming himself would be for him to fire Mueller’s summer fishing expedition.  But because Sessions is something of as swamp-tender himself, we don’t expect him to step up.  At least that’s how it looks in the rational part of Texas.

Then there’s the WaPo going on to speculate that there may be some changes in the WH Communications office with the departure of Spicer.  Gee, really?

This last story is of interest from a news “propagation and analytics” standpoint because of how it spins up so nicely.  The incoming (whoever) will be able to pick who they want.  But emotionally hot terms like “Purge!” get used in the NELP (northeast liberal press) and pretty quick, the story is foreshortened from  “communications office” to “purge in the WH” – which is all part of the anti-Trump rhetorician’s plans, from the appearance (and regularity) of it.

Meantime, the POTUS ripped ol’ Barack for NEVER attending or speaking to a Boy Scout National Jamboree.  Not to state the obvious, be we think Obama had (and is still orchestrating) an attack on traditional American values.  Like strong borders…honest choice in healthcare…and MORE, particularly in gutting the military… but I digress.

Off in background: Those turncoat repubnicians who want Pence to step in and replace Trump should consider that would move up Paul Ryan to #2, which is about the last thing the country needs…

Zombie Healthcare Bill

And here comes one of the head zombies: GOP Sets Senate Health Care Vote Buoyed by John McCain’s Return to D.C..  Wonder how much this cost the healthcare lobby?  Still after their $12-billion, are they?

Anything “buoyed” by McCain – who we recall was peddling the crooked anti-Trump dossier – ought to be shit-canned immediately.  Repeal Obamacare, fix Medicaid and jail the person who said “You can keep your own doctor.”

We sadly note that McCain and is colleagues in the Senate are not in the “regular people healthcare cesspool” the rest of us.  They are “special” – just ask ’em!

If we want Legislation for the People, we need to put all lawmakers into Social Security (and no fat cat retirements) and into Medicare and make insider trading by members of congress a felony like it is for the rest of us.  Right now, it’s like electing a criminal family to make up rules.

Remember the card game TEGWAR?  That’s what Washington is putting out now that our Code of Federal Regulations is incomprehensively long.  Wikipedia on point:

TegwarBang the Drum Slowly (the novel by Mark Harris, also a film); it is a game basically designed to separate a sucker from his cash. The letters stand for “The Exciting Game Without Any Rules.” When the characters in the film play the game, they appear to be making things up as they go along.

So yes, TEGWAR is no longer fictional.  It’s the FedGov, Congress, the Obama implants and holdovers, the Neocons at State, and the self-running, self-watering, self-centered, self-assembling, and self-important FedGov all rolled into 100,000 pages of TEGWAR gibberish.

If government was honest, www.tegwar.gov would return more than  an error code.

(Say, my BP is coming up nicely, now…)

Economics, Ure and Simple

Remember Monday I was telling you how the Effects of FX work?

Dandy exemplification for Ure edjumacation in the markets today.

When I looked in on the futures early (think 5:15 AM) they were showing the dollar holding and the Dow futures up 25.

But then a funny thing happened that I captured in a screenshot for you:

Look what happened in the USD Index!  The chart shows the purchasing power of the USD dropped a good bit just in the past half-hour, or so.

Remember:  When dollars are worth less, it then takes more of them to buy an  asset of fixed utility value.  Think of stocks as apartment units.  They produce future “rents” in the form of dividends and price appreciation.

Well I’ll be a SOB:  The Dow futures popped up over 100 points.  Just like we would expect!

And this, as we told you, means that we may be through wave 1 up,  and the small sideways 2 (ending now by the look of the futures) and this should be the starting point for the wave 3 up thrust that should take us to new highs next week and into the middle of the month – and possibly our ALL TIME HIGHS for a Decade or Longer – in the coming month.

No, this is NOT FINANCIAL ADVICE.  Just a verbal between friends.  Though MUCH more serious with my online brokerage firm.  We are 10-trades into the year and 9 of them made money.  Not a lot, but enough :-) More than paid for the truck repairs I had done Monday, lol.

Fingers crossed?

Off to write a dandy article for Peoplenomics subscribers tomorrow – after the housing report.  Tomorrow’s subscriber feature?  Turning Tragedy into a Business Model.

Fed Week: Effects of FX

We think it’s a pretty safe bet that the Fed won’t raise rates this week when their decision is announced on Wednesday.  But it’s also clear to us that the Fed is definitely grinding its foot into the floorboard with printing to keep this ol’ pig of a market going up – for just a while longer.

As a result, we would look for the Fed, while not raising rates, per se, to perhaps indicate a “minor” change to their trading desk in order to move things gently toward the “detox” that will lead to problems as easy-money becomes less ease -ee.

Let’s look at some of the market drivers this week and you’ll see how FX (foreign exchange) is likely to be a big factor…

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Today, obviously, we don’t have too much economic news, but there is one hold-over item from last week to consider now that we are past the typical monthly minor manipulations that occur around options expiration (last Thursday for indices and Friday for stocks).

That is the Federal Reserve’s report called H.6 Money Stocks.

Unfortunately, while non-government agencies like the Fed talk a good gamer of Obamian Transparency, the fact is that the Fed Money Stocks report would be a lot more useful if it was published writ large with as much emphasis as it paid to the closing Dow.  Regrettably it is not.

What we note in last weeks data, however, is worth thinking about.


The date-wording of the top rate is important.  When they say
“TO June 2017” what they are really saying is “Here’s what we did in March, April, and May…”  Note that M1 was going up 6.7% (annualized).

The current information is in the lower part of this combined graphic to keep things simple:  Notice the date here is “ending July 10” and then look to the right where you’ll see M1 going up at a 9.3% rate (again, annualized).

If you’re a math genius, you will immediately see what we’re talking about:  the Fed has jumped all over the ‘money pedal’ and that likely accounts for MUCH of what we see as a market price increase.  Simply:  When more and more money is pumped into the system, a good portion of it will “leak” into the Stock Market and a rally will result.

The opposite will, of course, also be true.

When the Fed turns off the money supply, then we will see a decline, as well.  In our view of things, we are very close to a SIGNIFICANT MARKET TOP here.

While we have some colleagues who thing we are already there, we would direct subscribers to our Peoplenomics.com premium content to look at the 12th chart in Saturday’s ChartPack and compare the minimum forecast top (under Elliott fifth wave rules) and look at last weekend’s Peoplenomics Index number (20,260.57) and judge things for yourself.

Admittedly, our way of looking at things is different that most, but we continue to hold that an aggregate of multiple indices will always be more accurate assessing the social (and hence, investment) mood than singular indicators such as the Dow Jones Industrials which is a mere 30 stocks deep.

Consider Europe,  As Well…

In doing so, perhaps a mental exercises that I developed to help me quickly assess foreign exchange moves will help clarify why it SEEMS stock prices are down in Europe today.

Let’s begin with a box of “something fungible..”  It doesn’t matter whether it’s a box of wheat, oil, silver, gold, gunpowder, or Christmas tree lights.  Just a box of something that has intrinsic value.

Now we are going to “buy” that box with Euros.

Let’s say that Friday there were 1,000 Euros in all of Creation and the cost of the box was 1 Euro.  In other words, this box was worth 1/1000th of the available Euros.  (I know that would never happen in Reality, but this is a thought exercise and I’m making a point.)

Now fast-forward to Monday.  Only because of currency manipulations we find that there are only 996-Euros in all of Creation today.

What happened to the “price” of the box?

It went down.  That’s because we know that given static valuations, the price of the Box will be 1/1000th of all the Euros in the world.  But since there are fewer Euros, the price of that box will now be 0.996 Euro.

What has happened in Europe is the value of the Euro has gone up (it doesn’t take as many to “buy the box” today) and as a result, Euro demoninated “boxes” – which look a lot like stocks  – are down.

While is the underlying mechanistic explanation of what’s really going on behind the scenes when you read headlines like “High-flying euro pushes down European shares.”

Bet you feel better, and smarter, now!

Does it mean the US will go down today?  Yes.  That’s due to inter-market arbitrage and linked markets.

But while the US market may go down a bit, as we pointed out in the opening section, the US Fed (which will likely announce “No Change” on Wednesday) is printing for all they’re worth.  And making the money chasing “the box” become more plentiful, it means that higher prices are still ahead, more than likely.  But not without a short-term pullback to what in Peoplenomics’ world is a mid-channel trend line and what is in Elliott terms, a possible Wave 2 of V forming on the way to our August 21st region expected high.

We do note that other very savvy traders I know think we are in the final highs now, but in Aggregated Market Theory (which we invented), the large Elliott waves must be obeyed and it makes both time and price a bit more reliable than other methods.  But we won’t know for sure, obviously until we get to September.  So it’s a fun game to play: “Call the Market High.”

Balance of the Week

We will have a two-part regular post tomorrow as the Case-Shiller Housing data comes out.  The continuing low rates seem to be good for housing start data, but since we have been watching real estate prices  in a possible grand Elliott Wave 2 bounce from the 2009-2010 lows, and we see some softening in Western markets, it is possible that a topping process for Housing is starting to form at recent prices.

We shall see.

But there is some ancillary data and comments suggesting that cities where the minimum wage has been raised to $15 and such, may have priced “the help” too high and that may let “some of the air out” of the western tech- centric markets.  Again, we will await data.

Durable goods and International Trade data highlight Thursday and we finish the week with GDP…which should be instructive.

The market should be higher by now, but the abysmal mess in Washington as the Swamp Critters have done noting of substance (substance to us in healthcare reform and tax rewrites) we may see the Market Peak coming in at the low-end of expectations or even failing in its scheduled fifth wave up.

News to Blame It On

It’s always fun to see the headlines when markets are under-performing since people love nothing more than a good excuse.

In Europe see: French President Emmanuel Macron’s Popularity Is Plummeting.  Oddly, the French market is up today while the British market is down almost a full percent.

Baked Immigrants

We were appalled to learn of the deaths of illegal immigrants at the hands of human traffickers in San Antonio.  Nine dead as of this morning’s count.

But before you go getting political and hand-wringing over the need to “open our borders” consider this:  ENABLES SMUGGLERS’ Top Texas official blames sanctuary cities for deaths.  Liberal’s are going to applaud that view.

Today’s Homework Assignment:

Go read the story Robotic Process Automation Market to Reach $5.1 Billion by 2025, According to Tractica.

Then pencil out how many displaced humans are generated by $5.1 billion per year in robotic process automation.

Answers due by midnight, winning answers will show up in the Comment section.  (So will the losing answers, but then we really do walk the equality thing here…)

Dems “Kill the Golden Geese” Plans

Oh yeah:  Democraps are up to it again with plans to punish success in their lefty-leaning world as Democrats take aim at big companies in economic blueprint.

Oh yeah…WTFG:  Demonize success…the same weak-brained bullshit denying that there aren’t winners and losers in school is now being extended to corporations.

Who are these people and where are our Leaders who should be calling this out?

The only things that need to be killed to save America?  Prohibit lobbying in Washington – and make all legislative contacts with industry groups searchable online and in writing only.  Then maybe the Fools on the Hill will judge on merits, not political payoffs.

Oh, sure, no money from outside any political district, too…

Apply firmly and see Ure country evolve…

DON’T READ THE BILL

Even as LAST-GASP EFFORT? New health bill a mystery; Trump urges GOP action. we note that there isn’t enough time to give a thoughtful READ and ask INTELLIGENT QUESTIONS.

More important, WHO HID THE SAUSAGE WHERE? In terms of an unwarranted “bail-out” scam by the crooked insurance companies who have turned the FedGov into a captive payday-loan type collection outfit…  (but don’t get me started, lol)…

Third World Thinking:

Can’t Afford a Toilet? ‘Go and Sell Your Wife,’ an Indian Official Suggests…”

Monetizing the Weather

Think we’re kidding?  Here’s an inconvenient story that goes along with the narrative:  A Comic Strip Mirrors the Ravages of Climate Change.

If I could handle a pen and ink, I’d do the Daily Doofs strip.  Maybe teach people statistics in it…

Coping: With “Your Inner Tool Slut”

One of the things that makes us all ‘urban survivors’ is that we have an interest in self-determination.

Now, to do this at work is hard, which is why so many of our readers are into gig work, contract work, and consulting.  No boss means more fun….except that then come quarterly taxes, insurance shopping, and all that happy horse-dink…

But outside of work, the typical US reader actual does stuff so this morning a romp through some of the new tool offers at Amazon which struck me as pretty interesting…

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Fall is coming, so for $21 try a Greenworks 24012 7 Amp Single Speed Electric 160 MPH Blower.

I have a variable speed Toro and it was $90 bucks, so to find this one for $21 bucks shows you how value engineering is going.

Here’s another super deal: Westcott Titanium Bonded Scissors, Straight-Handle, Pointed Tip, 8-Inch, Gray/Yellow, 2 Pieces Per Pack (13901).

Why is it a deal?  Because it is $6.30 for two pairs.  How many times has the wife threatened you with celibacy over ‘borrowing’ scissors for shop use?  I’ve got this one solved now.  Elaine has three pairs in the kitchen (one for food, two general purpose) and I have ’em all over the shop.  (When I put a tool down, they immediately disappear and need to be replaced.)

Speaking of disappearing tools, sockets must have a secret hide-out somewhere in the woods.  So I’m looking at getting one of those wrenches which is ‘self-adjusting’.  One size fits a wide range of bolt heads.  Under $10 bucks is the BLENDX 7mm to 19mm Ratchet Universal Sockets Metric Wrench Power Drill Adapter Set – Professional Repair Tool.  Not if I use it, it’s not…

Now Let’s Talk Power Tools

I’ve already got a Dremel tool with a bunch of attachments.  But if you don’t have one, think about the WEN 2305 Rotary Tool Kit with Flex Shaft which is about $21 bucks.

Dremel, by the way, is out with a $25 lightweight cordless unit: Dremel 7300-N/8 MiniMite 4.8-Volt Cordless Two-Speed Rotary Tool.  Seems to get good reviews.

I should have been patient…  These rotary tools are really useful.  About twice a year I will find a problem where nothing else will do.  Example about three weeks back was the studio door.  Deadbolt was not engaging right.  About 2-minutes of rotary tool later, smooth as silk.

Must be something going around with locks and rotary tools this month.  Robin had the same problem on the door to his gazebo.  Weird coinkydink, huh?

No air compressor?

Well, if your main reason to have a compressor it topping off your bike tires, might want to look at the $59 Air Hawk Pro Cordless Portable Air Compressor, Easy-To-Read Digital Pressure Gauge.   Just be aware that the online reviews aren’t overwhelming on this one.  Harbor Freight has monthly specials in many of the home handy-bastards magazines and their pancake compressor (sure to wake the neighbors if you ride out at 6 AM) is often on sale in the $39 price range and will do real work when paired with a flex hose and something like the under $20 WEN 61720 3/4-Inch to 2-Inch 18-Gauge Brad Nailer.

I’m starting to look at my fall office remodel project.  Main reason for doing it is to make some wider counters for equipment and as long as I’ll be doing cabinetry and such, I may put in tile floors.  Lowes, now and then, along with Home Despots, occasionally have tile for under a buck a square foot.

As you remember, I did tile in the guest room/gym here and our SKIL 3540-02 7-Inch Wet Tile Saw ($89 and change) did a great job.  If you are planning to go into business, a bigger unit might make sense, but for the home projects, including a possible kitchen work-over here?  Plenty good enough tool.

A New Table Saw?

My current “Big Tool Decision” is what to do about a table saw.

I was spoiled by the Seattle Public School system back in 1961, or so, when Asa Mercer Junior High didn’t have metal detectors, but did have a huge, big deck cabinet saw in the wood shop.

This will make no sense to Millennials because we don’t let today’s sissified kids touch anything sharper than an Android.  But back in the day?  People like me made it through school on the strength of an A in woodshop to balance off the D in Spanish (which was from staring at Ms. Harvey’s physique…but a story for another day…)

Our current table saw is about five – maybe six – years old.  It was a Craftsman (Sears) but there are many parts about it that are disappointing.

Let me show you what I mean:

The top (lame) yellow arrow indicates that there is a sliding table extension which works OK.  Not real strong (as you’ll experience first-hand running 3/4″ Baltic Birch ply through it.

In the middle by the blade (left) take a yardstick (or a piece of scrap) and run it up to the saw blade.  Then look down the right side of the ruler/yardstick and you’ll find the “run in” from the table edge is only about 8-1/2 inches.  When you get good at woodworking (I consider myself on the path but not there yet)  you will want (or build, which is what this may come down to) either a sliding table OR you look for a saw with 12″ of more table in front of the blade.

Yes, it makes for a heavy table, but a good cabinet saw lets you set up precision cuts.

The bottom highlight is my last bitch about this Sears saw:  It has an aluminum table and there is an odd extrusion that your miter-gauge sits in.  OK, in theory?  Keeps the miter gauge from flipping out on a kick-back.  Keeps lawyers happy.  BUT the trade-off is when you hit www.rockler.com and want a different/better/upgraded miter gauge…it’s not going to fit!.

One more problem with the current saw:  The arbor (the ‘bolt-endy thing that the blade goes on) should be at least an inch and a half long.

This one is an inch – if that.

What this means is that when I am setting up dado cuts, I can’t go more than 1/2 inch – maybe 5/8ths at a time.  You want to do single pass dados because every time you set up a multi-pass dado arrangement, the precision takes a lunch break.

So far I haven’t replaced the saw.  Moving?  Well, if we do that, will I even need a saw?  Yee gads, man, this is a head trip.  But if no one buys this old joint at a friendly-enough price and we live out our days here, why not a first-rate saw?

The old saying “It’s a poor workman who blames his tools” is one of the BS lessons from previous generations that didn’t get down to micro traces on silicon.   1/64th of an inch is a concern to me.  1/32nd becomes a noticeable lack of skill development.  A 16th is embarrassing and an 8th is grounds for a recut of a new piece.  A quarter off?  Time to be counting fingers, about there.

I’m still waiting for the ideal saw to show up.  Would I like a high-dollar Laguna, Powermatic, or Saw-Stop?  Oh, sure.  But unless I were getting a hair up about building a new home from the foundation up, I just can’t see the payback on it.

You know that one, I’m sure.  It’s the Curse of the Tool Slut.

Even so, it’s more pleasant than thinking about all the work ahead this week…

Write when you get rich,

George@ure.net

Dumb Readers and Decoherence

Ure is in a sour mood this morning.  No, not your fault.  Mine.  Because I don’t administer an IQ test before letting people read this site.

It began  with a piss-ant troll commenting that “You were wrong” in yesterdays pre-opening comment.

Oh?

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WTF kind of loser would write that?  Sure, the Dow only went up about 20 points early, but the NASDAQ and the S&P (2,475.25 intraday) hit records. Record highs beget profit taking, but so what??  The run’s not over, as we see it.

Sadly, this person needs to GTFU and get some skin in the game. Obviously not a serious investor.  By the close of the market Thursday, one of my trading accounts was down $71.  I have spilled that much (back in the day).

And yes, markets will go down again this morning.  So what?

I’m not going to brag about how well I’ve done since the market lows in November – when our model correctly called a long entry – but we have lots of Peoplenomics subscribers up 30-40 percent in the period.

So a pleasant “If you don’t like our take on economics, don’t let the door slap your ass on the way out…

Sheesh.

Anyone who doesn’t understand that on a trading account you will have big up days (like +$800) and you will have some down days (like -$71 Thursday) needs to a) read some books, b) learn something about trading, and so forth.

This commenter has been banished from further remarks because we don’t tolerate bullshit or fools – or, in this case – the worst of both.

Decoherence and Markets

What is “decoherence?”

In quantum physics it is (write this down) the “resolution of superposition.”

Which relates to markets how?

We went in to the week knowing that we would likely be UP for the week.  But we didn’t know how much.

Why?  This is options expiration, of course!  Indexes expired last night and the underlying’s come off today.  Any trading difference can land in the pockets of the pros.

Now, I can tell you our latest estimates of how high (and how soon) specific indices will go, but in a sour mood (because of the aforementioned dumb-shit) I’m  keeping that for subscribers.

We use a proprietary technology to look at markets.  Last Thursday our U.S. Aggregate reading closed at 20,055.013.  As of the market close yesterday, we were at 20,273.881.  That is an 1.09133% gain in a week.

Now, if you have a modest trading account, with say $25,000, your account value would likely be up $272 and change for the week.  No counting allowance for income tax, exchange fees, commish and yada yada… But of course, no one will be exactly on the money.

That’s because of “trading noise.”  Sure, some will have done better, others will have done worse.  All depends on how you decided to play the trend.  If you played the Dow ETFs, maybe a bit worse.  Or in the Q’s?  Maybe better.

Markets are all linked.  But each specific market is subject to a “decoherence pop” where potential targets ‘lock’ due to noisy trading conditions.

For example:  While Bitcoins last week were in the gutter, we’re pleased to report BIC’s are fetching $2,764 now.  And, in my view, could set new highs in the coming month as the markets are due to roll up higher.  How do you say Mood Swing?

You see:  Everything runs (to some extent) in lockstep.  When there is an ebullient social mood, all assets rise.  When the mood shifts (as we expect it to this fall) we will expect to see ALL assets fall.

But they won’t fall in perfect lockstep – because of decoherence.  If you want to understand how trading works in the real world, read this whole bit from Wikipedia and learn:

“Quantum decoherence is the loss of quantum coherence. In quantum mechanics, particles such as electrons behave like waves and are described by a wavefunction. These waves can interfere, leading to the peculiar behaviour of quantum particles. As long as there exists a definite phase relation between different states, the system is said to be coherent. This coherence is a fundamental property of quantum mechanics, and is necessary for the functioning of quantum computers. However, when a quantum system is not perfectly isolated, but in contact with its surroundings, the coherence decays with time, a process called quantum decoherence. As a result of this process, the quantum behaviour is lost. Decoherence was first introduced in 1970 by the German physicist H. Dieter Zeh and has been a subject of active research since the 1980s.[1]

Decoherence can be viewed as the loss of information from a system into the environment (often modeled as a heat bath),[2] since every system is loosely coupled with the energetic state of its surroundings. Viewed in isolation, the system’s dynamics are non-unitary (although the combined system plus environment evolves in a unitary fashion).[3] Thus the dynamics of the system alone are irreversible. As with any coupling, entanglements are generated between the system and environment. These have the effect of sharing quantum information with—or transferring it to—the surroundings.

Decoherence has been used to understand the collapse of the wavefunction in quantum mechanics. Decoherence does not generate actual wave function collapse. It only provides an explanation for the observation of wave function collapse, as the quantum nature of the system “leaks” into the environment. That is, components of the wavefunction are decoupled from a coherent system, and acquire phases from their immediate surroundings. A total superposition of the global or universal wavefunction still exists (and remains coherent at the global level), but its ultimate fate remains an interpretational issue. Specifically, decoherence does not attempt to explain the measurement problem. Rather, decoherence provides an explanation for the transition of the system to a mixture of states that seem to correspond to those states observers perceive. Moreover, our observation tells us that this mixture looks like a proper quantum ensemble in a measurement situation, as we observe that measurements lead to the “realization” of precisely one state in the “ensemble”.

Decoherence represents a challenge for the practical realization of quantum computers, since such machines are expected to rely heavily on the undisturbed evolution of quantum coherences. Simply put, they require that coherent states be preserved and that decoherence is managed, in order to actually perform quantum computation.”

To reiterate:  When markets are in a period where a sudden decoherence will happen to many stocks and indices around the same time, you will see deviations from “normal” trading trend channels.  The way markets “pop” out of superposition is determined by things like solar influences (our Peoplenomics focus tomorrow) but even things like the weather, believe it or not.

On this last, if your trading education hasn’t taken you there yet, go read the David Hirshleifer and Tyler Shumway paper “Good Day Sunshine: Stock Returns and the Weather…” from 2001.

If you’re still skeptical, look into the work of Markku Kaustia (Aalto University School of Business) and Elias Henrikki Rantapuska (Aalto University) as they asked more broadly (in 2011) “Does Mood Affect Trading Behavior?”  From their abstract:

“The assumption that mood affects investors’ behavior in the field is gaining acceptance due to experimental studies and papers linking stock returns with environmental variables, such as weather and length of day. To identify mood effects this paper utilizes account level stock trading data from all investors in Finland, a country with significant variation in weather and length of day. While some weather-related mood variables and calendar effects are individually significant, little of the day-to-day variation in trading is collectively explained by all such factors. In contrast, we find strong seasonal lower frequency patterns that seem connected to vacations. “

Now, toss in space weather (specifically our Solar Cycle work out tomorrow in PN) and figure out the weather in the Northeast, a handshake or arbitrage and expiration dates and yeah, you can do OK.

Or, you can sit on your butt losing money and bitch because people who work harder than you make a lot more money.  You ever wonder WHY?

Mueller Goes Fishing

With nothing solid, but a lot of democrat/Obama sycophants on staff, we are not surprised to see that the ‘special persecutor’ is going down “We will find a problem, or make one” boulevard.

We are going from Russia emails to Miss Universe 2013 and God knows what next.

We ask – slightly tongue in cheek: Does Mueller have worms?

Meantime, still no sign that Mueller will go after Hillary on server data or on her setting up the Russia uranium deal for a payoff “contribution” to the Clinton Foundation which seems to us to be much easier proven potentially felonious behavior.

Will Mueller have the cajones to ask Untouchable Loretta about that PHX onboard will Slick Willy?

‘Course not.  The Swamp is in charge…and maybe Trump erred by not cleaning house at Justice, first.

It’s all theater, though, although we won’t name who we think it crooked.  There’s enough switchbacks it should be obvious, unless Ure blind.

Bash and Trash Dept.

President Trump’s Approval Rating Is Worse Than Any Other President At This Point.

TEAM TRUMP SHAKEUP: Spokesman resigns, more major changes loom.

BLOWN COVER CIA boss rips NY Times for exposing operative – but will anyone do well-deserved prison time for traitorous actions?  Likely not…such is double-standards America. Left journos get a pass?  Maybe on swamp missions…

And TRUMP’S SANCTUARY SETBACK SF judge refuses to reinstate executive order to block federal $$$.  But we expected nothing less than a regional court judge ruling from the bench for the whole country; he was, after all, appointed by Barack whozit of the Shadow Government/ liberals-in-exile.

All in favor of heaping the same levels of scrutiny, obstruction, general bullshit, divisiveness and malevolence on the next democrat president, raise your hands?

Ayes seems to have it…

Reverse Racism Dept.

NY Times reporter accuses white women of racism on city sidewalks.”

I Told Your: Friday Holds Little Meaningful “news”

Bag of NASA moon dust sells for $1.8M at auction.

Johnny Depp’s extravagant spending detailed in court documents.

Justin Bieber banned from China for ‘bad behaviour’.

Teens filmed, mocked and laughed while man slowly drowned.

Girl, 5, fined £150 for lemonade stand

And “Will Smith Says Seeing Star Wars for the First Time Was Better Than Sex.”  Might we recommend a good doctor for that?

Dow should drop 50 after the open…but the week is likely to still end up in the plus column overall… We’ll go over the Fed Money Supply numbers tomorrow on the Peoplenomics side and all will become clear and decoherred.

Coping: Golf, Cats, and Robots

You need to flip over first thing this morning to our Rural Pioneer (TM) website where Oilman2 has a dandy article worth a read: “Transhumanism, Robots, AI and Hopium.  Then go read his piece on tax burdens on working Americans. “Our American Burden” ought to raise your BP a few points.  OM2’s a great writer and we enjoy his contributions.

Meanwhile, back at the ranch, it’s been a while since we had us a simple chit-chat about the leisurely pace of life here in the Outback of East Textus (sic).  But seeing as there is no economic news to speak of, why not?  Markets hitting new all-time-highs is not economic news to us because we have been telling people for a year and a half it was coming. Let’s start with the ‘home nine-hold golf course” for openers.

We have been experiencing one of the nicest weather-years ever – our own climatological inconvenient “trute.”

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Our ‘groundskeeper’ has a minor surgery coming up, so we haven’t been able to get as much golf site work done as we’d have liked.

Still, when I went out Thursday to play “lawn boy” I took a pass at the first hole and I love the look of it.  Check this out:  This is the view from what will be the first tee:

About 160 yards down the middle (the property is about 600 yards wide) but as you can see, the “fairway” is not exactly fair.

I’m starting to ponder what kind of a green to put in down in this area.

The view (telephoto on, please) from the middle of the fairway back up to the first tee, looks like this:

A close inspection of “the rough” says it’s a bit too rough, even for Texas Rural Golf Rules.  These are the rules that among other things, requires at least one “snake gun” per player, and not more than two beers per hole per player, unless you’re a house guest and we’re shooting 18-holes of “Last One Standing.”

Another reason we will be “getting after” the rough is that we still have goat weed in places, and the one thing that grows marvelously in East Texas is grass.  Especially in a good, wet year.  Local hay farmers may get four cuttings this year.

By the way, since we are going to put this ol’ joint on the market here’s what the front looks like: This on 29-acres….

Park-like setting, we like to think.  At least when I don’t have the trash out for pick-up.  Or so says the delusional ‘lawn boy’ to keep himself motivated to sweat for a couple of hours.

Golf – Re-imagined

Although the body may be working, driving a riding mower is not exactly high brain-load work.  So I’ve come up with a number of improvements to Golf – the business model.

One of the problems I see with having our own course is that mowing it would be a beast.  Or a coyote, couple of possums, or whatever….

Thursday’s big EPIPHANY while whacking down the fairway was that once we get this sucker built out, it will be a nappy maintenance problem.  How to resolve that?

And Suddenly the Inventor Appeared (It’s really a book about TRIZ, the Theory of Inventive Problem Solving)!

Ideally, when done, we would have a couple of golf carts so people wouldn’t have to walk.  Big on lazy, we is…

Bingo!  I looked at the problem differently.  I could adapt a lawn tractor trailer to carry 2 to 4 sets of clubs.  Then everyone goes around the course on?

A lawn tractor (mowing as you go)!!!

Price check:  $450-$600 for a serviceable used on on Craigslist.  Golf cart prices?  $1,500 and up.  Batteries need a charger and that’s extra….

What’s more, there might be enough 12-volt power on the lawn tractor to run a small fridge…that translates extra cold beer.  A light rack (LED, home welding project) would let us shoot Night Golf and with helmets on to protect from dead-fall, Storm Golf.

Play a round (spring and fall) per day, and two people aboard 52-inch mowers, would mow 100″ inches per day – call it 8.3 feet.  That’s for 9-holes.  Play in reverse and now you’ve got 16 1/2 feet of fairway.  Tomorrow’s 18 will press it out to 33 feet…and playing four days a week makes for a mowed course that way.

Only about half the time, in good weather, would the course  be played in both directions.  Still, that means almost 50 feet of fairway mowing playing 18-holes, three-days a week.  Toss in another 33-feet, so now we’re up to 84 feet, call it, of “mow-as-you-go” golf.

No, this is not going to be a 6,300 yard monster course.  I figure 1,500 – 2,000 yards.  When done, it should measure about 11-acres of fairways…between our “tree farm” trees, of course.  This won’t be an uptown deal since we don’t have lebensraum course width, or prettified greens.  It will take real skill to play, though.

That comes from our understanding of the golf edict: “Drive for Show, Putt for Dough.”

Watched “The Morris’s on Amazon last night – story of the great golf evolution in Scotland…made me want to go saddle up for an hour or two a day to get this project moving along faster.

Fortunately, it was dark.

Guest Room turns to Home Gym

The back half of the guest room now features that Gold’s Gym that Elaine and I recently put together:

Pardon the mess here, but once I get the rack built for the free weights and kettle balls, Elaine ought to enjoy the heck out of it.

I’m doing 50-reps a day on  the lats, butterflies, leg extensions, presses, and so forth.  Toss in half to 3/4-mile on the treadmill and I should feel pretty good.  Hasn’t happened yet.

Not that it matters to the doctor, of course.  I’m sure when I go in for the next blood draw they’ll be trying to get me on another statin.  With residual foot pain (plantar fasciitis) from the last statin adventure, I’m inclined to stick to my own wellness management program except when a need a pill for pain or infection…

Cat Tales

Just about every pet owner is delusional (including us) in that we think our pets are pretty smart.

About a month ago, Elaine had just used the shower off the MBR and in walks Zeus the Cat.  A couple of perfunctory ‘meows‘ and into the shower he goes, lapping up the water.

Well, don’t you know:  Elaine got suckered in by this…took the shower wand off its holder and turned on a fast drip.  Z was in cat heaven.

Fully five minutes later, Zeus wandered out of the shower much happier.  Drink, paw at the water, sniff, drink more….

There is something about this cat – and I think he may be addicted to negative ions (which are released by falling water – he LOVES falling or moving water of any kind.

Here’s the problem:

Now when he comes in at 5 AM (to have coffee with me, I thought…) he chomps down some dry food and heads immediately for the…care to guess?

If I am not fast enough coming to turn on the shower for him he begins with a soft meow… if he’s thirsty, the volume cranks up cranks up quickly.

He’s figured that either Elaine will get up and turn on the water, or I will stopping messing about in the kitchen and come turn on ‘the spring’ for him.

Thursday morning there was a new behavior:  Now, once he is done with the water-drinking, he lays down next to his private ‘river’ in the shower and goes to sleep.

For now, I’m letting this go as “cute” but one of these mornings….well, you know what I’m thinking.  Slide doors closed, turn on a lot more than a drip…  Maybe when fall rains show up…

Cruelty to animals?  Make room for the PETA protesters…

Cat Psychology note: I’ve notice that when Zeus begs (or shakes) he always does this with his left paw.

My sense is this cat is left-handed…and since lefties are pretty good at math, I’ve set out a couple of derivative equations for him to solve before I feed him again.

Elaine’s more a pass/fail pet owner and she’s never flunked one, as far as I know.

Seriously, if you want to train a cat, clickers seem to work better than words…possibly because they might be able to count clicks and associate a numeric with a reward.  Maybe we can learn something about Catificial Intelligence?

Write when you get rich.  the lawn boy has a string trimmer on hot standby…

George@ure.net

Waxing My Crystal Balls (…ahem…)

It isn’t that hard to see the future, at least when it comes to markets and where we go next.  There are a lot of tools that even us “small fry” investors can use to improve our odds, but a surprising number of people seem content to make a single decision and hold with a position through thick and thin, with the off-base thought that things will average out in the end.

Sure, it is nominally true, but buy and hold from the market peak in 1929 would have killed your family fortune.  The stock market didn’t recover from the 1929 debacle until the 1950’s.  From the market peak on 9/3/1929 at 381.17, we went down like crazy and it took a world war and more than 20 years to claw back up.  On December 31, 1949, for example, the market was still down at 200.13.  Buy and hold disaster example #1.

A further example may be found – more recently – in broader indices – as well.  Take the S&P:  Bought at the top of the Internet Bubble (March 24, 2000 and 1,527.46, your portfolio could have languished until July 6, 2007 when the S&P again crested 1,530.

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All of this is mentioned because we should still have about one more month to the upside – and maybe longer – before we get to the next significant market high.  And, along the way, we anticipate some short, sharp sell-offs that we plan to play using the trading strategies discussed over on the www.peoplenomics.com site.

And although I almost pulled the trigger on an exit from a significant long position Tuesday, that order was canceled a few minutes before the open, and as it turns out, that was a very good decision.

Our crystal ball is far from perfect; if it were better I’d be aggressively playing options again.  But we have come up with a grand new Big Picture tool and we’ll reveal that for PN subscribers Saturday.

In the meantime, we should trade sideways, and maybe give back a few cents today, but this view I shared a week or three back has filled out exactly as expected, except now we are almost up to the top of a trend channel where the short, sharp reversal should happen within two weeks and then up we should go toward the final highs.

I won’t go into a lot of detail about this chart (that’s for the paying folks in the front row over at Peoplenomics) except to say this is the daily chart of our unique Aggregate Index and using it, we can pretty clearly see how we can go sideways for another three or four weeks and then go short.

But the new “timing tool” we’ll discuss this weekend ought to augment our timing a fair bit.

Buy and hold is great, if you are young, inexperienced with trading, and so forth.  While we don’t offer financial advice, I don’t mind sharing (after the fact) how we play things in our own accounts and we do put a fair emphasis on understanding how to grow wealth in under a wide range of economic conditions we’ve covered here in the last 20 years.

But Don’t Trust Me

Trust genius.  A good starter is “Bill Gross warns of recession risk if highly levered economies hike rates.”

The government – or the non-governmental Fed if you want to look at it that way – has gotten itself in a pickle.  If they raise rates, that will change the forward-earnings calculations and the market will expect higher returns from stocks.  Problem:  There’s ain’t none.

You see (if you’ve never managed a P&L – profit and loss ledger) there are only so many ways to kick-up profits.  You can increase sales or you can decrease expenses.  Since well-run companies are doing this all the time, the major driver becomes generic economic growth.

While the Housing starts Wednesday were OK, the problem is that with our massive change in tolerance for a wider assortment of genders and relationships, family formation – and birth rates are down…

This gets me to a familiar Peoplenomics topic.

The Vlad and Donald Story

There is a very useful story on point over in today’s NY Times.  The problem is that you have to read the whole story to get the economic  tells that are useful when framing a worldview.

The Times went with the angle on how president Trump would not have hired attorney general Jeff Sessions if he had known in advance that Sessions would have recused himself from the Russian email silliness.

But down in the body copy of the Times interview with Trump, we read this which is far more important to framing an economic worldview:

“Describing a newly disclosed informal conversation he had with President Vladimir V. Putin of Russia during a dinner of world leaders in Germany this month, Mr. Trump said they talked for about 15 minutes, mostly about “pleasantries.” But Mr. Trump did say that they talked “about adoption.” Mr. Putin banned American adoptions of Russian children in 2012 after the United States enacted sanctions on Russians accused of human rights abuses, an issue that remains a sore point in relations with Moscow.”

Now the explanation:  This is absolutely critical because adoption is part and parcel of economic growth through immigration.

As we have modeled on the Peoplenomics side (more than a year ago, in fact) the way countries are trying to “buy some future growth” is by embracing immigration-based growth.

The Obama administration, for better or for worse, pushed open borders because it is a BUSINESS MODEL for democrats.  People come into ‘Merica, register and next thing you know, a generation or three of solid demos.

The republicans have a different idea:  They want to work on the utilization and innovation side.  Onshoring may help because it will slow the Balance of Trade disaster and because reindustrialization would be a jobs bonanza at home.

The problem is NEITHER PARTY has communicated this Reality to the voters.  Instead, arriving at this view doesn’t occur until you methodically look at how our favorite (ex?) commie, Angela Merkel has sopped up “growth” for Germany by brining in more peeps.  So has France, a lot of the Scandahoovians, and so forth.  The UK BREXIT, on the other hand, is in our view part cultural memory (the Crusades and kicking Muslims out of Europe once at a great price) and partly because the UK is about up to hear with socialism, especially of the sort that is unelected – exactly why the Brussel’s Sprouts earn the label megalomaniacs in many columns.

Brink-of-War moments – like the Ukrainian mess and the Russian moving into Eastern Ukraine – would likely never have happened had the Sprouts not spouted off about a European Unions “spanning from Portugal to Vladivostok…”   Which was a shocker to Putin and Russia.

In the large context, this worldview also explains a lot of other differences between the U.S. and Russia.  The Russians are less tolerant of LBGTQR (whatever) than we are because they know the straight people actually produce offspring at a higher rate than same-sex marriages.  No, I’m not saying sperm banks don’t work, but run the numbers yourself and you’ll see it in a flash.

As we go into additional earnings reports today, here’s the simple metric we’ll be looking at:  We expect that the winners in terms of gains in profitability will be those firms that have made the most effective use of ERSP and business process re-engineering.

That’s fairly simple to do with financial outfits.  Stick an SIVR phone system ahead of a massive SQL ERP platform and who needs the humans?

On the other hand, the high-human-density firms are more problematic and their optimizations are more difficult to implement.

This should apply – but we’ll see how much today and tomorrow  – as “Futures flat as investors await earnings deluge.”

Philly Fed Outlook

Just out:

“The index for current manufacturing activity in the region decreased from a reading of 27.6 in June to 19.5 this month (see Chart 1). The index has been positive for 12 consecutive months, but July’s reading is the lowest since November. Thirty-seven percent of the firms indicated increases in activity in July, down from 42 percent last month. The shipments index decreased 16 points, while the new orders index fell 24 points. Nearly 31 percent of the respondents reported a rise in new orders this month, down from 45 percent in June. Both the delivery times and unfilled orders indexes were positive for the ninth consecutive month, suggesting longer delivery times and increases in unfilled orders.”

45-minutes before the open, the Dow was up 25, with more upside this week as we should come very close to the top of our trend channel.

Bash du Jour

The award today goes to CNN for “Trump’s first six months in office: 991 tweets and 0 pieces of major legislation.”

As we’ve said before, Trump is going “consumer direct” with POTUS comms and that could lead to collapsing news networks fueled by little more than bizarre stories and Gollywood tripe.

Al Gore: Unrepentant Climate Sales

Time has a Gore spew here: “8 Questions With Al Gore.”

Like ‘old-time religion’ the soft-ball questions get to such important things as what can an individual do?  Rather than coldly looking at the data and wondering “So, what about that audit that shows virtually all of Climate Change is due to unwarranted statistical “adjustments?”

Climate change?  We think snow job.  We observe that Time didn’t ask about the Biggest snowfall in decades blankets Chile’s capital. ”

We will have to lump climate in with religion and politics as a total waste of time if you’re talking to a True Believer of any persuasion.

As of this morning we are christening Mr. Gore The Climate Lama.  (The “Hot Pope” and “Cardinal Heat”  didn’t test well with our focus group which consisted of Zeus the Cat…)

OK, time to gas up and become a lawn boy…more on the ‘morrow or moron tomorrow…we can never be too sure.

Coping: The New Doom Porn: Robotics & AI

If you’re going to be an urban survivor, you are going to have to “keep an open mind, but not so open that your brains fall out.”

Since 1997, we have been “calling it like we see it” when comes to market, tech, and futuring.  We’ve used all kinds of tools to get there, but when comes right down to it, the best “Future Detector” there is has already been installed between your ears.  The problem is that few people take the time to update their personal operating systems (uploading new knowledge) to deal with new information that moves the future around.

So this morning, a short survival course on  how to realistically assess the future.

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We raised a very interesting notion in the Peoplenomics.com report for subscribers Wednesday:  “Will AI Kill Markets?”

This is not idle speculation, as indeed, the process is already underway and has been since the 1990’s.

If you’re a young investor (like our reader Millennial Caller, for instance) you may not be old enough to remember ‘back in the day’ when the NYSE published program trading statistics.

When I first started watching the markets, the program trading was less than 10% of NYSE volume.  But since rudimentary (Big Data) AI is a feedstock of quantitative analysis, we can rest semi-assured that the investment question is quite real.

On the other hand, great promoter’s pronouncements about the danger of AI may be overblown a bit.  I’m talking here of people like Gates and Musk and all the others who are worried that AI will eat our lunch.

These people need to get out more.  One of the reminders that slapped us ‘upside the head’ coming back through the Amish enclave in Oklahoma Sunday was that there are humans who not only still get along without two cellphones and the latest Apple whizzies, but they also get along largely without petroleum.

Yes, there is a lifestyle shared, in many regards, by both Native Americans and Amish that has an incredibly low footprint in terms of energy and resource, but also has very little chance of failure.  Why?  Simply: They know where the off-switch is.

Oilman2 posted a note (with link) in one of the comments yesterday about how grid use is now about 2% colocation centers.

In a conversation, later in the morning, we got to musing about how much co-lo space would be needed to field a national fleet of any size autonomous vehicles.

As he explained it: “Sure, you can get most of the routines onto the onboard systems, but when things get hairy you’re going to need that back-link to moma…and the big database….”  There’s no doubt some truth to that.

But that does raise the question how autonomous vehicles will need continuous internet access, or have a very large computer onboard.  And the tradeoff there will be fuel economy offsets.  Computers will eat between one and two horsepower (745-watts to 1,490 watts) and that will be continuously, not pulsed. Serious processor, cooling, storage and associated peripherals including some old-fashioned linear actuators in most designs.

The idea that “drone swarms” and “drone delivery systems” will put humans out of the mix is about equally absurd.  Again, in the short term.

The problem isn’t that drones can’t carry weight…sure they can.  But we need to be very precise on  our thinking here.  Remember, convertible cars that could be both streetable as well as flyable have been conceptualized for 60-years.  Check out this Wikipedia snip:

“In 1956, the US Army’s Transportation Research Command began an investigation into “flying jeeps”, ducted-fan-based aircraft that were envisioned to be smaller and easier to fly than helicopters. In 1957, Chrysler, Curtiss-Wright, and Piasecki were assigned contracts for building and delivery of prototypes. They all delivered their prototypes; however, Piasecki’s VZ-8 was the most successful of the three. While it would normally operate close to the ground, it was capable of flying to several thousand feet, proving to be stable in flight. Nonetheless, the Army decided that the “Flying Jeep concept [was] unsuitable for the modern battlefield”, and concentrated on the development of conventional helicopters. In addition to the army contract, Piasecki was developing the Sky Car, a modified version of its VZ-8 for civilian use.”

Sounds to me a lot like drones.

The problem is people don’t sit back and think through the logical application of three sets of laws.  In the case of drones or autonomous vehicle, you have the laws of physics, the laws of electrochemistry and the laws of economics.  What’s more, there is also this ugly thing called “The Use Case.”

Let’s take the notion that Drones will end UPS and FedEx delivery driving.

Not so fast!

Let’s consider a helicopter – like the Bell 206 JetRanger.  We only need a few numbers here to start scaling our thinking in terms of payload.

Lift efficiency is related to swept area of the rotor.  In the case of the JetRanger, the rotor diameter is 33-feet 4-inches.

Next we will consider horsepower.  317 shaft horsepower was the limit due to the powertrain design.

Then we have empty weight and maximum gross takeoff weight.

2,000 pounds empty,  with 3,200 pounds full (four passengers, pilot, fuel, and oil).

From here we can work the numbers as follows.

3200 pounds and 317 horsepower or about 10-pounds per horsepower.

When you back out the pilot weight (170 pounds) you’re talking about 402 pounds of usable load (cargo, passengers, etc at full fuel)  You can add capacity by dumping as much of the 91 gallons of fuel (618 pounds worth) as you want.  Hell, throw out the 170 pound pilot, while you’re at it.

We need to begin thinking about the 10 pound typical delivery package now.

We can already see the basics coming into focus:  A drone that could handle a 10 pound package would likely weigh a minimum of 30 pounds.  And since the rotor loading number is ab out 4 pounds per square foot of swept area, we would assume our single-rotor drone would need (rounding) 30-square feet of swept area.

So how about area divided by pi equals r-square?  That would be 9.6 for r-square (roughly – I don’t design things before more coffee, usually) or about a 3.1 foot swept area.

OK, making progress.

Now we need to think about our fuel source.  The JetRanger burns about 30 gallons per hour holding things up against the ‘will of gravity.’  Since we know the JetRanger does 10 pounds per horsepower, our drone will likely be similar – so we need a 3-horsepower source for whatever our flight time is.

Here’s where we see OM2’s point about energy density makes drones a fine scam but hardly practical.  Reason?

Here’s the power density of Jet A: 43.15 MJ/kg.

Now the power density of a good lithium ion battery: 0.36–0.875 MJ/kg.

Simply:  Jet-A is 49-times more power dense than a Lithium Ion battery.

By extension then, we can fly a jet-powered drone an hour on 3/10-ths of a gallon of Jet-A.  But the same platform on batteries?  Maybe five minutes with equal load.

And here’s another thing:  Batteries don’t charge in a linear fashion.  Trust me when I tell you this – I have worked on serious battery instrumentation issues (see Google results):  Battery quick-charging is an evolving art, especially with new chemistries.

Moreover, there is another problem with lithium ion, but you need to visit some sites like Cadex’s Battery University site over here.  When you scroll down to the cycling performance of Lion batteries, there is yet-another problem that drone promoters don’t mention.

The faster and deeper you discharge any battery, the fewer number of cycles it will deliver.

As the Cadex chart shows (they’re smart on this stuff): The lithium ion test battery lost about 25% of its rated capacity at 500 cycles.

In other words, put this drone we’re designing on a UPS delivery rig.  Deliver one 10 pound box and then it’s battery change time.  Maybe you could get 8 cycles per day on  a battery pack for a drone.  Cool, right?

But here’s where cycle life bits you on the ass:  At the end of a month and a half of service, the lithium batteries would still work, but now you’re down to a 7.5 pound box, or so, or it’s time to buy a butt-load of batteries.

And we haven’t even gotten into heat and cycling and how drones would work in places like Denver on a hot day where density altitude degrade lift quickly and where summertime cooling of an 8-10 battery rack on a UPS van (which aren’t now air conditioned) would also degrade performance.

You really think delivery companies that wouldn’t put in a/c for their drivers will do it for their drones?

Above all, though, this gets us circled back to the laws of Economics.

We are living today in a world most of us never thought we would see:  We’re making business models out of fishing, camping, gender, r/c airplanes, computer programming, and a host of other activities that are, mostly, non-essential.

And this underscores the main problem we see for the world:  We live under economic systems that reward people for participation, even if the participation doesn’t make a lot of sense.  And that’s worrisome.

How long can this track persist and still drive markets to new all-time highs?

It’s a bunch to wrap your head around, but likely worth doing so while you still have what pilots call “airspeed, altitude, and ideas…”

Write when you get rich,

George@ure.net