Category: Uncategorized

Current position is long the nassies, gold, and 10y bonds… we may switch some of the portfolio to /es if that strength continues… Also the gold position is really a hedge, but if real rates keep edging up it should make a dollar…

We continue to follow momentum but expect a summer scare… we have no theories on where it will start. We can rely on the Market to tell us –it can’t keep a secret. China has an inverted yield curve, so we expect drama there within a year.  Also, we expect serious US sell off next year. Maybe down 15-20% But we will follow the market action, not the certainties (lol) of mortals…

Below you can see the summation strength edging over into SPX, but everything is weakening. If we don’t bounce soon, it is probably a short-term top and we’ll have our summer scare quickly…

Beta-rotation actually goes back to stocks, giving utilities a break…

Total option ratio still likes long /nq

Now for some momentum comparisons. The Asia model likes Indonesia and Taiwan, with Singapore dragging (might get some reversion there). Note all of these countries have futures contracts (mostly through Singapore exchange). I am not currently trading the Asia algos, because of (1) unknown risks with the Chinese (and Indian) yield structure and (2) our current desire to lower leverage.

Sector momentum. Note the health surge. Tech is second place now. I feel sorry for my friends who bought energy last year. Painful…

Some etfs that track the companies chasing the future… Look at biotech jump…

But in these macro categories /nq remains the place to sit..

And in the continuing AI/everything race… Its Tesla, Nvidia, and Alibaba…

If you have any sense you don’t bet all your $. I take profits out every year and put in what I call slow money. It’s low risk, slow money. For me that means cheap Vanguard index funds. This is my slow money universe here.

I’m in San Diego/Orange county all next week, working, and training bjj with some Atos killers. Shoot me a message if you wanna have lunch. It might work out, you never know. Running private money can be a lonely business.

Godspeed and happy trading…

 

 

Quantum computing is a element of the larger exponential technologies race that is currently driving the top large-cap technology stocks. Every bubble needs a narrative. And it is my experience that one can usually find the bubble by listening to the stories that the market tells itself. Which ever one inspires the most big eyed and breathless response is the one with a chance of blowing a bubble. Usually it is technology or bio technology because those industries are the best dream-salesmen. Remember the tech bubble? Their story was if you believe in the Internet at all you should buy the stocks because the internet is going to change the world. Currently the story that is gaining momentum is related to artificial intelligent. AI is going to change everything.  Yet the same companies can also tell the quantum computing narrative. Or the transportation revolution narrative. Or the photonic computing narrative. Or the big data narrative. Or the Internet of things narrative. Or the block chain technology narrative.   All the best stories are in those leading tech stocks. 

https://www.newscientist.com/article/2138373-google-on-track-for-quantum-computer-breakthrough-by-end-of-2017/

Alan Ho, an engineer in Google’s quantum AI lab, revealed the company’s progress at a quantum computing conference in Munich, Germany. His team is currently working with a 20-qubit system that has a “two-qubit fidelity” of 99.5 per cent – a measure of how error-prone the processor is, with a higher rating equating to fewer errors.

For quantum supremacy, Google will need to build a 49-qubit system with a two-qubit fidelity of at least 99.7 per cent. Ho is confident his team will deliver this system by the end of this year. Until now, the company’s best public effort was a 9-qubit computer built in 2015.

“Things really have moved much quicker than I would have expected,” says Simon Devitt at the RIKEN Center for Emergent Matter Science in Japan. Now that Google and other companies involved in quantum computing have mastered much of the fundamental science behind creating high-quality superconducting qubits, the big challenge facing these firms is scaling these systems and reducing their error rates.

It is important not to get carried away with numbers of qubits, says Michele Reilly, CEO at Turing Inc, a quantum start-up. It’s impossible to really harness the power of these machines in a useful way without error correction, she says – a technique that mitigates the fickle nature of quantum mechanics.

Ho says it will be 2027 before we have error-corrected quantum computers, so useful devices are still some way off. But if Google can be the first to demonstrate quantum supremacy, showing that qubits really can beat regular computers, it will be a major scientific breakthrough.

https://qz.com/1009155/chinas-second-largest-ecommerce-company-jd-jd-just-used-a-robot-to-deliver-packages/

Jingdong, or JD.com, China’s second-biggest e-commerce company after Alibaba, sent robots to deliver items for the first time yesterday (June 18), on the last day of a two-week-long shopping bonanza that recorded sales of around $17.6 billion, according to a spokesman with the company.
Designed by JD, the white, four-wheeled droid can carry five packages at once and travel 20 km (12.4 miles) if fully charged. It can climb up a 25-degree incline (link in Chinese), and find the shortest route from warehouse to destination. Once it reaches its destination, the robot sends a text message to notify the recipient of the delivery. Users can accept the delivery through face-recognition technology or by using a code, according to China’s state broadcaster CCTV.

https://www.scientificamerican.com/article/china-shatters-ldquo-spooky-action-at-a-distance-rdquo-record-preps-for-quantum-internet/

In a landmark study, a team of Chinese scientists using an experimental satellite has tested quantum entanglement over unprecedented distances, beaming entangled pairs of photons to three ground stations across China—each separated by more than 1,000 kilometers. The test verifies a mysterious and long-held tenet of quantum theory, and firmly establishes China as the frontrunner in a burgeoning “quantum space race” to create a secure, quantum-based global communications network—that is, a potentially unhackable “quantum internet” that would be of immense geopolitical importance. The findings were published Thursday in Science.
“China has taken the leadership in quantum communication,” says Nicolas Gisin, a physicist at the University of Geneva who was not involved in the study. “This demonstrates that global quantum communication is possible and will be achieved in the near future.”
The concept of quantum communications is considered the gold standard for security, in part because any compromising surveillance leaves its imprint on the transmission. Conventional encrypted messages require secret keys to decrypt, but those keys are vulnerable to eavesdropping as they are sent out into the ether. In quantum communications, however, these keys can be encoded in various quantum states of entangled photons—such as their polarization—and these states will be unavoidably altered if a message is intercepted by eavesdroppers. Ground-based quantum communications typically send entangled photon pairs through fiber-optic cables, or through the open air. But collisions with ordinary atoms along the way disrupt the photons’ delicate quantum states, limiting transmission distances to a few hundred kilometers. Sophisticated devices called “quantum repeaters”—equipped with “quantum memory” modules—could in principle be daisy-chained together to receive, store and retransmit the quantum keys across longer distances, but this task is so complex and difficult that such systems remain largely theoretical.

http://macromarketmusings.blogspot.com/2017/06/musings-on-junes-fomc-meeting.html

Yep, either the Fed is the most unlucky institution in the world or the Fed has a problem. I think the latter. The Fed appears to have begun having a problem with 2 percent inflation around the time of the Great Recession. This can be seen in the FOMC’s summary of economic projections (SEPs) figure below. It shows for each FOMC meeting where SEPs were provided to the public the central tendency forecast of the core PCE inflation rate over the next year. The horizon for these forecasts depend on the time of the year they were released and range from one year to almost two years out. The forecast horizons are long enough, in other words, for the FOMC to have meaningful influence on the inflation rate.

To be clear, the Fed has only been explicitly targeting inflation at 2 percent since 2012, but many studies have shown it to be implicitly doing so since the 1990s. So this truly has been an eight-year plus problem for the Fed and one that makes Janet Yellen’s remarks all the more disappointing to hear. One would think after almost a decade of undershooting 2 percent inflation there might be an acknowledgement from the FOMC like the one that came from Minneapolis Fed President Neel Kashkari (my bold):

[O]ver the past five years, 100 percent of the medium-term inflation forecasts (midpoints) in the FOMC’s Summary of Economic Projections have been too high: We keep predicting that inflation is around the corner. How can one explain the FOMC repeatedly making these one-sided errors? One-sided errors are indeed rational if the consequences are asymmetric. For example, if you are driving down the highway alongside a cliff, you will err by steering away from the cliff, because even one error in the other direction will cause you to fly over the cliff. In a monetary policy context, I believe the FOMC is doing the same thing: Based on our actions rather than our words, we are treating 2 percent as a ceiling rather than a target. I am not necessarily opposed to having an inflation ceiling… I am opposed to stating we have a target but then behaving as though it were a ceiling.

 

http://www.asco.org/about-asco/press-center/media-resources-meetings/annual-meeting-media-resource-center

CAR T-Cell Therapy Sends Multiple Myeloma Into Lasting Remission (Abstract LBA3001)
CHICAGO – In an early clinical trial, 33 out of 35 (94%) patients had clinical remission of multiple myeloma upon receiving a new type of immunotherapy ̶ chimeric antigen receptor (CAR) T cells targeting B-cell maturation protein or BCMA. Most patients had only mild side effects. Read the full release.

 

https://www.technologyreview.com/s/608041/first-quantum-secured-blockchain-technology-tested-in-moscow/

Enter Evgeny Kiktenko at the Russian Quantum Center in Mosco and a few pals who have designed, built, and tested a quantum blockchain system in which the security is guaranteed by quantum mechanics. They’ve built it using a standard quantum cryptography system of the kind that is already commercially available.

First some background. Blockchains record a list of transactions in a way that prevents dishonest use, such as tampering or double spending. They allow any computer to keep track of this list by compiling them into a block, which is then encrypted to form a number called a hash.

The encryption process is important. It is an algorithm that is easy to calculate but hard to do in reverse (like factorization). The hash value it produces is a unique property of the block, and any tampering with the records would be immediately obvious because this would change the hash.

New transactions are next gathered together into a new block and added to the existing hash value. This is then encrypted to create a new hash for the new block. This is added to the next list of transactions when they are encrypted, and so on. The result is a chain of blocks that each contain the hash values of all preceding blocks—hence the term blockchain.

All the computers that store these blocks regularly compare their hash values to ensure that they are all in agreement. Any computer that does not agree, discards the records that are causing the problem.

This approach is good but it is not perfect. One way to game this system is for a dishonest user to change the list of transactions in their favor, but in a way that leaves the hash unchanged. This can be done by brute force, in other words by changing a record, encrypting the result, and seeing whether the hash value is the same. And if not, trying again and again and again until it finds a hash that matches.

The security of blockchains is based on the belief that ordinary computers can only perform this kind of brute force attack over time scales that are entirely impractical, such as the age of the universe. By contrast, quantum computers are much faster and consequently pose a much greater threat.

Kiktenko and co have a solution that prevents quantum attacks of this kind. Their blockchain technology is subtly different. A transaction between two individuals contains the information about the sender, the receiver, the time of creation, the amount to be transferred, and a list of reference transactions that justifies that the sender has enough funds for the operation.

This transaction is then sent to all the computers in the currency network who store it until some pre-agreed time—10 minutes, say—when the transactions are gathered together into a block.

The next stage uses an algorithm that allows all parties to agree that the list of transactions is honest. This is based on proof from the 1980s in which everybody first shares their information with all other computers. Next, they communicate the information they received from the other parties in the network allowing everyone to see who said what. The parties then share this information in yet another round and so on until they agree that all computers have the same information.

The proof is that it is always possible to reach a consensus in fewer rounds than there are parties, provided that at least two-thirds of the parties are honest.

But in such a system how can Alice be sure she is receiving information from Bob and vice versa? Without this certainty, it is easy for a malicious user to game the system by pretending to be lots of different users.

This is where quantum mechanics comes in. Alice and Bob can verify each other’s identities using a technique called quantum key distribution. This sends information using quantum particles such as photons, which cannot be copied by an eavesdropper without destroying them. In this way, Alice and Bob can be sure of each other’s identity.