Monday, October 6, 2014

Why Trading Floors Are Shrinking

Even stock echanges are subject to disruption, watch this play out in other industries. Aivars Lode
By Gregg Wirth
A wave of ground-breaking innovation and lower volumes has forced floor traders to face a new reality: a smaller, more intimate trading floor.
Susan Certoma remembers those big trading floors. Touring them when they opened in the mid- to late 1990s - whether the massive 103,000-square-foot trading floor run by UBS in Stamford, Conn., or smaller yet impressive floors, like the Royal Bank of Canada's turreted trading floor in Toronto - it was clear where the industry was going.
"They heralded them as the wave of the future," said Certoma, president of the Wealth and Brokerage Processing Services at Broadridge Financial Solutions, a financial industry servicing company. "They looked like coliseums, with traders in circles on platforms."
As Certoma, the former chief information officer for Wachovia's Corporate and Investment banking divisions and an IT leader inside Goldman Sachs, Merrill Lynch and Lehman Brothers, recalls, "But then we began watching those huge trading floors shrink."
Indeed, less than 20 years later - eons in the span of technological change and innovation that has shaken and reshaped many industries, including securities trading - those cavernous trading floors and the vast majority of the floor traders who worked there have vanished or at the very least become unrecognizable.
Today, an environment that is dominated by high-speed trading strategies, electronic execution and algorithmic trading software has stripped out, or at least greatly diminished, the human role in the buying and selling of stocks and other securities.
This sweeping technological evolution is the shorthand reason given for what is seen by many in the industry and the general public as the demise of the trading floor and the floor trader, but there are other factors in play. Equity trading volume has continued to drop for years. In 2008, an average of 2.6 billion shares were traded daily on the New York Stock Exchange, but that number has dropped to a little more than 1 billion shares traded daily in 2013, according to data from the Securities Industry and Financial Markets Association (SIFMA). "The continuous imposition of regulations, like the Volcker Rule, and the drop in volume in equities and other asset classes are among the strongest driving forces behind new strategies for staying profitable in this environment," Certoma said.
But the real question isn't why this happened, it's what to do about it now. Can trading floors and the remaining floor traders adapt to this dramatically changing world, find niche services others cannot offer and recapture if not dominance, then at least relevance?
Some are doubtful. "If you ask me what's the future of trading," said Jim Leman, a trading veteran who logged more than two decades in the market groups of several Wall Street firms. "I'd say all the easy stuff is gone."
From Paper to Algos
At any moment in the storied past of the NYSE, the trading floor looked like organized chaos, a riotous surging crowd of traders waving paper tickets, gesturing wilding and calling out in staccato yips only they could understand. Much, if not all of that, is gone. The floors of the NYSE, the Chicago Board of Trade and the massive trading floors built by the large brokerages all across Wall Street are much quieter places, given more to the almost imperceptible hum of flat-screen computers than the din of the crowd
"It's very different," said legendary NYSE floor trader Kenny Polcari. "I mean, there hasn't been open outcry for like 12 or 15 years." Polcari, a 30-year stock trading veteran and outspoken media commentator, joined O'Neil Securities in late 2012. He has spent much of his career on the floor of the NYSE, and is a staunch defender of the institution, its culture and his role in it all.
"It drives me crazy," he said. "People hear that you trade on the floor of the NYSE and they immediately think you're a dinosaur." However, Polcari points out that he has all the same technology and connectivity as any desk trader up in Boston or anywhere. He swapped his paper pad for a handheld electronic trading device long ago. "It's all state-of-the-art now; we have access to everything here just like anywhere else, plus I can walk out onto the floor and trade."
Still, the number of bodies on the floor of the NYSE, roughly 5,500 at its peak, has dwindled to a fraction of that, about 700 traders in all. The exchange's new owners, Intercontinental Exchange (ICE), have promised further renovations, including $80 million to modernize the interior of the building to encourage more open spaces and greater employee interaction.
This tectonic shift didn't just happen at the NYSE, although because the 222-year-old institution is a bastion of American capitalism, the changes were just more noticeable. The enormous UBS trading floor in Stamford is now mostly filled not with active traders, but with back-office personnel; futures exchange the New York Board of Trade was shuttered (incidentally, by ICE); and many Wall Street firms, like Morgan Stanley, have scaled back their trading floors and jettisoned legions of traders.
"Do I miss how it was?" Polcari asked. "Sure, I miss it - every single person involved misses it. But I'm still excited about this business."
Changing Roles and New People
Reminisces aside, today's floor traders need to adapt, and one key factor that could help them has its roots in the very changes that are causing them such pain, said Leman, now a senior advisor at international consulting firm Eleven Canterbury. Back when algorithm trading programs were in their infancy, there was a great awakening among the buyside that much of what it was using traders and brokers for could be brought in-house at a great cost savings, he explained.
Before long, the same brokers and traders who were once doing the buying and selling for large buyside institutions were now instead training those buysiders to do it for themselves. "After a while, brokers and traders could no longer say to the buyside, 'Come to me, I've got the best execution or the best research,'" Leman said. "They had to also give the buyside the program trading tools and the algos, and coach them in how to use them."
Although it might seem counterintuitive, Leman said at this point in the game, brokers and traders who can offer the latest, customized algos or specialized niche services to help the buyside get that all-elusive edge in trading or squeeze out that extra bit of profit margin are going to be the ones that survive. "Finding the other side of a trade will always be important," he said. "But knowing what your customers want, and using your specialized insight into the market, plumbing proprietary data, and turning it all into a package or algo that your customer can use - that is what also is important now."
Broadridge's Certoma agreed, saying the changes in the trading industry and the evolving needs of buyside customers mean that the type of trader who may patrol the floor of an exchange or brokerage house in the future will have a very different skill set than before. "In the old days, floors were very reactive; traders would wait for an event or an announcement, and then they were off and running - now they are more analytical and technical," she said. And that means, gone are the days of floor traders with only high school diplomas, and trader jackets being passed down from father to son - now, an M.B.A. in quantum theory may be more the rule than the exception.
That also means that as Wall Street de-populated its trading floors, many people left behind now perform very different tasks than before. "There are fewer bodies, and those that remain have taken on different roles," Certoma said. "There are more risk-related roles, advanced technical experts, and quants and managers providing oversight."
John Henry on Wall Street
Right alongside these new types of floor traders are, of course, the machines that run almost all the trading now, with almost 80 percent of all equity trading being done electronically. In many ways, this lodges the vanishing floor trader firmly in the ages-old philosophical battle between man and machine. So, the real question for Wall Street may be, Can a financial service industry devoid of humans really serve them?
Kevin Foley, CEO of Aqua Securities, which runs a customized block-trade alternative trading system (ATS), said he isn't sure it can, although he admitted his views may run counter to those of some of his compatriots in the ATS field. Foley said he is not convinced that amid all the technological change, algo trading, and high-speed connections that there is no role for people to play.
"There's nothing inevitable about the concept of more machines and fewer people," he said. "Nothing prevents us from turning this around and going the other way." Prior to Aqua, Foley was with Bloomberg, and he helped establish Bloomberg Tradebook, a trading solutions platform and the first still-operating entity to register as an ATS with the SEC in 1999.
Finding a way to work with those computers, rather than trying to outpace or outrun them, is another way traders can remain relevant. For example, computers' ability to gather, interpret and react to the reams of data - the so-called big data - that are running through the wires and over the air is still relatively shaky, and mistakes in reading this data could cause market disruptions.
"Traders need to make judgment calls on all that unstructured data," Certoma explained. "Programs shouldn't interpret what is coming through - human interaction is needed. It's not just a science; there's a lot of art involved."
Indeed, Polcari and others will point to machine-led glitches, like the Flash Crash in 2010, and note that floor traders helped keep the damage under control at the NYSE that day, proving that the human touch is still very much needed in today's market. "When the [expletive] hits the fan, people will still want to talk to people," he said.
A Different Way Forward
Whether floor traders will be around to adjust those proverbial fans in the future is still a question on Wall Street, where the drive for lower costs and higher profits seems to rule all decisions. There is little debate, however, that the flamboyant role of the floor trader - pad in hand, gesturing wildly in a crowd of his brethren - may be relegated to history.
But there is a desperate need, many people say, for the human hand at the helm, and that's an idea that Wall Street, in its usual excitement for all things new, has gotten away from - and one that it's reminded of with every market-shaking trading glitch. "There is enough dissatisfaction in the market today that they may not continue to want what the machines are doing," said Aqua's Foley.
Beyond that, many market observers feel it's to the market's detriment that its population of floor traders, who collectively held a vast store of historical market knowledge and keen insight into what was happening in the markets on any given day, has been winnowed so dramatically. Some also suggest Wall Street needs to wake up to that lesson before the next computer-induced market meltdown.
"Wall Street always oversteers the boat, going too far in each direction," Foley said. "In my view, people will be back."

Monday, September 29, 2014

Andreessen goes on epic tweet storm, advises tech community to “worry”

Another bubble Andreessen warns, which is funny as a year or so ago he said this time it's different. Aivars Lode

By Lawrence J. Aragon
He didn’t use the word “bubble,” but venture capitalist Marc Andreessen went on a lengthy Twitter sermon today to tell the startup ecosystem it should “worry.”
The money tweet: “When the market turns, and it will turn, we will find out who has been swimming without trunks on: many high burn rate co’s will VAPORIZE.”
It is hard not to be worried when you see such a high-profile tech investor use the word “VAPORIZE” in all caps three times in his 18-part tweet storm.
Andreessen starts out by giving a nod to recent comments by fellow VCs Bill Gurley of Benchmark Capital and Fred Wilson of Union Square Ventures. “I think that Silicon Valley as a whole, or that the venture-capital community or startup community, is taking on an excessive amount of risk right now—unprecedented since ’99,” Gurley told the Wall Street Journal last week.
Wilson chimed in on his blog that he, like Gurley, was concerned about burn rates: “But burn rates are exactly that. Burning cash. Losing money. Emphasis on the losing. And they are indeed sky high all over the US startup sector right now.”
Taken as whole, the comments from Andreessen, Gurley and Wilson sound similar to Sequoia Capital‘s “R.I.P., Good Times” presentation to its entrepreneurs after the Financial Crisis. The crux of that presentation was to get to cash-flow positive as quickly as possible because venture capital was going to dry up.
Andreessen offers a similarly stark message:
1/Cash burn rates at startups: Recently @bgurley and @fredwilson have sounded a vivid alarm.
2/I said at the time that I agree with much of what Bill says, and I want to expand on the topic further:
3/New founders in last 10 years have ONLY been in environment where money is always easy to raise at higher valuations. THAT WILL NOT LAST.
4/When the market turns, and it will turn, we will find out who has been swimming without trunks on: many high burn rate co’s will VAPORIZE.
5/High cash burn rates are dangerous in several ways beyond the obvious increased risk of running out of cash. Important to understand why:
6/First: High burn rate kills your ability to adapt as you learn & as market changes. Co becomes unwieldy, too big to easily change course.
7/Second: Hiring people is easy; layoffs are devastating. Hiring for startups is effectively one way street. Again, can’t change once stuck.
8/Third: Your managers get trained and incented ONLY to hire, as answer to every question. Company bloats & becomes badly run at same time.
9/Fourth: Lots of people, big shiny office, high expense base = Fake “we’ve made it!” feeling. Removes pressure to deliver real results.
10/Fifth: More people multiplies communication overhead exponentially, slows everything down. Company bogs down, becomes bad place to work.
11/Sixth: Raising new money becomes harder & harder. You have bigger bulldog to feed, need more and more $ at higher and higher valuations.
12/Therefore you take on escalating risk of a catastrophic down round.

Tuesday, September 16, 2014

Revealed: How Mars Lost Its Atmosphere

Mars used to have an atmosphere, interesting that man was not involved in its loss. That said, we should be good stewards of our planet regardless. Aivars Lode

The Red Planet lost its protective blanket of air billions of years ago. Now astronomers are certain why
By Jeffrey Kluger

One of the biggest challenges about flying to Mars is remembering why you went there in the first place. The Curiosity rover has been on the Red Planet for almost a year now, and the landing itself — an outrageous feat achieved by a stationary hovercraft that lowered the 1-ton Mars car to the surface by cables — was a global television event. But once the wheels touched the soil and all of the high fives had been exchanged, most people outside of the space community turned away.
Curiosity, however, went to Mars to work, and if its sister rovers Spirit and Opportunity — both of which arrived in 2004 and one of which is still chugging — are any indication, it should be at it for a long time. In the past year, Curiosity has already made some intriguing discoveries about the mineralogy of Mars and the planet’s watery past, and this week it delivered again. In a pair of papers published in the journal Science, investigators announced new findings from the spacecraft about one of Mars’ most long-standing mysteries: how it lost its atmosphere, and why.
Mars’ modern atmosphere is only 1% the density of Earth‘s, but the planet’s watery phase is believed to have lasted for the first billion of its 4.5 billion years, which means its air must have been around that long too. But things were never likely to stay that way. Mars has only half Earth’s diameter, 11% its mass and 38% its gravity, making it easy for upper layers of the original atmosphere to have boiled away into the vacuum of space and been blasted out by meteor hits. And that cycle would build on itself: the thinner the air became, the easier it would be for space rocks to hit the ground, unleashing still more explosive energy and, in effect, blowing still more holes in the sky.
But that’s only one mechanism. Planets can lose their air not just from the top up but also from the bottom down, as elements of the atmosphere bond with — and retreat into — the soil. Martian meteorites that landed on Earth have often been found to include gas bubbles from the Martian sky, evidence that this commingling was going on.
Curiosity scientists sought to settle the matter with the help of the rover’s Sample Analysis at Mars (SAM) instruments, a collection of sensors that sniff the air for its chemical makeup — particularly its mix of isotopes. Elements don’t come in just one form, but in different sizes and weights — such as carbon 12 and carbon 13 — determined by the number of neutrons in the nucleus. That weight issue is critical in atmospheric studies, because just as heavier metals sink downward and lighter ones rise as a molten planet is forming, so do gases stratify themselves in the atmosphere by weight.
Earlier measurements of Mars’ current atmosphere had always shown a high concentration of the heavy isotopes of carbon and oxygen — convenient elements to measure because Mars’ atmosphere is overwhelmingly made of carbon dioxide. Those findings differ from the isotopic makeup of the sun and the early solar system as a whole, in which lighter isotopes were more evenly represented. Mars, like Earth and all of the other planets, would have started out with that same relatively even mix. The fact that the heavy isotopes dominate the remaining Martian air means its lighter, high-altitude gases bled away first — supporting the top-down theory.
“As atmosphere was lost, the signature of the process was embedded in the isotopic ratio,” said NASA‘s Paul Mahaffy, principal investigator for the SAM team, in a statement. That was the theory anyway, but it took a suite of instruments like SAM to sample the air with enough sensitivity to prove the heavy-isotope imbalance. As the Science paper revealed, Curiosity indeed sealed that deal.
The findings are considered particularly reliable because Curiosity used two different instruments to do its work: the tunable laser spectrometer, which analyzes how Martian air pumped into a chamber reflects two different frequencies of infrared laser; and the mass spectrometer, which, as its name suggests, measures the entire spectrum of elements present in an air sample according to their mass. “Getting the same results with two very different techniques increased our confidence that there’s no known systematic error,” said NASA’s Chris Weber, lead author of one of the new papers.
Mars’ lost air is never coming back, but the little bit it does have still makes the planet a chemically active place — and plays a major role in the combination of parachutes and braking-rockets spacecraft from Earth rely on to reach the surface safely. But change is a constant everywhere in the universe, and even today, the Red Planet’s atmospheric loss is thought to be continuing. How fast that’s happening will not be known until the arrival of NASA’s next Mars probe, the Mars Atmosphere and Volatile Evolution (MAVEN) mission, which is set for launch in November. The already harsh Mars, MAVEN may find, is fast becoming harsher still — one more reason to appreciate the improbably verdant Earth.

The Over Diagnosis of Cancer in the US

Unfortunately surgens make money by cutting. Now it is coming to light that there is an over diagnosis of cancer. Aivars Lode

http://www.wsj.com/video/the-overdiagnosis-of-cancer-in-america/03A7C0E5-7E42-4044-BAC7-106DC956E24B.html?mod=wsj_video_email

Wednesday, September 10, 2014

Whatever Happened to Global Warming?

The headline says it all. Aivars Lode

Now come climate scientists' implausible explanations for why the 'hiatus' has passed the 15-year mark.
By Matt Ridley
On Sept. 23 the United Nations will host a party for world leaders in New York to pledge urgent action against climate change. Yet leaders from China, India and Germany have already announced that they won't attend the summit and others are likely to follow, leaving President Obama looking a bit lonely. Could it be that they no longer regard it as an urgent threat that some time later in this century the air may get a bit warmer?
In effect, this is all that's left of the global-warming emergency the U.N. declared in its first report on the subject in 1990. The U.N. no longer claims that there will be dangerous or rapid climate change in the next two decades. Last September, between the second and final draft of its fifth assessment report, the U.N.'s Intergovernmental Panel on Climate Change quietly downgraded the warming it expected in the 30 years following 1995, to about 0.5 degrees Celsius from 0.7 (or, in Fahrenheit, to about 0.9 degrees, from 1.3).
Even that is likely to be too high. The climate-research establishment has finally admitted openly what skeptic scientists have been saying for nearly a decade: Global warming has stopped since shortly before this century began.
First the climate-research establishment denied that a pause existed, noting that if there was a pause, it would invalidate their theories. Now they say there is a pause (or "hiatus"), but that it doesn't after all invalidate their theories.
Alas, their explanations have made their predicament worse by implying that man-made climate change is so slow and tentative that it can be easily overwhelmed by natural variation in temperature—a possibility that they had previously all but ruled out.
When the climate scientist and geologist Bob Carter of James Cook University in Australia wrote an article in 2006 saying that there had been no global warming since 1998 according to the most widely used measure of average global air temperatures, there was an outcry. A year later, when David Whitehouse of the Global Warming Policy Foundation in London made the same point, the environmentalist and journalist Mark Lynas said in the New Statesman that Mr. Whitehouse was "wrong, completely wrong," and was "deliberately, or otherwise, misleading the public."
We know now that it was Mr. Lynas who was wrong. Two years before Mr. Whitehouse's article, climate scientists were already admitting in emails among themselves that there had been no warming since the late 1990s. "The scientific community would come down on me in no uncertain terms if I said the world had cooled from 1998," wrote Phil Jones of the University of East Anglia in Britain in 2005. He went on: "Okay it has but it is only seven years of data and it isn't statistically significant."
If the pause lasted 15 years, they conceded, then it would be so significant that it would invalidate the climate-change models upon which policy was being built. A report from the National Oceanic and Atmospheric Administration (NOAA) written in 2008 made this clear: "The simulations rule out (at the 95% level) zero trends for intervals of 15 yr or more."
Well, the pause has now lasted for 16, 19 or 26 years—depending on whether you choose the surface temperature record or one of two satellite records of the lower atmosphere. That's according to a new statistical calculation by Ross McKitrick, a professor of economics at the University of Guelph in Canada.
It has been roughly two decades since there was a trend in temperature significantly different from zero. The burst of warming that preceded the millennium lasted about 20 years and was preceded by 30 years of slight cooling after 1940.
This has taken me by surprise. I was among those who thought the pause was a blip. As a "lukewarmer," I've long thought that man-made carbon-dioxide emissions will raise global temperatures, but that this effect will not be amplified much by feedbacks from extra water vapor and clouds, so the world will probably be only a bit more than one degree Celsius warmer in 2100 than today. By contrast, the assumption built into the average climate model is that water-vapor feedback will treble the effect of carbon dioxide.
But now I worry that I am exaggerating, rather than underplaying, the likely warming.
Most science journalists, who are strongly biased in favor of reporting alarming predictions, rather than neutral facts, chose to ignore the pause until very recently, when there were explanations available for it. Nearly 40 different excuses for the pause have been advanced, including Chinese economic growth that supposedly pushed cooling sulfate particles into the air, the removal of ozone-eating chemicals, an excess of volcanic emissions, and a slowdown in magnetic activity in the sun.
The favorite explanation earlier this year was that strong trade winds in the Pacific Ocean had been taking warmth from the air and sequestering it in the ocean. This was based on a few sketchy observations, suggesting a very tiny change in water temperature—a few hundredths of a degree—at depths of up to 200 meters.
Last month two scientists wrote in Science that they had instead found the explanation in natural fluctuations in currents in the Atlantic Ocean. For the last 30 years of the 20th century, Xianyao Chen and Ka-Kit Tung suggested, these currents had been boosting the warming by bringing heat to the surface, then for the past 15 years the currents had been counteracting it by taking heat down deep.
The warming in the last three decades of the 20th century, to quote the news releasethat accompanied their paper, "was roughly half due to global warming and half to the natural Atlantic Ocean cycle." In other words, even the modest warming in the 1980s and 1990s—which never achieved the 0.3 degrees Celsius per decade necessary to satisfy the feedback-enhanced models that predict about three degrees of warming by the end of the century—had been exaggerated by natural causes. The man-made warming of the past 20 years has been so feeble that a shifting current in one ocean was enough to wipe it out altogether.
Putting the icing on the cake of good news, Xianyao Chen and Ka-Kit Tung think the Atlantic Ocean may continue to prevent any warming for the next two decades. So in their quest to explain the pause, scientists have made the future sound even less alarming than before. Let's hope that the United Nations admits as much on day one of its coming jamboree and asks the delegates to pack up, go home and concentrate on more pressing global problems like war, terror, disease, poverty, habitat loss and the 1.3 billion people with no electricity.
Mr. Ridley is the author of "The Rational Optimist" (HarperCollins, 2010) and a member of the British House of Lords.

Monday, September 1, 2014

China Is Awash in Grain Crops

There are reports of oversupply of grains out of China; so my question is, who is shorting grain or US farm land? Aivars Lode

Surpluses Will be Sold Into a Global Market Already in Oversupply
By Isabella Steger
Villagers harvest wheat in north China's Shanxi province. Xinhua/Zuma Press
China's grain cupboard is overflowing.
As the harvest looms next month, the country is on track for an 11th year of bumper grain crops. But production is too much, even for the world's most populous nation, with warehouses bursting at the seams and posing a dilemma for policy makers.
Estimates from state media say the government will be sitting on 150 million tons of grains that include three of the most important crops for China: rice, wheat and corn. That is double the 75 million tons last year and adds to an oversupply of these agricultural commodities that is pressuring prices lower.
"Chinese officials always talk about having a big harvest," said Fred Gale, an economist at the U.S. Department of Agriculture. "That sounds like a good thing, as they have been worried about supply keeping up with demand. But now, China seems to be struggling with surpluses of most of their commodities."
The glut of grains is being lauded in a country that grappled with acute food shortages and starvation as recently as a few decades ago. But China is paying far more than necessary to feed its people and it will be forced to sell down its surpluses into a global market already suffering from oversupply, potentially driving down prices further.
The situation has exposed China's inefficient and expensive government subsidy program aimed at keeping farmers' incomes up. The government is struggling with how to protect its rural residents while cutting production of these perishable commodities to save money and keep surpluses down.
The precise size and costs of the subsidy program are hard to come by. Official data show that China buys up one-third of corn production, while an estimate by state media said the government spent $36 billion in the last two years to buy up corn when the market price has fallen below a minimum floor.
"The stockpiles are absolutely ginormous, way out of line with anything that you could justify holding onto on any sort of commercial basis," said Thomas Pugh, an economist at Capital Economics in London. "These are perishable goods, so they will start to deteriorate."
He estimates China holds about 40% of the world's corn stocks. China plans to build storage facilities to hold 50 million metric tons more of grain by 2015 to cope with the excess, according to state media.
About 70% of China's corn consumption goes to feed for livestock as the country's appetite for meat rapidly rises, and the rest is processed into syrups or starches.
It is a particularly vexing problem for China this year, as crop production is also booming in the U.S. and dragging down prices there to near four-year lows, while Chinese prices have remained elevated because of the subsidies. That creates an incentive for Chinese traders to import corn from overseas, exacerbating China's already huge stockpile, said Jikun Huang, director of the government's Center for Chinese Agricultural Policy in Beijing.
The USDA forecast this month that U.S. corn production will exceed 14 billion bushels, far above last year's record harvest.
Corn on China's Dalian Commodity Exchange traded at around 2,390 yuan ($388) a ton as on Monday, compared with corn on the Chicago Board of Trade which traded at about 367 cents a bushel — equivalent to about 890 yuan a ton.
China has tried to curb corn U.S. imports this year, citing the presence of genetically modified strains. But Mr. Huang says traders are getting around it by importing other feed substitutes such as barley and sorghum.
And ridding China of these huge stockpiles isn't easy.

Chinese Premier Li Keqiang (foreground) inspects grain in July at China Grain Reserves Corporation in Zhuzhou, China. Xinhua/Zuma Press
A recent government auction of corn from Heilongjiang province held by the Chinese government went awry, with only a fifth of it sold at the price of 2,200 yuan a ton, "more than twice what U.S. feed mills are paying for corn right now," said the USDA's Mr. Gale.
The government has signaled that it recognizes the problem. State media have said the shortage of storage is a problem and Chinese Premier Li Keqiang has been photographed on visits to grain depots recently.
"In the past we have focused on expanding production and grain quality…now we need reforms for better buying, selling, and storage, to contribute to national security," Mr. Li is quoted as saying on the State Administration of Grain website.
China's surplus couldn't have come at a worse time for U.S. farmers, who are expected by the USDA to harvest a record 14 billion bushels. Corn futures have dropped 15% this year after falling 40% last year, and China's unwillingness to buy U.S. corn will further pressure prices, said Jason Britt, president of brokerage Central States Commodities Inc. in Kansas City, Mo.
"China's [lack of buying] has been a contributing factor in these lower prices," he said. "Now, the job of the market is to go down to a level where we find demand.
"It's amazing that China can overlook GMOs when stocks are tight, but when they're trying to protect their domestic farmers or they're in surplus, they can come up with things to mess with us—they're trade barriers, let's just call them what they are."
In January, the government said it would start trial programs in cotton and soybeans—two less-strategically important crops—to end stockpiling, and implement a target price system instead, first for cotton in Xinjiang and soybeans in the northeast, so that commodity prices are more market-driven.
The government will pay farmers the difference when the market price falls below the target price, but the government doesn't buy the commodity in the market to keep prices at a certain level. The idea is to set target prices for agricultural commodities at more market-based levels, which should in turn influence how much farmers decide to produce.
China is also in the process of unwinding its 10 million-ton cotton stockpile since late last year, which means China's appetite for cotton imports is likely to fall in coming years. That has hit cotton prices hard. In the U.S., cotton futures have fallen more than 20% this year.
"The government is moving in the right direction, step by step," said Cherry Zhang, a corn analyst at Shanghai JC Intelligence Co. "But much depends on how the changes for cotton and soybeans pan out in practice."

Monday, August 25, 2014

Get Paid To Click on Ads

How crazy is this? A company has been created to pay you for your click as they are making money in the arbitrage between what they pay you and the amount that the advertiser pays them. Aivars Lode

If you've ever searched online (so, pretty much everyone) this applies to you.

A London-based startup called Qmee will pay you to click on links that surface in search queries.
"Why wouldn't you want to get something back for something you do every day?" said Qmee founder Jonathan Knight.Once you've installed the Qmee toolbar in your browser, searches on every major engine (Google(GOOG)Yahoo (YAHOF) and Bing, as well as Ebay(EBAY, Tech30) and Amazon (AMZN, Tech30)) will yield a list of results in the left-hand column. Clicking on these links (which look a lot like Google ads) can earn you four to 15 cents apiece.
The more common the search (like "men's shoes" or "plane tickets"), the more likely there will be Qmee results. Theoretically, the results are directly related, although one search for women's dresses turned up for results for men's shoes.
As the search industry ages -- Google (GOOG) just celebrated its tenth anniversary as a public company -- is Qmee giving users a peek into the future of search?
Don't bet on it just yet.
Right now, Qmee said people should expect to see results just 15% of the time. They said this will grow as they partner with more ad networks. (They work with six networks right now, each with "thousands of clients.")
When I tested the app at CNNMoney, countless searches (everything from "prom dresses" to "movie tickets") turned up zero Qmee results. But on my home computer, searching the same terms turned up multiple Qmee results.
A Qmee representative said my experience at work was abnormal and not a complaint they've received (although a coworker had a similar experience).
Knight and co-founder Nick Sutton, both software executives, launched the "search loyalty" firm last year (the only one that offers up actual cash, according to Knight).
The intention is to let users get a little something when searching online. After all, users provide data about their behavior every time they click a search result links.
"Many loyalty programs require the customer to jump through hoops to redeem rewards," said Knight.
Qmee cash is redeemable through a PayPal account (or you can choose to donate to charity).
The company is not yet profitable, as 90% of its revenue goes to customers and just 10% goes to the firm. (The partnerships with ad networks are all monetized on a cost-per-click or cost-per-purchase model.)
Knight says while this ratio could change in the future, "a larger percentage of our revenues will always go to our users."
So far, it's just chump change for users -- the person who's accumulated the most money earned about $200 over the course of a year.
But it has the potential to take a bigger piece of the pie. ZenithOptimedia values the U.S. paid search industry at $16.8 billion this year.