Sunday, April 30, 2017

Culture: Placebo @ WiZink Center Madrid

(Drivebycuriosity) - Rock music can be pure magic. Yesterday my wife and I watched a performance by Placebo @ Madrid`s WiZink Center. It looked like the huge hall (capacity 15,500 people) was sold out.

For over more than 2 hours the British rock band delivered a fascinating melange of very different styles and performed catchy pop songs with massive walls of sound. The virtuous musicians showed their experience of 20 years stage performance and created fascinating sound pictures accompanied by an intoxicating light show.

The androgynous voice of front man Brian Molko harmonized perfectly with elements of punk, heavy metal & grunge & industrial rock and pleased the people who came to dance & celebrate as well as the head-bangers.

Their song "The Bitter End" - my favorite of the show - culminated into an orgasm of sound & light. The final,  a Kate Bush cover, developed into space rock.

 It was a hell of a party. Thank you Placebo, we want to see you again someday.

Saturday, April 29, 2017

Economy: Can We Forget The Word Recession?

(Drivebycuriosity) - There is a lot talk about the next US recession, meaning two straight quarters of economic contraction (negative BNP growth).  "The U.S. is overdue for a recession", wrote CNN Money in June 2016 (cnn). "It is only a matter of time before the next recession strikes" claimed the Economist in 2015! (economist). "It`s time to start planning for the next recession", wrote FiveThirtyEight about a year ago (fivethirty). These are just some examples of recession callers (next+recession).

I think the pessimism is a response to the first decade of this century, which presented 2 nasty recessions, in 2000/01 and the 2008 crisis. I believe that this period was an exception and I think we have entered a very long recession-free period.

Some claim that recessions are a force of nature and have to come frequently. Do they?  Take a look at Australia. The economy down under has avoided a recession in 25 years (washingtonpost). The Australians are going to challenge the record, which is hold by Netherlands. The European country didn`t have a recession between 1982 and 2008.

Even the US had a long period of economic growth (nber). There was just one very mild recession in the period from 1982 though 2000: The recession from 1991 was caused by jumping oil prices  during the first Gulf War (the so-called Kuweit war). Recessions are indeed often caused by sharp  oil price hikes as you can see on the chart above (macrotrends).  A study by the Federal Reserve Bank shows that oil price shocks are the leading candidate for explaining US recessions (federal).

According to Prof. James Hamilton (University of California, San Diego) the oil price shock in 2007/2008 (as the price of oil tripled!) turned the economic slowdown into a severe recession (econbrowser): "The oil price increase over 2007:H2-2008:H1 should be regarded as a key development that turned the slowdown in growth into a recession" (archives).

I think the risk that another oil price shock will cause a new recession is much lower today.  The rise of the US oil production since 2011 - thanks to  fracking (a result of technological progress) - has changed the global oil situation fundamentally. Plenty & cheap oil from the US is flooding the global oil market and reduces the dependence from the unreliable Opec producers who have caused many of the past recessions.

There is another culprit for frequent recessions: The Federal Reserve Bank. In the past the Fed often had to break climbing inflation expectations by hiking interest rates sharply.  But, the Fed is a learning organism (as everybody) and is getting smarter over the time. Thy have learned from their past mistakes. Today the monetary authority is aware of the risk that the economy could overheat and then suddenly implodes (boom & bust) and is trying to smooth the economic development. Now the Fed is responding gradually to the rising inflation and hiking interest rates in small well dosed steps.

Otherwise has the Fed enough munition to respond to a recession. If the economy is cooling to much they can again purchase bonds (Quantitative Easing) and they could reduce interest rates below zero (negative interest rates).

My optimism is also based on strengthening tailwinds from China, India & other emerging markets. Last year China's economic growth rate has stabilized at around 6% and seems to accelerate again. This is lifting the whole world economy.  For instance Japan´s exports climbed 12% in March y-o-y, powered by exports to China, which jumped 16%. It´s becoming more and more evident that China´s continuous rise is lifting many boats.

The global economy benefits also from the technological progress. We are experiencing a new industrial revolution.  Advances in Internet, mobile computing, 3-d-printing, robotics, nano- & biotechnology and other technologies are reducing costs, raising efficiency and creating new markets. Companies are getting more efficient & more productive which further reduces the risk of a recession.

I think that the US could follow the example of Australia and may even break Netherland`s record. Recessions are still possible of course, caused by rare & unforeseen incidents, but their probability is sinking. Maybe around the year 2030 we will have almost forgotten the word recession.

Tuesday, April 25, 2017

Stock Market: Should Short Selling Be Illegal?

(Drivebycuriosity) - There is a cult around short sellers. These people are betting on falling stock prices (by going short or shorting). They borrow stocks from a bank and sell the shares immediately  in the hope that stock prices will fall and then they could buy back these stocks for much less.

Famous short sellers like Jim Chanos, Bill Ackman, Whitney Tilson & Carson Block are celebrated in the New Yorker, Bloomberg, Business Insider and other media (bloomberg). Some are treated like rock stars (features). The influential magazine The New Yorker claims, "shorting helps counterbalance investor overconfidence, corporate puffery, and Wall Street’s inherent bullish bias" ("In Praise of Short Sellers" newyorker). The magazine also declares that shorting "contributes to the diversity of opinion that healthy markets require".

                                                         Feral Hogs

Does it? The graph above shows that short selling (measured as the so-called "short-interest") has been shrinking during the current bull market for stocks. It looks like short sellers had to cover their bets (and to buy back) as stock prices have been climbing in order to limit their losses - which could amplify the upwards trend. But history shows, that short sellers are getting much more active when stocks are falling. For instance the correction in early 2016 inspired George Soros and many others to short the US stock market (driveby). As a consequence the short sellers aggravated this dip. But they had to buy back as stocks recovered later in 2016.  So, short sellers are amplifying the stock market fluctuations instead of smoothing them.

History shows that short selling gets more intense when stock prices are in downwards trend - which  could lead to a snow ball effect. In the recession of 2008 and early 2009 short selling was a viable business model. Hedge funds and other speculators were betting on a meltdown of the market and were shorting it. Massive shorting accelerated the fall of the stocks which intensified the pessimistic sentiment and inspired so more short selling, creating a snowball effect. It worked temporarily as self-fulfilling prophecy.

After the bankruptcy of Lehman Brothers, which brought huge gains for short sellers, groups of short sellers tried to repeat their success. They attacked everyone who seemed vulnerable, especially the banks. Federal Reserve member Richard Fisher (Dallas Fed President) described these groups as " big money" that "does organize itself somewhat like feral hogs. If they detect a weakness or a bad scent, they go after it"  (marketwatch ).

These massive bets against banks and many other companies destroyed not just the trust into the attacked firms, these bets destroyed the trust into the whole economy. Bankruptcies and tumbling stock prices seemed to confirm those attacks. Thus the stock market got into a downward spiral which paralyzed the whole economy. Companies ceased investing & hiring, the recession was on the brink to turn into a disaster like the great depression of the 1930s. The destruction of trust lead to spiral of pessimism that almost sucked the whole economy into the vortex of a depression. In spring 2009 massive stimulus programs (QE) and a zero interest policy stopped finally the downward spiral.

                                                         Rumors & Allegations

Even in a sound economy can short sellers do a lot of damage. This is described in the James Bond movie "Casino Royale". A villain, named "Le Chiffre" shorted stocks of an airline and ordered then an assassin to bomb a big new passenger plane in order to destroy the whole company and make their stocks worthless. Just fiction? Not really. Last week in Germany a man was arrested for a bomb attack (reuters). He had purchased put options on shares of the soccer club Borrussia Dortmund, which gave him the right to sell these shares to a certain price. Then he detonated three bombs that targeted the club`s team bus in the hope of forcing down the club's share price and making a profit. "If the shares of Borussia Dortmund had fallen massively, the profit would have been several times the initial investment," the prosecutor's office said, adding that such a slump could have resulted if any players had been killed or seriously injured.

All short sellers benefit from falling stock prices. Thus they have a natural interest that the business of the shorted company fails. Even if short sellers do nothing illegal they can inflict a lot of harm by spreading rumors & allegations about the shorted company- a practice dubbed “short and distort”. This way they can ruin their reputation and irritate customers, creditors, investors and employees and so inflict harm onto the company.  Often short sellers appear on TV or they give interviews after shorting to "explain" their case. Sometimes they conspire to torpedo share prices in “bear raids.” With false allegations they can  destroy good companies and cause people to lose their jobs. And short sellers are not regulated the way Wall Street analysts are, so they aren’t as accountable (bloomberg). 

Short sellers are often very powerful and exert a large influence on the stock market.  Bill Ackman,  a hedge fund billionaire and CEO of the hedge fund Pershing Square Capital Management, has been betting big against Herbalife, a producer and seller of nutritional supplements, for years. In December 2012 Ackman revealed that had massively shorted stocks of Herbalife and then started bad-mouthing the company.  "To bring the stock down Ackman did not just use his huge reputation as a billionaire hedge fund manager and media star. Ackman´s team has organized protests, news conferences and letter-writing campaigns in California, Nevada, Connecticut, New York and Illinois, against his victim " wrote the New York Times (nytimes). He also pulled the political puppet strings and got support from leading politicians including a senator.
Short sellers don´t invest, they don´t support economic growth, quite contrary, they punish companies who´s management thinks long term and invests into the future (which often reduces gains in the short term or even causes losses). Short seller can discourage CEOs to invest and to create new jobs because the implied costs could provoke attacks by short sellers. Short sellers could slow down economic growth  - and they make any crisis worse. I think these are enough reasons that short selling should be illegal or at least constrained and scrutinized like the work of analysts.

Saturday, April 22, 2017

Culture: Caspian @ Irving Plaza, New York

(Drivebycuriosity) - I like atmospheric heavy metal. Fortunately my wife shares this taste. Yesterday we went to Irving Plaza, a rock venue in Manhattan´s midtown to attend a concert with 3 groups: The Uncured, Caspian & Katatonia. I chose these event because of Caspian, an instrumental band from Massachusetts. Wikipedia labels their sound as post-rock, what ever that means (wikipedia).

Caspian was better than expected. The virtuous band delivered very heavy & atmospheric pieces with psychedelic elements. I indulged into their melodic yet powerful riffs. The stage was kept mostly in dark with stroboscopic light which intensified the experience.  The intense sound in combination with the light show created the illusion of a shamanic ritual. Wow!

The event started with Uncured, a young heavy metal band which reminded me a bit of Slayer (uncuredband ). But the talented musicians showed their own ideas & delivered speedy riffs with fine melodic lines. I think we will here more from this band in future.

We didn´t like Katatonia. Their songs seemed too soft & cheesy for our taste and we left the concert during their second piece. Thanks to the fine performance of Uncured & Caspian the event was a lot of fun anyway. Thanks to all.

Thursday, April 20, 2017

Contemporary Art: All Art + @ Van Der Plas Gallery, New York

(Drivebycuriosity) - New York`s Lower East Side seems to develop into an infamous party district. But the LES is also a place of culture. You can find there more than 100 art galleries, even though  some of them have closed recently. Yesterday I peeked into an reception @ Van der Plaas Gallery (156 Orchard Street vanderplasgallery ). They opened an exhibition, called "All Art +". The group show contains the works by more than 30 artists and represents a variety of styles, techniques & ideas. I display here my favorites from the show, a very subjective selection as usual.

Above this paragraph you can see "Inquiet" by David Mellen (Oil on linen 52 x 73 in 132 cm x 185 cm). This work belongs to a small group of paintings with the same title. The artist (here his website  dsmstudio) explained: "This title was chosen because the contrast between the French reading of “ inquiet “(anxious, restless, agitated) and the opposite English reading of “in quiet” (silence, still). I wanted paintings which contained both anxiousness and a sense of calm". I have seen Mellen`s works first in 2014 @ Bosi Contemporary, also on Orchard Street, which is now closed (here my post about Mellen`s solo exhibition "The Loss of So Many driveby ).

Above "The Gift" by Jarred Oppenheim & Alannah Farrell (2016-2017, Oil on Linen).

Above a Painting by Hakob Hakobyan.

Above James Vogler`s "Cafe du Verde" (2016, oil on canvas) followed by Kyoko Miyabe`s "Bird Bone Series I" (2015, Acrylic on Canvas). Sorry, I don´t know who created the third image.


Wednesday, April 19, 2017

Economy: Bangkok - Another Example For Government Despotism

(Drivebycuriosity) - It seems we live in the time of ridiculous dictators. Turkey`s Erdogan is expanding his power and North Korea´s Kim is threatening the world. Unfortunately they are not alone. This week came another example for government despotism - from Bangkok.

The Bangkok Metropolitan Administration (BMA), an arm of Bangkok`s city government, decided that street food vendors will disappear from Bangkok`s street by the end of the year in the interests of cleanliness, safety and order (businessinsider). The ban is meant to "return the pavement to the pedestrians" and restore "order and hygiene".

The decision was made a month after the city was named the finest street food destination in the world by CNN for the second year (cnn). "In the capital, which is internationally recognized for its street food, famous locations such as Chinatown/Yaowarat and Khao San Road would be cleared of vendors in a bid to beautify Bangkok" comments the Thai news service The Nation (nationmultimedia). "The World's Street-Food Capital Is Banning Street Food", writes time Magazine (

Holy Cow! I had visited Bangkok some years ago and was fascinated by the metropolis because of her "hustle and bustle" and the exotic environment which is partly caused by the ubiquitous street markets. And Thai street food is outstanding because of its variety. If tourists want to see a clean swiped city they could visit Hamburg, Germany.

Bangkok´s city government is another example for an administration which is out of touch. The bureaucrats are showing their power and they are enforcing their idea of "order and hygiene". They don´t care about the economic & social consequences. They don´t care that they will destroy thousands of existences. Where will these vendors continue their business? How will these people earn their living?

The bureaucrats don´t care about the thousands of customers who will lose cheap sources for breakfast, lunch, snacks & dinners. They don`t care about low income groups who depend on affordable street food. And they don´t care that they will destroy an important tourist attraction and so endanger an essential income stream for whole Thailand.

Monday, April 17, 2017

Economy: Why America Needs China Even More

(Drivebycuriosity) - It seems America´s economy is cooling again, while China is gaining speed. Good Friday wasn`t so good for the US. Then the government reported the retail sales from March which were quite disappointing: U.S. retail sales fell for a second straight month in March, reports Reuters (reuters). This fits to other weak US data, like the Chicago Purchasing Manager Index, a barometer for the current US industrial activity, which dropped in April to 5.2 points from 16.4 points, signalling slowing industrial growth in the New York region  (marketwatch).

Quite contrary China reports better news. Yesterday we learned that the Chinese retail sales grew in March 10.9% year-over-year, faster than in January & February, we also heard that industrial production growth jumped to (tradingeconomics).

It seems the Chinese consumers are replacing the Americans as the engine of the global economy. China (1.3 billion people) is swiftly transforming into a modern economy, helped by the technological progress. People are flooding into the big cites. The rapid urbanization creates millions of jobs and is driving income growth for the whole nation. Swift rising incomes are fueling the economic growth of China and so the retail sales. The rising importance of the Chinese consumers is a boon for global consumer companies like Apple, McDonald´s, Starbucks & Co. and could compensate at least of the weak American retail. It could even save the US economy from another recession.

PS for illustration I chose am image from China's international fashion week in Beijing in 2016 as symbol for the New China.

Sunday, April 16, 2017

Contemporary Art: A Gallery Walk In Chelsea New York, Spring 2017

(Drivebycuriosity) - New York`s Chelsea district is a mecca of contemporary art. I use to go there sometimes because there is a cluster of ambitious art galleries who have frequently important exhibitions. Recently I posted already about the Albert Oehler show which I enjoyed while my latest visit there (driveby) . But there was much more to see. Here are some pics from my recent pilgrimage to Chelsea, a very subjective selection as usual.

Above you can see some installations by Robert Therrien @ Gagosian (555 West 24th Street, through may 2016, 2017  gagosian). According to the press release some of the contained objects are found, others made.

I spotted the images above this paragraph @ C24 Gallery (560 West 24th Street  c24gallery). They show paintings by Christian Vincent. The exhibition is called "Through the Frame" (through April 26, 2017  vincent). According to the press release the Los Angeles based artist "explores and illuminates social behavior, conformity and isolation in the post-industrial world".

Above this paragraph you can see "Blind Spot" followed by "Web", "Periscope", "Untitled", "Dissolve", "Gap" & "Through the Frame". The paintings are all created in 2016 and oil on canvas.

Above some abstracts which I found @ Max Laniado Gallery (522 West 23rd Street visiodellarte ). The paintings are created by Kaloon Chhour who was born 1968 in China and lives now in France.

Above another painting spotted @ Max Laniado. This work is created by Cosmina. She is a French citizen and born in Romania.


Contemporary Art: Fox`s Universe @ Gallery Canada, New York

(Drivebycuriosity) - Contemporary Art often shows a lot humor. You can see that in a new exhibition @  Gallery Canada in New York`s Lower East Side ( 333 Broome Street canadanewyork). They exhibit new paintings and drawings by Jason Fox, the exhibition is called "Square Cave" (through April 23, 2017  ). The curators write "in Fox’s universe, demons, angels, pop stars, beloved dead pets and politicians walk amongst mortals" (exhibitions). I display here my favorites from the show, a very subjective selection as usual.

Most of these paintings are Acrylic, oil, and pencil on canvas.