July 28, 2015

Hoisington - Misperceptions Create Significant Bond Market Value 5-15min

From the cyclical monthly high in interest rates in the 1990-91 recession through June of this year, the 30-year Treasury bond yield has dropped from 9% to 3%. This massive decline in long rates was hardly smooth with nine significant backups. In these nine cases yields rose an average of 127 basis points, with the range from about 200 basis points to 60 basis points (Chart 1). The recent move from the monthly low in February has been modest by comparison. Importantly, this powerful 6 percentage point downward move in long-term Treasury rates was nearly identical to the decline in the rate of inflation as measured by the monthly year-over-year change in the Consumer Price Index which moved from just over 6% in 1990 to 0% today. Therefore, it was the backdrop of shifting inflationary circumstances that once again determined the trend in long-term Treasury bond yields. ... In almost all cases, including the most recent rise, the intermittent change in psychology that drove interest rates higher in the short run, occurred despite weakening inflation. There was, however, always a strong sentiment that the rise marked the end of the bull market, and a major trend reversal was taking place. This is also the case today. ... Presently, four misperceptions have pushed Treasury bond yields to levels that represent significant value for long-term investors. These are:
1. The recent downturn in economic activity will give way to improving conditions and even higher bond yields.
2. Intensifying cost pressures will lead to higher inflation/yields.
3. The inevitable normalization of the Federal Funds rate will work its way up along the yield curve causing long rates to rise.
4. The bond market is in a bubble, and like all manias, it will eventually burst.

Screen shot 2015 07 28 at 1.25.49 am
Bloomberg - Distressed Denim: Levi’s Tries to Adapt to the Yoga Pants Era 5-15min

Levi Strauss may have invented jeans, but it never saw yoga pants coming. Inside the effort to win back the hearts, and butts, of shoppers ... At the foot of Telegraph Hill in San Francisco, in a renovated grain mill with soaring ceilings and wooden beams, Bart Sights is refining his recipes for denim. In his hands, stained dark blue from day after day of plunging fabric into buckets of indigo dye, he holds a list of steps for creating a particularly vexing style: women’s skinny jeans. Most such jeans contain so much synthetic fiber they appear slick, cheap, and unlike real denim. Sights has been searching for a way to give the fabric just the right amount of stretch, in just the right places—enough to flatter the figure, but not so much that they stop looking like jeans. ... The company, founded in 1853, has survived the Civil War, the Great Depression, and other epochal threats, but in the last two years it’s been tormented by an enemy none of its executives saw coming: yoga pants.

Inc. - How a Family Business Feud Almost Killed Mardi Gras 5-15min

"Michelangelo and da Vinci, all of them were float builders, so I'm in pretty good company," he says, with characteristic humility. Listening to the monologue is Barry Kern, Blaine's 52-year-old son, who does not share his dad's propensity for self-revelation. Asked about some outrageous antic of his father's, Barry usually shrugs and says, "That's just Blaine being Blaine." ... But Barry wasn't so sanguine in 2010, when he started slapping his father with lawsuits in a spat that nearly destroyed their venerable company and threatened to derail New Orleans's most beloved--and lucrative--tradition. ... The elder Kern built his first float in 1947 and has since helped make Mardi Gras in New Orleans a world-renowned event through his artistry, luck, and relentless self-promotion. Barry quietly turned what is now called Kern Studios into a more professional operation after he became its president in 1994, quadrupling revenue to $40 million and expanding the business with theme park attractions in Las Vegas, Europe, and Asia. ... Today's high-end floats sport dazzling visual effects and can cost $1 million.

Wired - The Superplant That May Finally Topple the Rubber Monopoly 5-15min

Mathur explains how he and his company, Yulex, hope to break the Asian rubber monopoly using gene sequencing and an unassuming desert plant. ... what he’s trying to do here in the desert, with a plant called guayule. ... Mathur tears a stem from one shrub and peels back the bark, pointing to a thin layer of, well, softness. This is called parenchyma. You can use it to make rubber, and that means you can make wetsuits, condoms, gloves, catheters, angioplasty balloons, and so many other medical devices. But most importantly, you can make tires. Car tires. Truck tires. Aircraft tires. In fact, this sort of natural rubber is essential to making tires. Yes, we now have synthetic rubber, but that isn’t as strong as the natural stuff. Our automobile tires contain about 50 percent natural rubber, and you simply can’t make a truck or aircraft tire without it. ... Today, almost all natural rubber comes from hevea rubber trees grown in Southeast Asia, and that hangs a nightmare scenario over US tire makers and the wider US economy. In the event of war or natural disaster, our supply could vanish, and rather quickly. But guayule can provide an alternative. Since the early 20th century, American researchers, entrepreneurs, and statesmen have eyed the plant as a way of freeing the U.S. economy from this deep dependence on Asia. Rubber trees don’t do well in the US, but guayule does. It’s indigenous to Mexico and the American southwest.

Art & Science - Technology and The Evolution of Storytelling < 5min

It’s interesting how people cannot see beyond what they’re used to. ... If you use technology correctly, you can change opinions overnight. ... We focused on the story and hiding the technology. ... It’s not the technology that entertains people, it’s what you do with the technology. ... your work will not be about the technology. It will be about connecting and entertaining people. ... If you create characters people connect with and tell stories that deeply entertain and move them, the audience will come.

Grantland - 30 for 30 Shorts: Ted Turner’s Greatest Race 14min

When Ted Turner entered his yacht Tenacious in the famed Fastnet Race in 1979, he did not need to prove himself. Turner already had the following on his résumé: founder of a television network, owner of the Atlanta Hawks and Braves, and, most appropriate here, winner of the 1977 America’s Cup. Still, he loved to sail and loved to race with his crew of carefully selected mates. This race would prove to be like no other Turner had ever entered when a freak storm turned the Celtic Sea into chaos. When the winds stopped and the race was over, many of the 303 entrants hadn’t even finished and, tragically, 15 sailors had lost their lives. The victorious crew of the Tenacious relive the voyage, of which Turner famously said: “I was more afraid of losing than I was of dying.”