Friday, September 18, 2020

Friday Links

  • A good many times I have been present at gatherings of people who, by the standards of the traditional culture, are thought highly educated and who have with considerable gusto been expressing their incredulity at the illiteracy of scientists. Once or twice I have been provoked and have asked the company how many of them could describe the Second Law of Thermodynamics. The response was cold: it was also negative. Yet I was asking something which is the scientific equivalent of: Have you read a work of Shakespeare's? I now believe that if I had asked an even simpler question – such as, What do you mean by mass, or acceleration, which is the scientific equivalent of saying, Can you read? – not more than one in ten of the highly educated would have felt that I was speaking the same language. So the great edifice of modern physics goes up, and the majority of the cleverest people in the western world have about as much insight into it as their neolithic ancestors would have had. [Wiki]
  • The LGBTQs are overwhelmingly and decidedly part of the lumpenproletariat: their class consciousness starts and ends with "does the society I live in tolerate my behavior or not?" this is why all conversations with them are wrt their "acceptance" instead of material conditions. Not just that their tolerance is a guaranteed self-sabotage on any kind of revolutionary action, not only will they invariably make the discourse about themselves but they will sabotage the revolution because their existence can only be wholly accepted by a neoliberal order. [twitter]
  • New Yorkers are afraid to let even a handful of spectators into the Arthur Ashe Stadium (capacity 23,771). Someone sitting by him/her/zir/theirself could contract coronavirus. When a group of Americans is fully stocked with an Abundance of Fear, how do they characterize themselves? The banners that cover the seats and ensure none of the tournament-affiliated folks can sit there read “New York Tough”. [Why couldn’t they give free tickets to people who were previously hospitalized for COVID-19? NYC has many thousands of such folks and, so far, there is no evidence that they are catching the Only Disease That Matters (TM) for a second time.] [PhilG]
  • Note also that England has had months of open pubs, and a very quiet situation, but now cases there are doubling every six to seven days (FT). Don’t switch back to talk of deaths! The “simple” theory of herd immunity is surprised to see that new trend in cases. What I call semi-herd immunity suggests a high degree of protection for the current configuration of social relations, after some point. As those social relations change, some of that temporary herd immunity dissolves, as new infecting connections are being created and new superspreaders arise and do their thing. But that takes a while, possibly months. The herd immunity theorists downplay the possible temporariness of the equilibrium they pinpoint. They instead prefer to focus on the (correct) point that most of the mainstream approaches did not forecast the collapse in deaths and hospitalizations found in England, Sweden, New York, and now parts of the American South. In reality, you need to put both sides of the picture together, and grasp both the insights and limitations of the herd immunity theorists. [Marginal Revolution]
  • A reasonable inference to be drawn from these facts is that the Investment Company Institute successfully lobbied Chairman Clayton who directly or indirectly pressured Division of Investment Management to issue a statement that it would not have issued absent such pressure. It is inconceivable that Mr. Algren, for one, is happy about that. There are probably other staff members who take seriously their mission to protect investors from the sort of abuses that led Congress to adopt the Investment Company Act of 1940 and who are troubled about giving fund boards a license to violate Section 18(i). To repeat, Congress’ rationale for adopting the Investment Company Act of 1940 was its finding that the states had failed to protect the interests of investors. Division of Investment Management, by withdrawing the Boulder Letter, has perversely thrown investors back into the clutches of states like Maryland that have demonstrated a willingness to weaken investor protections and fiduciary duty standards to entice fund sponsors to register their funds there. What do you think Messrs. Healy and Schenker would say about allowing a fund to opt into a control share statute like Maryland’s? [Phil Goldstein]
  • We present three lines of evidence to support our contention that laboratory manipulation is part of the history of SARS-CoV-2. (i) The genomic sequence of SARS-CoV-2 is suspiciously similar to that of a bat coronavirus discovered by military laboratories in the Third Military Medical University (Chongqing, China) and the Research Institute for Medicine of Nanjing Command (Nanjing, China). (ii) The receptor-binding motif (RBM) within the Spike protein of SARS-CoV-2, which determines the host specificity of the virus, resembles that of SARS-CoV from the 2003 epidemic in a suspicious manner. Genomic evidence suggests that the RBM has been genetically manipulated. (iii) SARS-CoV-2 contains a unique furin-cleavage site in its Spike protein, which is known to greatly enhance viral infectivity and cell tropism. Yet, this cleavage site is completely absent in this particular class of coronaviruses found in nature. In addition, rare codons associated with this additional sequence suggest the strong possibility that this furin-cleavage site is not the product of natural evolution and could have been inserted into the SARS-CoV-2 genome artificially by techniques other than simple serial passage or multi-strain recombination events inside co-infected tissue cultures or animals. [link]
  • Hello from the tail end of Japan Swelter Summer. The humidity broke a few days ago and everything is crisp and glorious and markedly less soggy. I am obsessed with humidity — my home is filled with hygrometers. I have a dry case for camera equipment and my one pair of fancy leather shoes. My friends send me the latest in dehumidifier news. Few people fully understand the implications of runaway humidity. What an odd thing to care about, you may think. But spend a summer in certain corners of Japan and you will suddenly care very much. A comfortable life is contingent on very narrow bands of humidity:temperature ratios. 60% humidity and 22 degrees Celsius is excellent. Crest 70% and 26 degrees and you have just bought a ticket for a mold dance. But increase airflow and the mold can be mitigated. Airflow is underrated. A stagnant room is screaming to be reclaimed by nature. Of all rooms, my bathroom has the best airflow. Its airflow is beautiful, a masterwork. Were you to toke a cigar in my tub the smoke would perform elegant acrobatics all about the volume. You would be awed by the flow. There are no mold issues in the bathroom. [Craig Mod]
  • I enjoy democracy immensely. It is incomparably idiotic, and hence incomparably amusing. Does it exalt dunderheads, cowards, trimmers, frauds, cads? Then the pain of seeing them go up is balanced and obliterated by the joy of seeing them come down. Is it inordinately wasteful, extravagant, dishonest? Then so is every other form of government: all alike are enemies to laborious and virtuous men. Is rascality at the very heart of it? Well, we have borne that rascality since 1776, and continue to survive. In the long run, it may turn out that rascality is necessary to human government, and even to civilization itself - that civilization, at bottom, is nothing but a colossal swindle. I do not know: I report only that when the suckers are running well the spectacle is infinitely exhilarating. But I am, it may be, a somewhat malicious man: my sympathies, when it comes to suckers, tend to be coy. What I can't make out is how any man can believe in democracy who feels for and with them, and is pained when they are debauched and made a show of. [H.L. Mencken]
  • In the days before agriculture, governments didn’t really exist. Most of the hunter-gatherers were egalitarian anarchists: They didn’t have chiefs or bosses, and they didn’t have much use for anyone who tried to be boss. Bushmen today still laugh at wannabe “big men.” Perhaps we could learn from them. But farmers do have chiefs: It goes with the territory. Grain farmers store food, and so they have something valuable to steal, which wasn’t the case among hunter-gatherers. Elites, defined as those who live off the productive work of others, came into existence in farming societies because they could. Interestingly, some peoples seem to have curbed the growth of elites just by growing root crops such as yams that rot quickly unless left in the ground, and thus are hard to steal.16 Another point is that the strongest early states often had natural barriers that made it difficult for “citizens” to escape the tax collectors. Egypt, with a strip of very fertile land embedded in uninhabitable desert, is a prime example. Of course, once your neighbors form states, there’s pressure on your group to do the same, both for self-defense and for the benefit of those locals who will form the new elite. Today, practically everyone lives under some kind of government. [The 10,000 Year Explosion: How Civilization Accelerated Human Evolution]

Thursday, September 17, 2020

@pdxsag Guest Review of The Analyst by "Y.N."

With the absurdity of the Snowflake IPO today (market cap $60B, >100x sales, Berkshire-Hathaway subscribed for $250M shares at the IPO price), I thought I should take the opportunity to do a review of the novella “The Analyst,” which was written by someone who went by "Y.N." in the CBS comments.

I first read it 2 years ago when it was brought to our attention by the author in the comments to a blog post. It is no less topical today than when it was written.

It is a hard book to review without giving away any spoilers. What I can say is that it combines the existential questions of great science fiction with a financial plot-line CBS readers would definitely appreciate.

Of the questions it brought to mind, one was how would we know whether any of the numbers Netflix, Amazon, FB, or any of these SaaS companies are real? What if 80% of social media is just a bunch of cloud services streaming from each other? What if 80% of Robin Hood trades are bots shuffling fractional shares amongst each other?

With billions at stake, why wouldn't a VC create a bunch of AWS instances that would be real, dues-paying customers to one of the portfolio companies they are prepping for IPO? With no moral compass, and a return of $20 for every $1 in revenue spent at the IPO-ing company, they'd be crazy not to.

As pertains to Robin Hood, what if those thousands of new traders every month are fake accounts made by Robin Hood's VC owners? It wouldn't need to be an inside job. Robin Hood itself could be completely ignorant, albeit willfully and with complete plausible deniably, to be sure. But with a couple hundred dollars and a stolen social security number from the dark web, it shouldn't be hard to open a fake account.

So the question becomes, how would investors on the outside know? What would be the "tell" that a SaaS company were faking its users with bots?

Jeff Bezos would know. The NSA would know. Perhaps a few network architects at Comcast, ATT, and the small number of tier 1 internet service providers might know. Overall, however, not that many people would be have access to the hard data to know. It would be easy to keep such a conspiracy covert. But what about the circumstantial evidence?

One beauty of SaaS fraud versus, say, a car company or telecom equipment manufacturer is the ability to hide the "stuffed channel." It is no easy task hiding 10,000 cars. Obviously they are big and expensive. If you claim to have built and shipped 100,000 cars in a quarter, you can be guaranteed that some meddlesome short-seller, or 30, have staked out your manufacturing plant and counted the cars as they've rolled off the assembly line and out the gate. In contrast, with SaaS fraud, it's just bits on a network connection, and that's assuming they've gone to the trouble of spinning up a user on the outside. As long as money is cheap and price to revenue is greater than 1.0, as a major investor you would continue paying for the service and even be ready to add a customers anytime a quarter looked like it was going to be a little light. Again, with no moral compass, you'd be stupid not to. The SEC certainly isn't going to investigate. Even if they wanted to (don't laugh), how would they? Bits went in and bits went out, no one has any way of determining if the bits had no real purpose.

The next question is how much AI is behind all the social media we interact with on a daily basis? We are used to thinking in terms of algorithms that serve up targeted advertising to us everyday. How much content is algorithmically generated? I assume readers are familiar with internet sock puppets. We think of them as having a human hand inside the sock, but is that necessary? Could a sophisticated AI operate a significant number of sock puppets to drive internet discourse around a topic among real investors? What about a small cabal of 6-12 individuals using AI and bots to force-multiply their actions? The chat bots used for customer service use AI to force-multiply real customer service representatives. How much of our interaction is real and how much is with the bot?

I believe once you start considering that then you have to start considering how much of your own real-life actions are influenced by virtual interactions. We may scoff at Facebook users falling for obvious conspiracy theories meant to discredit the people that believe them, but where is the line between obvious dis-information the “rubes” fall for, and the not so obvious dis-information one personally falls for? How many of your social media “friends” (including bloggers) talking about something in a believable manner would it take to move you to action? Especially in this day when all valuations are relative, what does one use as their check for reality?

I don't have answers. The pleasure of science-fiction is having an author pose interesting questions to the reader which he must ponder the answer to for himself. In this regard, “The Analyst” was excellent.


Friday, September 11, 2020

Friday Links

  • Will be interesting to see if that corner molding holds up over time. The cheap stuff is mostly air, the better stuff has more plastic content. If you do 3D printing you know what "fill" means..... look how the strap crushed the plastic corner molding in this photo. If it crushes/compresses it more over time.. the strap will be lose and the condenser will shake/possibly stress crack at it's base? [TMC]
  • My hypothesis…. Tesla’s the original design of the LCC (Liquid Cooled Condenser) had a shorter “stack height” to begin with. They may have needed to add more “stack-height” for the Heat pump system to perform optimally. I think the add stack-height made the cantilever distance too far which created a longer moment arm filled with heavy fluid in the LCC. Tesla probably found leaks and/or failures (at the sealing face) during Validation and testing. THEN added the “Band-Aid.” [Jalopnik]
  • We get 11 blocks down the road and this black Chevy Impala is ghosting us down the street, he’s kind of been in our shadow since block two or three He rolls his window down and starts asking us a bunch of questions. Why are we here, what are we doing, telling us we need to get the fuck out of here, asking us where our car is etc., we pretty much told him to get the fuck away from us because we didn’t know who he was. I finally asked him at one point, Who the fuck are you, man, you need to leave us alone, and he was like I’m the fucking police, bro, who are you? So he pulled his car over and he and his partner talked to us. He was one of the special programs guys, either with SWAT or SRT or whatever. He was the one that yelled at me not to reach, and tried to help us out. He said he knew that we’ve been pepper sprayed and we’re having trouble seeing, I kind of snapped at him, Like hey motherfucker, You’ve been watching this whole thing fucking unfold and you didn’t intervene at all or light the crowd up or something? He started laughing and he was like, Man, if I got out and tried to help you guys, my fucking car would be on fire right now, and I’d be running next to you. Bottom line: don’t go to an Antifa protest where you can put yourself in that situation. And if you find yourself in that situation, expect them to employ tactics that take away your situational awareness, and complicate the use of force continuum.” [American Partisan]
  • Though still an emerging theory, the bradykinin hypothesis explains several other of Covid-19’s seemingly bizarre symptoms. Jacobson and his team speculate that leaky vasculature caused by bradykinin storms could be responsible for “Covid toes,” a condition involving swollen, bruised toes that some Covid-19 patients experience. [link]
  • People of a certain age may remember the parlor game Mad Libs where each player is asked to provide random verbs, nouns, and adjectives that are later inserted into blanks in a partially completed story. See also the Chinese restaurant column A and column B method of naming a place. Panda Palace. Palace Garden. Jade Palace. Jade Garden. Panda Pagoda. Pagoda Garden. Jade Pagoda. Similarly heights, paired with a feature from nature, and a vague reference to something British will almost always congeal into the name of a housing development. Willow Glen Heights at Windsor III. The Oaks at Trafalgar Heights. Pinnacle Heights at Cotswold Meadows. [Granola Shotgun]
  • In early 2018, Murphy was lunching with one of his regular “bid-gossip” contacts at Signor Sassi, a splashy Italian restaurant near Harrods, when Wirecard came up in conversation. “You know they will pay you good money to stop writing about them,” the market contact stated. Murphy smiled, dismissing the idea. “No, I’m serious, they will pay you proper money,” he insisted. “They will pay you $10m. Go and talk to Bill. He’ll help you.” [FT]
  • New Trondheim was the most grandiose of the projects, an entirely new city for Germans that Hitler commissioned Albert Speer to design on the Trondheim Fjord, which was also the intended site of a vast new German naval base. Hitler imagined New Trondheim as the German cultural hub of the north, and thus “fabulously built,” as he told Joseph Goebbels, with a German art museum and opera house as well as other luxurious amenities. [Time]
  • They also need to set up or shore up—now—communication channels that don’t rely on the media or Big Tech. Once the ruling class gives word that the narrative is “Trump lost,” all the president’s social media accounts will be suspended. The T.V. channels, with the likely exception of Fox News, will refuse to cover anything he says. Count on it. He’s going to need a way to talk to the American people and he has to find the means, now. [American Mind]
  • Best theory on what happened in Vegas. Paddock was arms dealer entrapped by Feds. Agreed to help set up unknown buyer in exchange for deal. Preliminary meeting at Mandalay Bay—guns arranged showroom style, skeleton crew Fed team. Buyers figure out it's a setup or try to rob him. Buyers shoot Paddock. Feds hear what's going on, try to intervene. Buyers grab guns, shoot through the door. Feds outgunned, pull back. Thinking they're facing a bigger force, buyers shoot into crowd to create chaos. Realizing there's no resistance, buyers flee down side-stairs. With huge fuck-up, Feds destroy all record of the operation. Paddock's brother threatened into silence with CP charges. Vegas PD doesn't want full investigation into incident b/c of their sluggish response. Mandalay Bay owners on the hook for lawsuits, destroy any other evidence. Everyone who knows the full story (buyers, agents on the ground) has probably been killed. There will never be a serious inquiry into the shooting because too many important people would lose their jobs. [Mystery Grove]
  • Minard is best known for his cartographic depiction of numerical data on a map of Napoleon's disastrous losses suffered during the Russian campaign of 1812. The illustration depicts Napoleon's army departing the Polish-Russian border. A thick band illustrates the size of his army at specific geographic points during their advance and retreat. It displays six types of data in two dimensions: the number of Napoleon's troops; the distance traveled; temperature; latitude and longitude; direction of travel; and location relative to specific dates without making mention of Napoleon; Minard's interest lay with the travails and sacrifices of the soldiers. [Wiki]
  • "Even though Building 7 didn't get much attention in the media immediately, within the structural engineering community, it's considered to be much more important to understand," said William F. Baker, a partner in charge of structural engineering at the architectural firm Skidmore, Owings & Merrill. "They say, 'We know what happened at 1 and 2, but why did 7 come down?'" [NY Times]
  • SJ seems like an archetype of what I'm starting to call "Extrovert Who Doesn't Read". Another example would be Donald Trump. These people only know what they hear from their social circle, and they decide who is correct if the opinions differ largely based on the social status of the different advocates. They don't assemble their own body of knowledge by reading primary sources and weighing the arguments the way introverts do. One situation where these people get in a lot of trouble is if they have a serious disease. SJ's fad diets are an indication that he didn't know anything about chemistry or biology. On re-reading the bio, the conversations with engineers when he's in the room are about aesthetics. SJ did not seem to be a big part of the technical conversations, at least in Isaacson's telling. It would be interesting to know more about this. Was he sidelined by the Apple professional management during the Lisa era because of a lack of technical chops, or for being difficult to work with, or both? [CBS]
  • Last year I reviewed economist Art De Vany's New Evolution Diet book, which is a 5/5 with good thoughts on paleo, low-carb, and power law effort distribution, and has his choice quote, "bread is the ultimate poverty food – it exists only because grain is cheap, easy to grow and is less perishable than other foods." Remember the key takeaway from De Vany was that early humans would have been exposed to practically no foods capable of triggering a massive insulin release, and each insulin spike puts wear on the body, and also lessens the insulin sensitivity of adipose tissue, which sets up an unpleasant positive feedback loop of metabolic syndrome. [CBS]
  • From the moment I first drove one at the Mid-Ohio school in 2017, I knew I needed an S2000. Its gearbox is among the best ever built, its steering fast and precise. It scoots its way out of corners, your butt pulled along for the ride thanks to the above-the-rear-axle seating. Mostly, though, it's just about the engine. When the car crosses into VTEC territory, the rate of acceleration massively picks up, the S2000 bursting into life and screaming toward its 9000-rpm redline. It will do this all day, demanding that you beat the absolute snot out of it if you want any performance. It is uninterested in noncommittal driving; wring the life out of it or get dusted by minivans. You simply have to work for it. [Road and Track]
  • Mafia, not sting: The theory that Epstein routinely blackmailed the businessmen and celebs who visited his sin sites always seemed implausible: Did he really sit down with each of his marks and surprise them with the news that he could now blackmail them? Without one of these titans blowing the whistle on him (or figuring out some other way to, um, cancel him). All while continuing to attract more marks who somehow hadn't heard the news? But what if (and I’m stealing this theory from a friend) the marks willingly volunteered to be compromised? Joining Epstein's sex club would be more like joining the mafia -- you give them some power over you, but you'd get something (including potential protection and support, as well as potential sex) in return. No need for Epstein to sit you down after an orgiastic encounter and burst your bliss. (That's a lot of work!) The implicit deal would be understood from the start. [Kaus]

Tuesday, September 8, 2020

Guest Post: @pdxsag on Episode 5 of The End Game by Grant Williams and Bill Fleckenstein

This is a new feature from our correspondent @pdxsag. He has volunteered to “sit through podcasts so we don't have to.” Although, he adds, you should still listen to them, because he is only going to review the podcasts which are excellent -- so excellent you don't want to risk missing-out on anything. The latest is Episode 5 of The End Game by Grant Williams and Bill Fleckenstein, with guest Russell Napier. PDXsag wrote up Episode 6 last month, which had Lacy Hunt as the guest. 

Episode #5 (iTunes) is the counter-point to last month's Episode 6. Lacy Hunt believes unless and until the Fed starts monetization via direct commercial lending, the disinflation cycle will remain operative, up to and ultimately including negative nominal interest rates.

Russell Napier was a fellow disinflation-ist with Lacy Hunt until the Covid crisis. He argues the PPP lending program and similar programs in other developed countries are the leading wave of monetary largess which will result in an inflation cycle among developed countries that nearly every active market participant has not experienced in their lifetime. Napier expects, and perhaps the litmus test of his prediction, a 4% consumer inflation rate by Q2 2021, likely sooner.

Like last time, below are summaries I made of various key-points. Emphasis are mine. Occasional opinions interspersed within square brackets are also mine.

3 min: Fleck asks Napier to go into his process that shifted his thinking to being an inflationist.
Napier always expected the “next recession” to lead to a change. He thought it would be MMT, but one afternoon realized bank credit guarantees are “it.” They didn't exist in February or March, but suddenly they did, and universally in all developed countries.

5 min: Williams suggests loan guarantees are a lot easier politically to get through than MMT, which is very controversial. Napier concurs. Loan guarantees are hard to argue against when they are loans to small businesses in need. And  as contingent liabilities it is easy to pretend they don't exist on the government balance sheet. There is no increase recorded in the national debt. And they can be rolled at 0% interest indefinitely. [A rolling loan gathers no loss.]

7 min: Spain, Germany, Britain all have debt guarantee programs analogous to the US PPP. As an example of loan programs just being extended, Spain's emergency lending started as a 100 day program, then one day by edict it was a 150 day program. Napier concedes if these are a one-and-done pulse then his argument fails, but so far that doesn't appear to be how any of these programs are trending.

Even the Germans[!] are in on the game. They have the fastest growing banking system in Europe.

Britain has the “Bounce Back” program. Loans are up to 50k pounds, ie. to small biz, and 23 billion was disbursed in the first 6 weeks. The loan quality of the “Bounce Back” loans was such that 50% are expected to fail. Under traditional QE none of these loans would have been made. This is a fundamental difference. QE money sits on banks' balance sheets because the credit risk is still the banks' problem. Loan guarantees remove the credit risk, so the loans happen and lead to new money getting into the real economy. The loans are 3.6% for 6 years. Everyone who could, took a loan whether they actually needed one or not. Proof is the gang-busters business boats and sports car dealerships are doing.

Bank credit growth in Japan is shooting up as well. It's everywhere you look.

10 min: Williams says pieces for inflation are everywhere, and yet no one believes inflation can happen. Napier thinks it is entirely a timing question. Pros are paid to leave the party one minute to mid-night. So they are still in the no inflation camp because they think it's still 2-3 years away.

11 min: When every country has double digit money growth it's time to pay attention. 6 months ago OECD released a money growth number that was lowest since 2009. Four months later the rate has more than doubled. [He doesn't state the exact numbers though.]

12 min: If we had a blended inflation rate that took into account asset prices instead of just consumer prices we would be measuring inflation and no one would be arguing otherwise. Napier says he can argue there's a big difference between central bank balance sheet growth and broad money supply growth and their respective effect on asset prices and consumer prices. However, no one wants to argue that point. They justify the last 10 years of CB balance sheet growth only effecting asset prices like it's a good thing [which it's not, unless you're one of the Boomers that already own all the assets you ever are going to need], and use it to act like broad money supply growth won't affect consumer prices either.

17 min: Fleck highlights the distinction Napier made between asset inflation and consumer price inflation and asks why people act like one is good and the other is bad. Napier responds it's because of the amount of debt in the system. The pros realized that asset inflation is a one-way bet in our highly geared system. Even a slight amount of asset price correction would cause the whole system to crash. So pros are able to call policy-setters' bluff by loading up on debt and knowing central banks will act.

20 min: Williams mentions the only time in the last 35-40 years where top 10% incomes have fallen more than bottom 90% was during the S&L crisis. S&L was when asset prices deflated and were allowed to deflate. And it's not talked about much anywhere. The crisis came and went and everyone remembers Charles Keating [ahem, and John McCain], but the game of inflating asset prices since then has become crucial. Napier agrees – recounts he used to see Paul Volcker once a year or so. Napier finally asked him where did it all go wrong. Volcker was adamant that it was LTCM. LTCM was the bail-out where it all went wrong. [Proud to say I've been saying this for 20 f*cking 2 years.] Since then everyone who could gear-up money has bought assets on the belief that they won't be allowed to lose money. Napier continues that there are good reasons we have inequality today – for instance, not everyone is a Steve Jobs – but there are some really bad ones. And a select class being able to gear-up debt to buy assets and get all the tax advantages of that, which equity doesn't get, and know they'll be bailed out if anything goes wrong is one of the bad ones. This isn't an argument against assets or capitalism, it's an argument against one kind of overly favored class. [ahem, more equal] Napier calls it financial engineering vs. capitalism. He laments financial engineering may well prove to be bad for capitalism. [We've all seen enough Millennials cheering on AOC to know he's right about that.]

22 min: Fleck concurs LTCM was the Fed's Rubicon.

23 min: Napier reminds us of the Time cover with Greenspan, Summers, and Rubin, “Committee to Save the World”. It wasn't just Greenspan.

24 min: Williams asks what may happen from here. The return of inflation creates a whole new set of problems, some of which from the point of view of bankers and law makers are pretty dramatic.

Napier: Correct, 1) you have to create inflation and 2) you have to keep interest rates from rising. Not just short term, but long term too. We've done this before. Read “The Deficit Myth.” Yield Curve Control was done from 1941 to 1952, which the author uses as an example of a success, without mentioning during that time the US had rationing, price controls, credit controls, and capital controls including forced purchases of government debt. There was massive inflation in the black and grey market, and of course shortages in the regular market. Next, they forced (institutional) savers to buy government bonds.

What you're really doing is wiping out savers through forced taxation. If we do that, the richest people in the world will get around it. They have the tax advisors and attorneys to get around it. What you're really doing is wiping out the middle class. They can't afford to avoid it. Societies that wipe-out their middle class pay a really high price for it. Yield Curve Control sounds so innocuous and rather technocratic and very boring, but actually it changes the nature of what a society is.

28 min: Napier comments on how they could enforce YCC – They won't force individual savers to buy government bonds. However, life insurance, pension, mutual funds are all regulated entities. Being regulated, the government can say to them, you must buy X% of government bonds. They'll call it Macro Prudential Regulation. Who is going to come out against that? You'd be mad to be against prudential regulation. It's like mom and apple pie. [And universal healthcare coverage.]

29 min: Williams: the pernicious effects of this change from deflation to inflation is going to do more harm to more people than ever before. Napier corrects that it's savers that are harmed, not all people. It moves money from savers to debtors and it strikes at a schism in society. It's a redistributive tax without legislative accountability.

31 min: Napier: Soft money regimes are a product of democracy. We shouldn't forget that. The gold standard ends as soon as women get the vote. [Based!] Now a lot of people support the gold standard, but I don't. I prefer democracy. [Sad trombone] But I would think hard currencies and democracies are incompatible.

32 min: Fleck: what do you say to the people that are in the camp that there's too much debt.

Napier: There's not too much debt, there's not enough money. [lol wut] For the last 20 years we've tried to let Central Bankers create more money and they've failed to achieve it. So finally they've found a way around that with these lending programs. There are several ways to bring down a debt to GDP ratio and inflation is the least painful, and that's why it's preferred over defaults and preferred over austerity. The post-WWII gives us the model. Policy makers point to the 1945 to 1980 period as a triumph. But to put into context for listeners, what was it like to be a saver in that time period? If you owned British gov bonds you lost 85% of your purchasing power. There are modern policy makers that believe that to be one of the greatest success stories in history.

35 min: Napier: It's a supreme irony that every one I talk to believes Central Bankers are all-powerful, just as they've lost all their power to government policy makers. Government usurped Central Bank control by dictating the commercial banks' balance sheet growth and contraction. If banks are mandated to increase lending, they will have to make the loans and that money will enter the system. Admittedly people push back and say these lending programs are temporary, and if they are temporary I will be proven wrong. But, I'm not, that's how government can overwhelm Central Banks. It's capitalism with Chinese characteristics.

38 min: Napier brings up Euro and how this model with 19 member nations doesn't bode well. There will come a time when Germany wants to stop and countries like France or Italy are still very keen on keeping the money growing, and that's where the schism comes into the Euro, which raises questions about a single currency.

39 min: Fleck asks about End Game in Japan.

Napier: Start from the premise that Central Banks will never shrink their balance sheets. Is it really debt then? It is a perpetual non-interest bearing transfer. Where I come from a perpetual non-interest bearing transfer is a gift. [lol] Even Goldman couldn't sell a perpetual non-interest bearing transfer.

Japan's broad money growth is 5.9%, a 30 year high! People may ask why didn't they do this to begin with. Because they didn't create debt they created Reserves. Historically, if you created too many reserves in the system you got massive bank loan growth and inflation, but this time around those reserves just sat there: no loan growth, no new money, ergo no inflation.

For eight years I have been saying this is how it would end. They just mandate commercial bank balance sheet growth. I didn't see them doing it through bank credit guarantees, but here we are.

We've done bank balance sheet limiting to fight inflation. Nixon did it. The revolution of the 1980's was using interest rates to regulate money growth, not government regulation. Now we've come full circle. We're using government regulation to induce inflation, not fight it.

45 min: Napier: under the new model, fire everybody and hire Brazilians. If somebody can grow capital in Brazil that person deserves respect and admiration. You should have Brazilians on the End Game program. Developed world investors have learned everything they know under 40 years of disinflation. Emerging markets have a different skill set. By way of example, the skill set you needed from 1945 to 1979 is a different skill set than you've needed from 1980 to the present. [CBS - investor genotypes in an investing ecosystem]

47 min: Fleck asks Napier to give investors of today a short-hand for what financial repression means and how it operates.

Napier: Yeah, so I have a 90 minute presentation on this, so in other words we're really going to have to really, really, really get going. 1.) Prepare for capital controls. 2.) Inflation above interest rates – the firms that are prepared for that are minuscule in market cap. If you've had a 40 year trend in inflation and the winners are all those that benefited from disinflation, when you turn that around, those are not going to be the ones suited to the new environment. 3.) Look at Japan. They've not benefited from high fixed costs in a world of disinflation, so higher inflation should benefit them now. [Very interesting that Buffett made news this week with a $5 Billion investment in Japan] 4.) Read about the 1945-1979 period 5.) Gold is the stand-out asset. I'm not a gold-bug. It's not a productive asset, but it is the stand-out asset when we are dealing with financial repression.

50 min: Williams: with the caveat you're absolutely not a gold bug, could you talk a little bit about gold.

Napier: I'll set aside the inflation bit. That's the part everybody “gets.” The other bit is the interest rates, mandating they be below inflation. In response people go for that thing that isn't a paper asset that can be interfered with. If government wants to interfere with return on equity it's easy, they can double the corporate tax rate. If government wants to interfere with return on bonds they can do that by creating inflation and forcing you to buy bonds. The only way government can interfere with returns on gold is to take it off you. That's not impossible, but it is unlikely. [CBS - Actually very likely since it already happened during the 20th Century.]

If you look at gold now it's taking off while inflation hasn't. That's a reflection of government interfering and creating a premium for that which cannot be interfered with, because if it's inflation driving it, gold is way above where it should be.

53 min: Williams: where are inflation expectations?

Napier: They are still at incredibly low levels. Indicated inflation rates are 0.5% for whole of Europe. Italy is below 0.2%. US is higher. South Africa and Brazil are higher. But they are still incredibly low. France is below where it was in 2009.

Put another way, except for Japan most of the break-even inflation rates are at levels of inflation over the next five years that none of these countries has ever achieved. [It's Stag Mark's world and we're all just livin' in it. :)] Even Germany. Germany has never achieved the level of inflation they are expected to achieve over the next 5 years. So yes, inflation expectations are higher, but they are no where near what might be considered break-out levels. It's just not happening yet. So it's interesting about gold. Whatever is moving it is not inflation.

55 min: Fleck responds: Bond markets have been anesthetized. They've been an administered market for so long no one knows what to do. Conversely gold it still a “free market” where participants think for themselves and know how to act. So they are ready to respond to inflation expectations faster than the bond markets.

58 min: Interesting take on China military action potentially driving gold too. The medium range missile treaty Trump got US out of wasn't done because of Russia. It was done because of China. So now the US needs a country in Asia to stage medium range (3000 mile) missiles.

1 hr: Williams: What do you think of all the V-shape recovery talk.

Napier: Using SARS in Hong Kong as something of a guide, it all reverted to normal within 18 months. I have this incredible faith – and dismay – [lol] in human beings' ability to revert to form. Think of what human being have been though... the Blitz, SARS, etc. But they want to go back to what they had before. And on whole the achieve it, and they achieve it far more quickly than you'd think. So that's not a V-shaped recovery, but if in 18 months if consumption relative to savings is back to what it was in January; if we have the same GDP as before and broad money growth stabilizes at 15% a year from now, 4% inflation doesn't sound so unrealistic.

1 hr 5 min: Fleck: on the subject of inflation, CPI has been bastardized in the US. So when you say 4% do you mean CPI at 4? I think we'd need inflation at 10 or 12 because it's such a bad measure.

Napier: No I think the reported number can reach 4. [record-scratch] 4 isn't so outrageous. We were close to 4 in 2007, 2011, 2000, 1996. I have a long presentation on why 4 is important.

Those were all periods of China producing and periods of massive technological breakthrough. And those were periods of money supply growth closer to 10 than 4, and even then you got to 4 on the measured number. I think it's a fairly straight-forward forecast. Where it gets difficult is what happens after that, because above 4 it can spiral out of control very quickly. That's what's significant about 4.

There's been four times in the US where it's gotten to 4 and stopped. [Um, by crashing the equity markets.] I don't think it will this time. But it's hard enough to convince people it will even get to 4.

That's an interesting part of history. I don't think there's been a fiat currency that's stopped at 4. That's an achievement of sorts. It's come at a very high price if you ask me.

Fleck: we've had two bubble bursts to achieve that.

Napier: that's what I mean by it's come at a high price. But if the market believes we can cap it at 4. And through that time period we've just added more and more debt, meaning we really have to inflate it away. Maybe that's why people think it can't go above 4 – “because it's never been above 4 in my lifetime,” – which means that you're very young. [Ok, wow! Good points.]

1 hr 8 min: Williams: Can you tell people how they can follow you more?

Napier: Well there's kind of bad news. I write at my website, but you're only allowed into my website if you're a regulated financial institution. That's just how it is under British law. The good news is that lots of people steal it and appears all over the place. Using [Bing] and the year 2020 it's amazing where it will crop up. Some day we will pursue those vagabonds, but for now you can get it if you are resourceful. [lol]

1 hr 10 min: Closing comments.

Fleck to Williams: Wow. That's gonna blow some people's minds. [Guilty] I mean, I believe everything he's said. He's articulated it better than I ever could. I thought about the point Michael Green made, that the game you're playing might not be the game that's being played. Napier said it differently, but maybe the game is changing to something you'd have to have a lot of grey hair to have seen before.

Williams: That's what this series is all about. You have to stay alert to changes in the game. They will change the rules and when they do it's going to be really fast, before anyone can react to the rules having changed, or what's the point of changing the rules? [Indeed. Lots of quotes about lying central banks and lying politicians come to mind here.]

Monday, September 7, 2020

Labor Day Links

  • When it comes to freedom of association, the government arm of the ruling class is absolutely ruthless in declaring everything a “public accommodation” so that freedom effectively becomes nonexistent. But when half a dozen (or fewer) big tech companies take over the means of disseminating speech and ideas—oh, no! That’s not a public accommodation! Those are private firms and the rights of private firms are sacrosanct! [Michael Anton
  • The centre of the print is occupied by a financial wheel of fortune or merry-go-round ridden by figures representative of the broad section of society taken in by the scheme, including a whore and a clergyman on the left, then a boot black and a hag, and a Scottish nobleman to the right, on a fat-faced horse. The ride is surmounted by a goat and the slogan "Who'l Ride" and surrounded by a jostling crowd below. To the front of the crowd, a short pickpocket rifles through the pockets of a larger gentleman. Paulson identifies the first as a caricature of Alexander Pope, who profited from the South Sea Scheme; and speculates that the other is John Gay, who, refusing to cash in enough of his stock to enable himself to have "a clean shirt and a shoulder of mutton every day for life", lost his investment and all his imagined profits. The image of the wheel is a parody of Jacques Callot's La Pendaison from the series The Miseries and Misfortunes of War, and the crowd has elements taken from his La Roue. Women line a balcony to the upper left, queuing to enter a building surmounted by stag's antlers, under a sign which offers "Raffleing for Husbands with Lottery Fortunes in Here". [Wiki]
  • Assuming that PRC ASBM have these capabilities, which seems quite plausible to me, this test was presumably a demonstration for the US, to make sure that our military appreciates the PLARF ability to hit a moving target (e.g., US aircraft carrier) at sea. Once this mutual understanding is in place, FONOPs in the South China Sea become mere theatrics for the dim witted. [Steve Hsu]
  • Please check the tie rods under your Model Y so that they are securely in place! We noticed the other day that our Model Y's (VIN 0307xx, barely a month old) front right tire was pointing inward (top pointing inward) more than it should be. Upon inspection, we found that the tie rod was sideways and there was nothing holding it in place! Normally, a tie rod is held in place by a castle nut and cotter pin to keep the tie rod securely in place. None of this was there. Just the end of the tie rod. As soon as we realized this car is not safe to drive, we called Tesla. They called a tow company to tow our Y to the nearest SC here in Florida to get it fixed. Thank God nothing worse happened to us as we have already driven the car more than 2000 miles on road trips! However, for a $60,000+ car, this should not happen! Please check over your Model Y to make sure yours is safe to drive. You don't want to have tie rod come loose while driving down the road. [TMC]
  • The Polanco district was my favorite, all named after famous authors west of the Parque Lincoln (I feel pretty sure that was named after Abe) and famous philosophers and scientists east of that. To the west: Dickens, Moliere, Ibsen, Tennyson, Oscar Wilde, Julio Verne, Alejandro Dumas and Edgar Allen Poe. To the east: Galileo, Aristoteles, Hegel, Newton, Schiller. [link]
  • I still prefer the old wine making style of Caymus vs the new wine making style. They must add sugar to this wine to make it taste like blackberry cobbler with a scoop of vanilla ice cream. There is virtually no tannin. It is a flabby, jammy, primary pleasure wine, which will appeal to those who don’t even like wine. No complexity, no structure or backbone, no tension. Just a syrupy mess. [Cellar Tracker]

Tuesday, September 1, 2020

Cryptocurrency Link Compendium

  • While the supply of bitcoins might be finite, the aggregate supply of digital currency as a whole, including Ethereum, Litecoin, and all the other variants, is potentially infinite. We have already seen the emergence not just of Ethereum, but a seemingly limitless number of new Bitcoin immitation currencies alongside a proliferation of so-called 'initial coin offerings'. It is therefore a clear fallacy that one is buying into a finite supply of the world's next global currency to be. And why should we not have expected supply to mushroom in this way? Ethereum was created by a 21yo college dropout in his basemen at zero cost. If you can code a currency in your basement that subsequently ends up trading at an aggregate value of $40bn, then why on earth would you not do so? But this sort of alchemy can't last. One of the best measures of something's value is its replacement cost, and if a 21 year old can create a digital currency in his basement, it can't be all that hard. It is therefore reasonable to expect thousands and thousands of new coin offerings to emerge until the supply overwhelms demand and the prices of all of them crash. [LT3000]
  • Satoshi Nakamoto's paper and Bitcoin launch happened in 2008... over 10 years ago. The iPhone was launched in 2007. If blockchain really is a platform that will change everything, it's a real sleeper success story. Typically you see killer apps on a new platform a lot quicker. Web 1.0 launched Amazon and Netflix within the first couple of years. Where are all the blockchain apps? The only industries that have really been impacted are ransomware, money laundering, and facilities for exchanging and speculating on tokens. There are unloved monopoly ledger companies like OpenTable and Ticketmaster. Where has any centralized application actually been disrupted? If distributed ledger technology can't disrupt OpenTable, what use is it? My best guess is that blockchain and Bitcoin adoption will remain a curiosity and a niche phenomenon linked to black markets, illicit activities, weak states with unreliable payments and money. [link]
  • What is now apparent is that bitcoin was never a monetary phenomenon. No, bitcoin is a new sort of financial betting game. It is a digital, global, highly-secure, and fairer version of the old-fashioned chain letter. The premise behind bitcoin-the-game is that the current wave of buyers must guess when (or if) a subsequent wave of buyers will emerge, this second next wave's participation being contingent on when (or if) they believe a third wave of buyers to emerge. If they guess right, the early birds win at the expense of the late ones. And they can win a lot of money, as Coinbase points out in its post. [link]
  • [P]roof-of-work axiomatically requires high transaction costs to ensure payment finality ... Counterfeiters can attack bitcoin via a "double-spending" strategy, ie spending in one block and later undoing this by releasing a forged blockchain in which the transactions are erased. This paper starts by introducing the concept of "economic payment finality" in the blockchain. That is, a payment can be considered final only once it is unprofitable for any potential adversary to undo it with a double-spending attack. ... If the incentives of potential attackers are analysed, it is clear that the cost of economic payment finality is extreme. For example, to achieve economic payment finality within six blocks (one hour), back of the envelope calculations suggest that mining income must mount to 8.3% of the transaction volume – a multiple of transaction fees in today's mainstream payment services. [DSHR]
  • Let's compare Nakamoto's goals to the state of cryptocurrencies in practice: *No trusted third parties. In practice you have to trust both exchanges and mining pools. *Irreversible transactions. In practice immutability is a double-edged sword, but in any case the 51% attacks on smaller cryptocurrencies illustrate the reversibility of transactions. *Micro-transactions. In practice the average fee to get your transaction confirmed is more than $1 - as I write it is $4. *Parties transact directly without intermediaries. This is possible, but in practice for large transactions you need exchanges, and for small transactions you would need the Lightning Network (if it worked). *Buyers need not reveal personal information. In practice, except to an exchange. And note that de-pseudonymizing cryptocurrency addresses turns out to be fairly easy in practice. *Irreversibility protects sellers from fraud. In practice, fraud is rampant. *Escrow protects buyers from fraud. In practice, escrow mechanisms have not turned out to "easily be implemented". So Bitcoin hasn't been a great success measured by Nakamoto's goals for it. [DSHR]
  • Ethereum sucks. Either the devs are too incompetent to make the code work or they are being bribed to forestall upgrades; either way is bad news for Ethereum. This bodes poorly for future upgrades such as Caspar and Sharding. Ethereum will continue to fall relative to Bitcoin and other coins as people lose faith in the project. A trade that is 'short' Ethereum and long a combination Bitcoin, Tron, Stellar, Monero, Ripple should be successful. [Grey Enlightenment]
  • If you add together the current market value of the Brazilian real, the Iranian rial, and the Russian ruble – all starting with "r" and all questionable currencies – you arrive at something well over $2 trillion. As custody problems for holding cryptocurrencies are solved – and big and powerful financial intermediaries are working on it – why can't the market value of bitcoin rival any one of those or even all three together? If that happens, I'll never find a stock with a rate of return close to what bitcoin would provide. So if you make it a 1-2% position, the worst that can happen is you lose every penny. The best that can happen is you get an astronomical rate of return. The risk/reward is better than anything else I can find. [Horizon Kinetics]
  • The amount of computational power devoted to anonymous, decentralized blockchains such as Bitcoin's must simultaneously satisfy two conditions in equilibrium: (1) a zero-profit condition among miners, who engage in a rent-seeking competition for the prize associated with adding the next block to the chain; and (2) an incentive compatibility condition on the system's vulnerability to a "majority attack", namely that the computational costs of such an attack must exceed the benefits. Together, these two equations imply that (3) the recurring, "flow", payments to miners for running the blockchain must be large relative to the one-off, "stock", benefits of attacking it. This is very expensive! [link]
  • Even the most die-hard crypto enthusiasts prefer in practice to rely on trust rather than their own crypto-medieval systems. 93% of bitcoins are mined by managed consortiums, yet none of the consortiums use smart contracts to manage payouts. Instead, they promise things like a "long history of stable and accurate payouts." Sounds like a trustworthy middleman! [link]
  • A lot of folks are in situations where they either don't pay for electricity or pay a flat rate. Why aren't they all mining Bitcoin? How about office workers? Nobody complains if they plug in a space heater, a Lava lamp, an aquarium, or a personal phone charger. Maybe the landlord is paying the electric bill in any case. Why wouldn't there be a Bitcoin miner that "flies under the radar" by consuming less than 500 watts? Supposedly it takes about 13,000 kW/h to mine one coin (source), so that's about three years at 500 watts per hour. Three years is a long time to wait (we could get lucky and earn a Bitcoin after 1 day, right?), but on the other hand a $10,000 bonus once every three years would be welcome! [Phil G]
  • I have a half-baked, three-quarters-joking theory of cryptocurrency, which is that it is a magical incarnation of a sort of male internet grievance. People -- mostly men -- sit around on Reddit complaining that they are underappreciated geniuses and that it is unfair that they have not been rewarded with vast wealth. They feel dispossessed and betrayed: They expected the modern world to reward computer literacy, but then they grew up to realize that the modern world, much like the old world, rewards mostly people skills and creativity and emotional intelligence. And then Bitcoin came along, and paranoid computer-literate people who spent a lot of time on the internet were the early adopters, and it became the world's first economic system that allocates wealth basically for hanging around on Reddit. What Bonatsos describes is not an accident; cryptocurrency seems almost custom-designed as a way for the men to get all the wealth, again. I know you are going to email me to complain about this theory, but what I want to propose here is: What if you didn't? [Bloomberg]
  • I simply couldn't find much evidence that distributed ledgers are useful for any real-world applications (other than speculative asset bubbles). Once you understand that blockchains are bad at solving real-world problems, then you will understand why Bitcoin will fail. The blockchain imposes limitations that makes Bitcoin a bad version of something that has been tried in the past: e-gold (description here and Wired profile here). A company's stance on blockchain can also serve as a test of a company's management. In my view, companies pushing blockchain technology (e.g. IBM, Microsoft, Intel, Oracle) are disconnected from customers' actual needs and have mediocre management. Companies that don't talk about blockchain (e.g. Facebook, Amazon, Google, Apple) are more likely to produce sensible technology that will work in the real world. [Glenn Chan]
  • "We're getting requests for service that are just astounding," said Steve Wright, general manager of the Chelan County Public Utility District, which includes Wenatchee. "We do not intend to carry the risk of bitcoin prices on our system." [WSJ]
  • The financial guys that really love bitcoin are some of the guys that either blew up or closed funds due to poor performance. The two most prominent fund manager bitcoin boosters are like that. It almost feels like they are so happy to have found their Hail Mary pass. And the most prominent guys that have good performance and didn't blow up tend to be the guys that don't like bitcoin and think it's stupid, a bubble or whatever. [Brooklyn]
  • I'm not one to embrace conspiracy theories with alacrity but I do believe the government is purposely orchestrating an environment where cryptocurrencies can thrive—albeit for a truncated period of time—but with a baneful ulterior motive in store for the middle class. I believe governments are currently in the process of vetting the cryptocurrency space and using bitcoin as its primary test case. Their goal is to allow the public to gain trust and familiarity with electronic currencies before crushing private cryptocurrencies altogether, then replacing them with one government-sanctioned "bitcoin"—call it Fed-coin. [link]
  • Every single entity on, with the exception of Bitcoin, and, arguably, the Bitcoin-metacoins, is inherently flawed. By this, I mean, each has a negative economic value and should be abandoned. [link]
  • I don't write about crypto-currency often because its proponents are fanatical. (You’d be fanatical too if you combined rabid self interest that might make you a multi-millionaire with a social engineering project you thought was utopian.) But more and more, I am inclined to agree with a judgement my friend made years ago: While Bitcoin does something important (creates a peer-to-peer payment network) it does it in a terrible way. [link]
  • High computational power requirements translate into high transaction fees. And that’s a problem for a lot of the applications that have been proposed for the blockchain. Using bitcoin as a currency is the biggest obvious problem. Most banks for example process millions of transactions daily, and most of these transactions are almost free because running a nice secure sever that handles a million transaction a day isn’t a lot more expensive than one that handles just a few transactions. [Alpha Vulture]
  • Yesterday someone asked my cleaning lady to invest in Bitcoin. Now if someone had asked her to accept payment in Bitcoin, or send payment in Bitcoin, then this would be compelling evidence that one should invest in Bitcoin. But when cleaning ladies are asked to invest in Bitcoin, not a good investment. [Jim]

Monday, August 31, 2020

Tesla at $500 Billion

He did it. The fully diluted market capitalization is over $500 billion. It's bigger than every other U.S. public company except Apple, Amazon, Microsoft, Google, and Facebook. It has just edged out Berkshire and exceeds Visa and Johnson and Johnson. There would be no excuse not to include Tesla in the S&P 500 index.

For $515 billion (based on fully diluted share count) you can buy Tesla with $25 billion of TTM revenue and basically $0 EBIT.

Or, you could buy: Toyota, VW, Daimler, BMW, Honda, GM, Ford, Fiat Chrysler, and Subaru. They have a combined $1.5 trillion of annual revenue. That's a P/S of one-third of revenue instead of 20x. Just a sixtyfold valuation difference.

Those nine also have $74 billion of TTM EBIT. So they only trade at 7x EBIT. And it would be impossible for Tesla to earn as much because their EBIT is triple Tesla's revenue.