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It's over folks.

Samsung quite-clearly has soft sales on their new GS-5.  How do I know?  Because Verizon is giving away one with a purchase (on contract.)  That is, "buy one, get one."  That's unprecedented for a new flagship device.

Apple has seen soft demand as well against their expectations.

And now there are rumors that Amazon wants "in" that market.  Oh yeah, that'll work out well.  Facebook's venture into phones anyone?

If you have an angle -- something unique -- then you might be able to make it stick.  But in the main handsets are a commodity, and one that is now going to undergo rapid depreciation in price as everyone races toward the bottom of the margin barrel.

This same process happened with personal computers, and indeed it eventually happens with all technology.  You start with an "exclusive" on something "new", but eventually the "panache" fades with the teens, the tweenies and twenty-somethings waving around their latest bling, leaving you with a business that becomes increasingly cut-throat.

T-Mobile is in trouble in this regard too.  Many look at their recent "hidden" $200 offer to upgrade people out of BlackBerry handsets and into Samsung's 5 as yet another attack on BlackBerry.  Nope.  It's yet more evidence of soft demand; why would you otherwise double the previous offer on the newest "hot" device?  Note too that his offer is not open-ended either; it only applies to people on contracted plans who are still "upgrade eligible", which tells me quite a lot about motivation.  Someone fears being stuck with a lot of high-priced "zero day" launch inventory, and that inventory doesn't say "BlackBerry" on its face.

T-Mobile's petulant child Lagere is headed for some fun of the difficult sort.  He may think that there's something magical about the size of his manhood, matched only by the volume of his mouth, but he's wrong.  The simple fact is that he's trying to play margin games in a business where service quality has deteriorated to the point that people will accept cheap but not cheap and crappy.  Oh sure, the "underdog" and "scrappy gamester" motif looks good up front, but under the covers T-Mobile is actually raising prices and cutting feature set as their customer acquisition strategy "at all costs" hasn't done a thing for the red ink they're generating.  That's bad, by the way.

One of the bigger problems with US carriers is the lack of interoperability of hardware and the tying arrangements that result -- and that is bad for customers.  We put up with it in the US pretty much because we have to; it's been the legacy of the business in this nation.  That doesn't mean it makes sense; it simply means that monopoly behavior going back to the "A" and "B" carriers in the AMPS world has been the order of the day for so long that there literally was never a different model here in the US.

Legere is trying to claim he's "different" but that's horsecrap; all he is really doing is trying to buy share in a mature market by raiding other people.  Unfortunately he's up against the same reality as is everyone else -- hardware has transitioned to a commodity business, service expansion is expensive and trying to drive sales through various gimmicks and raids on other players (along with petulant displays of hubris) is all you have left in a market where everyone over the age of 10 already has a cellphone.

Add to this the "must make the quarter" Wall Street focus and you have a recipe for much hilarity in the upcoming months and years.  While AT&T and Verizon have sort of "responded" the key here is "sort of"; neither has mounted a clean response as of yet but you can bet they will, and when they do Lagere is going to look like the mouse that tried to roar but the sound you heard was the squeak of being crushed underfoot.  The market seems to sense this is coming too; after a clean double from the spin-off IPO last year the firm's stock is down over 10% thus far in 2014.

The problem, in the end, is that you need profits in business and I've yet to see a concise plan for how Lagere intends to achieve those aims.

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Oh oh.....

Braman vs CME

The CME has categorically denied that this "enhanced" or "first look" data feed exists.  Further, there have been multiple statements made by the media and various participants on the floor of these exchanges in which the claim has been made that these venues are not polluted by the sort of "HFT direct connection" cancer that appears to be all over the stock exchanges.

This lawsuit alleges otherwise, and further lays forth a very-specific statement of misconduct (read starting near the bottom of page 6.)

Either these folks are full of it or they're not.  

There is little middle ground possible.

This one bears watching folks.

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This is one of those stories that is very difficult to get anything approaching accurate full-scope information on, especially with everyone on all sides of the issue spinning like plates on sticks.  With that said, I'll take a crack at it.

Federal land managers say "escalating tensions" led them to release all 400 or so head of cattle rounded up on public land in southern Nevada from a rancher who has refused to recognize their authority.

Bureau of Land Management Chief Neil Kornze announced an abrupt halt to the weeklong roundup just hours before the release.

"Based on information about conditions on the ground and in consultation with law enforcement, we have made a decision to conclude the cattle gather because of our serious concerns about the safety of employees and members of the public," Kornze said in a statement.

The apparent beginning of this came when the BLM decided many years ago that a specific endangered tortoise meant it could seize land from Nevada and "protect" it -- land that historically (and the history is very, very long, apparently dating back to the 1870s!) had been used by Bundy's family to graze cattle.

There's an inherent problem here with Federalism that nobody appears to be taking on face-first, and that's no surprise.  First principles no longer seem to be principles at all when it comes to this nation.  Mr. Bundy's refusal to recognize what amounted to federalization of land his family had used in a non-destructive and renewable fashion, and to which he had made material improvements over the years without trying to claim exclusive rights, facially appears to be rather reasonable in light of the totality of the circumstances.

BLM claims that Bundy owes the government over $1 million in "grazing fees."  But BLM arguably owes Bundy for the appreciated value to the land that his improvements conferred and which they confiscated; the 5th Amendment prohibits this sort of "taking" without compensation.  How does this all pencil out?  I don't know -- we don't have an accurate accounting and nobody is looking at that angle of this dispute at all.

Then there is the attempted impoundment and impending destruction of the cattle that BLM tried to implement.  There were allegations that BLM intended to not just remove the cattle but steal and sell them into the commercial meat market, an act for which nobody has produced anything approaching judicially-valid process to back up.  An order to remove (which a judge allegedly issued) is not the same thing as an order to seize and dispose.  

Note carefully that cattle rustling has historically been an offense over which one can get shot.  And theft is theft no matter who commits the offense; absent a judicial order of seizure and disposal, which BLM has not produced, that is in fact exactly what they did.

Irrespective of all of this, and I'm still trying to get my arms around the full extent of where rationality would come down in light of it, the BLM was challenged by a modest but rapidly-growing group of citizens who simply said "No, you have gone too far and you're not going to do this.  End of discussion."  BLM then unilaterally decided that speech was not something to be respected either and tried to play "time, place and manner" games in the Nevada desert with an alleged "protest zone."  The people said nuts to that as well, and apparently were willing to defend themselves if accosted.

For now the BLM has capitulated and released the cattle they appear to have stolen, along with withdrawing their massed armed agents and equipment.  They have vowed to continue the fight in the courts, which of course they have the right to do.

Finally, as a backdrop to all of this mess, there are allegations that Harry Reid (yes, Mr. Senator) is involved in attempting to steal some of this land at a well-below-market-value price for some sort of solar energy project (run by one of his alleged pals) and that there are apparently mineral interests that would like to drill on it too, all of which would be incompatible with cattle grazing.  At this point I've been unable to validate the alleged corruption aspects of this to a degree that I'm comfortable with considering them driving forces behind this move, but they have been raised by multiple individuals and there does at least appear to be a facial appearance of impropriety.

I'm continuing to investigate this situation and, I will add, it looks a lot more complicated than many have made it appear at first blush.  I can't be certain how I'll come down on the facts when it is all "aired out", but for now it appears that an outbreak of violence is off the table, and that is an unquestionable good.

Let's hope that whatever the final resolution things stay that way.

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All you have to do to ensure failure is refuse to tell the truth.

April is cruel for other reasons. It’s Financial Literacy Month, when well-meaning experts bear the bad news: many of us are financial fools.

The 30-day marketing blitz sweeps up Congress, banks, state capitols, pollsters and personal finance columnists in an annual lamentation--and scolding--that Americans, the kids especially, don’t know much about money. To help, Bank of America, for example, is sponsoring a workshop series to educate low-income people.

...

Moreover, a lot of the courses and nonprofits are sponsored for less-than-pure motives. "A lot of financial institutions supporting this are doing it to increase their customer base," Marri says.

No kidding?

We're never going to solve problems like this as long as the incentives to lie continue to be as powerful as they are.  And they are indeed very powerful.

Let's just take a couple of basic ones:

  • 2% inflation is the Fed target, and it's ok.  Really?  First, despite the Fed's "target" the realized inflation rate measured by the government's intentionally-flawed method (in which they "adjust" for all sorts of things) is closer to 3% than 2%.  But even if it wasn't -- over 45 years (the average working life -- age 20 to 65) this would mean that a saved dollar when you're 20 is worth only 41 cents!  At the realized rate it's worth 26 cents.  Why isn't this pointed out?  Because there would be a literal revolution by morning if it was; the very precept that the government and Federal Reserve, along with banks, have designed and implemented a policy to steal three quarters of your earnings power over your working life would likely result in literal hangings.  This, of course, is why they don't tell you that.

  • The very same compounding happens everywhere else too where a percentage rate per year is specified.  Whether it's GDP, price inflation or whatever, that's the result.  The very belief that it's ok to increase taxes (say, your property tax, for example) by a "mere" 3% a year means that over the 18 years your child lives in that house from birth to graduation your property taxes go up by 70%.  That's nearly a double!  Stay until retirement (again, 20 -> 65) and those property taxes rise to a staggering 378% of what they were when you bought the house.  Would you put up with that "mere" 3% rate if you understood this?  Oh hell no!

This is why debt is so damned destructive, by the way.  In addition to allowing you to "feel" wealthier than you really are it utterly trashes your forward planning because of these embedded costs that bite harder the longer they go on.  Yet you'll never see this honestly discussed among financial "professionals"; instead they natter about compounded "growth" in your portfolio or savings and describe it as some sort of "magic."

It is no such thing -- the very premise of unbridled compounded growth is a chimera.

The worst part is found here:

This is the growth of the economy (GDP) in dollars quarterly and the growth of debt quarterly.  Note that with the notable exception of the crash in 2008 debt has always expanded faster than GDP over the last 30 years.

Note carefully that the so-called "recovery" has now been marked (as of Q4/2013) with a new high in gross debt accumulation in a single quarter (over $750 billion, to be precise) while GDP added just $177 billion.  In other words we are now expanding debt at a rate 4.2 times economic output.

This means that we're not expanding the productivity -- that is, output -- of our economy as quickly as we are spending.  Instead we are spending more than we make continually -- and expecting that this will be just fine.  It is that expectation and behavior that has led to both of the two most-recent blow-ups in the markets and will continue to do so until we stop doing that.  Economic output is in fact contracting on a production and economic surplus basis -- the only basis that matters in terms of long-term economic health and prosperity!

How is this expressed to you?  Simple: Monetary (that is, credit) inflation .vs. personal income expansion, as you can see right here.

Or, if you prefer it in an easy-to-read format:

You are factually losing 5% of your purchasing power per year and have been on a more-or-less steady basis since 2011!  How are you surviving?  By taking on more and more debt which eventually must be paid.

So when is it going to stop?

Not today, not yesterday, and probably not tomorrow.

But until it does all this nattering about people doing "poorly" when it comes to financial literacy boils down to the fact that that the entire banking and financial industry is engaged in selling you Unicorns.

Unicorns are mythical creatures and do not actually exist.

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Here's a good one for you.

The lawsuit alleges Ivey and an associate exploited a defect in cards made by a Kansas City manufacturer that enabled them to sort and arrange good cards in baccarat. The technique gave him an unfair advantage on four occasions between April and October 2012, the casino asserted in its lawsuit.

The casino claims the technique, called edge sorting, violates New Jersey casino gambling regulations. Its senior vice president, Joe Lupo, declined to comment on the lawsuit.

Oh really?

This ought to be an interesting case.

Let's talk a bit about what "edge sorting" is.  Pull out a deck of playing cards that has a design on the back; a design that goes all the way to the edge most-often exhibits this particular misfeature.  Due to very small differences in the alignment of the printing process you may observe that one of the long edges "cuts off" the pattern slightly differently in registration than the other, or one of the short edges.

If this is the case then you have a deck that can be edge sorted by players during use.

When you play with such a deck you turn your cards as you discard so that the desirable ones have the edge that is cut off in one direction, and the undesirable ones in the other.  Now, provided the dealer does not randomize the direction of the cards you have a prediction device as to whether a card you cannot see (since you can only see the back of it) is desirable or not.  While you (and possibly your friends who are doing this at the same table) can only de-randomize some of the cards you don't need to de-randomize all of them to gain an advantage.

There are multiple issues that arise here, however: You are not marking the deck; that is, altering the cards, which is cheating.  If you happen to fortuitously see a dealer's hole card (or another player's hole card at the poker table, for instance) because he screws up that's not cheating.  The other party's mistake is something you are entitled to use to your advantage, just as another player may use your mistake to his advantage.  

Indeed the difference between a winning and losing poker player over time (since over a large enough number of hands everyone receives the same number of aces, 10s and deuces) is almost-always exactly that and nothing more -- reading the "tells" of other players at the table and thus divining, without being able to see, what cards he might have.

Now there will be those who argue that by choosing how you discard you are effectively tampering with the deal.  I disagree; observation is not cheating.  Walk into most casinos that hand-shuffle (e.g. at the poker table) and you will see the dealer "muck" the discards so as to randomize their orientation.  At single-deck blackjack they also cut off the deal quite-early in the deck so as to prevent you from counting effectively and varying your bet in an attempt to gain an advantage, which again is using nothing more than your powers of observation and memory.

Indeed if you simply hand-shuffle in an interleaved "riffle" style but during at least one of the shuffles you turn one of the cut halves 180 degrees you instantly destroy any attempt by the players to edge-sort the deck.

You don't think they do that sort of thing in a casino without purpose, do you?

Now you know why they do it.

Guarding against the possibility of a detectable pattern difference in playing cards is a risk controlled for by the casino in their shuffling procedures and they are the ones who also choose the manufacturer of the cards they use, and have the sole right of inspection of incoming decks.

Using your power of observation to see patterns whether that is of an animate (e.g. another player) form or an inanimate one (e.g. patterns in the backs of the cards) along with the procedures that a casino decide to employ (or not) is IMHO part of the game.  Part of the job of those who you are competing against (whether the house or other players at the table as is the case when playing poker) is to reduce to the greatest possible extent your ability to observe such things so as to reduce the game to one of pure mathematical odds.

It will be interesting to see how this case ultimately resolves.

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