One Trader Reflects On A Bad Trade – The Never-Ending Grain Pain (And Whose Fault It Was)

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Authored by Kevin Muir via The Macro Tourist blog,

I have had some bad trades in my day. But lately, one call has been especially atrocious.

For the past couple of years, I have taken stabs on the long side of the grain market. At different times, I have held various positions for different lengths of time, but make no mistake – grains have done nothing but cost me money. Sure, I might have a decent sounding argument, The Last Remaining Cheap Asset, but the market is indisputably telling me that I am dead wrong.

And it’s hard to sit and watch the grains go down. Day after day. Week after week. Month after month. Like the slow drip of a leaky faucet that no one can fix, it can drive you insane.

Have a look at the 5-year chart for front month Wheat.

Tough to make money writing any blue tickets with that sort of action. All rallies have been opportunities to sell, not the start of any sustainable uptrend.

This recent grain bear market has pushed the big three contracts (wheat, corn and soybeans) down to near all time lows when measured in real terms.

I don’t want to bother with another forecast about why this time will be different, and how the low will be made in the coming weeks. After a certain number posts, I begin to more closely resemble a degenerate gambler than a cool calculating macro trader (I think that number might be three, which means it’s too late for me, and I do in fact resemble Richard Dreyfuss a whole lot more than George Soros).

And although I poke fun at myself, it’s no laughing matter. The amount of economic pain in farming is downright scary. According to an article in The Guardian, Why are America’s farmers killing themselves in record numbers?, the stress from low grain prices is causing an epidemic amongst the agricultural community.

Once upon a time, I was a vegetable farmer in Arizona. And I, too, called Rosmann. I was depressed, unhappily married, a new mom, overwhelmed by the kind of large debt typical for a farm operation.

 

We were growing food, but couldn’t afford to buy it. We worked 80 hours a week, but we couldn’t afford to see a dentist, let alone a therapist. I remember panic when a late freeze threatened our crop, the constant fights about money, the way light swept across the walls on the days I could not force myself to get out of bed.

 

“Farming has always been a stressful occupation because many of the factors that affect agricultural production are largely beyond the control of the producers,” wrote Rosmann in the journal Behavioral Healthcare. “The emotional wellbeing of family farmers and ranchers is intimately intertwined with these changes.”

 

Last year, a study by the Centers for Disease Control and Prevention (CDC) found that people working in agriculture – including farmers, farm laborers, ranchers, fishers, and lumber harvesters – take their lives at a rate higher than any other occupation. The data suggested that the suicide rate for agricultural workers in 17 states was nearly five times higher compared with that in the general population.

 

After the study was released, Newsweek reported that the suicide death rate for farmers was more than double that of military veterans. This, however, could be an underestimate, as the data collected skipped several major agricultural states, including Iowa. Rosmann and other experts add that the farmer suicide rate might be higher, because an unknown number of farmers disguise their suicides as farm accidents.

 

The US farmer suicide crisis echoes a much larger farmer suicide crisis happening globally: an Australian farmer dies by suicide every four days; in the UK, one farmer a week takes his or her own life; in France, one farmer dies by suicide every two days; in India, more than 270,000 farmers have died by suicide since 1995.

The lightbulb

For the longest time, I had no idea why grain prices were so low. It perplexed me. Central Banks around the globe were printing money at an unprecedented pace. All else being equal, you would expect a real asset, like grains, to have rallied in these circumstances. Yeah sure the advances in farming technology might keep the price of grains pressured, but at the same time, demand has also never been higher, so you would expect the debasement of money to eventually win out and send grains prices skyward.

But more importantly, these situations are usually self correcting. Nothing solves the problem of oversupply like low prices. Except this time. Even with the state of farming littered with heartbreaking stories of ruined families, not enough farmers are giving up planting crops to allow the price to rise.

This conundrum would still be a mystery to me, if it wasn’t for one of my sharp readers, who sent me a note last week. It was actually a response to a post I made about Grandma’s Bond Portfolio is in Trouble, but Shaeffer Steward from Nesvick Trading Group, related it back to the grain market in such a unique original way, I felt it was too important not to share.

I suggest that while Kevin’s assessment for the economy in general might be eerily accurate, it is ENTIRELY BACKWARDS for agriculture.

 

Before you dismiss my hypothesis, hear me out.

 

I hypothesize that the farm economy is in dire circumstances (recall article I sent you the other day: http://bit.ly/2yFHDFT )

 

Primarily because commodity prices skyrocketed during the 2004-2008 super-cycle triggered by the ethanol buildout combined with huge demand growth out of China and when the GFC occurred in 2007-2008, many sectors of the economy literally collapsed under their own weight but agriculture actually thrived because the QE provided the accelerant to keep things going. You see, agriculture did exactly what you would’ve expected – lower cost of money & greater availability of credit (greater supply) – commodity prices remained rather high so farmers levered up, borrowed money and banks were glad to loan it to them as many were using land as collateralization on loans and after all, the land values were based off of what people were willing to pay (rent) to farm it or what sort of return they needed to make it a worthwhile investment.

 

What we’ve seen happen is massive leveraging, steadily increasing cost of production (seed, chemical, fertilizer, equipment, insurance, land rents, etc) and now as prices come under pressure due to massive global oversupplies, margins have quickly collapsed and the cost structure hasn’t responded. Instead, farmers have levered up further by refinancing land and/or selling off some land to keep their bankers going along with them and the cycle has continued.

 

Why would the banks lend to farmers when they didn’t lend to normal citizens? Why would farmers be willing to borrow money when normal citizens weren’t willing to borrow money? Glad you asked.

 

CROP INSURANCE

 

Specifically, federally subsidized crop insurance.

 

Farmers take extraordinary risks doing what they do BUT they now have access (and have had access) to crop insurance that protects a portion of their historical production and/or projected revenue. When I say “a portion” I mean upwards of 75-85%. When I say “federally subsidized crop insurance” I mean that the federal govt pays upwards of 65% of the premium on behalf of the farmer on some crop insurance policies. WHOA.

 

Let me put figures to it for you. Imagine that you were a farmer and your history showed that your 5 year avg yield (actual production history) on your farm was 55 bu/ac and at planting time the insurance price for soybeans was $10.19/bu. Let’s say that it was going to cost you $550/ac to grow soybeans, so a breakeven type situation if you make ordinary yields at ordinary prices. Imagine that you could guarantee yourself $420.00/ac in revenue ($10.19/bu x 55 bu/ac = $560 bu/ac revenue x 75% coverage = $420 /ac) and it only cost you $3.70/ac. You’re paying $3.70/ac to guarantee yourself $420.00/ac in revenue. Pretty cheap, right? Yes, but the REAL cost of that insurance is more like $8.23/ac with the govt paying $4.53/ac and the farmer paying $3.70.

 

Granted, there are some situations in which you can lose more and some causes of loss, such as hail are not covered by basic crop insurance and require a separate policy but in the grand scheme of things, the cost of protecting 75% of revenue is reasonable enough that farmers buy it and banks make loans that they might not otherwise make sans crop insurance policies. There is also increased risks because the loss calculations are based on futures prices at planting and harvest time and do not address the cash markets which might have wide, unfavorable basis so it isn’t anywhere near a complete failsafe but enough to keep the borrowed money flowing.

 

Now we need to put it all together. The relatively “cheap” cost of subsidized crop insurance encourages the farmer to take risks he wouldn’t take otherwise. The balance sheet equity he has goes a lot further if you consider that he “really” only has $130/ac at risk instead of the full $550/ac so he’s willing to a) stay in the game and b) expand his acreage because if he hits a homerun on larger yields and/or higher prices, then JACKPOT!!. If it goes bad, he’s out $130/ac and it doesn’t completely wipe him out – plus he’s using the bank’s money at very low interest rates.

 

The farmer not only wants to stay in the game but he wants to grow so he’s bidding up inputs and more importantly land rents because if you don’t have the land, then you’re out of the game. Revenues continue to be good, in general so the farm cash flow has meat on the bone and where there is meat on the bone, the dogs come chewing. Seed costs are higher every year and sometimes much higher. Equipment costs have gone FREAKIN’ PARABOLIC. Land rents have skyrocketed. Since many farmers are self-insured, health insurance prices have… well you know what they’ve done. Much of this expansion has been done with debt financing on equipment meaning that while the interest rates are low, interest costs are accumulating. You see, there HAS been demand for debt from agriculture and the lenders have seen positive cash flows and the revenue safety net of crop insurance as courage to continue to lend to farmers.

 

Let’s take a detour for a moment here – banks have wanted to lend money but “conservatively” and if the average consumer really hasn’t had the appetite for borrowing money, that makes it a difficult task. If you’re a regional bank or small town bank and you can lend out money on 10-12 month agricultural operating notes to the tune of $500k-2.5 mil each isn’t it much easier to put $10-20 mil to work than if you were dealing with making retail loans for cars, houses, etc particularly since those loans are longer maturity loans? What if you could effectively put $20 mil out in annual operating loans with 12 month or less maturities at 4.5-5.5% via 25-30 loans PLUS the person borrowing it has 75% revenue protection bought via crop insurance as well as land & equipment collateralizing the notes at a time that equipment and land prices are zooming into the stratosphere?!?!?!?!?!

 

You see, the ag community kept growing and the appetite for debt was there from the start but encouraged by federally subsidized crop insurance. Lenders needed to put money to work and they found it too easy NOT to make large operating notes that renewed annually at decent interest rates to individuals/businesses that were a) looking at positive cash flows, b) partially protected by federally subsidized crop revenue protection in the form of crop insurance and c) collateralized by rapidly appreciating assets (equipment & land). Farmers get to expand, rural America gets a hand, bankers put money to work and everyone lives happily ever after…

 

Until commodity prices come under pressure because the supply side gets overstimulated, revenue side drops dramatically while the cost side remains sticky and then we get the massive transfer of equity from the farmer to a variety of beneficiaries including a) banks in the form of interest, b) landlords in the form of higher rent and higher asset(land) values, c) equipment companies in the form of inflated revenues due to inflated equipment prices, d) input providers in the form of higher prices for seed, chemical and fertilizer… all being transferred from the farmer’s balance sheet.

 

Then you add in the intangible side to the equation: what is the farmer going to do if he decides to quit because he doesn’t want to take all of these risks? If he decides NOT to farm because he sees what is happening in terms of greater and greater risks to his equity what is he going to do to put food on his table? If he doesn’t pay the extra $25/ac land rent to keep a neighbor from renting it out from under him he’ll lose the land and then what will he do? There are only so many jobs “in town” to get and rural America is drying up so what will he do? You see, here is the hard part. He made the decision to get in or stay in the rat race even when he knew that the numbers didn’t make sense because he didn’t see a viable “plan B” and there was a banker standing there able and willing to continue to give him more and more rope until he finally hanged himself when the mouse trap flipped on him.

 

THAT, fine sir, is where we are today in US agriculture.

 

I apologize that this turned out as lengthy as it did BUT I felt that it was a worthwhile exercise to put these thoughts into email and share them with you because you are a student of the markets and also because you will hopefully be joining us for our Commodity Roundtable in January so a better framing of the situation might help you understand the circumstances they are facing.

 

As a macroeconomist, how do we work out from under this situation? What is the roadmap for the US farmer? Higher commodity prices are a temporary fix as we’ve seen because as long as the money is available (available credit) and affordable (low interest rates) the inflationary explosion continues on the cost/input side of the equation. Currently we’re shrinking farmer balance sheets until banks won’t be able to lend to them any longer at which time the decisions will be made FOR the farmer not BY the farmer.

Brilliant! I mean, f’ng brilliant. Shaeffer completely nailed it. The government’s subsidies have created a situation where far too much credit has been extended to an industry. This has caused inflation in prices of the inputs that go into farming, but not the output.

Want another example? Have a look at Student Loans versus tuition inflation.

Tuition inflation has greatly outpaced regular CPI, but it has gone hand in hand with the growth of student debt. Over allocations of credit have peculiar effects on the pricing of both the inputs and the outputs of the affected area.

What to do about it?

Now I am not sure what to do about Shaeffer’s deduction. As long as subsidies exist, it seems that too much money will be allocated to agriculture loans, and will therefore, keep grain prices lower.

But here’s a thought. Over the past half dozen years, there has been little demand for loans in the regular economy. This has encouraged bankers to lend to farmers with their government backstop.

Yet what will happen if economic activity picks up? Loan demand across all sectors will increase, decreasing the amount of credit that will be extended to farmers. This will occur at a terrible time as grain prices are near rock bottom levels. Unfortunately, without as much credit, many of these farmers might be forced to quit. However, that will cause the price of the grains to rally. Maybe to a more sustainable level where farmers can once again make a living. Ironically, rising interest rates, might be the best thing for both farmers, and grain prices.

Wait! Did I just make another bullish argument for buying grains?

Yeah, yeah, I did. As Richard Dreyfuss taught me so well, let it ride…


Market On Close in December

What’s that famous Wall Street saying? The dumb money trades in the morning, the smart money trades at the close. Well, astute market watcher Helene Meisler recently highlighted that the Market on Close (MOC) imbalances have consistently been to the sell side lately.

In fact, every single day in December has seen MOC sell imbalances.

Institutions often trade at the close, while the public is more prone to trading closer to the open. There has even been an indicator created to measure this phenomenon.

If we look at the SMART Index, the late day selling shows up clearly with a big retreat from the highs.

So far, the stock market has not followed the SMART Index lower in any meaningful way. But don’t worry, I am sure this distribution by institutions is somehow bullish. After all, don’t you know? Stocks only go higher.

A Perfect Forecast

While I am on the topic of the stock market, earlier in the week Meb Faber noted that Barrons reported:

These strategists are usually bullish, so it’s not terribly surprising. But it does smack of another period when universal optimism also reigned. At the end of 2007, the S&P 500 stood at 1468 and Wall Street’s smartest had the following forecasts:

And where did it close? Down 38.5% to 903. Ooops. Just a little off.

Thanks for reading and have a great weekend,

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What do made-for-AI processors really do?

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Tech’s biggest players have fully embraced the AI revolution. Apple, Qualcomm and Huawei have made mobile chipsets that are designed to better tackle machine learning tasks, each with a slightly different approach. Huawei launched its Kirin 970 at IFA this year, calling it the first chipset with a dedicated neural processing unit (NPU). Then, Apple unveiled the A11 Bionic chip, which powers the iPhone 8, 8 Plus and X. The A11 Bionic features a neural engine that the company says is "purpose-built for machine learning," among other things.

Last week, Qualcomm announced the Snapdragon 845, which sends AI tasks to the most suitable cores. There’s not a lot of difference between the three company’s approaches — it ultimately boils down to the level of access each company offers to developers, and how much power each setup consumes.

Before we get into that though, let’s figure out if an AI chip is really all that much different from existing CPUs. A term you’ll hear a lot in the industry with reference to AI lately is "heterogeneous computing." It refers to systems that use multiple types of processors, each with specialized functions, to gain performance or save energy. The idea isn’t new — plenty of existing chipsets use it — the three new offerings in question just employ the concept to varying degrees.

The Snapdragon 845.

Smartphone CPUs from the last three years or so have used ARM’s big.LITTLE architecture, which pairs relatively slower, energy-saving cores with faster, power-draining ones. The main goal is to use as little power as possible, to get better battery life. Some of the first phones using such architecture include the Samsung Galaxy S4 with the company’s own Exynos 5 chip, as well as Huawei’s Mate 8 and Honor 6.

This year’s "AI chips" take this concept a step further by either adding a new dedicated component to execute machine-learning tasks, or, in the case of the Snapdragon 845, using other low-power cores to do so. For instance, the Snapdragon 845 can tap its digital signal processor (DSP) to tackle long-running tasks that require a lot of repetitive math, like listening out for a hotword. Activities like image recognition, on the other hand, are better managed by the GPU, Qualcomm’s director of product management Gary Brotman told Engadget. Brotman heads up AI and machine learning for the Snapdragon platform.

Meanwhile, Apple’s A11 Bionic uses a neural engine in its GPU to speed up Face ID, Animoji and some third-party apps. That means when you fire up those processes on your iPhone X, the A11 turns on the neural engine to carry out the calculations needed to either verify who you are or map your facial expressions onto talking poop.

On the Kirin 970, the NPU takes over tasks like scanning and translating words in pictures taken with Microsoft’s Translator, which is the only third-party app so far to have been optimized for this chipset. Huawei said its "HiAI" heterogeneous computing structure maximizes the performance of most of the components on its chipset, so it may be assigning AI tasks to more than just the NPU.

Differences aside, this new architecture means that machine learning computations, which used to be processed in the cloud, can now be carried out more efficiently on a device. By using parts other than the CPU to run AI tasks, your phone can do more things simultaneously, so you are less likely to encounter lag when waiting for a translation or finding a picture of your dog.

Plus, running these processes on your phone instead of sending them to the cloud is also better for your privacy, since you reduce the potential opportunities for hackers to get at your data.

The A11 Bionic’s two "performance" cores and four "efficiency" cores.

Another big advantage of these AI chips is energy savings. Power is a precious resource that needs to be allocated judiciously, since some of these actions can be repeated all day. The GPU tends to suck more juice, so if it’s something the more energy efficient DSP can perform with similar results, then it’s better to tap the latter.

To be clear, it’s not the chipsets themselves that decide which cores to use when executing certain tasks. "Today, it’s up to developers or OEMs where they want to run it," Brotman said. Programmers can use supported libraries like Google’s TensorFlow (or more specifically its Lite mobile version) to dictate on which cores to run their models. Qualcomm, Huawei and Apple all work with the most popular options like TensorFlow Lite and Facebook’s Caffe2. Qualcomm also supports the newer Open Neural Networks Exchange (ONNX), while Apple adds compatibility for even more machine learning models via its Core ML framework.

So far, none of these chips have delivered very noticeable real-world benefits. Chip makers will tout their own test results and benchmarks that are ultimately meaningless until AI processes become a more significant part of our daily lives. We’re in the early stages of on-device machine learning being implemented, and developers who have made use of the new hardware are few and far between.

Right now, though, it’s clear that the race is on to make carrying out machine learning-related tasks on your device much faster and more power-efficient. We’ll just have to wait awhile longer to see the real benefits of this pivot to AI.

Images: Huawei (Kirin AI processor), Apple (A11 processor cores).

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Buchanan Warns “Unlike Nixon, Trump Will Not Go Quietly”

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Authored by Patrick Buchanan via Buchanan.org,

On Aug. 9, 1974, Richard Nixon bowed to the inevitability of impeachment and conviction by a Democratic Senate and resigned.

The prospect of such an end for Donald Trump has this city drooling. Yet, comparing Russiagate and Watergate, history is not likely to repeat itself.

First, the underlying crime in Watergate, a break-in to wiretap offices of the DNC, had been traced, within 48 hours, to the Committee to Re-Elect the President.

In Russiagate, the underlying crime – the “collusion” of Trump’s campaign with the Kremlin to hack into the emails of the DNC — has, after 18 months of investigating, still not been established.

Campaign manager Paul Manafort has been indicted, but for financial crimes committed long before he enlisted with Trump.

Gen. Michael Flynn has pled guilty to lying about phone calls he made to Russian Ambassador Sergey Kislyak, but only after Trump had been elected and Flynn had been named national security adviser.

Flynn asked Kislyak for help in blocking or postponing a Security Council resolution denouncing Israel, and to tell Vladimir Putin not to go ballistic over President Obama’s expulsion of 35 Russian diplomats.

This is what security advisers do.

Why Flynn let himself be ensnared in a perjury trap, when he had to know his calls were recorded, is puzzling.

Second, it is said Trump obstructed justice when he fired FBI Director James Comey for refusing to cut slack for Flynn.

But even Comey admits Trump acted within his authority.

And Comey had usurped the authority of Justice Department prosecutors when he announced in July 2016 that Hillary Clinton ought not to be prosecuted for having been “extremely careless” in transmitting security secrets over her private email server.

We now know that the first draft of Comey’s statement described Clinton as “grossly negligent,” the precise statute language for an indictment.

We also now know that helping to edit Comey’s first draft to soften its impact was Deputy FBI Director Andrew McCabe. His wife, Jill McCabe, a candidate for state senate in Virginia, received $467,000 in campaign contributions from the PAC of Clinton bundler Terry McAuliffe.

Comey has also admitted he leaked to The New York Times details of a one-on-one with Trump to trigger the naming of a special counsel — to go after Trump. And that assignment somehow fell to Comey’s predecessor, friend, and confidant Robert Mueller.

Mueller swiftly hired half a dozen prosecutorial bulldogs who had been Clinton contributors, and Andrew Weinstein, a Trump hater who had congratulated Acting Attorney General Sally Yates for refusing to carry out Trump’s travel ban.

FBI official Peter Strzok had to be been removed from the Mueller probe for hatred of Trump manifest in emails to his FBI lady friend.

Strzok was also involved in the investigation of Clinton’s email server and is said to have been the one who persuaded Comey to tone down his language about her misconduct, and let Hillary walk.

In Mueller’s tenure, still no Trump tie to the hacking of the DNC has been found. But a connection between Hillary’s campaign and Russian spies — to find dirt to smear and destroy Trump and his campaign — has been fairly well established.

By June 2016, the Clinton campaign and DNC had begun shoveling millions of dollars to the Perkins Coie law firm, which had hired the oppo research firm Fusion GPS, to go dirt-diving on Trump.

Fusion contacted ex-British MI6 spy Christopher Steele, who had ties to former KGB and FSB intelligence agents in Russia. They began to feed Steele, who fed Fusion, which fed the U.S. anti-Trump media with the alleged dirty deeds of Trump in Moscow hotels.

While the truth of the dirty dossier has never been established, Comey’s FBI rose like a hungry trout on learning of its contents.

There are credible allegations Comey’s FBI sought to hire Steele and used the dirt in his dossier to broaden the investigation of Trump — and that its contents were also used to justify FISA warrants on Trump and his people.

This week, we learned that the Justice Department’s Bruce Ohr had contacts with Fusion during the campaign, while his wife actually worked at Fusion investigating Trump. This thing is starting to stink.

Is the Trump investigation the rotten fruit of a poisoned tree?

Is Mueller’s Dump Trump team investigating the wrong campaign?

There are other reasons to believe Trump may survive the deep state-media conspiracy to break his presidency, overturn his mandate, and reinstate a discredited establishment.

Trump has Fox News and fighting congressmen behind him and the mainstream media is deeply distrusted and widely detested. And there is no Democratic House to impeach him or Democratic Senate to convict him.

Moreover, Trump is not Nixon, who, like Charles I, accepted his fate and let the executioner’s sword fall with dignity.

If Trump goes, one imagines, he will not go quietly.

In the words of the great Jerry Lee Lewis, there’s gonna be a “whole lotta shakin’ goin’ on.”

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Great job everybody, we just killed free online porn

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RIP your porn habit.

Thursday’s FCC vote to end net neutrality will kill many of the things you enjoy most about the internet in its current form, but chief among them is your ability to access copious amounts of free adult entertainment.

At the moment, porn makes up a massive portion of our online consumption. Last year Pornhub viewers alone used 3,110 petabytes of bandwidth. And people are paying almost nothing for it. 

But now that internet service providers will have the option to control what we can access, they’ll be able to stop the free flow of what we all want most. Platforms like Pornhub and YouPorn have been vocal in the fight against net neutrality, and the loss of it will likely reshape the entire industry. 

Clearly this will affect anyone’s ability to freely and anonymously consume whatever it is they’re especially into. But it will also severely impact anyone’s ability to upload their own amateur videos — meaning the adult landscape could get considerably more boring

Of course porn will never completely disappear — it’ll likely just cost you a lot more to get off. ISPs will now be able to make you pay through the nose for the content you crave, and they’ll also be able to track exactly what you’re watching. Ugh.

So you’d better go out and get your fill now, before watching “Sloppy Throat Games” or “Voyeur in My Closet” costs you more than you’d earn in a day.

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This couple shunned traditional vacations for traveling the country in a converted van — here’s how they made it work on $30 a day

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via the van dwelling 8

Millennials take vacations differently from any other generation. They skip tourist traps for unique experiences, creating picture-perfect memories that will later be on their Instagram feeds.

A year ago, Lucas and Willa Via decided to shun traditional vacations and become road warriors. They bought a van on Craigslist, remodeled it with bohemian-chic interiors, and left New York for wide open spaces. The couple drove across 14 US states over four months.

Between filling up the tank and eating out, they spent less than $35 a day on the essentials.

"If we flew by a teeny tiny log cabin cafe that looked straight out of ‘Hansel and Gretel,’ we’d make room in our budget to turn right around and give it a try. This goes for signs that said, ‘world’s best donuts.’ There are a lot of those," Willa told Business Insider.

Real life has picked back up for the Vias, who live in San Francisco now. But they plan to take the van out for weekend getaways as a way to vacation more frequently and affordably.

Lucas and Willa shared some photos of their adventures with us. Follow them on Instagram for more snapshots of their #vanlife.

SEE ALSO: 30 photos show the extreme lengths millennials will go to live in cities instead of suburbs

Lucas and Willa Via are living their most Instagrammable lives.

They were inspired to vacation in a converted van-dwelling after seeing the unmissable hashtag on social media. (There are over 2.3 million Instagram posts tagged #vanlife).

Source: Instagram

Van dwelling is an increasingly popular lifestyle choice among creatives and tech workers, as a way to live in urban centers without spending half of income on rent.

 

See the rest of the story at Business Insider

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What science says about why we get déjà vu

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memories

  • About 70% of the population experience déjà vu.
  • It’s the sense of familiarity that feels misplaced because you know you haven’t experienced the same thing before.
  • Psychologists and neuroscientists have come up with several different theories over the years for why we experience the strange sensation.

It’s one of the oddest sensations. That feeling where you are in a new situation, or a completely new environment, but you get an intense feeling of familiarity. For no apparent reason, you feel like you’re reliving a past experience.

It’s called déjà vu, which is French for "already seen," and it happens to an estimated 70% of the population, according to How Stuff Works, with people aged between 15 and 25 years old experiencing it most.

Unless it’s happened to you, it’s a hard experience to explain, but it’s a bit like trying to remember a dream that is slipping away. And as soon as you rack your brain to try and think back to when you might have experienced something familiar, the feeling is gone.

Déjà vu is difficult to study as it is so fleeting. It has puzzled researchers as to how to replicate it in a laboratory environment. This has led to a few different theories over time about how and why our brains act this strange way.

Accidental triggers in the brain

Back in 2006, scientists at the Leeds Memory Group thought they had gone some way to recreating the sensation in a lab by using hypnosis to trigger part of the brain’s recognition process. The experiment was based on the theory that two key processes happen in the brain when we recognise something or someone familiar.

Firstly, our brains search through our memories to see if we’ve observed the scene before, and if it comes up with a match, a separate area of the brain identifies it as familiar. In déjà vu, the second part of the process could be triggered by accident.

The researchers recruited 18 volunteers, who were asked to look at 24 common words. Then they were hypnotised and told that when they were presented with a word in a red frame, it would feel familiar. Words in green frames would make them think the word was in the original list of 24.

After being taken out of hypnosis, the subjects were given a series of words in different coloured frames, including some words that didn’t appear in the original list. In the group, 10 said they felt a peculiar sensation when they saw new words in red frames, and 5 said it felt like they were having déjà vu.

Malfunctioning memory

Over the years, psychologists have come up with a few different theories for déjà vu.

It could be some sort of malfunctioning between the long and short term circuits in the brain, meaning new information may take a shortcut straight to long-term memory. This skips over the mechanisms the brain normally uses to store information, so it could feel like we are experiencing something from the past.

It could also be something to do with the rhinal cortex, which is an area of the brain that makes us feel familiarity. It could somehow be activated without triggering other areas associated with memory. That could explain why it’s so difficult to pin down what feels familiar about the déjà vu. It’s usually a vague familiarity, not a specific object or person.

A fourth theory is that the feeling déjà vu is set off by false memories. Psychologist Valerie F. Reyna came up with one of the leading theories for false memories. She told Business Insider:

"[Déjà vu] is certainly related to false memory in the sense that it is a memory dissociation kind of effect. It dissociates reality from your memory.

"There’s all kinds of different dissociative experiences that can happen. Sometimes you cannot be sure, for example, if you dreamed something or experienced it, if you saw it in a movie or it happened in real life."

It’s most likely a memory mismatch

Work last year by psychology researcher Akira O’Connor, however, suggested false memories may not be to blame. Instead, it could be a sign of the brain checking its memory.

O’Connor and his team scanned the brains of 21 volunteers while doing a common test for triggering false memories, New Scientist reported.

To do this, you give a person a list of related words, such as bed, night, snooze, and nap. Then, when the person is asked about the words afterwards, they tend to give words related to what they’ve heard — in this case it would be "sleep."

To try and create the feeling of déjà vu, the researchers asked the subjects if they heard any words beginning with "s," which they replied they hadn’t. But when they asked about the word "sleep," they were able to remember they couldn’t have heard it, but it felt familiar all the same.

The team expected to see areas of the brain associated with memory — such as the hippocampus — light up. But it didn’t. Instead, areas involved in decision making were active.

When presenting the findings at the International Conference on Memory in Budapest, O’Connor said he thinks the frontal regions of the brain could be flipping through our memories, then sending signals if there’s a mismatch between what we think we’ve experienced and what we actually have experienced.

"Brain regions associated with memory conflict, rather than false memory, appear to be driving the déjà vu experience," O’Connor wrote in a blog post about the findings.

"This is consistent with our idea of déjà vu as the conscious awareness of a discrepancy in memory signals being corrected. This, in turn, sheds some light on why déjà vu occurrence appears to decline with age despite the fact that memory errors tend to increase with age. If it’s not an error, but the prevention of an error, this makes a lot more sense."

SEE ALSO: Scientists have created brain implants that could boost our memory by up to 30%

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NOW WATCH: What happens when vegetarians eat meat for the first time

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The FCC repealed net neutrality — and cable companies fell (CMCSA, TMUS, TWX, S, VZ, CHTR)

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  • The Federal Communications Commission voted to repeal net neutrality rules on Thursday.
  • Many of the major telecom companies were down after the vote.

The Federal Communications Commission, chaired by Ajit Pai, voted to reclassify the internet as a Class I utility, turning over so-called net neutrality regulations put in place in 2015.

After the vote on Thursday, blocking, throttling and paid prioritization by internet service providers will no longer be prohibited. Pai and his fellow Republican commission members have said reversing the rules will return the telecom industry to a period of light-touch regulation that will spur growth and investment in the sector.

The new rules are not set to go into effect for 60 days, in which critics are sure to file lawsuits to stop the rules from going into place. To no avail, the two Democratic commissioners, as well as many members of Congress on both sides of the aisle, asked Pai and his commission to delay Thursday’s vote.

Many of the largest internet providers in America started the day down in anticipation of the FCC’s vote, and all but Comcast ended the trading session lower than their open. The S&P 500 started the day in positive territory but ended the day down 0.39%.

Here’s how the major internet providers ended the day after the vote:

Read more about the net neutrality vote, and what it means for you, here.

SEE ALSO: The FCC is expected to repeal net neutrality on Thursday — here’s what that means for you

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NOW WATCH: Here’s what bitcoin futures could mean for the price of bitcoin

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Shocking Video Shows What Everyday Life Is Like In Puerto Rico Now

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Authored by Daisy Luther via The Organic Prepper blog,

In Puerto Rico, everything has changed since Hurricane Maria struck nearly 3 months ago.

Many people have no running water. And if they do, it can’t be consumed without boiling.

There’s no electricity in many regions.

Supplies are scarce.

I’ve written about the SHTF aftermath in Puerto Rico, both the day after the storm,  a week after, and a couple of months later. But while there is a lot of good information in all those articles, it’s just words on a page.

The video below brings it to life. This is what life looks like for people who have just watched everything be turned upside down by Mother Nature.

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“A Violent Downside Break”: Why One Trader Thinks The Christmas “Pain Trade” Will Be Especially Painful

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Before you shut down that terminal for the year, hoping that the year is – mercifully – finally over, you may want to consider that according to former Lehman trader and current Bloomberg macro commentator Mark Cudmore, the Christmas pain trade is about to be unveiled, and it will be especially painful for all those short Treasurys. As Cudmore warns, with ten-years stuck in a 2.3%-2.43% range for the past seven weeks, "the arguments are adding up for a violent downside break during the weeks ahead."

Here are his arguments why, as laid out in Cudmore’s latest Macro View :

A Treasuries Rally May Be the Christmas Pain Trade

 

Post-Fed price-action suggests Treasury bulls may stampede while traders are in holiday mode. 

 

Ten-year yields have been stuck in a 2.3%-2.43% range for the past seven weeks. The arguments are adding up for a violent downside break during the weeks ahead.

 

Many investors were punting for a hawkish turn from Yellen this week. There was indeed a subtle, but important Fed shift, but it was dovish. The committee raised growth projections, that also incorporated tax reform, without raising the dot plot.

 

The implication is that they’re struggling to explain “transitory” low inflation. Maybe there’s an increasing acceptance that either the Phillips curve is broken or that they should be paying more attention to structural disinflationary pressures from technology, globalization and demographics.

 

And investors seem to have overlooked the fact that it’s still very far from certain that the tax bill will be passed before year-end. Come January, the Republican majority in the Senate shrinks to one.

 

With Trump having already been celebrating and promoting its imminent passage, there will be real disappointment for markets if the tax package is delayed. And the problems are mounting up, from Rubio’s recent objections to McCain’s health concerns.

 

With optimism priced in everywhere and complacency across assets, traders may be wrongly positioned and vulnerable to a low- liquidity surprise.

 

This day last year, in the wake of a Fed hike, the 10-year Treasury yield reached the highest level of the last three years before tumbling 21 bps from that peak by year-end. Fundamentals may be adding up to a repeat performance.

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Jack Black thinks Donald Trump stole Tenacious D’s magic

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Donald Trump will soon pass a bill to raise us all high above the mucky-muck.

Jack Black was a guest on Conan on Thursday night, and Conan O’Brien asked him if he thought his brash style as frontman for Tenacious D had influenced the current president of the United States.

Black said yes, and that he felt guilty performing with Tenacious D because, "this evil fucking warlock stole our magic, but just took out all the irony."

Jack Black, you sit in the corner and think about what you did. Read more…

More about Donald Trump, Conan, Jack Black, Tenacious D, and Culture

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