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Mark's Market Blog

2-15-15: Why I Don't Believe in Global Warming.

By Mark Lawrence

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Putin has Agreed to a Cease Fire in Ukraine! The Greeks Will Be Cowed by the Germans and Pay Their Debts! All the big threats are behind us. The markets shot upwards to new record levels - the S&P nearing 2100 and the DOW breaking 18,000 - on very unconvincing volume. Is this it? Volatility is behind us and we can now look forward to a year of uninterrupted gains? Not bloody likely. imho. Putin's record on keeping his promises is not very reassuring, and Greece simply cannot afford to pay back these debts, either financially or politically.

S&P 500 August 25 2014 to February 13 2015

Inventories are rising and are now at a level that predicts recession. I don't know what to make of this, as I don't believe we're near a recession. I imagine part of the problem is slowing exports, as much of the rest of the world slides into recession.

On Thursday a Ukraine cease fire was announced by Merkle, Hollande and Putin. European markets leaped upwards a couple percent on the news. The cease fire would start Sunday, followed by the withdrawal of heavy weapons. Meanwhile Obama and congress continue to debate sending arms to Ukraine. The Leader of the Free World was conspicuously absent from the negotiations. While the talks were ongoing Putin had 50 tanks and 40 missile launchers moved into Ukraine. Fighting continues to be intense around the rail yard city of Debaltseve and near Mariupol; it seems the Russian backed rebels are intent on adding this to their territory before the cease fire. The IMF announced a $40 billion bailout package for Ukraine. Is it over? We'll see. It's still winter there, an easy time to agree to a cease fire. Even WW I shut down the first couple of years for a christmas break. Perhaps in a couple months the snow will melt and there will be "unexpected" provocations.

News of an accord between the EU and Greece was leaked where Greece agreed they would pay all their debts and continue with austerity and talks would continue - this would have represented a complete cave in to EU demands by the new Greek government. An hour later the accord was denied vigorously by Tsipras in Athens, who would not survive the winter if he agreed to such a thing. Then there were claims that his finance minister Varoufakis had agreed only to have Tsipris pull the rug. This seems unlikely to me - the entire team is committed to a 50% cut in Greek debt. I think ECB president Draghi and German finance minister Schauble are playing games with the press, trying to make the Greeks look disorganized and indecisive. The Greeks have approached these negotiations in a rather provocative fashion, leaving the Germans feeling rather strongly disrespected; perhaps a more politic road could have been taken. However it's clear to me the current deal is choking the life out of Greece and anyone who thinks the new government will be satisfied with a few tweeks around the edges is failing to understand the situation in Athens. The Greeks are a proud people who consider their country to be the home of democracy and rational scientific thought - indeed, "democracy" itself is a Greek word - and the idea that a 3,000 year old democracy would be pushed around by Germany, a country which has only existed for about 125 years, does not sell well in Greece. Without question Greece needs some major reforms - hairdressers retiring at age 52 on full pensions, more than half the workforce working for the government, everyone cheating on their taxes, these things must all stop. But these reforms must be agreed upon by the Greeks themselves after debate, not imposed from outside by unelected bureaucrats who are perceived, correctly I think, to just be spokes- puppets for the banks and the Germans. The EU is in a contradictory state where there is no federal union that can agree to europe wide standards, yet the EU bureaucrats think they can push around democratically elected sovereign leaders.

Apple is borrowing $1 billion by selling Swiss franc bonds. Swiss government bonds currently pay -0.07%, you have to pay them to hold your money. Apple will pay 0.3% on 9 year bonds and 0.75% on 15 year bonds. Why is a company with $140 billion in cash borrowing money? To buy back shares and pay their dividend, of course - if they repatriate their cash they have to pay 35% income tax, but no tax on loans.

Apple has noticed that the Tesla is basically an iPad with wheels. Rumor is they're working on their own car, the Titan. They hope to leap-frog Tesla, as they're apparently working on a google type self driving car. With a huge iPad. I don't really understand this - the Tesla screen is for navigation and control, but a self-driving car needs neither. And since cars in the near future will all be wifi spots, you'll use your own laptop or netbook, not the car screen for internet work. I'm unclear on what an iCar brings to the table.

GM, Ford, Toyota and VW have to be very concerned that their future competition is likely not each other but Silicon Valley. As cars become electric they turn into software projects more than automotive engineering projects - it's a big trick to get 30mpg out of a 650hp Corvette gas motor, but it's no big trick to get both mileage and performance out of an electric motor, you just use bigger magnets. Of course these new cars are by the liberals, for the liberals and of the liberals, that liberals may not perish from the earth. In the bulk of America, the low population density conservative "fly-over" portion, electric self-driving cars make almost no sense. However, we can foresee a time when farm equipment and long haul trucks are self-driving diesels and the latest Mercedes luxo-boxes do a credible job of self-driving on the freeway. Commercial aircraft already are pretty much self-driving; most of the latest crashes happen when the computers decide they can't handle things and then it turns out the foreign trained pilots can't either. Perhaps soon the Daytona 500 and Indy 500 record laps will be held by a computer. Will we cheer on a Charlotte 500 wire-to-wire race between Apple/Chevy and Google/Ford? Will the new Ford GT appear at the 24 hours of LeMans with self-driving features?

When will gasoline prices go back to $4/gallon? Maybe never. Depending on who you believe, sometime in 2016 to 2018 the price of solar energy drops below coal for energy generation. For those who are worried about global warming, the days of coal and oil are numbered. It's clear that in the next ten years we're going to see a revolution where new power grids let us generate solar power during the day in deserts like southern New Mexico and west Texas; store excess power for morning and evening use perhaps in mountainous regions like Colorado, and use the power all over the country for our new self-driving urban electric google or apple boxes. In fact a couple of people have speculated that this changeover will result in a massive stock market crash in 2016, the deepest ever seen, as energy companies like Exxon bite the dust, followed by a historic multi-decade bull market as we invest heavily in solar panels, a new smart electric grid, and all new transportation systems. Huge soviet-style apartment buildings will perhaps become "popular" as we move people from gas-guzzling suburbs into efficient cities. Will it happen? I dunno about market crashes, but companies and economies that are completely dependent on oil are clearly going to go into long-term decline. More than anything else this will bring peace to the planet as oil money is no longer available to fund muslim terrorism. And the oil states - Saudi Arabia, Russia, Venezuela, Norway, Nigeria - they will be in real trouble if they can't find an alternative source of revenue. Perhaps new solar states will emerge - tropical countries that are near major economies might find they can generate and export solar power. Winners? Central America, Spain, Thailand and Vietnam. The US and Canada are major oil producers but we have other ways of making money, we'll recover. And coal, that amazingly cheap and nasty substance, that's going to stay in the ground where it belongs. Motor oil and plastics will more and more be synthesized from natural gas, not from oil or coal. I agree, we're at the dawn of a new era, and major changes like this require major shifts in markets. Look at the Fortune 10 - it's dominated by oil and car companies, Exxon-mobil (2), Chevron (3), GM (7), Ford (8), Valero (10), and all of these companies are vulnerable. Not all of them will successfully make the transition. I wonder how we'll get trucks, trains, ships and aircraft off oil dependency. This will take a bit more time than houses, buildings and urban cars, obviously.

At my college we had a saying, "When the going gets weird, the weird turn pro." Samsung's new SmartTV with voice activation has an interesting property - everything the TV hears is sent over the internet to third parties for analysis. So Samsung is quietly warning people to not discuss sensitive information near their TV. And that doesn't even count if your TV is hacked. Also police could get access to these recordings without ever showing you a warrant.

Samsung is having a bad news week. It seems Samsung signed a deal with Yahoo to insert pop up ads into shows on the SmarTV. These are popping up even when you show your own content, like a home movie.

Several of my readers have encouraged me to including something like this. I wrote this originally as a reply to a professor at Cornell who asserts that the drought in California is caused by man-made CO2 emissions and was likely, according to his computer models, to persist for 20+ more years. This global warming computer model stuff is, imho, completely out of control, and the people promoting the models are fortune telling fear-mongering self-proclaimed wizards calling up spirits from the vasty deeps. They're the high priests of a low order. Feel free to copy this around.

Why I Don't believe in Global Warming and You Shouldn't Either

by Mark Lawrence

We're being told repeatedly that 2014 was the hottest year on record. 2014 just barely brought us back into the ±2 standard deviation model prediction range. This indicates there's a roughly 2.5% chance that the climate models are right and a 97.5% change that the models are garbage.

As of December 2014, the earth's actual temperature is far below the NASA model based on actual CO2 emissions and is tracking NASA's model for freezing C02 emissions at 2000 levels - actually a little below, and even more below if you prefer the data from the jokers at HadCRUT.

Perhaps I'm cheating and just using a particularly poor set of models? Former NASA scientist Dr. Roy Spencer says that climate models used by government agencies to create policies "have failed miserably." Spencer compared 90 climate models against surface temperature and satellite temperature data. 95% of the models "have over-forecast the warming trend since 1979, whether we use their own surface temperature dataset (HadCRUT4), or our satellite dataset of lower tropospheric temperatures (UAH)."

Why this failure of the models? Recently we've been told the heat is still building up, but it's being absorbed by the oceans and not visible in surface or atmospheric temperatures. Climate scientists claim that Pacific trade winds have caused the planet to stop warming. Stronger winds in the last two decades may have forced warmer water deeper while bringing cooler water to the surface. The NOAA has released a graph seemingly showing an exponential rise in ocean temperatures. The Y axis is labeled in Joules, a unit of energy, not temperature. Why Joules? When I convert the Y axis to degrees centigrade, the ocean temperature has risen by 0.036°c. I don't believe you can measure sea water in situ to that accuracy, and I don't believe you can lift sea water to the surface and maintain the temperature to that accuracy. That's why the Y axis is presented in Joules. 'Cause if it were degrees centigrade, we would all laugh.

As you see, the climate models suck. Seriously suck. -2 standard deviation suck. 95%+ suck. If Boeing's models sucked like that you would never get on an airplane. If the Fed's models sucked like that they would wind up doing something insanely stupid like buying $5 trillion of US bonds and no one would benefit but Wall Street bankers.

And what if the data is wrong and the models are right? What if Climate Change is, against all logic and measurement and odds, due to man made emissions? What happens if we don't actually cut our emissions in half and decimate our economy and lifestyle as the Climate Scientists demand? Well, here's another of their fine computer models of who gets hurt most by global warming:

Presuming the models mean anything at all, who gets hurt most by global warming? The very people who continue to breed irresponsibly and have six kids per "family." The very people who are most polluting their air and water, who are cutting down jungles and rain forests, who are dumping 8 million metric tons of plastic into the ocean every year and over-fishing them to near extinction levels. We're supposed to go back to a 1950s lifestyle so that Africa, India, SE Asia and Brazil can continue to be the real problem? Forget it.

Ok, this is 'way off topic, normally I don't go here. I'm not a religious person, but I am very spiritual; I believe we come back to earth repeatedly to polish ourselves and learn to handle ourselves and others with love and tolerance. I'm not very close to done. Here's an interview with a young muslim girl, the youngest person ever to win a Nobel prize (peace), and I'm here to tell you she's a couple thousand lives ahead of me. . . Malala was shot in the head at age 14 by the taliban for speaking out for education for girls. She recovered, and her voice has not been silenced. I Am Malala.

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