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Put into perspective Ahead of the mainstream

June 2016 Written by Bruno J. Schneller, CAIA & Miranda Ademaj Contents:

Hedge funds (page 3)

Markets (page 6)

Think tank (page 11)

Time out (page 15)

Put into perspective – June 2016

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"Like champagne, bull markets remove inhibitions." – James Grant

Put into perspective – June 2016

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Watch out asset managers, hedge funds will top $5 trillion by taking your clients

In just five years, the hedge fund industry will double in size to a staggering $5.1 trillion in assets. That's a huge jump considering hedge fund performance has been anything but impressive since 2011. Hedge funds trailed the S&P 500 in the first four months of 2012 returning 5% versus a 11.2% gain for the S&P 500.

Despite the poor performance of late a new report from Citi shows that the hedge fund industry will jump from its current $2.1 trillion to $5.1 trillion by 2016. By comparison, the US mutual fund industry has $13 trillion in assets; and that's an industry open to retail investors rather than just accredited investors hedge funds are limited to.

But what's more interesting than the projected growth of the hedge fund industry is how Citi predicts it will get there–hedge funds will look and act more like traditional asset managers than they ever have in their path to $5 trillion in assets.

Forbes

The hedge fund truth – why we need hedge fund therapy

This video looks at some of the truths and fictions around the hedge fund industry, focusing around recent bad press about returns, fees and a shortage of talent. It asks if the entire industry should be tarred with the same big brush or if there is nuance that investors and industry watchers may not have considered.

Click to watch

Vimeo

Enough about the fees already!

Once again the Oracle of Omaha and his sidekick have unleashed a barrage on the hedge fund industry and the "outrageous" fees managers charge. At their annual Woodstock of Capitalism the pair astutely pointed out that market volatility, combined with political uncertainty, has hurt performance at many funds. Despite this, what really seems to be most troubling to them is the fees hedge fund managers charge. While Mr. Buffett and Mr. Munger have a point (the fees ARE high), they are missing the fundamental issue – the free market. The market, you see, is what dictates the fees. When the market decides that hedge fund fees are too high, well, guess what: The fees will come down. It seems that both Mr. Munger and Mr. Buffett have forgotten this basic tenet of capitalism.

Perception is reality when it comes to hedge funds. Investors believe that they're getting a better product with a hedge fund than with a mutual fund and they're willing to pay for it. It's no different than picking The Palm over Outback – both are steakhouses, both serve meat and potatoes, but one is clearly superior and customers are willing to pony up more for its filet mignon.

When the market decides that hedge fund fees are too high, the fees will come down. Period, end of story. Right now, though, it seems that the only ones complaining about fees are those who can't charge them.

Harvest

Clinton son-in-law's firm is said to close Greece hedge fund

It was a hedge fund portfolio pitched by Hillary Clinton's son-in-law, Marc Mezvinsky, as an opportunity to bet on a Greek economic revival. Now, two years later, the Greece-focused fund is shutting down, after losing nearly 90 percent of its value, according to two investors with direct knowledge of the matter who spoke on the condition of anonymity.

Investors were told last month that the fund would close. The fund, Eaglevale Hellenic Opportunity, had raised $25 million from investors to buy Greek bank stocks and government debt. Eaglevale Partners, a Manhattan hedge fund firm founded by Mr. Mezvinsky and two former

HEDGE FUNDS

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Goldman Sachs colleagues, raised money for the Hellenic fund at a time when some on Wall Street had hopes for a revival in the Greek econ-omy. For a time, Mr. Mezvinsky appeared at hedge fund conferences promoting the Greece investment thesis.

DealBook

The evolution of hedge funds

Cliff Asness, AQR Capital Management's chief investment officer, discusses the evolution of hedge funds with Bloomberg's Erik Schatzker at the Milken Institute Global Conference.

Click to watch

Bloomberg

Rich hedge fund managers are still rich

If you have billions of dollars at the beginning of the year, and you invest your money, and the market goes up, then at the end of the year you'll have made hundreds of millions of dollars. This is very obvious, but here is your annual reminder of it, dressed up as overpaid hedge fund managers:

The top 25 hedge fund managers reaped $11.62 billion in compensation in 2014, according to an annual ranking by Institutional Investor's Alpha magazine.

This is not especially true, though, for ordinary uses of the word "compensation." Here is how Institutional Investor describes its methodol-ogy:

To estimate a hedge fund manager's total earnings for one year, we draw from two components. As always, Institutional Investor's Alpha counts the individual's share of a firm's management and performance fees. The management fees often add up to a sizable sum at the largest firms, many of which charge between 2 and 5 percent. We also count the gains on the individual's own capital in their funds, which can be considerable. If a manager still has not reached his high-water mark, we count just management fees and the gains on his personal capital for the year.

Emphasis added. Most of this "compensation" is not "compensation," in the sense of amounts that pension funds paid these guys to manage their money. Most of it is just return on capital: The managers had money in their funds, and the funds went up, so the managers had more money at the end of the year than at the beginning. They invested a lot of money reasonably successfully, so now they have more money.

So I mean look: The best-paid hedge fund managers do seem to have been paid pretty well. Even subtracting returns on their own funds, several of them seem to have made hundreds of millions of dollars from fee income. But most of the best-paid hedge fund managers aren't getting richer mainly by being paid to manage hedge funds, just like Warren Buffett's wealth is not mainly driven by his $100,000 sal-ary at Berkshire Hathaway. They got rich initially by being paid to manage hedge funds -- mostly because they did a good job of it -- but their income now comes mostly from having a lot of money and investing it. As I said when we talked about this list last year, they live in a Piket-tian world where returns on capital outstrip returns to labor.

What else should we think about? One thing to consider is alignment of incentives. There's a stereotype that small hedge funds live on their performance fees, so they are hungry and motivated: A 2 percent management fee on a small amount of money is a very small amount of money, so to keep the lights on and send the kids to sailing camp you need to make your 20 percent performance fee as big as possible. Big hedge funds, on the other hand, can live comfortably on their management fees, because 2 percent of a lot of money is still a lot of money. So you'd expect them to be more conservative asset gatherers, and less inclined to chase performance, relative to smaller funds.

And then there are the "best paid" hedge funds, where the manager has billions of dollars invested in his own fund. He's not living on man-agement fees or performance fees; the main determinant of his earnings -- um, "earnings" -- for the year is not how much he charges but just how much he returns on his own money. The classic hedge-fund-manager 2-and-20 fee structure is swamped, for him, by his personal invest-ment. In some ways this is an ideal alignment of incentives: The manager participates alongside his investors, rather than getting paid mostly in an option on their returns (performance fees) or a flat cut of assets (management fees).

Put into perspective – June 2016

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Of course, there's no reason to think that the main use of hedge funds is to get above-equity-market returns. Presumably no one is investing with Ray Dalio, the creator of "risk parity" investing, because they want him to beat the S&P 500 in a bull market. You might very well invest in a hedge fund to reduce or diversify your risks, rather than to beat the stock market.

BloombergView

Billionaire hedge fund manager Ray Dalio on why he's "a professional mistake maker"

Ray Dalio runs the world's biggest hedge fund firm and has a net worth that Forbes estimates at $15.6 billion. But he calls himself "a profes-sional mistake maker." That attitude may be the key to his immense success.

Dalio shared his views about mistakes, learning, success, philanthropy and more in a candid discussion with Harvard University psychology professor Robert Kegan at the Milken Institute Global Conference in Beverly Hills. Kegan spent a week at Dalio's hedge fund firm and wrote a chapter about it for his book. In the discussion, titled "Meaningful Work and Relationships Through Radical Truth and Transparency," the conversation centered on the way Dalio has built the culture, operating process and employee development at Bridgewater Associates, his hedge fund firm, with the focus on airing disagreements as a way to reach investment decisions. "Can we be straight with each other? Can we work it through? That's the essence of it," Dalio said, describing his firm's operating philosophy. "Would you like to know your weak-nesses? Might you find it painful to find them? That's what it's about," he added.

Dalio started Bridgewater Associates in a two-bedroom apartment in 1975. Today it employs 1,500 people and manages about $150 billion in assets. Dalio ranked 9th on Forbes 2016 list of Highest Earning Hedge Fund Managers & Traders, earning an estimated $500 million in 2015. His funds delivered a mixed performance last year.

Some tidbits from the conversation:

On disagreement:

Dalio has written down his ideas in something called "The Principles," available for download on the Bridgewater website. Kegan noted in the discussion that it has been downloaded 2 million times.

Disagreement is a routine matter at Bridgewater. "In order to be successful in markets … you need to have a view that's different from others … but there's a high probability that you're wrong, so you need to thrash it out." Thrashing out differences of opinion can be painful, Dalio admitted. One of his principles is "Pain Plus Reflection Equals Progress." Elaborating, Dalio said: "Pain probably indicates something is wrong. I found my best learnings came from painful experiences." That's because he is always trying to learn from them.

On mistakes:

Dalio said he's made plenty of mistakes. "I'm a professional mistake maker. I'm lucky two-thirds of my trades are right." Asked what his big-gest mistake was, he recalled being on Wall Street Week in 1982 and calling the bottom of the stock market. Mexico did default on its debt in 1982 and then the Fed eased rates, Dalio recalled. He turned out to be wrong about the stock market's reaction to so much debt being ex-tended to Latin American countries.

"I learned that every time I made a mistake, I would write it down. What I was finding is … that instead of just making a decision, thinking about what are the criteria for making the decision. That helped me a lot. That helped others a lot. When the next one came along we had an agreed upon way of dealing with it."

On success:

"Success comes from knowing what you don't know, more than coming from what you do know," Dalio said. "Nobody has all that's needed to be successful. We need teams." And the teams use something that Dalio calls "believability-weighted decision making."

On meditation:

Dalio said he's done transcendental meditation since 1969. "It is a means of centering yourself. It gives you equanimity. It means a lot to me," he said.

On why Bridgewater is not a cult:

Kegan noted that some people call Bridgewater a cult. Dalio's response: "It's the opposite of a cult," Dalio said. "It's independent thinking. Think of it as similar to a legal system. You can work yourself through that disagreement. It brings out the talents and weaknesses of people. People can have a path to success."

On wealth and philanthropy:

"In terms of the money I think it's a full cycle. I started with nothing … dust to dust … I don't' think giving my kids a lot of money is a good idea. The best thing I could give them is strength. Struggling gives you strength."

Dalio signed the Bill Gates and Warren Buffett-backed Giving Pledge, a promise some super-rich have made to give away at least half of their wealth to charity. "I think that's [signing the Giving Pledge is being] a good role model." And, Dalio, said that members of the Giving Pledge learn about philanthropy. "I also admire those two people [Gates and Buffett] a lot."

Forbes

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US equity prices almost all driven by PE expansion…

Société Générale Cross Asset Research

…and more than all price rise driven by PE in the Eurozone!

Société Générale Cross Asset Research

Median stock trades at the 99th percentile of historical valuation

Goldman Sachs Global Investment Research

Not so merry-go-round

BofA Merrill Lynch

MARKETS

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Today's markets: A place where nothing makes sense

The Wall Street Journal

US CESI vs S&P500

The Feb-March rally in equities was accompanied by the rebound in US CESI.

However, we note that most recently, a gap has opened between the two. US CESI appears to be rolling over again, while equities con-tinue to perform well. A red flag?

JP Morgan

Bayer could get ECB financing for Monsanto bid, rules show

Bayer could receive financing from the European Central Bank that would help to fund a takeover of Monsanto, according to the terms of the ECB's bond-buying program. The ECB can buy bonds issued by companies that are based in the euro area, have an investment-grade rating and are not banks, provided that they are denominated in euros and meet certain technical requirements.

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The purpose for which the bonds are issued is not among the criteria set by the ECB, which will start buying corporate bonds on the market and directly from issuers next month. This means that, in theory, the ECB could buy debt issued by Bayer, which said it would finance its cash bid for Monsanto with a combination of debt and equity.

Reuters

Crude congestion

Huge traffic jams of tankers have formed around the world with some 200 million barrels of oil either waiting to be loaded or delivered as ports struggle to cope with record volumes in perhaps the most visible sign of the global oil glut.

Reuters

Tightening lending standards

BofA Merrill Lynch

Weak capital markets backdrop

BofA Merrill Lynch

Wall Street values Tesla Motors at $620,000 per car

After a rally that ended in April, Tesla's market capitalization is currently about $31 billion - equivalent to $620,000 for every car it delivered last year, or $63,000 for every car it hopes to produce in 2020.

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By comparison, General Motors Co's $48 billion market value is equivalent to about $4,800 for every vehicle it sold last year.

Tesla's heady valuation - about 125 times the next 12 months of expected earnings - and the implication that shareholders may be overpay-ing for Musk's small but fast-growing luxury car company have made the stock a favorite of short sellers.

Reuters

Tick-up in expected negative profits

BofA Merrill Lynch

India's central bank governor warns on stimulus overuse

Although Mr. Rajan said there were limits on stimulus, he said central banks "cannot claim to be out of ammunition because immediately that would create the wrong kind of expectations, so there's always something up their sleeves". Mr. Rajan said he was a supporter of stimulus policies to "balance things out" over short periods when households or companies were proving excessively cautious with their spending. But eight years after the financial crisis, we "have to ask ourselves is that the real problem?".

"I have this image of stimulus as a bridge," he said. "As the economy goes down, there is an expectation it will come up. Stimulus is a bridge which smoothes over the growth rate of the economy and prevents damaging expectations from building up." If stimulus went on for a long time, if it did not work, he said, the adjustment would be sharp, indicating there was little room for further stimulus.

Mr. Rajan warned governments not to rely too much on fiscal stimulus through cutting taxes or increasing public spending. "If your debt to GDP is over 100 per cent, [and you] do more fiscal stimulus, you'd better have a pretty high rate of return in mind, otherwise your younger and middle-aged generations are thinking 'This thing is not going to return enough, but I'm going to have to pay for it'." The most extreme forms of stimulus — such as "helicopter money", where the central bank prints money so that governments can give a check to their citi-zens — were unlikely to work, Mr. Rajan said.

The Bank of Japan and the European Central Bank are under pressure to consider such a move but Mr. Rajan said there was a good chance households would see the move as a sign of panic rather than a sign to spend more. "Is the advent of helicopter money going to result in everybody going out and spending as though there is no tomorrow when they get a check? Or are they going to ask, 'What kind of world are we in when the central bank prints money and throws it out of the window?'"

The Financial Times

Bull market losing big ally as buybacks fall most since 2009

Bloomberg

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Video of the month

Milton Berg: We're at the cusp of a 30-year bear market

Milton Berg, MB Advisors founder and chief executive officer, discusses his outlook for markets with Bloomberg's Erik Schatzker at the SALT Conference in Las Vegas, Nevada on "Bloomberg Markets."

Click to watch

Bloomberg

Joke of the month

A father told his 3 sons when he sent them to the university: "I feel it's my duty to provide you with the best possible education, and you do not owe me for that. However, I want you to appreciate it. As a token, please each put $1,000 into my coffin when I die." And so it happened. His sons became a doctor, a lawyer and a financial planner, each very successful financially. When their father's time come and they saw their father in the coffin, they remembered his wish. First, it was the doctor who put 10 $100 bills onto the chest of the deceased. Then, came the financial planner, who also put $1,000 there. Finally, it was the heartbroken lawyer's turn. He dipped into his pocket, took out his checkbook, wrote a check for $3,000, put it into his father's coffin, and took the $2,000 cash. He later went on to become a member of Con-gress...

Cartoon of the month

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Olivier Blanchard eyes ugly "end game" for Japan on debt spiral

Olivier Blanchard, former chief economist at the International Monetary Fund, said zero interest rates have disguised the underlying danger posed by Japan's public debt, likely to reach 250pc of GDP this year and spiraling upwards on an unsustainable trajectory.

Prof Blanchard said the Japanese treasury will have to tap foreign funds to plug the gap and this will prove far more costly, threatening to bring the long-feared funding crisis to a head. "If and when US hedge funds become the marginal Japanese debt, they are going to ask for a substantial spread," he told the Tele-graph.

Analysts say this would transform the country's debt dynamics and kill the illusion of solvency, possibly in a sudden, non-linear fashion. Prof Blanchard, now at the Peterson Institute in Washington, said the Bank of Japan will come under mounting political pressure to fund the budget directly, at which point the country risks lurching from deflation to an inflationary denouement. "One day the BoJ may well get a call from the finance ministry saying please think about us – it is a life or death question - and keep rates at zero for a bit longer," he said.

The Telegraph

The political value of gold

These means of exchange had to have a trusted value and as economies evolved, precious metals, silver and gold served this purpose. As international trading devel-oped, nations relied on paper money supplied by their governments and central banks that was still backed by silver and gold. This gave value and trust to the cur-rency and forced discipline on the emitting institution.

In the course of the 20th century, the gold standard was abandoned and trust in the resulting fiat money depended on assessments of the underlying economy, political stability and belief that the central bank would protect the value of the currency with responsible monetary policies. This worked in some instances. Germany and its Bundesbank set with the deutsche mark an outstanding example of prudent mone-tary policy, impervious to pressure from politicians.

Unfortunately, government overspending led to large budget deficits and a fiscal crisis. Allowing economic cycles to run their course is re-jected for political reasons, meaning that unsustainable cheap money is often used to ease cyclical lows in the economy. On the whole, the European Central Bank (ECB) has followed the politically expedient approach of southern European countries rather than the discipline that was the bedrock of the old German Bundesbank.

All means of exchange should be constrained in supply in order to retain value. For fiat currencies, the supply limit is no longer restrained. The euro area's monetary base has increased from approximately 700 billion euros in 2006 to about 1.8 trillion euros in 2016, according to the ECB. This additional money creation, not covered by an economic basis, is worrying.

Gold-backed currencies used to provide a measure of control on monetary aggregates that is lacking today. Without controls on the money supply, confidence in its rarity is being sacrificed along with value. While gold may no longer be a realistic form of currency, it is still a valid medium of exchange with the advantage of holding intrinsic value and being limited in supply.

With individuals being discouraged from acquiring gold, central banks are buying again – especially Russia and China. Increasing gold reserves relative to foreign currency reserves has the advantage of reducing exposure to foreign monetary policies. There are large uncertainties around the quantity of gold the Chinese are acquiring, as the Peoples Bank of China may not be the sole purchaser. The authorities in Beijing can use other entities to buy gold on global markets, while China is also the world leader in gold mining output.

Both China and Russia are seeking to reduce their dependence on the US dollar, especially China, which is striving to establish the renminbi as a global reserve currency. The gold in the vaults of the Russian and Chinese central banks is insufficient to back their currencies. So why are these countries buying? They are probably trying to use gold as a lever to increase confidence in their currencies and make them more independent from US monetary policies and the dollar.

Meanwhile, there is growing awareness that central banks have misused their money creating capacity for political ends. This realization, combined with low interest rates, plunging confidence in traditional currencies and government institutions, and increased gold demand by Eastern central banks, may be contributing to the present rally in gold prices.

Unless Western governments and central banks change their policies, people may start shifting their trust from fiat money back to gold. Pre-cious metals have the advantage of being easily storable, holding intrinsic value, and not being subject to negative interest rates, as is the case with bank deposits. Gold will only become more attractive if governments make progress in their current push to physically abolish cash.

THINK TANK

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A key concern is that today's policymakers could abuse their legislative powers to outlaw physical ownership of gold, especially in Europe and the US, as a way of extending the control and reach of monetary policy. There are precedents for this, including President Franklin Roose-velt's executive order in 1933 to outlaw gold currency ownership by individuals. The step would be a logical, if totalitarian, outcome of cur-rent monetary policies.

It is just one small step from abolishing cash to outlawing gold ownership.

If the current economic policy direction is maintained, the strength of the US dollar and the euro will wane, people's trust in gold relative to their own currencies will increase, and certain members of the "dollar bloc" will prepare themselves to stop following the lead of the Federal Reserve and the US currency.

Geopolitical Intelligence Services

2015 was a terrible year for the common working man

The Washington Post

US suicide rate has risen sharply in the 21st century

The Washington Post

Sweden's holy war on children's books

Taken to its extremes, the urge to cleanse a culture of elements that do not live up to the politically correct orthodoxy currently in political vogue unsettlingly echoes the Taliban and ISIS credos of destroying everything that does not accord with their Quranic views. The desire

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"not to offend," taken to its logical conclusion, is a totalitarian impulse, which threatens to destroy everything that disagrees with its doc-trines. Crucially, who gets to decide what is offensive?

The question arises: How much purging and expiation will be needed to render a country's culture politically correct?

"When we have days of carnivals and music the goal is that these days should be experienced as positive by everyone. The Swedish flag is not allowed as part of carnival dress. ... Positive and bright feelings must be in focus. ... School photos must obviously be free of national symbols." — Swedish school in Halmstad.

Rome covered up its classical nude statues for a visit from Iran's president, Hassan Rouhani, in January 2016. A decade ago, who would have even imagined such sycophancy?

The Gatestone Institute

Italian court rules food theft "not a crime" if hungry

Stealing small amounts of food to stave off hunger is not a crime, Italy's highest court of ap-peal has ruled. Judges overturned a theft conviction against Roman Ostriakov after he stole cheese and sausages worth €4.07 (£3; $4.50) from a supermarket. Mr. Ostriakov, a homeless man of Ukrainian background, had taken the food "in the face of the immediate and essential need for nourishment", the court of cassation decided. Therefore it was not a crime, it said. In 2015, Mr. Ostriakov was convicted of theft and sentenced to six months in jail and a €100 fine.

However, his case was sent to appeal on the grounds that the conviction should be reduced to attempted theft and the sentence cut, as Mr. Ostriakov had not left the shop premises when he

was caught. Italy's Supreme Court of Cassation, which reviews only the application of the law and not the facts of the case, made a final and definitive ruling overturning the conviction entirely. "The condition of the defendant and the circumstances in which the seizure of merchan-dise took place prove that he took possession of that small amount of food in the face of an immediate and essential need for nourishment, acting therefore in a state of necessity," wrote the court.

BBC

Medical errors are leading killer after heart disease and cancer, study finds

Bloomberg

600 tons of melted radioactive Fukushima fuel still not found, clean-up chief reveals

Following the tsunami-caused 2011 meltdown at Fukushima Dai-ichi nuclear power plant uranium fuel of three power generating reactors gained critical temperature and burnt through the respective reactor pressure vessels, concentrating somewhere on the lower levels of the station currently filled with water.

The melted nuclear fuel from Reactor 1 poured out completely, estimated 30 to 50 percent of fuel from Reactor 2 and 3 remained in the active zone, Masuda said.

The official estimates that approximately "200 tons of [nuclear fuel] debris lies within each unit," which makes in total about 600 tons of melted fuel mixed up with metal construction elements, concrete and whatever else was down there.

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Five years after the Fukushima tragedy, the exact location of the highly radioactive "runaway" fuel remains mystery for TEPCO. The abso-lutely uncontrollable fission of the melted nuclear fuel assemblies continue somewhere under the remains of the station.

TEPCO's inability to locate the melted fuel could be explained by huge levels of radiation near the melted reactor shells. It is so high that even custom-built robots sent there to get information about the current state of affairs there get disabled by the tremendous radioactiv-ity flux. Human presence in the area is understandably out of the question.

RT

How the epidemic of drug overdose deaths ripples across America

The New York Times

We grew apart

Connect The Dots

German report: Bailout has saved banks, not Greece

Some 95 percent of the 220 billion euros disbursed to Greece since the start of the financial crisis as loans from the bailout mechanism has been directed toward saving the European banks. That means about 210 billion euros was eventually channeled to the Eurozone credit sec-tor while just 5 percent ended up in state coffers, according to a study by the European School of Management and Technology (ESMT) in Berlin. "Europe and the International Monetary Fund have in previous years mainly saved the banks and other private creditors," con-cluded the report, published in German newspaper Handelsblatt. ESMT director Jorg Rocholl told the financial newspaper that "the bailout packages mainly saved the European banks."

The economists who took part in the study have analyzed each loan separately to established where the money ended up, and concluded that just 9.7 billion euros – less than 5 percent – actually found its way into the Greek budget for the benefit of citizens. "This is something that everyone suspected, but few people actually knew. That has now been confirmed by the study.

Ekathimerini

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France bans out of work emails

Well this late night email situation can no longer happen with our French friends. Known for imposing the 37-hour week, truck drivers go-ing on strike over literally anything, and general hard work, the French certainly are leading the charge for the much vaunted work life bal-ance.

It has been termed 'the right to disconnect', and was first tabled back in 2014. Benoit Hamon of the French National Assembly told the BBC earlier in May, "All the studies show there is far more work-related stress today than there used to be, and that the stress is constant. Em-ployees physically leave the office, but they do not leave their work. They remain attached by a kind of electronic leash— like a dog. The texts, the messages, the emails — they colonize the life of the individual to the point where he or she eventually breaks down."

Unfortunately for some, it is not a catchall law. There is a caveat, if the company has less than 50 employees, the new law does not apply.

One question the new law raises, is what about international firms with French employees. Can a US firm send an afternoon email to em-ployees that will arrive after work hours for Jean-Louis, who is enjoying some cheese and fine wine in his local Parisian cafe?

There is an increased awareness that our addiction to smartphones is affecting lives. South Korea, were the average person spends over four hours looking at phones and tablets per day, has introduced a 'space-out' competition were people sit in silence without looking for any digi-tal stimulation.

ValueWalk

Navy to take charge of huge high-tech destroyer worth $4 billion

The US Navy will soon take charge of the first in its newest, most advanced line of warships: the angular, tech-savvy — and expensive — USS Zumwalt. The largest and most technologically sophisticated destroyer in the Navy's fleet, the USS Zumwalt will be the first of an ambitious class of three destroyers planned since the 1990s. At 610 feet long, the USS Zumwalt will be the largest destroyer in the Navy. The final cost to build the behemoth is expected to be at least $4.4 billion.

ABC News

Oberlin students want to abolish midterms and any grades below C

Students at Oberlin College are asking the school to put academics on the back burner so they can better turn their attention to activism. More than 1,300 students at the Midwestern liberal arts college have now signed a petition asking that the college get rid of any grade be-low a C for the semester, and some students are requesting alternatives to the standard written midterm examination, such as a conver-sation with a professor in lieu of an essay.

The students say that between their activism work and their heavy course load, finding success within the usual grading parameters is increasingly difficult." A lot of us worked alongside community members in Cleveland who were protesting," Megan Bautista, a co-liaison in Oberlin's student government, said, referring to the protests surrounding the shooting death of 12-year-old Tamir Rice by a police officer in 2014. "But we needed to organize on campus as well — it wasn't sustainable to keep driving 40 minutes away. A lot of us started suffering academically."

The Week

Bavarians rush for non-lethal weapons licenses

In the first three months of 2016 the number of people who applied for so-called small weapons licenses in Bavaria was already double the number for the whole of 2015.

The Local

TIME OUT

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Hiring hurdle: Finding workers who can pass a drug test

A few years back, the heavy-equipment manufacturer JCB held a job fair in the glass foyer of its sprawling headquarters near here, but when a throng of prospective employees learned the next step would be drug testing, an alarming thing happened: About half of them left. That story still circulates within the business community of this historic port city. But the problem has gotten worse.

All over the country, employers say they see a disturbing downside of tighter labor markets as they try to rebuild from the worst recession since the Depression: They are struggling to find workers who can pass a pre-employment drug test.

That hurdle partly stems from the growing ubiquity of drug testing, at corporations with big human resources departments, in industries like trucking where testing is mandated by federal law for safety reasons, and increasingly at smaller companies. But data suggest employers' difficulties also reflect an increase in the use of drugs, especially marijuana — employers' main gripe — and also heroin and other opioid drugs much in the news.

Ray Gaster, the owner of lumberyards on both sides of the Georgia-South Carolina border, recently joined friends at a retreat in Alabama to swap business talk. The big topic? Drug tests. "They were complaining about trying to find drivers, or finding people, who are drug-free and can do some of the jobs that they have," Mr. Gaster said. He shared their concern.

The New York Times

Venezuela doesn't have enough money to pay for its money

Billions of new bills in circulation and still more are needed

Rampant inflation means gym bags full of cash for dinner

Venezuela's epic shortages are nothing new at this point. No diapers or car parts or aspirin -- it's all been well documented. But now the country is at risk of running out of money itself.

In a tale that highlights the chaos of unbridled inflation, Venezuela is scrambling to print new bills fast enough to keep up with the torrid pace of price increases. Most of the cash, like nearly everything else in the oil-exporting country, is imported. And with hard currency reserves sinking to critically low levels, the central bank is doling out payments so slowly to foreign providers that they are foregoing further business.

Venezuela, in other words, is now so broke that it may not have enough money to pay for its money.

Bloomberg

Hungry Venezuelans hunt dogs, cats, pigeons as food runs out

Ramón Muchacho, Mayor of Chacao in Caracas, said the streets of the capital of Vene-zuela are filled with people killing animals for food. Through Twitter, Muchacho reported that in Venezuela, it is a "painful reality" that people "hunt cats, dogs and pigeons" to ease their hunger. People are also reportedly gathering vegetables from the ground and trash to eat as well.

The Venezuelan Chamber of Food (Cavidea) said many businesses only have 15 days worth of inventory. Production has been effected as a result of a shortage of raw materi-als, as well as exhausted national and international supply resources.

Supermarket employees confirmed food does not arrive at the same rate as it did before, and that people's inability to get enough is a daily struggle. Supermarkets are registered into a system in such a way that they are not permitted to sell Venezuelans food 15 days since their purchase of the same product. As a result, long food lines have formed all over the country, with many people reselling their share to earn an "extra income."

PanAm Post

Denied breaks, US poultry workers wear diapers on the job

Workers in plants run by the largest US poultry producers are regularly being denied bathroom breaks and as a result some are reduced to wearing diapers while working on the processing line, Oxfam America said in a report.

"It's not just their dignity that suffers: they are in danger of serious health problems," said Oxfam America, the US arm of the UK-based global development group. The group works for a "just world without poverty" and focuses on topics ranging from refugees in Greece to malnutri-tion.

The report cited unnamed workers from Tyson Foods Inc., Pilgrim's Pride Corp., Perdue Farms Inc. and Sanderson Farms Inc. who said that supervisors mock them, ignore requests and threaten punishment or firing. When they can go, they wait in long lines even though they are given limited time, sometimes 10 minutes, according to the report. Some workers have urinated or defecated themselves while working

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because they can't hold on any longer, the report said. Some workers "restrict intake of liquids and fluids to dangerous degrees," Oxfam said.

The conditions present difficulties, especially for menstruating or pregnant women, according to the latest report. Workers could also face medical problems, including urinary tract infections, and managers have told some workers to eat and drink less to avoid going to the bath-room, according to the report.

Bloomberg

Cash-strapped ISIS killing injured fighters to sell organs

Cash-strapped Islamic State terror group has been killing its injured fighters so that their organs can be extracted and sold on the black mar-ket abroad, according to media reports.

"Doctors were threatened to take out the body organs of a wounded ISIL militant," the Arabic-language al-Sabah newspaper reported citing an unnamed source in the Iraqi city of Mosul.

The terrorists are suffering a budget shortage after their recent loss of territory in the southern part of Mosul and for the same reason it is reportedly killing its own militants who have been injured in southern Mosul to take out their body organs such as hearts and kidneys to sell them in the black market, the Iranian FARS news agency reported.

The Times of India

Not so awesome: Lego becoming more violent to boost sales

There's a new "arms race" gripping the globe, but this time happening in the world of toys, ac-cording to New Zealand researchers. The beloved and iconic Lego brand has increased the amount of pieces depicting violent weapons in bid to boost sales, according to a study by NZ's University of Canterbury.

The interlocking brick manufacturer has released more than 12,000 sets since 1949, but the first weapons didn't appear until 1978. Back then, they were tiny axes made for a medieval castle set, but since then "violence in Lego products has increased significantly," found re-search published in the Public Library of Science journal.

"This increase is not in line with their policy that 'Lego products aim to discourage pretend violence as a primary play incentive'. The violence in Lego products seems to have gone beyond just enriching game play," writes the study's authors.

"To catch the attention of their customers, toy manufacturers are locked in a metaphorical arms race for exciting new products," added the authors. "In this race they do not only compete with other toy manufacturers but also with television and video games, which have become more violent over the years."

RT

Brazil's anti-corruption minister quits over leaked recordings

Brazil's Transparency Minister Fabiano Silveira resigned after leaked recordings suggested he tried to derail a sprawling corruption probe, the latest cabinet casualty impacting interim President Michel Temer's administration.

Reuters

Iceland's biggest political party is now the "Pirate Party"

Iceland's anti-establishment Pirate Party continues to lead nationwide polls as the most popular choice for the next elections. The party — whose policies include internet freedom, drug decriminalisation, and open democracy — has consistently led the polls for the last year and, as a result, has secured more funding than any of its rivals.

AntiMedia

Math mayhem: Professor questioned for terrorism after solving equation on flight

40-year-old Ivy League professor Guido Menzi, who despite his darker complexion and exotic accent is not of Middle Eastern descent, was questioned after a nearby passenger saw him working on a mathematical equation in-flight and suspected him of plotting a terror attack, the Washington Post reported.

The unsuspecting Menzi, who is Italian, boarded a plane from Philadelphia to Syracuse to give a talk at Queen's University in Ontario, Canada. His seatmate, a woman in her 30's, became suspicious of Menzi after he was inattentive to the woman's efforts at starting a conversation.

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The unidentified vigilante proceeded to ask Menzi if he lived in Syracuse, to which he curtly answered no. She then noticed Menzi scribbling diligently on a pad of paper, and discerned from his quiet demeanor and strange writings that he must be plotting a terror attack.

As the plane was still boarding, the woman, attempting to save the passengers from a perceived imminent danger, handed the stewardess a note warning her of Menzi's nefarious notepad. The woman, who had told the crew she was "ill", delayed the plane from leaving the tarmac. Shortly thereafter, Menzi was escorted off of the plane and questioned by authorities about his interaction with his seatmate. He said the interaction was fine, and although the woman had acted a bit strange, did not seem visibly ill.

Authorities then mentioned his suspicious scribbles, to which he replied that he was simply a professor working on a paper he co-authored, and his scribbles were mathematics problems he was attempting to solve. After showing sufficient proof that he was, indeed, not a threat to anyone aboard the fateful flight, he was allowed to return to his seat.

The Jerusalem Post

Former security official pleads guilty to attempting to make meth after explosion in government facility

A former federal security official accused of making methamphetamine inside a highly secured government research facility and causing an explosion pleaded guilty. Christopher Bartley, a police lieutenant for the National Institutes of Standards and Technology (NIST), reported to work and that evening went into a room where he could make meth under a chemical fume hood, according to his plea agreement. The ex-plosion he caused blew four shatterproof windows out of their frames, sending them 22-33 feet from the building. Bartley suffered burns on his arms and singed eyebrows and hair, according to the US attorney.

The blast sent the temperature to 180 degrees, and a silent heat alarm activated. Responding firefighters saw Bartley leaving the room, ac-cording to the US attorney. He took items from the scene and dumped them in trash near the building and at another NIST building. Investi-gators searched the room and the trash and found equipment and household items for making meth. In Bartley's car they found a recipe and more equipment.

NBC Washington

This is the first fast-food chain in America that requires zero human interaction

A new restaurant chain called Eatsa is unlike any fast-food chain we've seen before. The restaurant is almost fully automated, functioning like a vending machine that spits out freshly-prepared quinoa bowls. When customers enter Eatsa, they order their food at an iPad kiosk. Then they wait in front of a wall of glass cubbies, where their food will appear when it's ready. Hidden behind the wall of cubbies, kitchen staff prepare the food.

When an order is ready, an employee will place it in one of the cubbies. The door to that cubbie will then light up with the name of the customer who ordered the bowl. The entire process requires zero human interaction between customers and workers.

Business Insider

Boris Johnson wins The Spectator's President Erdogan Offensive Poetry competition

I'm pleased to announce that we have a winner of The Spectator's President Erdogan Offensive Poetry competition, and here it is:

There was a young fellow from Ankara

Who was a terrific wankerer

Till he sowed his wild oats

With the help of a goat

But he didn't even stop to thankera.

The author of this winning entry is former Mayor of London and chief Brexiteer, Boris Johnson MP.

The Spectator

Report: Nobody fucking cares

According to a brief but conclusive report released Monday, nobody fucking cares. "Doesn't fucking matter," read the report in part, which went on to inform readers that no one gives two shits, so fuck it. "Seriously. Stop wasting everyone's goddamn time." The report further urged those who still hadn't shut up about it to quit acting like fucking idiots and just give it a rest, for Christ's sake.

The Onion

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Bruno J. Schneller is the CIO of Skën-derbeg Alternative Investments AG. Prior to establishing the company, Bruno worked at investment bou-tique and fund of hedge funds pio-neer BrunnerInvest AG.

Prior to BrunnerInvest AG, Bruno worked at AXA Private Equity in 2007 and at Zurich-based hedge fund Naissance Capital Ltd. in 2006.

Bruno holds a M.A. from University of St Gallen (HSG) and earned the CAIA designation in 2012. Further-more, he is a CFA Level II candidate.

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Prior to establishing the com-pany, Miranda worked at Brun-nerInvest AG and Sallfort Privat-bank AG. Before that, she worked at Credit Suisse for sev-eral years.

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Bruno J. Schneller, CAIA Miranda Ademaj

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