The Future of The U.S. Dollar

Had an interesting conversation with The Dealer out of Hong Kong last night. We were both glued to our screens waiting to see what would happen with the Shanghai equities markets. I like chatting with this guy. He never tells me market theories, but he will tell me what players are doing. Size, timing, targets and such. It's incredibly interesting information in its own right, regardless of my own market take. He asked what I really felt about economies around the world, and how the U.S. dollar will play out.
Here are my long-term thoughts on the U.S. dollar going forward:


First, the economy continues to surprise to the upside here in the U.S. The unemployment rate is still very strong, and with last week's durables coming in with a healthy revised increase for March, I'm thinking that the GDP release will push to the upside.


There's one missing ingredient with the U.S. economy so far, and that's consumer spending. Incomes are increasing rapidly. But, the spending that should be associated with that hasn't shown up yet. I think that's a matter of time, because I don't see any reason for the U.S. consumers to all of a sudden change their savings habits. That should continue to support the U.S. economy. We just had two reports of confidence come in healthy. Confident consumers translates into confident shoppers. That translates into the missing ingredient.


Interest rates are still relatively low when looked at historically. The 10-year is still below the 5.000% level, but that could go by the end of summer, however. There's still plenty of liquidity around to encourage growth. As for the decline in the real estate market, that's kind of a non-event up to now, and I don't see any reason why the economy could spin out of control from one sector that was over-inflated.

In all, I see a lot of reasons to buy the U.S. economy, and therefore the U.S. dollar.

But, to play the dollar, you have to compare it against its counterparts.

The U.S. dollar was the JPY carry of the early 2000's... you know, when our own interest rates were down to nothing? The greenback took it on the chin for several months. Now, interest rates are some of the highest in the world. The reasons to sell the greenback like a used hooker are gone. Not enough profit potential to push large market players to really go hard against it.

To have a take on the U.S. greenback, you also have to have a take against other currencies. I've read blogs from beginner traders where they focus only on one currency in order to learn the finer elements. That's like looking at a pinky and saying the entire body is healthy. You take that approach, I'll go over to your place and eat your lunch right at your desk.

Looking at the U.S. dollar gets to be a little tricky.

I think the reason to push the EUR and GBP higher are gone. We're basically at parity with rationale in these currencies. There's an edge vs. EUR for now. But, it's not a big one, and I don't see any reason for it to narrow. If the U.S. economy continues to push higher, along with confidence, then we're going to see all of the long-term sellers hitting the "take profit" buttons soon. That will boost the U.S. dollar off of its all-time low ranges. I don't know that we'll go too far from these levels. But, some profit taking is just around the corner.

At the same time, I see the renewed interest in the U.S. dollar pushing USD/JPY higher. This will make for an interesting balancing act with the carry trade. It'll go just about nowhere as USD/JPY goes higher and USD/vs. goes lower. As long as there's no reason to sell profitable trades, then the carry should continue. But, what if the Bank of Japan gets even more aggressive? We are pretty certain that there's an interest rate increase hitting the wires in August, after the elections. But, beyond that, no real certainty. If the BoJ keeps pounding their chests, the USD/JPY could sell off. That could push the carry lower across the board, pushing the USD higher vs EVERYTHING. That's the one catalyst that I'll be watching at the end of the summer. Until then, I'm all systems go with the carry.

In all, I like the USD, and have been a big buyer over the course of the last few weeks. It's worked like a champ. I'm going to continue with that approach going forward looking for big moves. I normally don't play for bigger moves. But, I think we've got a hot summer in store for us. And the headline may very well be the USD.

David Andrew Taylor

http://www.bestwaytoinvest.com/the-future-of-the-u.s.-dollar

Obama Warns of 'Quiet Riot' Among Blacks

Democratic presidential hopeful Barack Obama said Tuesday that the Bush administration has done nothing to defuse a "quiet riot" among blacks that threatens to erupt just as riots in Los Angeles did 15 years ago.

The first-term Illinois senator said that with black people from New Orleans and the Gulf Coast still displaced 20 months after Hurricane Katrina, frustration and resentments are building explosively as they did before the 1992 riots.

"This administration was colorblind in its incompetence," Obama said at a conference of black clergy, "but the poverty and the hopelessness was there long before the hurricane.

"All the hurricane did was to pull the curtain back for all the world to see," he said.

Obama's criticism of Bush prompted ovation after ovation from the nearly 8,000 people gathered in Hampton University's Convocation Center, particularly when he denounced the Iraq war and noted that he had opposed it from the outset.

Repeatedly, he referred to the riots that erupted in Los Angeles after a jury acquitted four police officers of assault charges in the 1991 beating of Rodney King, a black motorist, after a high speed chase. Fifty-five people died and 2,000 were injured in several days of riots in the city's black neighborhoods.

"Those 'quiet riots' that take place every day are born from the same place as the fires and the destruction and the police decked out in riot gear and the deaths," Obama said. "They happen when a sense of disconnect settles in and hope dissipates. Despair takes hold and young people all across this country look at the way the world is and believe that things are never going to get any better."

He argued that once a hurricane hits or a jury renders a not guilty verdict, "the frustration is there for all to see."

Obama, who is bidding to become the first black president, took the stage after a succession of ministers repeatedly brought the crowd to its feet, singing, praying and swaying to music.

Repeatedly, with evangelical zeal, he raised issues that roused the crowd: increasing the minimum wage and teacher pay, funding for public schools and college financial aid for the poor, ending predatory lending and expediting the reconstruction of New Orleans and the Mississippi coast.

He introduced his own pastor, the Rev. Jeremiah Wright of Chicago's Trinity United as "Unashamedly Black and Unapologetically Christian." He credited Wright with introducing him to Christ, and peppered his speech with Scriptural references, at one point invoking the opening lines of the Lord's Prayer.

Obama noted that during the riots, a bullet pierced the abdomen of a pregnant woman and lodged in the elbow of her fetus. The baby was delivered by caesarian section, the bullet was removed and the child, Jessica Glennis Evers-Jones, has only a small scar on her arm to show for it.

Using the incident as a metaphor, Obama said society's problems are worsening because "in too many places across the country, we have not even bothered to take the bullet out."

"When we have more black men in prison than in college, then it's time to take the bullet out," he said.

Obama doesn't regularly focus on racial themes in his standard campaign speeches. He did speak out on black issues in Selma, Ala., in March, when he told a largely black audience that he was a product of the civil rights movement and lectured blacks for failing to vote in large numbers.

Several ministers at the conference said Obama's message and style plays well among black voters and with their spiritual leaders.

The Rev. Robert Abbott, pastor of the Holy Trinity Baptist Church in Amityville, N.Y., said Obama connects with black audiences because of the preacher's style he uses when addressing them.

"The way he sounds, it's like he can reach out and encourage people," Abbott said.

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Salesforce bolts on Google ad management utility

Salesforce.com and Google have announced an online ads and CRM alliance that'll have some in Silicon Valley feeling deflated this morning.

The result of the tie-in is Salesforce Group Edition featuring Google AdWords. This will combine the creation and management of campaigns using Google AdWord with Salesforce.com's dashboard and customer relationship management (CRM) platform.

The companies have come in beneath expectations, two weeks after reports of a Microsoft-threatening tie-up. This was supposed to combine Google services such as email and Instant Messenger with Salesforce.com's customer relationship management - and surely this would have been logical early checkmate to Microsoft's fledgling Office Live and promised CRM Live.

Today's offering appears to extend the pre-existing Salesforce.com for Google AdWords - that was founded on software from Kieden, the much-admired former Salesforce.com partner, bought by Salesforce.com last August - in integration and pricing.

On integration, Salesforce Group Edition featuring Google AdWords facilitates lead capture by sucking potential customers' data into Salesforce.com from things such as forms on companies' websites. Lead information can then be shared with others inside the company. The companies hope to pull customers to sites by combining ads with search results.

Price appears to have been simplified compared to the previous Kieden offering: $1,200 per year with a 30-day introductory offer of $600 per year plus a $50 AdWord credit. That compares to a set of tiered charges based on monthly ad spend.

Salesforce.com's chief executive Marc Benioff is expected to put some color on the news later today at an event in San Francisco. He will likely pitch this as democratizing business software and advertising for millions of companies while talking tough on CRM encumbents like Microsoft.

But there is no doubt that this is not the deal pundits and optimists expected. And, while the news was anticlimactic, the hype certainly wasn't, with the companies remarking how both had "revolutionized how customers and businesses utilize the internet.”®

http://www.theregister.co.uk/2007/06/05/google_salesforce_alliance/

New 125 Miles per Gallon Toyota Prius

The Pennsylvania based Lithium Technology Corporation recently demonstrated a new type of "plug-in" Toyota Prius hybrid car. The new model is based on advanced lithium iron phosphate battery which allows the hybrid car to travel up to a distance of 125 miles per gallon of fuel – making it possibly the most efficient mass-produced car in the world.

Lithium Technology Corporation (LTC) announced that its' new lithium iron phosphate (LiFePO4) technology might be incoporated in hybrid cars expected to arrive in the market in 2008-2009. The Toyota Prius demonstrated by LTC was also equipped with a "plug-in" capability which allows it to recharge using conventional power sources (such as a power outlet in the owner's garage). Currently there are no "plug-in" capable cars on the market but special conversion kits are available and a small number of people are already using them to recharge their hybrid vehicles.

Although the new long range "plug-in" Toyota Prius might prove to be even more popular than its current version (which since the launch of its second version in 2004 has sold over 200,000 units worldwide), it is still very far from breaking the world record for the longest drive per gallon of fuel. This record was recently broken by a prototype car built by a team from St. Joseph La Joliverie University in France, which set an astonishing record of 7,148 miles per gallon of fuel (3,039 km per liter).

More information on the new lithium iron phosphate battery technology can be found on the LTC website.

Image: Current model Toyota Prius powered by 168-cell nickel metal hydride (NiMH) battery (Credit: Toyota Motor).

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Random Permutation

So, I’ve totally been writing this blog for almost a week, but so far I haven’t talked about how an actual algorithm works. Here’s a classic algorithm.

Let’s say you have an array of n elements a[0] through a[n-1]. You would like to generate a random permutation of this array. This means that any ordering of the array is equally probable, which means that if you look at any position in a, any element has an equal chance of being there: 1 in n (1/n). We assume that we have the function r(n) which generates a uniform random integer between 0 and n-1, inclusive. (In C, you could do this with random() % n, and in Java you’d do (int)(Math.random() * n).)

On two occasions while interviewing, I have been asked for an algorithm to permute an array. Both times the interviewer was amazed when I showed them this algorithm. Many people assume that a second storage array is necessary for remembering numbers you have picked, but you can do it in place with no memory. The algorithm (usually credited to Knuth, but see below) is quite simple:

For i = 1 to n-1:

• Let j = r(i+1)


• Swap a[i] and a[j]

My guess as to why more people don’t know it is due to its interesting use of induction. Software engineers generally learn of induction in college, fear it, learn how to parrot back enough to pass the classes that use it, then promptly forget it. But recursion is ubiquitous and unavoidable. Whether explicitly recursing with a function calling itself, or implicitly in a loop, any time later steps assume that earlier steps have done their work over part of the data, you need induction. Instead of fearing induction, learn how it works and learn how you can rely on it to do more with your data.

So how does the algorithm use induction? Suppose we are in iteration i. Assume inductively that a[0]…a[i-1] are a random permutation of that part of the array. As a base case, a[0] starts as being a permutation of itself. Now consider what the array will look like after the swap. Element i has an equal chance of being in any position 0…i. What about the remaining elements? Each one has a (i-1)/i chance of standing still and a 1/i chance of being put in the ith spot. If it stands still, it had a 1/(i-1) chance of being there by the induction hypothesis. But multiplying this by the stand-still probability, we get a 1/i chance of it being there after the swap. Together with the swap probability, this means that it has a 1/i chance of being in any spot, which is the definition of a uniform permutation.

As a side note, Wikipedia gives a different version:

• For i = 0 to n-2:
  
  
  
  • Let j = i + r(n-i)
  
  
  • Swap a[i] and a[j]
  
  

This has the advantage that as soon as the i-loop visits a location, its value is finalized so you can output the permutation as it is being created. The disadvantage is that it’s “less inductive” in that, after the ith iteration, you don’t have a true permutation of the first i elements, but only part of a permutation of all n elements. Also, if you are simply generating a random permutation of the numbers 0…n-1 (or analogously the result of some function), you can replace a[i] with i (or f(i)) in the first version and you don’t need to initialize the array. This doesn’t work in the second because of its “future swaps”. This is the version that most people give. A proof of its correctness is given here.

What are some uses of random permutations? They can be good for generating test data, e.g. for a sorting function or any other function which should be able to deal with random data. They can be good as a starting point for a hill-climbing algorithm, e.g. with Traveling Salesman. And, of course, they’re great for asking about in interviews.

http://www.algoblog.com/2007/06/04/permutation/

Bike Raid on East 6th Street

Around 9 p.m. last Wednesday, Robert Carnevale got an emergency call from his girlfriend. Police had showed up on his block of East 6th Street, between 1st and 2nd avenues. They were cutting the locks off bicycles chained to street signs, Caroline Dorn told him.

Carnevale, who owns three bikes himself, raced back to find what's become known as Operation Bike Raid in full swing. Sparks from the NYPD's circular saws arced through the night. Police, some in plainclothes, were piling cycles by the dozen in a heap on the sidewalk. Carnevale says he ran up and down the street, buzzing all the doors to alert his neighbors. People who live nearby were trying to claim their bikes.

At first Carnevale took still pictures, then he switched the digital camera into video mode. He approached the plainclothes lieutenant who seemed to be in charge and asked for his name. Carnevale says the officer gave his name, but got annoyed when asked to spell it. "You got my name," the officer says on the video. "I did you a favor. . . . Now I'm going to lock you up."

And he did, sending Carnavale to the pokey for 22 hours on a charge of disorderly conduct. The cop also rang up Carole Vale, a nurse who happened by and asked for an explanation. Vale spent 13 hours in a cell, on the same count.

In addition to the two arrests, the NYPD collared about 15 bikes. Officers, some in plainclothes, loaded bikes into unmarked black vans. "Why is domestic spying being used on non-polluting transportation?" asked Time's Up director Bill DiPaola at a press conference today.

City code does prohibit locking a bike to anything other than a city-approved rack, but there's some dispute over whether that applies solely to abandoned bikes. The rusted carcasses of old cruisers, often picked cleaned of valuable parts, litter street signs and bike racks around the five boroughs.

Transportation Alternative reports that the East Village police precinct, the 9th, started trying to identify and tag abandoned bikes in 2005. Cyclists generally see getting rid of useless junkers as a positive, since it leaves more room for bikes in daily use. Not surprisingly, they take less kindly to having their bikes cut loose and removed with no advance notice or information afterward about how to get them back.

Civil rights lawyer Norman Siegel, representing the East 6th Street riders at the press conference today, said the raid might have been prompted by a complaint from Community Board 3. He cited a court decision from September 2005, in which a judge ruled that the city had violated the due process rights of three cyclists by clipping their locks and hauling off the bikes with no warning. "The unlawful activity here is not by the cyclists, it's by the cops," Siegel said.

http://www.villagevoice.com/blogs/runninscared/archives/2007/06/bike_raid_on_ea.php

Libby sentenced to 30 months in prison

• Cheney says he is "deeply saddened" by conviction
• Judge to rule next week on whether Libby can remain free during appeal
• Lewis Libby sentenced to 30 months in jail, $250,000 fine
• Libby was convicted in March of perjury, obstruction of justice

WASHINGTON (CNN) -- I. Lewis "Scooter" Libby, former chief of staff to Vice President Dick Cheney, was sentenced Tuesday to 30 months in prison for lying to investigators looking into the leak of a CIA operative's identity.

He also was fined $250,000. Libby was convicted March 6 of four counts in a five-count indictment alleging perjury, obstruction of justice and making false statements to FBI investigators.

He plans to appeal the verdict. (Watch what led up to Libby's sentence )

Cheney released a statement after the verdict saying he is "deeply saddened" by his former aide and friend's conviction and he hopes that his appeal will "return a final result consistent with what we know of this fine man."

Libby has served "tirelessly and with great distinction" in the State and Defense departments and in the White House, Cheney said.

"I have always considered him to be a man of the highest intellect, judgment and personal integrity -- a man fully committed to protecting the vital security interests of the United States and its citizens," the vice president said.

Federal Judge Reggie Walton said he would make a decision next Tuesday on whether to allow Libby to remain free while his lawyers file an appeal.

Under federal sentencing guidelines, Libby -- if imprisoned -- must serve at least 80 percent of his sentence, or two years.

If the judge decides Libby must start serving his sentence, it could be 45 to 60 days before he must report to prison. (Time.com: Why so tough on Libby?)

Libby, standing next to his wife, bowed his head when the sentences were read.

Neither Libby nor his attorneys spoke to reporters after leaving the courthouse.

A White House spokeswoman said President Bush "felt terrible" for Libby, his wife and children.

Deputy White House Press Secretary Dana Perino told reporters that because appeals are still pending, the White House would have no further comment.

President Bush "has not intervened so far in this," Perino said.

Aides informed Bush about the sentence on board Air Force One as he flew from the Czech Republic to Germany to attend the G8 summit.

The 30-month sentence was for the obstruction of justice charge. Libby received shorter sentences on the other counts, to run concurrently.

"People who occupy these types of positions, where they have the welfare and security of the nation in their hands, have a special obligation to not do anything that might create a problem," Walton said, according to The Associated Press.

Libby was found guilty in March of lying to investigators about what he told reporters about Valerie Plame Wilson, whose identity as a CIA operative was leaked to the media in 2003.

Libby has maintained his innocence ever since he was indicted and resigned in October 2005.

Libby spoke briefly before he was sentenced, telling the judge, "I realize fully that the court must decide my punishment. It is respectfully my hope that the court will consider, along with the jury verdict, my whole life."

Libby's wife, Harriet Grant, sat in the packed courtroom with conservative commentator Mary Matalin, a former Cheney aide, the AP said. (Watch CNN legal analyst on whether Libby will get a presidential pardon )

On Tuesday, the judge released dozens of letters written to him by Libby's supporters and detractors, including former Defense Secretary Donald Rumsfeld and former U.S. Ambassador to the U.N. John Bolton.

In one letter, Robert Blackwill, who served as presidential envoy to Iraq and in several other posts under President Bush, said he has known Libby for 20 years.

"During these years at the White House, I encountered no one more driven by analytical temperament, fairness of mind and sound policy reasoning than Scooter Libby," Blackwill said.

"Mr. Libby in my judgment has been, over the decades, an exemplary public policy practitioner."

Another person, whose signature was redacted, wrote, "I am writing to urge that Scooter Libby receive the maximum possible sentence. Due to the crimes for which he was convicted, we may never know of the more substantial criminal activities for which he served as a firewall."

The case involves statements Libby made to the FBI and a grand jury during their probe into how the covert identity of CIA operative Plame Wilson was leaked. Libby was the only person charged in the probe. He was not accused of actually leaking classified material.

Plame Wilson's name became public when Robert Novak named her in his column on July 14, 2003. Her husband, former ambassador Joseph Wilson, had openly questioned the Bush administration's basis for invading Iraq. (Timeline of key events in investigation)

Former Deputy Secretary of State Richard Armitage has admitted he disclosed the information to a reporter. Novak pointed to another "senior administration official" -- Bush political adviser Karl Rove -- as the second source for his column.

After the jury returned its verdict against Libby on March 6, lead defense attorney Ted Wells appeared on the courthouse steps with Libby and his other attorneys and declared, "We have every confidence Mr. Libby ultimately will be vindicated." Wells said he believes his client is "totally innocent and that he did not do anything wrong."

Cheney has continued to express support and empathy for his former chief of staff, and it's possible Libby could be granted a presidential pardon before the end of President Bush's term.

CNN's Paul Courson, Brianna Keilar, Jeffrey Toobin and Brian Todd contributed to this report.

Copyright 2007 CNN. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed. Associated Press contributed to this report.

http://www.cnn.com/2007/POLITICS/06/05/cia.leak.trial/index.html

Orrin Hatch, Software Pirate?

Leander Kahney

Sen. Orrin Hatch (R-Utah) suggested Tuesday that people who download copyright materials from the Internet should have their computers automatically destroyed.

But Hatch himself is using unlicensed software on his official website, which presumably would qualify his computer to be smoked by the system he proposes.

The senator's site makes extensive use of a JavaScript menu system developed by Milonic Solutions, a software company based in the United Kingdom. The copyright-protected code has not been licensed for use on Hatch's website.

"It's an unlicensed copy," said Andy Woolley, who runs Milonic. "It's very unfortunate for him because of those comments he made."

Hatch on Tuesday surprised a Senate hearing on copyright issues with the suggestion that technology should be developed to remotely destroy the computers of people who illegally download music from the Net.

Hatch said damaging someone's computer "may be the only way you can teach somebody about copyrights," the Associated Press reported. He then suggested the technology would twice warn a computer user about illegal online behavior, "then destroy their computer."

Any such technology would be in violation of federal antihacking laws. The senator, who chairs the Senate Judiciary Committee, suggested Congress would have to make copyright holders exempt from current laws for them to legally destroy people's computers.

On Wednesday, Hatch clarified his comments, but stuck by the original idea. "I do not favor extreme remedies -- unless no moderate remedies can be found," he said in a statement. "I asked the interested industries to help us find those moderate remedies."

Just as well. Because if Hatch's terminator system embraced software as well as music, his servers would be targeted for destruction.

Milonic Solutions' JavaScript code used on Hatch's website costs $900 for a site-wide license. It is free for personal or nonprofit use, which the senator likely qualifies for.

However, the software's license stipulates that the user must register the software to receive a licensing code, and provide a link in the source code to Milonic's website.

On Wednesday, the senator's site met none of Milonic's licensing terms. The site's source code (which can be seen by selecting Source under the View menu in Internet Explorer) had neither a link to Milonic's site nor a registration code.

However, by Thursday afternoon Hatch's site had been updated to contain some of the requisite copyright information. An old version of the page can be seen by viewing Google's cache of the site.

"They're using our code," Woolley said Wednesday. "We've had no contact with them. They are in breach of our licensing terms."

When contacted Thursday, Woolley said the company that maintains the senator's site had e-mailed Milonic to begin the registration process. Woolley said the code added to Hatch's site after the issue came to light met some -- but not all -- of Milonic's licensing requirements.

Before the site was updated, the source code on Hatch's site contained the line: "* i am the license for the menu (duh) *"

Woolley said he had no idea where the line came from -- it has nothing to do with him, and he hadn't seen it on other websites that use his menu system.

"It looks like it's trying to cover something up, as though they got a license," he said.

A spokesman in Hatch's office on Wednesday responded, "That's ironic" before declining to put Wired News in contact with the site's webmaster. He deferred comment on the senator's statement to the Senate Judiciary Committee, which did not return calls.

The apparent violation was discovered by Laurence Simon, an unemployed system administrator from Houston, who was poking around Hatch's site after becoming outraged by his comments.

Milonic's Woolley said the senator's unlicensed use of his software was just "the tip of the iceberg." He said he knows of at least two other senators using unlicensed copies of his software, and many big companies.

Continental Airlines, for example, one of the largest airlines in the United States, uses Woolley's system throughout its Continental.com website. Woolley said the airline has not paid for the software. Worse, the copyright notices in the source code have been removed.

"That really pisses me off," he said.

A spokesman for Continental said the airline would look into the matter.

Woolley makes his living from his software. Like a lot of independent programmers, he struggles to get people to conform to his licensing terms, let alone pay for his software.

"We don't want blood," he said. "We just want payment for the hard work we do. We work very, very hard. If they're not prepared to pay, they're software pirates."

http://www.wired.com/politics/law/news/2003/06/59305