Thu 7:54 am
Not so fast: Innovation of computer chips faces a big hurdle – This is an interesting article, for which I have used the headline shown in the International Herald Tribune, by John Markoff of The New York Times. Here is the opening:
For decades, the power of computers has grown at a staggering rate as designers have managed to squeeze ever more and ever tinier transistors onto a silicon chip – doubling the number every two years, on average, and leading the way to increasingly powerful and inexpensive personal computers, laptops and smartphones.
Now, however, researchers fear that this extraordinary acceleration is about to meet its limits. The problem is not that they cannot squeeze more transistors onto the chips – they surely can – but instead, like a city that cannot provide electricity for its entire streetlight system, that all those transistors could require too much power to run economically. They could overheat, too. The upshot could be that the gadget-crazy populace, accustomed to a retail drumbeat of breathtaking new products, may have to accept next-generation electronics that are only modestly better than their predecessors, rather than exponentially faster, cheaper and more wondrous. Simply put, the Next Big thing may take longer to arrive. “It is true that simply taking old processor architectures and scaling them won’t work anymore,” said William J. Dally, chief scientist at Nvidia, a maker of graphics processors, and a professor of computer science at Stanford University. “Real innovation is required to make progress today.” a paper presented in June at the International Symposium on Computer Architecture summed up the problem: even today, the most advanced microprocessor chips have so many transistors that it is impractical to supply power to all of them at the same time. so some of the transistors are left unpowered – or dark, in industry parlance – while the others are working. The phenomenon is known as dark silicon.
My view –The progress in silicon chip speed may slow for a while, and then computer scientists will innovate and find a new breakthrough, in my opinion. We are a clever, albeit destructive, species.
I like the spirit of Dr Patterson, quoted in the last paragraph of the article.
Email of the day (1) –On gold and objectivity:
“I hope u r well.
“Your comments on gold today [Ed: Monday] were very measured and spot on! you are one of the very few investors who review everything objectively and I guess this is why you are right more often than not!
My comment –Thank you for your thoughtful remarks.
I find that objectivity is always a struggle, given personal interests, hopes and fears. But it is a struggle worth waging, and not just in markets.
Email of the day (2) –More on gold:
“The historic chart of gold brought back some very old memories for me too.
“I vividly recall the final phase in 1979 during which time the price quadrupled and the very last day was a $60 spike to around $860. Price data was not in the form of the “instant internet gratification” that we get today and we used to huddle around the Ceefax page on BBC2 waiting for the closing price in Hong Kong to be posted every morning. I think they sent it over by carrier pigeon!
“I spoke at a seminar recently with around 100 attendees and asked how many of them had exposure to gold. Not an ETF, a gold mining share or a sovereign amongst the lot of them. most of them had no idea that they could actually buy bars of the stuff!
“A 1979 style blow off top, which, as you have taught me and many others at the Chart Seminar over the years, is a common end phase in “commodity” markets (but is gold still a commodity? – answers on a postcard please) would take the price from $1600 to $6400. and even then it might not be expensive. There are a lot of people out there who don’t realise the consequences of the “pound note in your pocket” no longer being “real” money.
“As for the article in the Economist, I fervently believe there should be a health warning on every copy quoting P.J. O’Rourke,
“Economics is an entire scientific discipline of not knowing what you’re talking about.” My comment –Thanks for the memories.
Your experience in addressing 100 seminar attendees was revelatory, although I assume that they were interested in gold or presumably you would not have been talking about it.
In that sense, gold is becoming like sex: everyone is interested in it whether they have any or not.
The Weekly View – Debt Ceiling ‘Catastrophe’ Averted –My thanks to Rod Smyth, bill Ryder and Ken Liu of RiverFront Investment Group for their ever-interesting market letter. It is posted in the Subscriber’s Area along with my further comments. Additional commentary by Eoin Treacy
Today’s interesting charts – in the increasingly anxious environment that pervades markets, factual reading of chart action is likely to reap benefits.
US yield curve spread (10yr – 2yr) – The spread appears to have peaked below 300 basis points for the third time in 20 years reflecting just how loose monetary policy is at present. while policy has not yet begun to tighten significantly, this spread looks unlikely to widen very much farther.
Email of the day (1) – on the S&P 500’s chart pattern:
“Wow, looks like the S&P500 completed a type 3 top today. Ouch. I’m sure you’ll address this in your message tonight, of course.
“I was trying to think of how the US Government could get worse… no creative ideas so far.
“Guess I’m gonna go long calls on the double-short S&P500… crap.
“Have a great evening.”
My comment – Thank you for this note which arrived at 22:30 last night. yes, David addressed the deteriorating stock market environment in some depth in last night’s audio. he also reviewed a number of salient charts in Monday’s Comment of the Day. As you highlight leveraged ETFs are more suitable for traders than investors.
Email of the day (2) – on a rerun of 2007/2008:
“I cannot help but notice that we may be experiencing a re-run of 2007/08 when equity markets peaked out at the end of 2007 but gold continued to rise until mid March 2008 and then started falling. do you see a similar scenario playing out again?”
My comment – Thank you for this interesting question which I’m sure will be of interest to other subscribers. As you point out gold was an initial beneficiary of the stock market’s deterioration. however, it was not immune from the seizing up of credit lines that followed the Bear Stearns and Lehman Brothers bankruptcies. It fell sharply although not as much as most stock markets.
Eoin’s personal portfolio: stock market index short opened, currency trade initiated
Email of the day (3) – on corn and USDA forecasts:
“I hope this finds you and your family well : )
“I’ve attached the latest Musings, and, as usual, have the permission of the author for redistribution to Fullermoney subscribers.
“Page 16 contains a very interesting couple of paragraphs on potential breakthroughs in finding sweet spots in shale formations. Previous Musings that I have forwarded (along with this one) make the case that shale formations have sweet spots where drilling will yield substantially higher extraction rates (even now, many companies and governments are modelling shale formations as if they were huge flat areas of equally available natural gas, despite considerable evidence to the contrary).
“On a separate subject, I just spent a week and a half in the corn belt, and 2 things became apparent: the news media frenzy on how the heat wave might destroy the corn crop is pretty much complete BS, as the corn which managed to get planted in between the massive rains during the planting season shows excellent growth and yield potential, which was in fact enhanced by the warm weather following unusually wet conditions. you could actually see the change in corn height over a week of sweltering weather. Some corn was planted very late, betting on a late first frost — that corn is, naturally, far behind, under 3 feet in height, and showing no signs of tasseling. This part of the crop is very much at risk of an early frost, which is now being forecast as a high probability by Weatherbell Analytics and by Evelyn Browning Garriss.
“On the other hand, it looks to me like the USDA forecasts on a record acreage having been planted with corn are too high, almost as if they forgot to factor in the spring floods. The University of Illinois Ag Department is also reporting that the USDA estimates for the bean crush are considerably above their estimates. and we US taxpayers pay $1billion/week to support the USDA…”
My comment – Thank you for this informative email and for requesting permission to post Musings from the Oil Patch in Comment of the Day. My family and I are enjoying the summer although our eldest daughter can’t wait to get back to school next month. She asks several times a day how many more “sleeps” are left to September 1st.
The USDA has proven to be an unreliable forecaster of grain and bean yields not least because they appear to attempt to manage expectations rather than simply report facts. last year, night time temperatures were an issue with corn crops. It wasn’t getting cold enough for the sucrose to swell the ears sufficiently to increase the yield. I wonder how cold the nights were on your trip to the corn belt?
Musings from the Oil Patch – Thanks to the author of the above email for forwarding another in this excellent series of reports focusing on shale gas production. Here is a section: If we look at estimates of the EURs suggested by producers active in the Barnett shale versus the cumulative production data from wells, there is no close correlation. (Exhibit 7 below.) This comparative data has been collected by Art Berman, a critic of the economic analysis underlying gas shale development, but the data doesn’t seem to support the claims of gas shale producers. To understand the significance of this data, one should examine production from the Barnett based on historic wells and not including newly drilled wells. As the chart in Exhibit 8 shows, if one excludes Barnett wells drilled in the past 12 months, total gas production declines at a 44% annual rate. that decline rate is consistent with gas shale well production profiles, but the rate of decline highlights the problem gas shale producers will face when and if they slow down drilling new wells in the basin. without significant new well drilling, gas production is at risk, but the flip side of that risk is a higher natural gas price.My view – Natural gas remains a game changer for the energy industry. Massive investment in LNG capacity continues and many of the major oil companies now produce more gas than oil. The economics of gas powered vehicles are becoming increasingly persuasive in a high cost energy environment and natural gas’s low carbon credentials also endear it to environmentally conscious consumers.
The Chart Seminar 2011 & 2012: US dates announced – following a sell-out tour to Singapore and Sydney earlier this year, The Chart Seminar, now in its 42nd year, will be going on tour again next year. Interest in both our US seminars for 2012 has been brisk so far. The New York seminar is now 33% full and the San Francisco seminar is 35% full. The London seminar in November is more than 50% full. anyone interested in securing a place at any of our events should contact Sarah Barnes at .
The date and venues for my seminars in 2011 and so far in 2012 are:
London – November 3rd & 4th 2011 at the Radisson Edwardian Hampshire
San Francisco – April 16th &17th 2012
New York – April 23rd & 24th 2012
The full rate is £950 + VAT. The early booking rate of £875 for non-subscribers expires on September 30th for the London seminar and January 30th 2012 for the US seminars. Paid-up Fullermoney subscribers are offered a discounted rate of £850. anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates