Month: February 2015

The Untapped $140 Trillion Innovation For Jobs Market

TechCrunch

Editor’s note: David Nordfors is the co-chair and co-founder of the i4j Innovation for Jobs Summit together with Vint Cerf. 

It’s a popular sport nowadays, discussing if tech is going to kill or create jobs. The answer is simple if you ask me. If we care more about tasks than about people, then tech will replace people. If we care more about people than about tasks, then tech will leverage people.

Think about it this way: I work in your company, I wash the dishes. You buy a dishwashing machine. You can either say “David, good luck!” or you can say “let’s rock!”

“Good luck” is the task-centered economy. You replace me with a machine. You lower the cost and raise the efficiency. In the innovation economy, this is the race against the machine.

“Let’s rock” is the people-centered economy. You buy a machine so that we can do…

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The carry trade’s bond doppelganger

MKTSTK

The carry trade is an integral part of global financial markets. While in the past we highlighted the relationship between the Yen and the stock market, the simplest form of the carry trade consists of borrowing money at a low interest rate in one currency and investing it at a higher rate in another currency.

Given it’s deep liquidity, the US Treasury curve is a favored destination for flows related to the carry trade. When interest rates rise in the US it becomes increasingly attractive to borrow money in a cheap currency (such as the Yen) and use the proceeds to finance the purchase of a Treasury bond. For example, late last week yields on the US 30 Year Treasury bond rose above 2.5% for the first time since mid-January. At the same time the value of the Yen fell sharply against the dollar.

The relationship between the Yen and…

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Traders violently revise their expectations for interest rates

MKTSTK

us_interest_rate_complex

Look at the heatmap above: it shows the 1 minute correlation matrix for the US interest rate futures complex including the first 16 Eurodollar contracts and the Treasury curve. Unlike heatmaps of the stock market, this matrix is smooth from cell to cell: note the beautifully sloping gradient from the front end of the curve (GEH5) to the back (UBH5). No one would blame you for thinking that any market with such an ordered correlation structure must be one of the most efficient in the world.

As the second chart shows, however, the market has a funny way of shattering consensus opinion. Buoyed by the prospect of QE from Europe and stagnant prices at home, US Treasury bonds had begun to enter bubble territory. Short term interest rate traders bid up the price of Eurodollar futures, pushing back their expectations for the date of the first rate increase.

But early this week the…

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What You Need To Know About Zero Knowledge

TechCrunch

Anonymity? Privacy? How quaint. We live in a world bedecked with ever more cameras, ever more sensors, ever more drones, ever more data, ever fewer things that can be hidden. TLS and Tor can hide your online browsing, true — but, realistically, everything important you do, online or off, can easily be audited and tracked.

True, you can still send private messages. Signal/RedPhone/TextSecure from Open WhisperSystems are the gold standard for secure messaging, and Dark Matter looks interesting. But if you want to go beyond messaging into transacting, your luck runs out.

Consider Bitcoin. It’s infamous as the currency of choice for dark markets — but it’s also, “in a sense, the least anonymous money that has ever existed, since every transaction is observable by anyone with a bitcoin account,” to quote economist David Friedman. Just ask alleged Silk Road kingpin Ross Ulbricht, who had 700,000 bitcoin on his…

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