RECESSION NOW BEHIND US!! ---maybe not!

Bob Englehart's Cartoon from mid-September this year



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-us-maybe-not.html

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BlueBeats Hank Risan: Thats Not the Beatles, Its
a Virtual Cover Band

If you thought that was AC/DC, Pink Floyd, Led Zeppelin, and The Beatles you streamed for free or downloaded this week for $.25 from BlueBeat.com, it?s an understandable error.

The site?s owner Hank Risan tells FastCompany his catalog of music doesn?t include tracks by the original artists, who, of course, own the publishing rights to their music (many have long resisted posting their music for sale online). His tunes aren?t technically Beatles tracks at all but, rather, "psycho-acoustic simulations" of Beatles songs performed and broadcast on BlueBeat and made available for download.

Performances? By, what, some kind of virtual cover band? "Exactly!" Risan says, almost giddily. "Only they don?t eat as much. And you don?t have to pay them union wages!" It was if we?d summed up a concept he?d long been trying to explain to the Recording Industry Association of America (RIAA) general counsel Steven Marks, and lawyers for EMI records, distributor of The Beatles catalog who filed suit against Risan and BlueBeat on Wednesday claiming copyright infringement, and the judge in the case who ordered BlueBeat to shut down until he can hold a hearing on Nov. 20th. Risan has tried to respond to the suit by EMI, which holds exclusive rights to distribute The Beatles catalog, by writing the material on BlueBeat is an "entirely different sound recording." It went over the head of most, but in a phone call late Friday evening, he explained further.

A full disclosure: There?s much more to this story, but it involves a battery of experts and lawyers that just weren?t available at post time, but Risan?s own explanation, even in part, was worth getting to as soon as possible, given the attention we?ve given to EMI?s side of the case.

Here is, in very basic terms, why his site is legal, according to Risan.

First, he obtained necessary licenses to broadcast original works on the web. (Ars Technica has a good summary of the laws involved here). He claims, too, to have paid royalties to all appropriate performing rights organizations since 2003. "That?s going to be very problematic for EMI when the judge hears the case," Risan says. Next, he bought a legitimate copy of each song or album featured on BlueBeat and analyzed it, "We make an analysis of that work that we break down into parametric fields like timbre, pitch, loudness. You create an analytical view of the work."

Sounds an awful lot like ripping a CD. Not so, Risan insists. "It?s done with sophisticated algorithmic, mathematic and artistic ? this is not some kind of mechanical process. This is a trial-and-error artistic endeavor."

The entire analysis, he says, goes into his computers. "Using psycho-acoustic synthetic methods, we synthesize a new sound recording in a new 3-D environment. Like you said, a virtual cover band. Instead of bringing a bunch of guys in that look like The Beatles and sound like The Beatles into a conventional recording studio, we do this all in a virtual 3-D environment."

The disc he bought at the store is then destroyed, lest anyone try to say he?s posting it for download. Rather, his "independent simulated production" (don?t call it a re-recording) is then "broadcast" ? streamed in ?colloquial? terms, as Risan puts it -- on BlueBeat. Those broadcasts, along with new visuals and information are bundled up for what Risan calls "time-shifted audio visual displays" -- they look remarkably like song tracks -- and sold for a quarter apiece. The quarter actually buys you the time-shifted audio-visual display, not, say, The Beatles? "Helter Skelter."

It?s reminiscent of the classic approach whereby a ticket scalper charges $200 for a $25 concert ticket by bundling the face value ticket with a commemorative $175 pencil. Risan insists, though, that he?s doing this to educate people about the coming wave of psycho-acoustic and psycho-visual technology. He points to groundbreaking work being done in this field at Stanford University and says, "The goal was never to make money and that?s why were charging a quarter and not a dollar. To educate and inform and inspire people, that?s what we?re all about."

There are technical and logical problems here. The "if it quacks like a duck" principal surely applies to what sound like other artists tracks, and BlueBeat sure markets them that way. There are some philosophical and structural problems with Risan?s arguments, too. To suspend what logic tells you about BlueBeat, you have to subscribe not only to Risan?s ideas but to his vocabulary. The minute you refer to his "performances? as "tracks" or call them "re-recordings," you run afoul of his theory. And although there might be a value in tools that perfectly, synthetically recreate complex combinations of sounds, why foist upon the public an application of that technology that looks a hell of a lot like piracy? Put another way, if you?re in favor of encouraging creativity, why get behind a tool whose primary purpose is to mimic someone else?s creation so closely it can?t be differentiated from the original?

Risan admits his argument was subject to interpretation, and he?s keeping the money he?s made from BlueBeat aside, he says, in case he loses his legal battle. He won?t say how much that is, but he says it?s less than most might think. "Look what the press was doing. You guys were saying we were all pirates. So people were a little bit nervous going to the site?. When we have our day in court on the 20th, I think that some surprises are going to happen that will open up the public?s eyes to new innovation artistically."

The thing about courts, though, is that they often favor the reasonable perceptions of common people over the challenging mental gymnastics of an academic. Risan has thought this through on a deeply analytical level, applying all sorts of arithmetic to a process others equate with the "import" button on iTunes. And he?s put his money where his math is, gambling BlueBeat?s future on his analytical theories. But even if Risan convincingly lays out his rationale for selling seemingly stolen songs, that doesn?t guarantee a judge on Nov. 20 won?t think it?s a load of bull. Or at least a "psycho-acoustic simulation" thereof.

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nk-risan-s-not-beatles-it-s-virtual-cover-band

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US Unemployment rate shoots to 102%, even as
trend in Nonfarm Payrolls is steadily improving now -

Ugly Canadian employment data knocks CAD for steep losses initially but risk attempts comeback after NY open.

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MAJOR HEADLINES ? PREVIOUS SESSION

• Australia Oct. AiG Performance of Construction Index out at 50.9 vs. 50.8 in Sep.
• apan Sep. Leading/Coincident Index out at 86.4/92.5 vs. 86.2/92.5 expected
• Switzerland Oct. Unemployment Rate (NSA) rose to 4.0% as expected and vs. 3.9% in Sep.
• Norway Sep. Industrial Production rose 0.9% MoM
• Norway Sep. Industrial Product Manufacturing rose 2.2% MoM vs. 0.4% expected
• UK Oct. PPI Input rose 2.6% MoM and +0.1% YoY vs. +1.5%/-1.3% expected, respectively
• UK Oct. PPI Output rose 0.2% MoM and 1.7% YoY vs. +0.3%/1.9% expected, respectively
• Germany Sep. Factory Orders rose +0.9% Mom and fell -13.1% YoY vs. +1.0%/-13.6% expected, respectively
• Canada Oct. Unemployment Rate rose to 8.6% vs. 8.5% expected and 8.4% in Sep.
• Canada Oct. Net Change in Employment fell -43.2k vs. +10k expected
• US Oct. Change in Nonfarm Payrolls out at -190k vs. -175k expected and -219k in Sep.
• US Oct. Unemployment Rate rose to 10.2% vs. 9.9% expected and 9.8% in Sep.
• US Oct. Average Hourly Earnings rose 0.3% vs. 0.1% expected
• US Oct. Average Weekly Hours steady at 33.0 vs. 33.1 expected
• US Sep. Wholesale Inventories fell -0.9% MoM vs. -1.0% expected

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THEMES TO WATCH ? UPCOMING SESSION

(All times GMT)

• US Treasury's Krueger to Speak (1800)
• US Sep. Consumer Credit (2000)
• Australia Sep. Home Loans (0030)
• Australia RBA's Lowe to Speak  (0320)
• G-20 meeting this weekend

Market Comments:
The US payrolls data on the headline was slightly worse than expected, but the combination with previous month's revision (revised -263k to -219k for a +44k upward revision) actually makes the number slightly better than expected. The unemployment rate stole the headlines though, as the rate shot 0.4% higher to 10.2%, the first time the official tally has topped 10% since the 1982-3 time frame, when the rate was above 10% for 10 months. As we have discussed before, however, the real un- and underemployment situation this time around is far worse due to the changing nature of the work force, more temping, more "self-employed" who are only finding odd jobs and working part time, etc. It was also disappointing for the prospect of an imminent improvement in employment to see the Average Weekly Hour data remaining at the all time low of 33.0 hours/week rather than ticking higher. Still, as long as the decline rate in initial jobless claims continues at the current rate, we might look out for a topping of the unemployment cycle in a few months time.
The initial reaction by the market actually made sense for once, as traders failed to find the data especially inspiring for risk, but at equities opened for trade in New York, it appears that the risk perma-bulls are trying to mount a charge and bonds have reversed sharply lower after an initial rally, suggesting that the pressure on JPY crosses will be to the upside if they can't find support. We prefer a stronger JPY if we have a look over at the EURJPY chart, but the bond market is providing a bit of the challenge to that view so far today

More hawkishness from the RBA
AUD, one of the more risk-sensitive currencies, has traded to a new high for the week after the RBA raised its GDP forecasts sharply (2010 growth projected at 3.25% vs. previous 2.25%) overnight. Inflation was forecast at a relatively modest 2.25% for 2010 and 2.5% (vs. 2% previously) for 2011 and 2012. The RBA said that rates will be raised gradually. We also have to remember the RBA's recent words cautioning the market that currency strength was becoming a big enough factor that it could affect the trajectory of rates. The front end of the Australian curve has ticked higher on this news, but not as high as the AUDUSD has rallied. AUD was also boosted by the RBA comment that China investment is Australia is bigger than Australia Bureau of Statistics figures suggest.
CAD unemployment
CAD is struggling for direction as the rally in risk appetite after the US open is trying to pull it stronger after a terrible Canadian employment report earlier this morning suggests that the Canadian job market is still looking for a bottom.
Chart: EURUSD
We discussed the weekly pivots earlier this week as key for the USD this week, and EURUSD, since crossing above the 1.4825 area pivot on Wednesday, has twice found support in that area, including today. Meanwhile, the recent sell-off wave back below the old high offers a wave setup in which bears are looking for resistance to come in at the usual Fibo level suspects at market turnarounds (the 0.618 and 0.764, with the latter having been a very interesting level in past market cycles for EURUSD). That 0.764 retracement comes in at around 1.4960 if this 1.4895 area 0.618 Fibo can't hold back the rally. Failure of the 0 .764 level to hold would suggest a full retest of 1.5063 high and perhaps beyond if risk continues to rally and equities take out their recent highs.

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shoots-to-102-even.html

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US Unemployment - Wakeup Call

The positive sentiment could continue ahead of the US labor market data today, but the market is likely to be disappointed as the Unemployment Rate has a high likelihood of being released at 10%

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Calendar
Economic Data Releases

Country
Time (GMT)
Name
Expectation
Prior
Comment
GE
11:00
Factory Orders MoM (SEP)
1.0%
1.4%

US
13:30
Change in Nonfarm Payrolls (OCT)
-175K
-263K
Saxo exp.: -205K
US
13:30
Unemployment Rate (OCT)
9.9%
9.8%
Saxo exp.: 10.0%

---

What's going on?

Theme Comment
·         Strong rally in stocks yesterday, engulfing all price action on Wednesday in S&P500. The positive sentiment could continue ahead of the US labor market data today, but the market is likely to be disappointed as the Unemployment Rate in our opinion has a high likelihood of being released at 10% and the NFP could also disappoint. Look for the Participation Rate and Weekly Hours as well.
·         Our stance: Don?t be long over the figures. Buy on eventual dips afterwards.
·         The RBA was decidedly bullish on the Australian economy o/n and AUDUSD is likely to test the previous highs within next week.

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FX

FX
Daily stance
Comment
EURUSD
0/+
Prefer to buy dips to 1.4835-45 for a rebound through 1.49 targeting 1.4950-60. Stop below 1.48
USDJPY
0
Likely stuck in a 90.40-91.20 range
EURJPY
0
Expect to trade in a 134.25 ? 135.35 range today
GBPUSD
+
Chance of further upside after y?day?s action. Break abv 1.6625 tgts 1.67, suppt 1.6540-50
AUDUSD
+
Buy break abv 0.9150, or any dip down to 0.9080, for 0.9220 then 0.9260

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FX Options

FX-Options
Comment
EURUSD
Vols heavily offered yesterday as large DNTs being protected in both directions.

Believe vols will sell off further and expect a tight range for the rest of the year.
EURCHF
Vols slightly bid and RR trading further in favour of EURCHF.

Huge options related stops between 1.5000 and 1.5050.

---

Equities

Equities
Daily stance
Comment
DAX
0/+
Buy on dips towards 5412 targeting 5471. S/L below 5380.
FTSE
0/+
Buy on dips towards 5100 targeting 5138. S/L below 5075.
S&P500
0/+
Buy on dips towards 1051 targeting 1060. S/L below 1045.
Nasdaq100
0/+

DJIA
0/+

---

Futures

Commodities
Daily Stance
Comment
Gold
0/+
Buy on dips towards 1085 and target 1095. Stop below 1080.
Silver
0/+
Buy at the break of 17.62 and target 17.85. Stop below 17.50.
Oil (CLZ9)
0/-
Sell on the break of 79 and target 77.50. Stop above 80.30.

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p-call.html

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The non-farm payroll event rolls into town
unemployment at 10% - Forex Market Update

On the other hand, RBA upgrades its forecast for Australian economy ? AUD looking firmer

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MAJOR HEADLINES ? PREVIOUS SESSION

• CA Sep. Building Permits out at +1.6% m/m, as expected, vs. revised +7.4% prior
• US Q3 Non-farm Productivity out at 9.5% vs. 6.5% expected and revised 6.9% prior
• US Q3 Unit Labour Costs out at -5.2% vs. -4.2% expected and revised -6.1% prior
• US Weekly Initial Jobless Claims out at 512k vs. 522k expected and revised 532k prior
• US Weekly Continuing Claims out at 5745k vs. 5750k expected and revised 5817k prior
• UK Oct NIESR GDP Estimate out at -0.4% vs. unchanged from prior revised number
• CA Oct. Ivey PMI out at 61.2 vs. 58.0 expected and 61.7 prior
• AU AiG Performance of Construction Index out at 50.9 vs. 50.8 prior
• JP Sep. Leading Index out at 86.4 vs. 83.2 prior
• JP Sep. Coincident Index out at 92.5 vs. 91.2 prior
• Swiss Oct. Unemployment out at 4.0%, as expected, vs. 3.9% prior

---

THEMES TO WATCH ? UPCOMING SESSION

(All times GMT)

• UK PPI Input/Output (0930)
• GE Factory Orders (1100)
• CA Unemployment (1200)
• US Non-farm payrolls (1330)
• US Unemployment Rate (1330)
• US Wholesale Inventories (1500)
• EU ECB?s Gonzalez to speak (1630)
• EU ECB?s Nowotny to speak (1700)
• US Consumer Credit (2000)
• G-20 Meeting (n/a)

Market Comments:
The second phase of central bank meetings occurred overnight and there was a hint that both the BOE and ECB were adopting a slightly more optimistic approach on their respective economies, though this did not stop the BOE from announcing a £25 bln increase to its quantitative easing programme. The total for its Asset Purchase facility was upped to £200 bln but the pace of disbursement on the remainder was extended to 3 months rather than one. Noted for its extremely cautious view on the state of the economy, the MPC this time suggested that a pickup in activity may soon be evident (albeit at a snail?s pace). With the increase in the QE measures at the lower end of market expectations, and the day?s economic data coming in better than expected, GBP survived an early sell-off and came back strongly, touching a 2-week high.
The ECB meeting by contrast was as steady as they come although Gov. Trichet was a tad more hawkish in his press conference than the market had expected. He said that interest rates were ?appropriate? but it was comments that ?not all liquidity would be needed in future? that got the EUR going, pushing it up to a one-week high.
Across the Atlantic, US productivity spiked 9.5% in Q3, no doubt reflecting the impact of stimulus measures and hefty job cuts by companies. The jobless claims showed a slight improvement with 512k jobs lost vs. 532k last week and, when compared with the slightly worse ADP report yesterday, may cloud the release of tonight?s non-farm payroll data. Equities liked the data, rebounding strongly, but the correlation between strong equities/weak dollar appeared to disengage with the greenback closing marginally higher on the Index. No doubt the uncertainty surrounding tonight?s jobs report was a factor influencing currency markets.
The major mover during the Asian session was the AUD (though only a 30 pip-or so rally) following the release of the RBA?s quarterly monetary policy report. An upgrade to near-term growth forecasts for 2009 to 1.75% from 0.5% and for 2010 to 3.25% from 2.25% proved the catalyst while revisions to headline CPI through December 2010 to 2.25% (though still within the target band of 2-3%) also helped. Overall an upbeat assessment with less spare capacity than originally thought, but nevertheless any increases in interest rates are likely to be gradual. The report acknowledged that consumption growth was showing signs of slowing as stimulus fades but forecast that spending would remain resilient.
The other headline in Asia concerned Fannie Mae, though Asian markets failed to show any reaction to the news. The mortgage lender has requested an additional $15 bln in additional funding by year-end after posting another net quarterly loss of $18.9 bln in Q3. The lender has already received some $44.9 bln in federal government assistance under a senior preferred-stock purchase agreement. Should the market decide to take notice then it should be another knock back for risk appetite.
An article in the China Daily suggested that the huge surge in deposits at China?s biggest bank could signal that the huge rallies in the country?s equity and property markets this year are sustainable and not just fueled by massive cash injections from the central bank. The report notes that deposits at the country?s four largest listed banks grew by Yuan 4.3 tln ($629.7 bln) during the first half of 2009, more than the Yuan 3 tln increase in loans from the same banks.
Looking ahead to tonight?s non-farm payroll numbers, the market is looking for a loss of 175k jobs in the payroll report and an increase in employment up to 9.9%. A print with a 10% handle would likely cause a dent to risk appetite (even though eventually the market sees it as inevitable) and the risk of a surprise would likely lie to this side. We note that Wednesday?s weak reading in the employment sub-component of the non-manufacturing ISM data is a definite negative for tonight though the ADP report could suggest a possible shrinking in the magnitude of payroll losses. All in all, a bit of a lottery.
 Apart from the US employment data, other data points on the horizon include Swiss unemployment, UK PPI and German factory orders during the European session while the US session can look forward to Canada unemployment and US wholesale inventories. G-20 meeting in Scotland this weekend but nothing concrete or defining for currency markets is expected though individual finance minister may pass asides about the strength of their currencies versus the greenback.
Have a great weekend.

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t-rolls-into-town.html

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