4 Things That Pundits Who "Predict" the Future Always Seem to Get Wrong

Peter Thiel has pointed out that we wanted flying cars, but got 140 characters instead. He’s only partly right. For decades futuristic visions showed everyday families zipping around in flying cars and it’s true that even today we’re still stuck on the ground. However, that’s not because we’re unable to build one. In fact the first was invented in 1934.

The problem is not so much with engineering, but economics and safety. We could build a flying car if we wanted to, but to make one that can compete with a regular automobile is another matter entirely. Besides, in many ways, 140 characters are better than a flying car. Cars only let us travel around town, the Internet helps us span the globe.

That has created far more value than a flying car ever could. We often fail to predict the future accurately because we don’t account for our capacity to surprise ourselves, to see new possibilities and take new directions. We interact with each other, collaborate and change our priorities. The future that we predict is never as exciting as the one we eventually create.

1. The Future Will Not Look Like the Past

We tend to predict the future by extrapolating from the present. So if we invent a car and then an airplane, it only seems natural that we can combine the two. If family has a car, then having one that flies can seem like a logical next step. We don’t look at a car and dream up, say, a computer. So in 1934, we dreamed of flying cars, but not computers.

It’s not just optimists that fall prey to this fundamental error, but pessimists too. In Homo Deus, author and historian Yuval Noah Harari points to several studies that show that human jobs are being replaced by machines. He then paints a dystopian picture. “Humans might become militarily and economically useless”, he writes. Yeesh!

Yet the picture is not as dark as it may seem. Consider the retail apocalypse. Over the past few years, we’ve seen an unprecedented number of retail store closings. Those jobs are gone and they’re not coming back. You can imagine thousands of retail employees sitting at home, wondering how to pay their bills, just as Harari predicts.

Yet economist Michael Mandel argues that the data tells a very different story. First, he shows that the jobs gained from e-commerce far outstrip those lost from traditional retail. Second, he points out that the total e-commerce sector, including lower-wage fulfillment centers, has an average wage of $21.13 per hour, which is 27 percent higher than the $16.65 that the average worker in traditional retail earns.

So not only are more people working, they are taking home more money too. Not only is the retail apocalypse not a tragedy, it’s somewhat of a blessing.

2. The Next Big Thing Always Starts Out Looking Like Nothing At All

Every technology eventually hits theoretical limits. Buy a computer today and you’ll find that the technical specifications are much like they were five years ago. When a new generation of iPhones comes out these days, reviewers tout the camera rather than the processor speed. The truth is that Moore’s law is effectively over.

That seems tragic, because our ability to exponentially increase the number of transistors that we can squeeze onto a silicon wafer has driven technological advancement over the past few decades. Every 18 months or so, a new generation of chips has come out and opened up new possibilities that entrepreneurs have turned into exciting new businesses.

What will we do now?

Yet there’s no real need to worry. There is no 11th commandment that says, “Thou shalt compute with ones and zeros” and the end of Moore’s law will give way to newer, more powerful technologies, like quantum and neuromorphic computing. These are still in their nascent stage and may not have an impact for at least five to ten years, but will likely power the future for decades to come.

3. It’s Ecosystems, Not Inventions, That Drive the Future

When the first automobiles came to market, they were called “horseless carriages” because that’s what everyone knew and was familiar with. So it seemed logical that people would use them much like they used horses, to take the occasional trip into town and to work in the fields. Yet it didn’t turn out that way, because driving a car is nothing like riding a horse.

So first people started taking “Sunday drives” to relax and see family and friends, something that would be too tiring to do regularly on a horse. Gas stations and paved roads changed how products were distributed and factories moved from cities in the north, close to customers, to small towns in the south, where land and labor were cheaper.

As our ability to travel increased, people started moving out of cities and into suburbs. When consumers could easily load a week’s worth of groceries into their cars, corner stores gave way to supermarkets and, eventually, shopping malls. The automobile changed a lot more than simply how we got from place to place. It changed our way of life in ways that were impossible to predict.

4. We Can Only Validate Patterns Going Forward

G. H. Hardy once wrote that, “a mathematician, like a painter or poet, is a maker of patterns. If his patterns are more permanent than theirs, it is because they are made with ideas.” Futurists often work the same way, identifying patterns in the past and present, then extrapolating them into the future. Yet there is a substantive difference between patterns that we consider to be preordained and those that are to be discovered.

Think about Steve Jobs and Appl for a minute and you will probably recognize the pattern and assume I misspelled the name of his iconic company by forgetting to include the “e” at the end. But I could have just have easily been about to describe an “Applet” he designed for the iPhone or some connection between Jobs and Appleton WI, a small town outside Green Bay.

The problem with patterns is that the future is something we create, not some preordained plan that we are beholden to. The things we create often become inflection points and change our course. That may frustrate the futurists, but it’s what makes life exciting for the rest of us.

3 Stocks To Hold During The Economic Slowdown

Stocks are becoming more expensive. Yet earnings have not bolstered these prices. In fact, earnings surprises have been mostly negative, causing the Citigroup Economic Surprise Index to diverge with the price-to-earnings ratio of the market:

This index, almost by necessity, oscillates. As earnings continue to disappoint, analysts will inevitably lower their expectations, in turn creating an environment of more positive earnings surprises. This is bullish for the market, especially for companies reporting earnings in the coming months.

When earnings surprise, stocks rise. This is true even when stocks are perceived to be expensive. Those who are concerned with the inflated equity costs should be comforted to know that we are still in a bull market.

Don’t Worry Yet

Leading economic indicators tell us not to worry just yet. For example, ISM New Orders show continued growth in customer demand – 38 consecutive months of growth, in fact.

Note that new orders trend down before recessions:

We might be seeing slower growth, but we still see growth. Eventually, the top will be in, and leading economic indicators will start to decay before the next recession. For now, the economy is as strong as ever but with slowing growth.

Because the economy influences company earnings and because the economy is still strong, the Citigroup Economic Surprise Index being low is likely the result of analysts’ expectations being too high. With growth slowing, this makes sense. Analysts have been assuming the fast growth in corporate earnings will continue, neglecting the slowdown in economic growth.

Peak Growth

Currently, the slope of leading economic indicators (LEIs) is flattening. This could be a temporary stall, but we often see this toward the end of a bull market. The economy is likely leaving the expansion phase of the business cycle and entering a slowdown phase:

At this point, the risk/reward curve begins to become concave, meaning that the downside risk is beginning to outweigh further upside reward. From here, we will likely see lower volatility as the market makes its way up to a peak for this bull market. Before we hit the recession phase of the business cycle, we will likely see another rally, but one of much lower volatility and speed than the post-December rally.

The bull market is not over. With foreign economies clearly being deep in the slowdown phase, the US market is one of the last places for bulls. Yet the fact that the economy is slowing down means investors should be rebalancing their portfolios for the sake of maintaining alpha.

Outperforming Sectors

According to research on sector performance during the business cycle, at this point, investors should be ditching real estate and consumer discretionary stocks in favor of healthcare and consumer staples:

Drawing inspiration from this, here is my list of positions to hold during the coming economic slowdown:

Macquarie Infrastructure (NYSE:MIC)

This company falls in the “industrials” sector. This is a B2B service company – or set of companies, rather.

MIC has seen a stable, positive growth rate since around 2013. The slowdown earlier this decade did not make a significant impact on the company’s growth, implying that we should see growth continue during the next slowdown:

(Source: Damon Verial; data from ADVFN)

Cash flows too have been strong and growing:

(Source: Damon Verial; data from ADVFN)

Putting it all together, I calculate the company as undervalued as per its discounted cash flow valuation. Here is my discounted cash flow valuation plotted against the stock:

(Source: Damon Verial; data from ADVFN)

You can see that MIC was not underpriced until the last selloff. My chart only generated a buy signal in 2018. The valuation implies a 60% upside.

Four analyst downgrades after February’s earnings brought the stock to a discounted level. We know this was an overreaction because the stock is quickly filling the down area gap that appeared after earnings:

(Source: Stockcharts.com)

One key reason for my choice of MIC is its mispricing. Yet once the gap fills, the post-earnings drift will be officially over. Get in on this one early for some excess returns and to lock in on the company’s 10% dividend yield.

TreeHouse Foods (NYSE:THS)

This food and beverage company falls in the “consumer staples” category. It attracted my attention last month with an odd earnings reaction. The company reported a revenue decline of over 10%, causing the stock to fall.

Yet it was bought right back up, with dip-buying erasing all losses. The stock carried on as if nothing happened. This type of post-earnings reaction shows a strong investor base, which limits news-based drawdowns:

(Source: Stockcharts.com)

I dug into the earnings call transcript to see if I could find anything of interest. Lexical analysis is useful here. Proper financial lexical analysis can generate management sentiment, which is a predictor of a stock’s price over the coming month.

THS’s earnings calls were quite interesting. Rarely does a call contain more pessimism than optimism. However, THS was the rare exception for most of this and last year – except for the recent quarter.

Its most recent earnings call was roughly as optimistic as the average company. Because the previous quarter and year showed negative sentiment scores, I cannot make a comparison. Suffice to say, management is indirectly pointing to an inflection point in the company.

Here are a few flagged statements from the earnings call:

“Importantly, pricing execution has gone a lot more smoothly than last year with a minimal disconnect between inflation and pricing.”

– A tangible factor for the recent turnaround in sentiment.

“We worked hard as an organization to resolve the majority of our service issues and to restore customer trust and TreeHouse’s ability to deliver.”

– A similar statement; an admission of problems that are being corrected. Acknowledgement of issues and plans for resolution remains a strong indicator of excess returns, according to financial lexical analysis. (The downplaying of problems in contrast implies negative excess returns.)

“Quite frankly, solving the Snacks issue right now is our most important and where all the focus is.”

– A continued focus on problems. Should the company again succeed, we will likely see another quarter of strong sentiment, implying upward pressure on the stock price.

THS has outperformed the US food market to a great extent: 68% annual returns versus -4%. Yet my analysis hints that mean reversion is still underway, as the company still has a lower price-to-book than the average food stock. The company is expected to see a 60% earnings growth over the next year, making now a good entry point.

Because THS does not offer a dividend, you can use options instead for this play. I recommend the Aug 16 $60 calls. These have a delta of 100, allowing you to fully mimic holding 100 shares of THS per contract at a cost of around $650 and with minimum theta decay.

Madrigal Pharmaceuticals (NASDAQ:MDGL)

This company falls in the “healthcare” category. Investing in MDGL gives you exposure to a pipeline of cardiovascular, liver, and metabolic treatments. The stock is trading at under half its previous price because shares were diluted via a public offering for the sake of raising capital.

This capital will be used to finance the company’s pipeline. The timing was smart: just before a slowdown. The company will be able to focus on its pipeline with little regard to decaying economic conditions.

The options market is pricing the stock at $130, which is slightly above MDGL’s current price. I, too, see the stock as undervalued. Over the past year, MDGL has outperformed the biotech sector with 8% returns versus -1% returns.

Since 2016, MDGL has had no long-term debt and can cover its short-term debt with its current cash and assets. With its moat of cash, MDGL can continue working on its pipeline without worrying about earnings. A strong clinical trial result or two should draw investors into this company, and the stock will rally in response.

This stock is more of a gamble than the other two, so do look into the pipeline to see if anything strikes your fancy. Biotech stocks are notoriously hard to predict, and so my philosophy is to bet on those that are (1) outperforming the sector, (2) have a decent pipeline or high-sales product, and (3) are financially healthy, whether that mean strong earnings or enough cash runway to support the pipeline.

This is a rather unpopular stock for the general public, but is popular with the “smart money”: venture capitalists, hedge funds, and institutions:

(Source: Simply Wall St)

If you want to play this without putting too much capital at risk, I suggest the June 21 $130 call options. If the option market’s prediction is correct, these contracts are currently underpriced. Aim for roughly 25% ROI over the next quarter and roll the options over quarterly.

Conclusion

The US economy is at peak growth. From here, it will soon (or already has by some measures) enter into the slowdown phase of the business cycle. During this phase, three sectors show excess returns: industrials, consumer staples, and healthcare.

While you could simply buy ETFs in these sectors, if we are to seek alpha, we should look for stocks that are to outperform in these sectors. Thus, we gain excess returns upon excess returns. I gave my three picks, one from each sector.

We have MIC, an industrial with strong growth; THS, a food company that is at an inflection point, having solved many of its major problems, and a management, which has recently traded pessimism for optimism; and MDGL, a biotech company that is cash-rich and focusing on its pipeline. All things being equal, holding these companies in your portfolio during the inevitable slowdown will produce alpha. Happy trading.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Daimler buys Torc Robotics stake for self-driving trucks

FRANKFURT (Reuters) – Daimler Trucks has agreed to buy a majority stake in self-driving truck software maker Torc Robotics as part of a broader push to develop autonomous vehicles.

The Daimler logo is seen before the Daimler annual shareholder meeting in Berlin, Germany, April 5, 2018. REUTERS/Hannibal Hanschke

Torc, based in Blacksburg, Virginia, will help Daimler accelerate software development by giving the German manufacturer access to 120 skilled staff, Daimler Trucks Chief Executive Martin Daum said.

“You cannot have enough expertise in this area. Our Achilles’ heel is the ability to quickly develop software,” Daum said.

Financial terms of the deal were not disclosed.

Torc Robotics has partnerships to develop self-driving technology with Caterpillar with mining and agricultural applications, and competed in the DARPA self-driving vehicles challenge 12 years ago.

Torc has developed technology that allows vehicles to operate at a high level of automation, known as level 4, helping Daimler to accelerate its own plans for commercializing self-driving vehicles.

“Torc’s Level 4 system has been shown to operate well for both urban and highway driving in rain, snow, fog, and sunshine,” said Roger Nielsen, CEO of Daimler Trucks North America (DTNA), which includes the market-leading Freightliner brand.

Daimler currently offers a level 2 automation system on its trucks, which can automatically brake, accelerate and steer using radar and camera systems that make partially automated driving possible.

“Bringing Torc Robotics within the Daimler Trucks family creates a unique and powerful team of innovators to put highly automated trucks on the road,” Daum said.

Torc will continue to be run on an arms-length basis from Daimler but the Torc team will work closely with Daimler Trucks’ developers, Daimler said.

Torc will continue to develop its Asimov self-driving software and testing at its Blacksburg facility. At the same time, Daimler Trucks will focus on further evolving automated driving technology and vehicle integration for heavy-duty trucks at its Automated Truck Research & Development Center in Portland.

Daimler Trucks will also use know-how about sensors and automation from the group’s Mercedes-Benz passenger car brand, the car and truck maker said.

Reporting by Edward Taylor; Editing by Thomas Seythal and Mark Potter

China's ZTE Corp lost $1 billion in 2018, despite last quarter rebound

FILE PHOTO: People walk next to ZTE booth at the Mobile World Congress in Barcelona, Spain February 25, 2019. REUTERS/Rafael Marchante/File Photo

HONG KONG (Reuters) – China’s ZTE Corp made a net profit of 276 million yuan in the fourth-quarter as it recovered from costly U.S. sanctions which dragged it to an overall 2018 loss of 7.0 billion yuan ($1 billion).

The world’s fourth-largest telecommunications equipment maker by market share was forced to stop most business between April and July last year due to U.S. sanctions. It paid $1.4 billion to lift these and reported its worst half-year loss of 7.8 billion yuan in August.

ZTE’s 2018 loss announced on Wednesday was just within its earlier guidance range of 6.2 billion yuan to 7.2 billion yuan, but was deeper than the average estimate of a loss of 6.2 billion yuan by 10 analysts, according to Refinitiv Eikon data.

The company had expected a first-quarter net profit of 800 million to 1.2 billion yuan, against a net loss of 5.4 billion yuan year earlier. It reported a profit of 4.57 billion yuan in 2017 before it became embroiled in a crippling row with the U.S. government over violations of export restrictions.

ZTE said its revenue for the quarter ending in December was 26.7 billion yuan, while its full-year revenue dropped 21.4 percent to 85.5 billion yuan, against an average estimate of 87 billion yuan by 12 analysts.

Reporting by Sijia Jiang; Editing by Stephen Coates and Alexander Smith

Exclusive: Told U.S. security at risk, Chinese firm seeks to sell Grindr dating app

(Reuters) – Chinese gaming company Beijing Kunlun Tech Co Ltd is seeking to sell Grindr LLC, the popular gay dating app it has owned since 2016, after a U.S. government national security panel raised concerns about its ownership, according to people familiar with the matter.

The Committee on Foreign Investment in the United States (CFIUS) has informed Kunlun that its ownership of West Hollywood, California-based Grindr constitutes a national security risk, the two sources said.

CFIUS’ specific concerns and whether any attempt was made to mitigate them could not be learned. The United States has been increasingly scrutinizing app developers over the safety of personal data they handle, especially if some of it involves U.S. military or intelligence personnel.

Kunlun had said last August it was preparing for an initial public offering (IPO) of Grindr. As a result of CFIUS’ intervention, Kunlun has now shifted its focus to an auction process to sell Grindr outright, given that the IPO would have kept Grindr under Kunlun’s control for a longer period of time, the sources said.

Grindr has hired investment bank Cowen Inc to handle the sale process, and is soliciting acquisition interest from U.S. investment firms, as well as Grindr’s competitors, according to the sources.

The development represents a rare, high-profile example of CFIUS undoing an acquisition that has already been completed. Kunlun took over Grindr through two separate deals between 2016 and 2018 without submitting the acquisition for CFIUS review, according to the sources, making it vulnerable to such an intervention.

The sources asked not to be identified because the matter is confidential.

Kunlun representatives did not respond to requests for comment. Grindr and Cowen declined to comment. A spokesman for the U.S. Department of the Treasury, which chairs CFIUS, said the panel does not comment publicly on individual cases.

Grindr, which describes itself as the world’s largest social networking app for gay, bisexual, transgender and queer people, had 27 million users as of 2017. The company collects personal information submitted by its users, including a person’s location, messages, and in some cases even someone’s HIV status, according to its privacy policy.

CFIUS’ intervention in the Grindr deal underscores its focus on the safety of personal data, after it blocked the acquisitions of U.S. money transfer company MoneyGram International Inc and mobile marketing firm AppLovin by Chinese bidders in the last two years.

CFIUS does not always reveal the reasons it chooses to block a deal to the companies involved, as doing so could potentially reveal classified conclusions by U.S. agencies, said Jason Waite, a partner at law firm Alston & Bird LLP focusing on the regulatory aspects of international trade and investment.

“Personal data has emerged as a mainstream concern of CFIUS,” Waite said.

The unraveling of the Grindr deal also highlights the pitfalls facing Chinese acquirers of U.S. companies seeking to bypass the CFIUS review system, which is based mostly on voluntary deal submissions.

Previous examples of the U.S. ordering the divestment of a company after the acquirer did not file for CFIUS review include China National Aero-Technology Import and Export Corporation’s acquisition of Seattle-based aircraft component maker Mamco in 1990, Ralls Corporation’s divestment of four wind farms in Oregon in 2012, and Ironshore Inc’s sale of Wright & Co, a provider of professional liability coverage to U.S. government employees such as law enforcement personnel and national security officials, to Starr Companies in 2016.

PRIVACY CONCERNS

Kunlun acquired a majority stake in Grindr in 2016 for $93 million. It bought out the remainder of the company in 2018.

Grindr’s founder and chief executive officer, Joel Simkhai, stepped down in 2018 after Kunlun bought the remaining stake in the company.

FILE PHOTO: An unidentified man using a smart phone walks through London’s Canary Wharf financial district in the evening light in London, Britain, September 28, 2018. REUTERS/Russell Boyce/File Photo

Kunlun’s control of Grindr has fueled concerns among privacy advocates in the United States. U.S. senators Edward Markey and Richard Blumenthal sent a letter to Grindr last year demanding answers with regards to how the app would protect users’ privacy under its Chinese owner.

Kunlun is one of China’s largest mobile gaming companies. It was part of a buyout consortium that acquired Norwegian internet browser business Opera Ltd for $600 million in 2016.

Founded in 2008 by Tsinghua University graduate Zhou Yahui, Kunlun also owns Qudian Inc, a Chinese consumer credit provider, and Xianlai Huyu, a Chinese mobile gaming company.

Reporting by Carl O’Donnell, Liana B. Baker and Echo Wang in New York; Editing by Greg Roumeliotis and Lisa Shumaker

The Very Mathematical History of a Perfect Color Combination

A couple of years ago, I fell in love with a color scheme: off-white text accented with a buttery yellow-orange and a neutral blue against a deep gray, the “color of television, tuned to a dead channel,” to borrow a phrase from Neuromancer author William Gibson. The colors were part of a theme called “Solarized Dark” for the popular MacOS code editor TextMate. To be honest, I didn’t think much of Solarized at first. But I soon found that I couldn’t work with any other color scheme. Staring at screens all day can make you particular about fonts and colors.

It turns out I’m not alone. I’m not a coder by trade, but I like to use code editors for writing and organizing notes. While hunting for tools after switching from a Mac to Windows, I started to see Solarized Dark and its sibling Solarized Light, which uses the same 16-color palette, practically everywhere I looked. It’s hard to say how many programmers use it. The design is free and open source, so there’s no tally of purchases. It’s available for every major code editor, and many other programming tools. Microsoft even bundled it with its popular code editor VS Code. Solarized has a loyal following.

“If I bring up a terminal window that doesn’t have Solarized, I feel out of place, I don’t feel at home,” says Zachery Bir, a Richmond, Virginia, programmer and artist who has been using Solarized since shortly after it was released in 2011. Bir likes Solarized so much he uses it as the color scheme for his computer-generated art. “I didn’t trust myself to come up with a palette that was balanced and looked good both in a dark and light medium,” he says.

The Solarized color scheme is no accident. It reflects the obsessive attention to detail of its creator, Ethan Schoonover. “I didn’t release it until I was 1,000 percent sure I loved all the colors and they were all dialed in mathematically,” Schoonover says. “I had multiple monitors, some were color calibrated, others were deliberately messed up. Sometimes I showed my wife, who thought I was a little nuts.”

Too Much Contrast

Schoonover was working as a designer and programmer in Seattle when he started work on Solarized in 2010. He’d recently switched operating systems was disappointed in the color schemes available for the tools he used. Many applications offered only a simple white-on-black scheme that harkens back to old-school text-based computer terminals. But Schoonover found these throwback color schemes much harsher than the retro displays they tried to emulate. That’s because the backgrounds displayed on old 1980s monitors weren’t truly black, Schoonover says. “They had less contrast.” Today’s LCD’s, on the other hand, are capable of displaying much darker, and much brighter, colors.

The optimal amount of contrast for text on a screen is controversial; many people prefer high-contrast themes. But contrast wasn’t Schoonover’s only concern. He found most low-contrast color schemes lacking as well. Even the best-designed themes tended to use at least one color that appeared distractingly brighter than others. That’s because the apparent brightness of a color varies depending on its background. In other words, a specific shade of blue will appear more or less bright, depending on the surrounding colors.

This phenomenon, known as the Helmholtz–Kohlrausch effect, is particularly aggravating for programmers because coding tools use color to distinguish different parts of code. In the code for a web page in a typical text editor using the Solarized Dark theme, for example, web links appear in green; the syntax for formatting, such as adding italics, is blue, and comments that developers write for themselves are gray. Ideally, the colors should help tell these elements apart, but no single element should stand out more than others.

Schoonover set out to find a set of colors that would not only look good together, but have the same apparent brightness. That task was made more difficult because he wanted to use the same palette in both a light and a dark theme. Hence the need for all the monitors and testing.

Examples of the Solarized Dark (left) and Solarized Light (right) themes displaying HTML code in the code editor Vim.

Ethan Schoonover

Ethan Schoonover

Schoonover talks a lot about the mathematical nature of his color selections, but he picked the starting colors, a blue and a yellow, for very personal reasons. The blue reminds him of his long standing thalassophobia, the fear of very deep water. And though he says he doesn’t otherwise experience synesthesia—such as hearing colors or tasting words—the yellow invokes tastes and smells he associates with his childhood. “My parents are artists, I’m comfortable picking things for obscure reasons,” he says.

With those starting points, Schoonover sought out other colors that provided just enough—but not too much—contrast between elements, and that maintained the same level of contrast in the light and dark versions. The result is a palette of just 16 colors that retain the same relationships even when inverted. “I suppose it’s a little like composing music with only a limited number of notes,” Schoonover says. “There can be something sparse and beautiful about it.”

An Open Source Program Takes Off

Schoonover released Solarized for free in April 2011 on GitHub, a code hosting platform and collaboration service. He says he never intended to commercialize it. “It would kill something special about it, taint it,” he says. “I believe in open source software, I believe in giving something special to the world that anyone can use.”

Although he’d tested the color scheme in a variety of applications, Schoonover initially only released themes for a few tools he used in his own work, like the code editor Vim and the text-based email client Mutt. He announced the release of Solarized on the Vim mailing list; soon after, the project hit the front page of the online community Hacker News. It was an immediate hit with programmers, who soon went to work adapting it to other programming tools beyond those Schoonover initially supported. In 2013, Solarized Dark appeared on the monitors of developers in a Facebook commercial—watch for those dark rectangles on the screens and notice the faintly colored lines that cross them.

Solarized is slowly starting to find its way into applications for non-geeks. Ulysses, a writing application for MacOS, includes Solarized themes as an option. The color scheme was used for many of the graphics in the video game N++ in 2014. The note-taking app MicroPad even advertises Solarized as a feature on its website. “Solarized Dark for MicroPad is especially useful for late-night studying, which I do more often than I would like to admit,” says MicroPad creator Nick Webster, a computer science student at Victoria University in Wellington, New Zealand.

But it still hasn’t really crossed over to the mainstream as a color scheme for, say, a major web application or software suite. “When Apple introduced dark mode for MacOS, I thought it was cool,” says Bir, the Virginia programmer and artist. “But I wish it was Solarized.”

With more applications, like Google Chrome, Facebook Messenger, and Slack, releasing dark mode themes, though, Solarized just might have its day in the sun.


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AI cloudops is coming, whether you like it or not

As someone who’s worked with AI for the last 30 years (yes, it was a thing 30 years ago), I’ve often thought of its capabilities were overrated and used for the wrong things in many cases. Now that it’s cheap thanks to cloud computing, and much more effective thanks to the pace of innovation, AI as a solution is coming up again, including the use in cloud operations.

The idea is to replace people with AI to be both proactive and reactive to cloud operational issues such as outages, resource governance, security attacks, and performance. Cloudops involves largely repeatable problems, right?

There are of course some upsides and some downsides to this. Moreover, although the use of AI in cloud operations maybe a foregone conclusion, there will still be a learning curve that is required. As long as you understand that and know what to expect in terms of ROI for both the short term and long term, I’m okay with anything that that makes cloud operations more effective.

So, let’s look at the pros and cons.

The pros of AI for cloudops

The pros are that you can have a 7/24/365 monitoring and management program on the cheap. If you believe operational staff is expensive, try hiring them for shift work. AI-based monitoring and management systems never sleep, never take time off, and never ask for a raise. Once they are up and running, they cost almost nothing beyond their license fees and infrastructure costs. And they are self-learning at the same time; in other words, the more they run, the better that they get at the job.

Another pro is that these systems get smarter every day and share a common brain. People get smarter with experience as well, but they don’t do a good job sharing their experiences with others. People also retire and quit, with the knowledge and experience walking out the door with them.

The cons of AI for cloudops

One con is that the cost of rolling out these systems is high, even in the cloud. Vendors that have married AI and operational tools are going to charge a premium to get them up and running and in production. While the prices are all over the place, count on paying 50 percent more than for traditional tools, including consulting services for the first year or so to get the tools learning correctly.

Another con is that operations people don’t seem to like them no matter how well they perform. The number of passive-aggressive actions that I’ve seen over the years from people pushing back on AI-enabled operations tools has been huge.

They view this technology as not to be trusted, plus the fact that AI some day may displace their jobs does not make things better. Organizations that implement these tools need to have change agents, plus an understanding about the human factors with this technology.

Is the future AI-enabled cloud-operations tools? I don’t see how it won’t be. The pros will get better, and the cons will begin to diminish, like any other rollout of new technology. Hopefully, our new AI operations overlords will have mercy on us in a few years.

Micron sees memory chip recovery coming later in year, shares rise

(Reuters) – U.S. chipmaker Micron Technology Inc on Wednesday said it sees a recovery in the memory chip market coming and reported a quarterly profit that beat estimates as cost controls helped offset falling demand and prices, sending its shares up nearly 5 percent.

The logo of U.S. memory chip maker MicronTechnology is pictured at their booth at an industrial fair in Frankfurt, Germany, July 14, 2015. REUTERS/Kai Pfaffenbach

Micron makes NAND storage chips that are used in phones and internet servers as well as DRAM chips that help computer processors communicate with those storage chips.

The company beat revenue expectations for the fiscal second quarter ended Feb. 28. Although it gave a forecast for its fiscal third quarter that was below Wall Street’s expectations, Micron said demand is likely to begin growing again by its fourth quarter.

The results come against the backdrop of a glut in the global semiconductor industry triggered by waning demand for smartphones and spotty purchasing patterns by cloud-computing vendors, which hurt chipmakers such as Intel Corp earlier this year.

Meantime, Micron trimmed its spending plans and said it had idled some factory lines to bring its chip output in line with lower demand, helping keep profits flowing and a share buyback plan on track.

For its fiscal second quarter, Micron generated nearly $1 billion in free cash flow and a profit of $1.71 per share, excluding items. That was down from $2.82 a year earlier but above Wall Street expectations of $1.67, according to IBES data from Refinitiv.

“Certainly Micron has not been in a situation before where it’s been able to deliver such healthy profitability and cash flow in an adverse industry environment,” Chief Executive Sanjay Mehrotra said in an interview with Reuters.

Kinngai Chan, an analyst with Summit Insights Group, said investors were focusing on the outlook for a recovery in the second half of the calendar year, with the fiscal third quarter forecast representing “the bottom for Micron’s near-term sales and gross margin.”

The Boise, Idaho-based company said on Wednesday it expects revenue between $4.6 billion and $5 billion for its fiscal third quarter, falling short of analyst expectations of $5.3 billion according to IBES data from Refinitiv. The company cut planned capital expenditures for the 2019 fiscal year to $9 billion, Micron executives said, down from a previous forecast of between $9 billion and $9.5 billion.

Revenue fell to $5.84 billion from $7.35 billion, beating expectations of $5.3 billion.

The company said it bought back 21 million shares of its common stock for $702 million during the quarter as part of its $10 billion share buyback program, leaving a net cash position of $2.99 billion.

Reporting by Sayanti Chakraborty in Bengaluru and Stephen Nellis in San Francisco; editing by Sriraj Kalluvila and Leslie Adler

A Cab’s-Eye View of How Peloton’s Trucks ‘Talk’ to Each Other

Techno-optimist prognosticators will tell you that driverless trucks are just around the corner. They will also gently tell you—always gently—that yes, truck driving, a job that nearly 3.7 million Americans perform today, is perhaps on the brink of extinction. At the very least, on the brink of uncomfortable change.

A startup called Peloton Technology sees the future a bit differently. Based in Mountain View, California, the eight-year-old company has a plan to broadly commercialize a partially automated truck technology called platooning. It would still depend on drivers sitting in front of a steering wheel, but it would be more fuel efficient and, hopefully, safer than truck-based transportation today.

The company employs 10 professional truck drivers to help refine its tech, and I’m about to meet two of them out on Peloton’s test track in California’s Central Valley. Michael Perkins is tall, thin, and has been driving very big trucks for about 20 years. Jake Gregory is shorter and picked up truck driving in college, before taking a detour to the FBI.

We hit the highway first, because the rain has suddenly cleared. (Here’s an unfortunate reality about Peloton’s driver assistance tech: It doesn’t work great in the rain. Or snow. It’s a safety issue. More on that later.) Out on Interstate 5, Perkins’ long, white semitrailer cruises along in front of me. I’m on board the second, identical truck behind it, with Gregory behind the wheel. A small screen mounted on Gregory’s dashboard shows a camera view of what’s happening in front of Perkins’ rig. It’s like their trucks are connected. Which, in fact, they are about to be.

Peloton

Perkins radios in that he’s ready to go; Gregory says he is too. Inside the two truck cabs, each driver hits a button. Three ascending tones—la, la, la—means Peloton’s automated system has authorized the trucks to platoon on this stretch of highway. A dedicated short range communications (DSRC) connection is now established between the two vehicles. It’s like Wi-Fi but faster and easier to secure. Now, whatever the front truck does, the back truck will near-simultaneously “know”—and react accordingly.

Then Gregory speeds up, pulling his truck up so it’s tailgating about 70 feet from the leader. Sounds risky! But right now, the two trucks are platooning. Ours is on a kind of hopped-up cruise control, which means Gregory’s feet aren’t actually controlling the brakes or accelerator. At the same time, Gregory maintains control of his steering wheel. If Perkins were to brake hard, Gregory’s truck would too, faster than a human could. The robots have taken over. Kind of? Not really? More like, they’re collaborating, with some human oversight.

Peloton’s name, a reference to bicycle racing, helps explain how this platooning works. Just as the riders in the peloton, or main group of racing cyclists, preserve energy by drafting off of those around them, the following trucks in the truck platoon reduce their aerodynamic drag by drafting off the ones in front. The lead truck, meanwhile, get a little push. This saves fuel, according to Peloton—up to 10 percent for the following car and 4.5 percent for the first one, depending on the road and weather conditions and the following distance. It might also prevent crashes, since this tech has much faster reaction times (about 30 milliseconds) than puny humans (about 1 to 1.5 seconds).

Other companies in Europe, China, Japan, and Singapore are seriously experimenting with truck platooning. The American military has hosted platooning demonstrations. Just this week, the US Department of Transportation gave out $1.5 million in grants to universities studying the tech. And Peloton has tested in a bunch of US states: Arizona, California, Michigan, Florida, and Texas, where Peloton has immediate plans to run the majority of its routes.

Right now, the company says it does have paying customers, though it won’t reveal their names until later this year. According to Josh Switkes, the company’s CEO, some pair of US truck drivers are running a route while platooning on a Peloton-enabled truck every day.

And testing continues, on the software in its office, on its test track, and on actual highways, where it confirms the technology’s reliability. “The highway or field is not for testing,” Switkes says. “The goal of testing is to find failures, and you don’t want those failures to be on public roads.” In a report released today, the company lays out this approach to safety for regulators and interested industry parties alike. It borrows more from automotive processes than Silicon Valley–style software ones, amounting to something like easy does it.

It turns out, the linking-up move Perkins and Gregory just performed on the 5 is one of the most safety-critical parts of truck platooning, Switkes says. The moment when the following truck has to move faster than the one in front of it is the most dangerous part.

To make sure drivers like Perkins and Gregory don’t crash into each other, or anyone else, Peloton needs to make sure that the platooning drivers know how the tech works. (Right now, the company’s driver training process takes about half a day.) It also needs to understand exactly how heavy the trucks are when they start platooning, how their brakes are working, and how their tires function. For this reason, the company says, it has carved out partnerships with its suppliers, which means its trucks are built from the ground up with platooning in mind.

This is also why Peloton doesn’t platoon in the rain right now, or in the snow: The company can’t yet gauge exactly how tires deteriorate over time, which means it can’t quite predict how they’ll react in a hard-braking situation. Worn tires might slide in the moisture, leading to a domino chain of truck crashes. So no platooning in the Midwest in the winter, or anywhere during a rainy spring. “On certain routes, it’s a significant limitation,” says Switkes. “But we’re erring on the side of safety.”

And if that seems a little dull, Switkes would tell you that’s the point. His favorite word is “pragmatic,” and he doesn’t believe driverless trucks will prowl the highways any time soon. The technology is too complicated, he argues, and developers will have to go through years of safety testing before they’re ready for the roads—and before the public feels safe riding in their own bitty cars around 50,000-pound robot trucks. So Peloton is going all in on making human-based driving both safer and more efficient. With a bit of tech boost.

Not all manufacturers agree: In January, Daimler announced it would stop its platooning development to focus on autonomous trucking. Tests showed that “fuel savings, even in perfect platooning conditions, are less than expected,” the German company wrote in a press release. “At least for U.S. long-distance applications, analysis currently shows no business case for customers driving platoons with new, highly aerodynamic trucks.”

Platooning advocates disagree, but even the most supportive believe finding a market for this trucker assistance isn’t simple. Steven Shladover is researcher with the California Partners for Advanced Transportation Technology program at UC Berkeley. He has studied platooning for two decades, and points out that the truck industry would need to execute a fair bit of choreography to pull off platooning. Fleet operators would have to coordinate deliveries, matching up trucks heading in the same direction at the same time. “Does the truck industry see enough of a benefit in platooning to fit it into their operational strategies?” he says.

While everyone in trucking waits to find out, Perkins and Gregory head back to Peloton’s test track and proceed to show off a few, freakier moves: some hard braking, some driving side-by-side to prove that the trucks can still “talk” to each other in that position. At one point, another company employee in a white Toyota Tundra cuts into the 55-foot space between the two trucks, and they smoothly part to make room for him. Maybe platooning will improve life for truckers—too bad it can’t fix the problem of everyday reckless drivers, too.


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Google to prompt Android users to choose preferred browsers to allay EU concerns

FILE PHOTO: A 3D printed Android mascot Bugdroid is seen in front of a Google logo in this illustration taken July 9, 2017. REUTERS/Dado Ruvic/Illustration

BRUSSELS (Reuters) – Alphabet’s Google will prompt Android users to choose their preferred browsers and search apps, a senior Google executive said on Tuesday, as the company seeks to allay EU antitrust concerns and ward off fresh sanctions.

The European Commission last year handed Google a record 4.34 billion euro ($4.9 billion) fine for using the market power of its mobile software to block rivals in areas such as internet browsing.

By pre-installing its Chrome browser and Google search app on Android devices, Google had an unfair advantage over its rivals, EU enforcers said.

Google will now try to ensure that Android users are aware of browsers and search engines other than its own services, Kent Walker, senior vice-president of global affairs, said in a blog.

“In the coming months, via the Play Store, we’ll start asking users of existing and new Android devices in Europe which browser and search apps they would like to use,” he wrote without providing details.

The company, which introduced a licensing fee for device makers to access its app marketplace after the EU sanction, does not plan to scrap the charge.

Google could be fined up to 5 percent of Alphabet’s average daily worldwide turnover if it fails to comply with the EU order to stop anti-competitive practices.

Reporting by Foo Yun Chee; Editing by David Goodman