FRIDAY, JUNE 25, 2021
BLOGS/OP-EDS
New Personal Income data is out! (Jason Furman via Twitter @jasonfurman)
Jason Furman on the new personal income data, “New Personal Income data is out! Real disposable personal income was 4% above its pre-pandemic trend. In a normal world that would be huge–but it is less huge than recent months boosted by checks. A with lots of charts! Overall consumption remained 1% below it’s pre-pandmic trend, the same shortfall it had in April. This was because spending was revised up for March and April but down for May. Also these data are adjusted for inflation and that was up a lot in recent months. The composition of consumption was creeping towards normalization as spending on goods fell sharply but still 10% above trend and services spending spending crept up but still 6% below trend. You see that in particular goods and services as well: –Motor vehicles and parts are 25% above trend (down a lot from April) –Restaurant meals are *almost* back, just 1% below pre-COVID –Movies still *way* down (shifting from positive to normative: you should see Cruella) The release also includes the personal consumption expenditures price index. It is usually ~0.2pp below the CPI as it was this month. The core PCE (not the official Fed target but what they mostly look at) is now well above a 2% growth rate from the pre-pandemic period. So far this year core PCE prices have risen at a 4.8 percent annual rate. To hit the Fed’s median expectation of 3.0% for Q4/Q4 prices will need to slow to a 1.7% annual rate for the remainder of the year. That’s possible (some prices will fall, like autos) but not what I expect. Finally, a glimpse into the future. Excess saving continues to grow and is now $2.2 trillion. This *could* support substantially higher consumption but no one knows whether or not it will. Note the monthly consumption gap is ~$10b so don’t need much spendout to be well above it.”
Liquidity trap for me but not for thee? (Tyler Cowen, Marginal Revolutions)
Tyler Cowen argues the Fed is a rate maker, not taker, “…no one is doubting that the Fed is in charge of forthcoming rates of inflation. (And if the T-Bill rate is ever so slightly above zero, rather than at or below zero, that too seems to stem from higher expected rates of price inflation in the first place.) I agree with those individuals who suggest that the currently higher rates of price inflation will not be with us 4-5 years from now, and that is because the Fed does not want that to happen…”
Ten Things We Now Know About the White Working Class Vote in 2020 (Ruy Teixeira, The Liberal Patriot)
Ruy Teixeira highlights an interesting factoid about the 2020 electorate, the shift against Trump in the non-college white vote was driven by men, “…Even with their declining population share and Trump’s dominance of their group, white noncollege voters still made up a larger share of Biden’s coalition (32 percent) than white college voters (29 percent), according to Catalist….The shift against Trump among white noncollege voters was almost entirely driven by men. They shifted 7 points against him, while women in this group barely moved at all (.2 points). This is a not a widely-appreciated fact, to say the least….”
Where Did the Coronavirus Come From? What We Already Know Is Troubling. (Zeynep Tufekci, New York Times)
Zeynep Tufekci on the “lab leak” hypothesis, “…Since most pandemics have been due to zoonotic events, emerging from animals, is there reason to doubt lab involvement? Maybe if you look at all of human history. A better period of comparison is the time since the advent of molecular biology, when it became more likely for scientists to cause outbreaks. The 1977 pandemic was tied to research activities, while the other two pandemics that have occurred since then, AIDS and the H1N1 swine flu of 2009, were not…even if we are denied answers, we can still learn lessons. Perhaps the biggest one is that we were due for a bat coronavirus outbreak, one way or another, and the research showing bat coronaviruses’ ability to jump to humans was a warning not heeded…”
Who are the better forecasters of inflation, bond traders or economists? (Joseph Gagnon + Madi Sarsenbayev, Peterson Institute For International Economics)
Joseph Gagnon and Madi Sarsenbayev point out that post 2000 the accuracy of economists’ inflationary forecasts has declined “…The graph is split into two panels to magnify changes in the data after 2000, when inflation and inflation forecasts were relatively stable over time. Bond yields, inflation compensation, and economists’ forecasts all miss most of the fluctuations in future long-term inflation….The apparently strong predictive power of economists’ forecasts in table 2 is mainly derived from the years before 2000, when both inflation and forecasts of inflation were trending downward. As shown in table 1, which focuses on the years since 1999, predictive power of economists’ forecasts is at best moderate and limited to longer horizons…”
Preferred Shares (Tim Barker, Phenomenal World)
Tim Barker argues that labor’s stronger position will likely lead to a rebound in labor share, and inflation with a good Larry Lindsey quote, “…redistribution is difficult because someone always loses. Even in a virtuous circle of demand-led growth, social conflict is never far away….But the experience reminds us that economic expansions can generate self-undermining social conflicts. On these matters, FOMC transcripts contain moments of remarkable lucidity. In 1995, Lawrence Lindsey told his colleagues: “It is not hard to understand how we can get both lack of inflation and an improvement in the unemployment rate when in fact wages are being suppressed. The problem is that we cannot have wages that continue to be depressed and have a 3 percent expansion of the real private economy; it just does not add up. One of two things can happen: In one, workers get restless, wages go up, the profit share falls, and there is upward pressure on inflation. That is scenario “one” … Or we get scenario “two,” where the demand is not there, we do not in fact have 3 percent expansion ex-government in the economy, and we get slower growth than the Greenbook is forecasting. My own bet is that the second result is more likely than the first.” In plain language, Lindsey laid out a choice between stagnation and redistribution, and predicted stagnation. It was a smart wager. The subsequent decades of low growth have only now given way to a new willingness to experiment with expansion. While we await the results, we can remind ourselves that we live in an economic system defined by conflict, as well as cooperation, between groups of people with divergent interests…”
News
U.S. Personal Spending Stagnated in May as Prices Increased (Reade Pickert, Bloomberg) ($)
“…U.S. personal spending stagnated in May, reflecting a decline in outlays for merchandise, while a closely watched inflation measure continued to climb. Purchases of goods and services were unchanged following an upwardly revised 0.9% increase in April, Commerce Department figures showed Friday. The personal consumption expenditures price gauge, which the Federal Reserve officially uses for its inflation target, rose 0.4%…”
Used-Car Prices Are Poised to Peak in U.S. After Pandemic Surge (Alexandre Tanzi, Bloomberg) ($)
“…The record-breaking rise in used-car prices is probably coming to an end — and with it a key driver of the recent spike in U.S. inflation. The bellwether of the industry — the wholesale market where dealers buy and sell in bulk — has already topped out and prices of individual secondhand cars should follow in a matter of weeks, said Zo Rahim, industry analyst at Cox Automotive. Cox owns Manheim, the biggest U.S. auction house selling millions of vehicles every year…”
A new phase in the financial cycle (Staff, The Economist) ($)
“…Yet in early April the curve began to flatten. The yields on two-, three- and five-year Treasury bonds perked up as money markets began to price in the prospect that the Federal Reserve would raise interest rates in 2023. There were bigger moves at the long end of the curve. By this week the ten-year yield had fallen to 1.5%, more than 0.2 percentage points lower than at the end of March. The 30-year yield fell by even more….The bond market is hinting that the early-cycle phase in which risk assets are embraced almost without discrimination has come to a close. The peak in economic growth may have passed. Output and orders readings in the manufacturing purchasing managers’ index (pmi), a closely watched marker of activity, probably peaked in May. Other cyclical indicators have rolled over. The prospect of further fiscal stimulus is also more uncertain. America’s infrastructure bill is stuck; whatever now emerges from Congress will have a far smaller price tag than the $2trn-3trn figure widely touted just weeks ago. Markets are forward-looking. They now have less to look forward to. If peak gdp growth lies in the past, the scope for further upward revisions to forecasts for stockmarket earnings is limited. The s&p 500 index already trades at a high multiple of prospective earnings. A lot of good news is already priced into risky assets…There are echoes here of early 2004, says Andrew Sheets of Morgan Stanley…When America’s unemployment rate peaked in 2003, it was a cue for economic recovery and a strong early-cycle rally in risky assets. Stocks, commodities and corporate bonds performed very well, just as they have over the past year. As 2003 turned into 2004, the economy kept going. But markets slipped into something of a funk…”
New Econ Research
Learning from Inflation Experiences (Ulrike Malmendier + Stefan Nagel, NBER) (2013)
“How do individuals form expectations about future inflation? We propose that personal experiences play an important role. Individuals adapt their forecasts to new data but overweight inflation realized during their life-times. Young individuals update their expectations more strongly in the direction of recent surprises than older individuals since recent experiences make up a larger part of their lives so far. We find support for these predictions using 57 years of microdata on inflation expectations from the Reuters/Michigan Survey of Consumers. Differences in life-time experiences strongly predict differences in subjective inflation expectations. Learning from experience explains the substantial disagreement between young and old individuals in periods of high surprise inflation, such as the 1970s. It also explains household borrowing and lending behavior, including the choice of fixed versus variable-rate investments and mortgages. The loss of distant memory implied by learning from experience provides a natural microfoundation for models of perpetual learning, such as constant-gain learning models”
Do US firms have an incentive to comply with the FLSA and the NLRA? (Anna Stansbury, Peterson Institute For International Economics)
“….To what extent do US firms have an incentive to comply with the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA)? I examine this question through a simple comparison of the expected costs of noncompliance (in terms of legal sanctions) to the profits firms can earn through noncompliance. In the case of the FLSA minimum wage and overtime provisions, typical willful violators are required to pay back wages owed and in some cases additional penalties, if detected by the Department of Labor (DOL). Based on available data on the penalties levied, a typical firm would need to expect a chance of at least 78–88 percent that its violation would be detected in order to have an incentive to comply with the FLSA. In practice, the probability of detection many firms can expect to face is likely much lower than this. In the case of the NLRA, a firm that fires a worker illegally is required to reinstate the worker with back pay if the violation is detected. Based on empirical estimates of the effect of unionization on firm profits, a typical firm may have an incentive to fire a worker illegally for union activities if this illegal firing would reduce the likelihood of unionization at the firm by as little as 0.15–2 percent. These analyses illustrate that neither the FLSA nor the NLRA penalty and enforcement regimes create sufficient incentive to comply for many firms. In this context, the substantial evidence of minimum wage and overtime violations, and of illegal employer behavior toward unions, is not surprising…”
New Numbers
Personal Income and Outlays, May 2021 (Bureau Of Economic Analysis, U.S. Department Of Commerce)
“…Personal income decreased $414.3 billion, or 2.0 percent at a monthly rate, while consumer spending increased $2.9 billion, or less than 0.1 percent, in May. The decrease in personal income reflected declines in pandemic-related assistance programs. In addition to presenting estimates for May 2021, these highlights provide comparisons to February 2020, the last month before the onset of the COVID19 pandemic in the United States…A comparison of the May 2021 current-dollar levels of consumer spending with the February 2020 pre-pandemic levels shows that spending for goods increased while spending for services decreased. Spending for goods in May 2021 was 20 percent above the February 2020 level. Categories with notable increases included motor vehicles and parts, recreational goods and vehicles (led by information processing equipment), and furnishings and durable household equipment. Spending for services in May 2021 was 1.0 percent below the February 2020 level. Categories with notable decreases included transportation services, recreation services, and food services and accommodations. During the COVID-19 pandemic, establishments in these sectors were at times closed or at limited capacity….”
New Science
Ion dynamics in battery materials imaged rapidly (Aashutosh Mistry, Nature)
“Merryweather et al. have customized an optical microscopy technique, previously used in biology9, to track the movement of lithium ions in the active materials of batteries. In this approach, a laser beam is shone at electrochemically operating battery particles as they store or release lithium ions, and the scattered light is analysed. The local concentration of electrons in these particles changes as more lithium is stored, which in turn alters the scattering pattern. Therefore, the time evolution of the scattering signals at each position on a particle correlates with the local change in lithium concentration (Fig. 1)….This method could also be used to examine solid electrolytes — battery materials that are interesting, but poorly understood. If light scattering from solid electrolytes changes with local ion concentration as it does in active materials, then the technique could be used to map how the ion distribution in such electrolytes changes when an electric current passes through them. Optical scattering might be equally useful for studying other systems that involve coupled ion and electron transport, such as catalyst layers in fuel cells and electrochemical gas sensors…Merryweather and colleagues’ research offers previously inaccessible insights into battery materials operating at far-from-equilibrium conditions. Their method for directly observing changes in active particles during operation will complement existing approaches, in which internal changes are inferred from destructive testing of batteries. It could therefore revolutionize the battery-design cycle….”
China plans crewed missions to Mars by 2033 (Christian Shepherd, Financial Times) ($)
“…Beijing wants to send astronauts to the red planet over five missions running from 2033 to 2043, Wang Xiaojun, head of China Academy of Launch Vehicle Technology, one of the country’s state-run aerospace companies, said in remarks published by Chinese state media….Wang also described an expected third phase during which trips to Mars become commonplace, including the possible use of multiple space stations to form a “sky ladder” of stops for travelers along the route…”
In Our Airpods
Multilateral tax cooperation gets one step closer (PIIE’s Trade Talks Podcast)
THURSDAY, JUNE 24, 2021
BLOGS/OP-EDS
One Chart Shows How the Entire Housing Market Got More Expensive (Joe Weisenthal, Bloomberg Odd Lots) ($)
Joe Weisenthal highlights a great chart by Ali Wof of composition of new home sales by price, “…this chart of the composition of new home sales by price shows the big upward move across all different levels. Low-end homes occupy a substantially lower share of the total number of homes sold this May (relative to last year), while higher-priced homes have grown in share….”
A Few Comments on May New Home Sales (Bill McBride, Calculated Risk)
Bill McBride on the new home sales numbers, “…And on inventory: note that completed inventory is near record lows,..but inventory under construction is closer to normal…The inventory of completed homes for sale was at 36 thousand in May, just above the record low of 33 thousand in April 2021. That is about 0.6 months of completed supply (just above the record low). The inventory of new homes under construction, and not started, is at 4.6 months – a normal level….”
Is Education No Longer the ‘Great Equalizer’? (Thomas Edsall, New York Times) ($)
Thomas Edsall on non-cognitive returns to education, “education lifts all boats, but not by equal amounts,” but advocates continued investment in non-cognitive skills to help low skilled workers add value in a service based economy, implicitly highlights the importance of supervision for lower skilled workers, “…A promising approach to the augmentation of human capital lies in the exploration of noncognitive skills — perseverance, punctuality, self-restraint, politeness, thoroughness, postponement of gratification, grit — all of which are increasingly valuable in a service-based economy. Noncognitive skills have proven to be teachable, especially among very young children….Education, training in cognitive and noncognitive skills, nutrition, health care and parenting are all among the building blocks of human capital, and evidence suggests that continuing investments that combat economic hardship among whites and minorities — and which help defuse debilitating conflicts over values, culture and race — stand the best chance of reversing the disarray and inequality that plague our political system and our social order….”
I Never Did Acid in the 70s, But I’m Experiencing Flashbacks Anyway (Craig Pirrong, Streetwise Professor)
“Who knows? Not me. We never lost control” Craig Pirrong on the “material risk” of sustained inflation, “…one would expect that this is one time, and at least partially transitory, jump in the price level rather than inflation qua inflation. That said, there are reasons for concern… availability bias is a big reason why people focus on commodity prices–they are readily observable, on a second-by-second basis, because they are actively traded on liquid markets. Other goods and services, not so much. But just because we can see them easily doesn’t mean that they are reliable beacons for the price level overall, or changes therein. This brings to mind why we should really fear a return of 70s-style inflation (or worse, heaven forfend). When sitting in (the great) Sherwin Rosen’s Econ 302 course at Chicago on a cold morning in February, 1982, I was startled when Sherwin’s normal rather droning delivery was interrupted by him shouting and pounding his right fist into his left palm: “And that’s the problem with inflation. IT FUCKS UP RELATIVE PRICES!!!!” Some prices are stickier than others, meaning that inflation pressures can impact some goods and services more and sooner than others–thereby causing changes in relative prices. This is a bad thing–and why Sherwin dropped the F-bomb about it–because relative prices guide resource allocation. If you fuck up relative prices, as inflation does, you interfere with resource allocation, leading to lower incomes and growth. Inflation has adverse real consequences. So we should definitely fear an acid flashback to 70s inflation. And although I do not believe the recent surge in prices is a harbinger thereof, I think that there is a material risk that we may all experience such a flashback…”
News
Lord of the Roths: How Tech Mogul Peter Thiel Turned a Retirement Account for the Middle Class Into a $5 Billion Tax-Free Piggy Bank (Justin Elliott et al., Pro Publica)
“…Over the last 20 years, Thiel has quietly turned his Roth IRA — a humdrum retirement vehicle intended to spur Americans to save for their golden years — into a gargantuan tax-exempt piggy bank, confidential Internal Revenue Service data shows. Using stock deals unavailable to most people, Thiel has taken a retirement account worth less than $2,000 in 1999 and spun it into a $5 billion windfall….Yet, from the start, a small number of entrepreneurs, like Thiel, made an end run around the rules: Open a Roth with $2,000 or less. Get a sweetheart deal to buy a stake in a startup that has a good chance of one day exploding in value. Pay just fractions of a penny per share, a price low enough to buy huge numbers of shares. Watch as all the gains on that stock — no matter how giant — are shielded from taxes forever, as long as the IRA remains untouched until age 59 and a half. Then use the proceeds, still inside the Roth, to make other investments…”
U.S. Initial Jobless Claims Are Higher Than Estimates at 411,000 (Olivia Rockeman, Bloomberg) ($)
“…Applications for U.S. state unemployment insurance fell slightly last week, though were higher than forecast, as the labor market meanders toward a full recovery. Initial claims in regular state programs decreased by 7,000 to 411,000 in the week ended June 19, Labor Department data showed Thursday. The median estimate in a Bloomberg survey of economists called for 380,000 new applications. The prior week’s claims were revised up to 418,000….”
How Home Builders Are Contributing to Housing Frenzy (Justin Lahart, Wall Street Journal) ($)
“…But another factor behind the low level of home sales might be that some builders are waiting until a home is further along in the construction process before they sell it, giving them further visibility into costs before locking in a price. Evercore ISI analyst Stephen Kim notes that on a recent trip to Charlotte, N.C., builders told him they were letting more time elapse between starting a project and selling, and building more homes on “spec,” or without a guaranteed buyer.The implication is that the slowdown in new-home sales might not last much longer, as homes that are under construction eventually hit the market. Builders might still not be close to slaking demand, but they will be able to profit from it even more….”
Nonbank Lenders Are Dominating the Mortgage Market (Orla McCaffrey, Wall Street Journal) ($)
“…Nonbank mortgage lenders in the U.S. issued 68.1% of all mortgages originated in 2020, up from 58.9% in 2019, according to industry research firm Inside Mortgage Finance. That is their highest market share on record and their biggest yearly gain since 2014….”
How Tiger Global is changing Silicon Valley (Staff, The Economist) ($)
“…Between January and May Tiger Global Management….ploughed money into 118 startups, ten times more than it backed in the same period in 2020….Its portfolio now counts more than 400 firm…Its new vehicle aims to raise an additional $10bn. That may be less than SoftBank’s gargantuan $100bn Vision Fund, but it is still an awful lot by VC standards—and the New Yorker may leave a more enduring mark on Silicon Valley than its deep-pocketed Japanese rival has….Tiger Global’s final impact may be the most profound. It reflects a shift in the balance of power between investors and entrepreneurs. Traditionally, investors had the upper hand. Startup founders pilgrimaged to Sand Hill Road, seeking not just money but valuable advice that the best VCs would provide. Competition from Tiger Global and other tourists has forced Californian VCs to offer more generous terms, monetary and otherwise. That in turn has made entrepreneurs themselves more confident. “It’s no fun to be an investor these days,” sums up the boss of a startup preparing to go public. The question for moneymen in Silicon Valley (which remains overwhelmingly male) is less what startup to back and more whether a startup lets you invest….”
Economics needs to evolve (Staff, The Economist) ($)
“…Evolutionary economics seeks to explain real-world phenomena as the outcome of a process of continuous change. Its concepts often have analogues in the field of biological evolution, but evolutionary economists do not attempt a rigid mapping of biological theories to economic ones. An evolutionary approach acknowledges that the past informs the present: economic choices are made within and informed by historical, cultural and institutional contexts. Fittingly, the habits of the economics profession today can be understood only by examining the field’s own history. In the 19th century the discipline that would become economics was an evolutionary science in several senses. Thinkers of diverse backgrounds vied to offer theories which best explained economic activity while, at the same time, its practitioners saw the object of their study as an extension of the biological sciences….an evolutionary approach crept back into the profession. One important contribution came in 1982, when Richard Nelson, now of Columbia University, and Sidney Winter, now of the University of Pennsylvania, published “An Evolutionary Theory of Economic Change”. Neoclassical models of economic growth failed to capture the forces—like Schumpeterian creative destruction—which played an essential role in generating technological change, they thought. Theories often supposed, for instance, that executives knew and would immediately adopt profit-maximising strategies. In reality, practices might differ widely across an industry, reflecting distinct beliefs and the persistence of firms’ unique cultures and habits. As these approaches competed, some ways of doing things became more widespread across an economy—until some other “industrial mutation” changed the competitive dynamic again….Theory built on unrealistic assumptions has proved less illuminating than economists a century ago might have hoped. Trying to understand the world as it is could yield insights and perhaps, eventually, better predictions. Economists still working with equilibrium models out of habit should consider the disruptive potential of a new, yet old, approach…”
New Econ Research
The Impact of Intangibles on Base Rates (Michael Mauboussin + Dan Callahan, Morgan Stanley)
“…suggests two hypotheses that we can test. The first is that intangible-based businesses can grow faster than what the base rate data show…the right tail of the distribution of growth rates is extending outward from the average. Amazon’s results provide anecdotal evidence for this. The second is that we should observe greater variance in the distribution of growth rates for intangible-based businesses. That means that the left tail of the distribution of growth rates is also spreading further from the average. BlackBerry’s 26.7 percent average annual revenue decline in the past decade through February 2021 is a case in point….Companies grow by generating a return on investment. The nature of investment has changed markedly in recent decades, from one dominated by tangible assets to one mostly in the form of intangible assets. Intangible assets have some characteristics that distinguish them from tangible assets, including greater potential economies of scale and higher risk of obsolescence. The good news is that intangible-intensive companies can grow faster than their tangible counterparts. The bad news is they can also become irrelevant and shrink fast. As a consequence, we should see two effects in the data: higher growth and more dispersion in the outcomes. Our analysis of the results from companies in the Russell 3000 from 1984-2020 reveals both of these. The base rate of sales growth is getting stretched from the average in both the positive and negative direction. There are two main lessons for investors. First, it is important to be mindful of the potential shift in the base rate as the result of the rise of intangibles. Second, skillful investors may be able to identify the companies that will grow faster than expected, hence providing the potential for attractive returns….”
The Global Recovery: Lessons from the Past (Dario Caldara et al., Federal Reserve)
“…In this note, we draw insights about the ongoing global recovery by looking at the evolution of several economic indicators in the aftermath of past recessions. We find that, following severe contractions, output typically remains well below its pre-recession trend in the medium term. This behavior is more marked for severe recessions that are accompanied by financial crises, while severe but short contractions result in a faster recovery. The post-COVID-19 recovery appears to be much more rapid than in standard severe recessions, putting it roughly in line with severe and short recessions of the past…. The current recovery outperforms those from typical severe recessions. Figure 1 compares the ongoing global recovery, and its projected path, with the historical evolution of GDP in the aftermath of severe contractions. Given the sharp rebound in economic activity in the second half of 2020 (solid portion of black line), the recovery from the COVID-19 shock has so far outperformed those from typical severe recessions, suggesting that this episode may look more like the “severe and short” recessions rather than the “severe and financial” ones… Furthermore, productivity is likely to be more resilient compared to past slumps, which should help to sustain the pace of the recovery in the coming years….”
New Numbers
Gross Domestic Product (Third Estimate), GDP by Industry, and Corporate Profits (Revised), 1st Quarter 2021 (Bureau Of Economic Analysis, U.S. Department Of Commerce)
“…Real gross domestic product (GDP) increased at an annual rate of 6.4 percent in the first quarter of 2021 (table 1), according to the “third” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 4.3 percent. The “third” estimate of GDP released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was also 6.4 percent. Upward revisions to nonresidential fixed investment, private inventory investment, and exports were offset by an upward revision to imports, which are a subtraction in the calculation of GDP (see “Updates to GDP”). The increase in real GDP in the first quarter reflected increases in personal consumption expenditures (PCE), nonresidential fixed investment, federal government spending, residential fixed investment, and state and local government spending that were partly offset by decreases in private inventory investment and exports…”
New Science
Same or Different? The Question Flummoxes Neural Networks (John Pavlus, Quanta Magazine)
“…One of the most powerful classes of artificial intelligence systems, known as convolutional neural networks or CNNs, can be trained to perform a range of sophisticated tasks better than humans can, from recognizing cancer in medical imagery to choosing moves in a game of Go. But recent research has shown that CNNs can tell if two simple visual patterns are identical or not only under very limited conditions. Vary those conditions even slightly, and the network’s performance plunges….Ricci thinks that getting any machine to learn same-different distinctions will require a breakthrough in the understanding of learning itself. Kids understand the rules of “One of These Things Is Not Like the Other” after a single Sesame Street episode, not extensive training. Birds, bees and people can all learn that way — not just when learning to tell “same” from “different,” but for a variety of cognitive tasks. “I think that until we figure out how you can learn from a few examples and novel objects, we’re pretty much screwed,” Ricci said….”
U.S. Confirms Removal of Wuhan Virus Sequences From Database (Rachel Chang + Robert Langreth, Bloomberg) ($)
“…Details of the genetic makeup of some of the earliest samples of coronavirus in China were removed from an American database where they were initially stored at the request of Chinese researchers, U.S. officials confirmed, adding to concerns over secrecy surrounding the outbreak and its origins. The data, first submitted to the U.S.-based Sequence Read Archive in March 2020, were “requested to be withdrawn” by the same researcher three months later in June, the U.S. National Institutes of Health said in a statement Wednesday. The genetic sequences came from the Chinese city of Wuhan where the Covid-19 outbreak was initially concentrated…he disappearance of the genetic sequences from the database raises questions about what else from the Wuhan outbreak has been shielded, said American virologist Jesse Bloom, who publicized his discovery that they were missing earlier this week. Bloom, who subsequently recovered the information, said it
Covid Delta strain risks spreading ‘like wildfire’ among unvaccinated in US (Nikou Asgari + John Burn-Murdoch, Financial Times) ($)
“….The Delta variant of coronavirus that has swept across Europe is now gaining ground in the US…Official estimates from the US Centers for Disease Control and Prevention put Delta’s prevalence at 10 per cent during the period from May 22 to June 5. The FT’s analysis applies similar methods to more up-to-date data, matching the CDC’s figure for late May but then rising rapidly to between 37 per cent and 42 per cent on June 20….”