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The earnings disappointments continue with CAT and 3M the latest to add to fears about "peak earnings" after 3M not only missed Q3 earnings but slashed its full year EPS guidance, while CAT warned about rising material and freight costs.

Starting with 3M, the multinational conglomerate reported 3Q EPS $2.58, which while a 10.7% increase Y/Y, missed estimates of 2.70 on net sales $8.15 billion, also missing estimates of $8.40 billion.

3M reported operating cash flow of $2.1 billion, of which almost all was repaid to shareholders, with $794 million paid in cash dividends to shareholders and $1.1 billion in stock repurchased in the quarter. On a geographic basis, core results were ok with sales growing 1.6% in Asia Pacific and 1.3% in the U.S.; however, total sales declined 3.9% in EMEA (Europe, Middle East and Africa) and 5.5 percent in Latin America/Canada.

The top-line was ugly: industrial net sales were $3.02 billion in the 3rd quarter, increasing 2.2% in local currency terms but down 2.1% after the foreign currency translation. Operating income was $667 million, a decrease of 0.7 percent year-on-year; operating margins were 22.1 percent.

The revenue pain continued:

  • Healthcare revenues of $1.45 billion were even worse, down 2.8% in U.S. dollars.
  • Electronics and energy sales were $1.4 billion, down 4.8% in U.S. dollars.
  • Consumer sales were $1.2 billion, down 3.4% in U.S. dollars.

But the biggest disappointment was the company's guidance, which now sees full year adjusted EPS of $9.90 to $10.00, below the consensus est. $10.28, and down versus the prior expectation of $10.20 to $10.45. The cut reflects an estimated full-year earnings headwind of $0.05 per share from foreign currency versus a prior expectation of a benefit of $0.10 per share.

Separately, Caterpillar reported Q3 results which beat on adj EPS $2.86, vs the estimate $2.85 and revenue $13.5 billion, also above the estimate $13.31 billion.

But while earnings were strong, what traders were worried about was the company's warnings that “manufacturing costs were higher due to increased material and freight costs," adding that "Material costs were higher primarily due to increases in steel prices and tariffs."

Also hitting CAT stocks was the company 2018 EPS guidance, which while in line with the prior range of $11.00 to $12.00 adjusted, with the lower range of that forecast falling short of the $11.65 EPS estimated by analysts.

After earnings, CAT - which beat - is down 6% while 3M is tumbling over 7%...

... and the two key Dow members are dragging the Dow Jones even lower, with the industrial index now down over 400 points in the pre market.

Author: Tyler Durden
Posted: October 23, 2018, 11:53 am

Turkish President Erdogan's didn't quite deliver on his promise to reveal "the naked truth" in the killing of Saudi journalist Jamal Khashoggi during a speech on Tuesday before the Turkish parliament, though he did raise important questions while providing the most detailed public statement yet on the killing, which corroborated several anonymously sourced reports that surfaced in recent days.

Erdogan

Though it was conspicuously timed to overlap with the opening of Crown Prince Mohammad bin Salman's "Davos in the Desert," Erdogan's speech didn't include any previously unreported bombshell allegations, nor the "smoking gun" to connect the killing directly to MbS, Erdogan did assert that the "savage" killing had been pre-planned by the Saudi government, contradicting the Saudi government's official story that Khashoggi's death was the result of a botched interrogation, and that he died after a brief struggle...with 15 Saudi intelligence operatives, as the Financial Times pointed out. Though his statement was the most aggressive yet from the Turkish government, it notably stopped short of directly accusing the Saudi leadership of murder.

"We have significant signs that this was not something that happened instantaneously, spontaneously," Mr Erdogan said in speech to members of his parliamentary party. "Khashoggi was murdered in a ferocious manner."

Erdogan said the gathering of the 15 intelligence operatives in Istanbul was clearly no accident, and that the Turkish government wants to know "on whose orders" they were sent. While the Saudis had taken "an important step" in admitting to the killing, Erdogan said more details - such as the location of Khashoggi's remains - must be shared with Turkish investigators.

"People who had qualifications related to the incident gathered in Istanbul," he said. "On whose orders did they come . . .? We want an answer."

"Why has the body not been found?"

Erdogan also questioned why the Saudis had refused to open their consulate to Turkish investigators until days after Khashoggi's disappearance.

"Dear members, let me tell you that the Saudi authorities have taken an important step confirming the crime, the killing. Now we ask Saudi authorities to work hard to reveal the names of those involved from bottom to top."

As Bloomberg pointed out, hours before Erdogan’s speech, the Turkish newspaper Sabah, which is closely tied to the Turkish state, reported that Ahmad Abdullah al-Muzaini, the attaché of the Saudi Consulate in Istanbul, helped orchestrate the murder on the ground and was the main Saudi intelligence representative there. Meanwhile, Reuters reported Monday that a close confidant of MbS whom the newswire described as "the Saudi Steve Bannon" helped plan the killing and even spoke with Khashoggi via Skype before ordering that he be killed.

Watch the full video of Erdogan's speech below:


Author: Tyler Durden
Posted: October 23, 2018, 11:25 am

Yesterday morning, Morgan Stanley declared that the "dead cat bounce is over. One day later, the bank's thesis was confirmed with global markets a sea of red on Tuesday, as a violent rout in Asia carried over into Europe, slamming tech and industrial stocks, and crossing the Atlantic, sending US equity futures retesting the lowest level hit during the October 10/11 two-day rout.

An ugly start to European trading pushed world shares towards their lowest level in a year on Tuesday, as negative drivers from Saudi Arabia’s diplomatic isolation to worries about Italy’s finances, trade wars and a slew of ugly earnings piled on the pressure.

Selling escalated from Wall Street into a heavy selloff in Asia before hitting Europe, which was facing a fifth day of uninterrupted declines. 

One day after relentless Chinese jawboning sent the Shanghai Composite surging 4.1%, its biggest gain in two years, Chinese stocks resumed their slide as traders overpowered Beijing much to the surprise of professional traders, especially after Beijing announced fresh measures to ease the funding strains of private companies, as top officials - including president Xi - sought to restore confidence in the world’s second-largest economy. The State Council announced it would support bond financing by private firms, and said the central bank will provide funding to facilitate this. It was not enough however, and the Shanghai Composite resumed its slide, dropping 2.3% overnight and reversing more than half of Monday's gain, while China's CSI300 tumbled 2.7%.

The sudden, sharp moves in Chinese stocks in either direction have made the Shanghai Composite the most volatile world index, as vol spiked to the highest level since March 2016.

Despite the return of China's rout, the yuan was little changed and stood near Monday’s 21-month low, trading at 6.9464 per dollar in the onshore market on expectations China will pursue looser monetary policy to cope with pressure from U.S. President Donald Trump on tariffs.

"This morning weaker stocks in Asia raised some eyebrows and overall sentiment is suffering from trade tensions, Italy to Brexit; a concoction of concerns," said ING strategist Benjamin Schroeder.

Asia’s overnight tumble gave back much of the ground the region had clawed back over the last two sessions with MSCI’s index of Asian shares dropping 2.1% to a one and a half year low and on the verge of a bear market...

... with declines in many of the region’s heavyweight markets even more pronounced. South Korea’s Kospi and Hong Kong’s Hang Seng both fell 3% and Japan’s Nikkei lost 2.7%.

“We’ve got a few negative factors when market sentiment was already fragile,” said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management. “And earnings from some Japanese companies were weaker than expected, with some starting to blame trade wars.”  Hurting local stocks, the yen gained 0.5% amid the risk-off mood to 112.30 to the dollar.

Meanwhile, all major European indices were "drowning in a sea of red" as sentiment continued from Asia amid trade woes and growing concerns surrounding Saudi and the West. Indeed, Asia's weakness only added to Europe's ugly mood, with the European STOXX 600 index dropping to a two-year low with almost half of its stocks now in bear-market territory — down 20 percent from their peak.

The bloodbath has spared nobody: Germany’s DAX fell to late 2016 lows with Bayer one of the worst performers, dropping 8% after a U.S. court found the company liable for Monsanto weed killer Roundup’s link to cancer; London’s FTSE was down near April lows, and MSCI’s world share index was just two points of a one-year low.

Eurpope's rout was led by industrial and tech names as the tech sector index, SX8P dropped as much as 4.4%, hitting the lowest level since August 2017, led lower by AMS and Atos. Apple supplier AMS plunged as much as 32% after its margin outlook disappointed; Atos fell 24% after it also cut its outlook. The SX8P is down 18% from peak in June, getting close to bear territory; technical chart shows 50-DMA crossing below 200-DMA for first time since August 2016, triggering bearish “death cross” signal.

Other tech heavyweights also tumbled with ASML -4%, SAP -3%, Infineon -4.8% all dragged lower in sympathy. According to Bloomberg, the European tech sector now trades at 17.8x fwd earnings, down from 22.4x in June.

Also hit were European industrials with the Stoxx 600 Industrial Goods & Services index falling as much as 2.5%, touching the lowest level since Feb 2017 following a slew of warnings and disappointing results in the sector. Swedish defense company Saab (-14%) led the sector lower after posting weaker-than-expected 3Q earnings and announcing a rights issue, while Finnish power plant components manufacturer Wartsila fell 9.5% after 3Q results which disappointed on "several fronts." Swiss elevator maker Schindler dropped 8% after 3Q results which were a slight miss across the board, sparking more fears about earnings in 2019.

“Global financial markets continue to struggle to rally as various geopolitical concerns weigh on investor confidence,” Nick Twidale, chief operating officer at Rakuten Securities Australia, said in a note. “With the rest of the world looking much more pessimistic in the current environment,” markets were poised for “a firm correction,” he added.

And with both Asia and Europe crumbling, not even US equity futures, usually resilient to offshore turbulence, were able to stage a rebound, and tumbled 37 points, or 1.3%, retesting the lows from the October 10/11 two-day rout.

In FX, the euro also fell towards a two-month low and Italian bonds struggled before a European Commission meeting that could see Brussels take the unprecedented step of demanding changes to Italy’s recently laid out budget plans.  That has bred some doubt about the European Central Bank raising interest rates next summer, leaving the euro at $1.1470.

“The prospect of a normalization of (ECB) monetary policy was the main reason why the euro was able to appreciate over the past year. However, there is a rising risk that this support is now going to crumble,” Commerzbank analyst Thu Lan Nguyen said.

The Bloomberg dollar index trimmed the overnight haven bid, which capped just shy of 2018 highs. The pound rose above $1.30, rebounding from an almost three-week low, as the threat of an imminent leadership challenge to U.K. Prime Minister Theresa May faded. Former Brexit minister Steve Baker dropped a parliamentary attempt to sabotage the withdrawal talks, and Conservative Party challengers judged they don’t have the numbers to overthrow May.

All that contributed to the risk-averse mood, with the safe-haven Japanese yen and Swiss franc strengthening while higher-yielding currencies like the Australian and New Zealand dollars fell. The worst performing Emerging Market currency was the Turkish lira which dropped more than 3%, leading declines among emerging-market currencies, after the leader of the nationalist MHP said he’d end a voting alliance with President Recep Tayyip Erdogan’s ruling AK Party at local elections scheduled for March 31.

In global rates markets, BTPs reversed early losses, bolstered by a press report that Italy hopes ECB will buy country’s debt if spreads get out of control. Bund/BTP spread broadly steady around 300bp.

U.S. growth data later in the week as well as earnings from companies including Amazon, Alphabet, Microsoft and Intel could be key to how far much further the drop will go. In the meantime, uncertainty over the death of a Saudi journalist, Italy’s budget and Brexit are among the factors weighing on sentiment.

Meanwhile, fears about diplomatic escalation with Saudi Arabia over the Khashoggi murder festered after Turkish President Erdogan said the information and evidence shows journalist Khashoggi was murdered savagely and was part of a planned operation, he added the Saudi King acknowledged the murder in a phone call. Riyadh faces international pressure to provide all the facts about an incident that has raised a global storm and added the threat of sanctions against the kingdom to a list of market concerns. U.S. President Donald Trump said on Monday he was not satisfied with what he had heard from Saudi Arabia about the killing, but expressed reluctance to punish the kingdom economically.

Investors worry that may lead to Saudi retaliation through crude oil, although a pledge by the Saudi energy minister to play a “responsible role” and keep markets supplied while not ruling out that Saudi output should be 1-2m b/d higher held down crude prices on Tuesday; as a result, WTI and Brent are both in the red with prices currently hovering under USD 68.50/bbl and USD 78.50/bbl respectively. Saudi Energy Minister Al Falih said the oil market is in a good place now and will continue to monitor the oil market, but supply and demand have their uncertainties. Al-Falih sees a lot of output decline in many regions and does not rule out that Saudi output is going to be 1-2mln BPD higher. He said that the nation will be able to produce 12mln bpd of oil in less than three months.

Gold is trading with gains in excess of 1% amid safe haven flows. Elsewhere, China’s alumina exports for September have increased by over 5 times to 165.8k tonnes compared to August. Separately, world refined copper market showed a 47k tonnes deficit in July vs. June’s deficit of 38k tonnes.

Verizon, McDonald’s, 3M and Texas Instruments are among companies reporting earnings. Richmond manufacturing survey is due.

Market Snapshot

  • S&P 500 futures down 1.3% to 2,720.50
  • STOXX Europe 600 down 1.3% to 355.20
  • MXAP down 2.1% to 150.51
  • MXAPJ down 2.1% to 475.27
  • Nikkei down 2.7% to 22,010.78
  • Topix down 2.6% to 1,650.72
  • Hang Seng Index down 3.1% to 25,346.55
  • Shanghai Composite down 2.3% to 2,594.82
  • Sensex down 0.9% to 33,826.52
  • Australia S&P/ASX 200 down 1.1% to 5,843.09
  • Kospi down 2.6% to 2,106.10
  • German 10Y yield fell 0.7 bps to 0.441%
  • Euro up 0.04% to $1.1469
  • Brent Futures down 1.2% to $78.89/bbl
  • Italian 10Y yield rose 0.7 bps to 3.118%
  • Spanish 10Y yield fell 2.2 bps to 1.674%
  • Brent Futures down 1.2% to $78.89/bbl
  • Gold spot up 1.2% to $1,236.25
  • U.S. Dollar Index down 0.1% to 95.92

Top Overnight News from Bloomberg

  • Erdogan said the murder of Saudi journalist Jamal Khashoggi in Istanbul was part of a planned operation as he tries to turn the death into a catalyst for changing the balance of power in Saudi Arabia and regaining influence across the Middle East
  • Equities failed to get any reprieve after China announced fresh measures to ease the funding strains of private companies, as top officials seek to restore confidence in the world’s second- largest economy. The State Council announced it would support bond financing by private firms, and said the central bank will provide funding to facilitate this
  • French Finance Minister Bruno Le Maire said euro-area limits on budget deficits must be respected and the Italian government has an interest in upholding the restrictions. The European Commission will likely decide Tuesday on whether to formally demand a member state to take back, revise and resubmit its budget, a step it has never taken before
  • The Italian government hopes that the European Central Bank would purchase the country’s securities if the bond yield spread with German bunds gets out of control in the coming months, newspaper La Stampa reported, without saying where it obtained the information
  • U.S. President Donald Trump’s surprise call to cut middle-income families’ taxes by 10% could mean top earners get a break, too. It’s still unclear how Trump will propose to reduce the tax burden on middle-class Americans, but one of the most straightforward ways would be to lower rates by 10% for single filers making up to $82,500
  • A small group of British currency traders didn’t have the power to fix prices in a $5.1 trillion-a-day market where hundreds of competitors were battling to get the best price, a foreign-exchange expert told a U.S. jury considering criminal antitrust charges against the lot known as “The Cartel”

Asian equity markets were lower across the board following the uninspiring performance on Wall St where most major indices finished in the red amid underperformance in financials and in which the S&P 500 posted a 4th consecutive loss. ASX 200 (-1.05%) was dragged lower by weakness across the large industries including financials, energy and resources, while Nikkei 225 (-2.67%) slumped as Japanese exporters suffered the ill-effects of a firmer currency. Hang Seng (-3.08%) and Shanghai Comp. (-2.26%) conformed to the downbeat tone as buying in the mainland eased following the prior day’s over 4% rally, while US equity futures declined alongside their Asian peers with pressure exacerbated as the E-mini S&P broke below US session lows around the 2750.00 level. Finally, 10yr JGBs were quiet and only marginally benefitted from the downbeat risk tone, while the enhanced-liquidity auction for 10yr, 20yr and 30yr JGBs failed to spur any meaningful demand with the b/c unchanged from the prior.

Top Asian News

  • Indonesia Holds Key Rate as Run of Hikes Helps Stabilize Rupiah
  • China’s Central Bank to Offer More Funds for Private Companies
  • Agarwal Says Trying to Combine Anglo, Hindustan Zinc Ops: CNBC
  • J&J to Buy Rest of Japan Skin-Care Company Ci:z for $2 Billion

All major European indices are drowning in a sea of red as sentiment continues from Asia amid trade woes and growing concerns surrounding Saudi and the West; Germany's DAX (-2.1%) is lagging its peers, largely due to downside in Bayer (-8.0%) after a US judge affirmed a verdict in regards the weed-killer which was linked to cancer. Key sectors are broadly in the red, with IT (-3.8%) the lagging index, significantly weighed on by Atos (-22.4%) following a cut to their financial year growth guidance. Meanwhile, AMS (-27.0%) slumped amid earnings, with the likes of STMicroelectronics (-4.8%), Infeneon (-5.0%) and Wirecard (-5.8%) dragged lower in sympathy.

Top European News

  • Car Stocks Fall as Renault Sales Miss Offsets Confirmed Guidance
  • French Are Target of Widespread Spying by Chinese, Figaro Says
  • BTPs Rise on Report That Italy Hopes ECB Will Buy Nation’s Debt

In FX, the Yen was the standout G10 outperformer on safe-haven grounds, with Usd/Jpy retreating further from Monday’s near 112.90 highs towards 112.25 where stops are anticipated down to 112.20 and Jpy crosses also trending lower again as big figure levels give way (like 129.00 vs the Eur and 80.00 vs the Aud). GBP - A sterling effort to avoid another leg-down and loss of a round number, as Cable rebounds firmly from sub-1.2950 lows to retest 1.3000 with the aid of reported model buying around 1.2985. However, the Pound remains precarious and prone to further Brexit-related pressure, as Eur/Gbp hovers above 0.8800 having broken above a couple of Mas yesterday. NZD - The Kiwi is also relatively resilient to broad risk aversion and hovering around 0.6650 vs its US counterpart, albeit partly on favourable cross-flows again as AUD/Nzd remains capped around 1.0800 and the Aud loses 0.7100 support alongside ongoing weakness in the Yuan. EM - The Lira has lost more of its recent recovery momentum on a mixture of factors including a move from the CBRT ahead of Thursday’s rate meeting to raise the RRR on Usd, renewed political uncertainty following the national party announcing that it will not continue its AK party allowance and a further deterioration in consumer confidence. Usd/Try just off near 5.8700 highs, but still significantly above lows circa 5.6670.

In commodities, WTI and Brent are both in the red with prices currently hovering under USD 68.50/bbl and USD 78.50/bbl respectively, this price dip comes as Saudi Arabia pledges to be responsible in energy markets removing some of the market’s risk sentiment ahead of the step-up in Iranian sanctions. Saudi Energy Minister Al Falih said the oil market is in a good place now and will continue to monitor the oil market, but supply and demand have their uncertainties. Al-Falih sees a lot of output decline in many regions and does not rule out that Saudi output is going to be 1-2mln BPD higher. He said that the nation will be able to produce 12mln bpd of oil in less than three months. Iran said they are not concerned about maintaining oil production. Iranian Oil Minister said the country's oil exports cannot be stopped and sanctions on Iran will keep the market volatile. Gold is trading with gains in excess of 1% amid safe haven flows due to political tensions between Saudi Arabia and Western countries. Elsewhere, China’s alumina exports for September have increased by over 5 times to 165.8k tonnes compared to August. Separately, world refined copper market showed a 47k tonnes deficit in July vs. June’s deficit of 38k tonnes.

Today, we get the October Richmond Fed manufacturing index. Away from data, BOE Governor Carney and Chief Economist Haldane, and the Fed's Kashkari and Evans will be speaking at different times. In addition, Caterpillar, Verizon, Texas Instruments, Lockheed Martin, United Technologies, and Harley Davidson will release their earnings.

US Event Calendar

  • 9:30am: Fed’s Kashkari Speaks at Early Childhood Development Event
  • 10:00am: Richmond Fed Manufact. Index, est. 24, prior 29
  • 1:30pm: Fed’s Bostic Speaks on Economy and Monetary Policy
  • 2:15pm: Fed’s Kaplan Speaks at Economic Development Event in Texas
  • 8pm: Fed’s George Takes Part in Payment System Conference in Sydney

DB's Jim Reid concludes the overnight wrap

It was another disappointing day for markets after a bright start with China and Italy rallying hard. Italy as we’ll see later reversed these gains with China equity markets also selling off around 1.5% overnight (more also later). The S&P 500 closed -0.42% yesterday, its fourth consecutive daily loss and remarkably the 17th day of losses over the last 22 trading session (a month). This is the worst such stretch of losses since October 2000. I have to hat tip my colleague Quinn for this stat. Hopefully he’ll return the favour by sharing me in on his winning lottery ticket.

The DOW also fell in sympathy, dropping -0.50%, though tech had a positive session, with the NASDAQ and FANGs gaining +0.48% and +1.44%, respectively. An impressive out-performance. Banks underperformed sharply, dropping -2.55%. US HY credit sold-off, with the generic US HY CDS index rising +4bps to the highest level since December 2016. Note that the US cash HY index is only marginally wider YTD now but has risen over 40bps from recent tights. In Europe, the STOXX 600 fell -0.42%, with banks underperforming as well (-1.17%). Italian assets gave up strong initial gains with 10yr BTPs climbing 1bps after rallying nearly 20bps near the open as relief over Moody’s stable outlook from Friday night kicked in. That completed a 50bps rally (3.80% to 3.30%) in less than one full trading day from early Friday morning before the yesterday’s reversal. We eventually closed just below 3.50% last night.

The Italian government officially replied to the European Commission’s letter asking for clarification on several budget points. Finance Minister Tria said that he knows that Italy’s spending plans do not comply with EU rules, but that he wants "constructive" talks on the issue and that the government will stand ready to ensure its 2019 budget deficit doesn’t exceed its 2.4% target. Contrary to speculation in press on Friday, there were no indications that Italy might lower its headline deficit to a more fiscally-sustainable target of 2.1% of GDP. The EU may implement the never-before-used step of demanding revisions to the budget as soon as today. Contrary to last week, there were limited signs of contagion today, with Spanish spreads tightening -2.8bps,  though the euro depreciated 0.43% versus the dollar. The greenback rallied to its strongest level in 2 months, gaining +0.33%, with gains coming against both developed and emerging market currencies.

This morning in Asia, the risk off sentiment from Wall Street has continued with the Nikkei (-2.26%), Hang Seng (-2.03%), Shanghai Comp (-1.37%) and Kospi (-2.40%) all lower along with most Asian markets. Elsewhere, futures on the S&P 500 (-0.89%) are pointing to a weak start. In the meantime, China’s state council yesterday announced that it would support bond financing by private firms and added that the PBOC will provide funding to facilitate this. The PBOC also announced a plan shortly after to support such issuance, without providing any details on how it would work, the size of the plan, or when it would begin.

So a lot of intervention in China at the moment.

Back to yesterday and the British Pound had its worst day in a month, dropping around -0.85% versus the dollar as Brexit negotiations continued and Prime Minister May faced down the conflicting flanks of her governing coalition. First, Steve Baker of the Eurosceptic European Research Group proposed an amendment that would have required the Northern Ireland Assembly to approve anything that would treat NI separate from the rest of the UK, making it more difficult for Prime Minister May to negotiate a backstop deal with the EU. Baker ultimately withdrew his amendment, avoiding a more direct confrontation within the Conservative party. Second, media outlets (Including Bloomberg) reported that a “centrist” MP is supporting a no-confidence vote in PM May, which might signal that a political crisis is more imminent than most people realize. Our strategists have held this view for weeks, and continue to think that the fundamental tension within the governing coalition is more significant than discounted in the market. Exemplifying this yesterday Ireland’s Foreign Minister Coveney said that any attempt by the UK to move away from the backstop arrangement "is not going to fly with Ireland or the EU as a whole." So the NI issue does not appear to be any closer to a solution.

Today’s most important event could be Turkey’s President Erdogan promise to unveil details of the Turkish investigation over the killing of Saudi Arabia’s journalist Khashoggi. So, one to keep an eye out on amidst rising geopolitical risks. Turkey has found itself as a huge power broker over this story so today’s announcement will be fascinating and has numerous sub plots and implications just as the ill fated Saudi investor conference starts. Separately, Saudi Energy Minister al-Falih downplayed the spillovers from geopolitical tensions into the oil markets, asserting that Saudi Arabia would increase production as planned and would not try to use oil prices as a weapon.

In other news, the German Bundesbank said in its monthly report that Germany’s growth may have stalled in the third quarter as carmakers struggled with a switch to new emissions testing. However, the report added, the “upswing in Germany is still fundamentally intact” and the “growth break shouldn’t be long-lasting.” This is consistent with our economists’ view, which sees the recent softness in hard data as transitory, though they note downside risks to the third quarter GDP print in a few weeks.

On the earnings front, US companies mostly missed expectations yesterday. Toy-maker Hasbro reported that sales fell in North America and that it was struggling to meet demand for its products. Halliburton, the energy services giant, reported slow activity growth in US fracking and lowered its fourth quarter guidance. Management cited bottlenecks in the Permian Basin and increasing pressure on firms to generate a profit rather than maximize production volumes. Finally, the household products manufacturer Kimberly-Clark (maker of Kleenex and other consumer products) cited high commodity prices and currency volatility for its disappointing earnings guidance. All three stocks traded lower and weighed on sentiment. On the economic data front, the only  major release in the US was the Chicago National Activity Index, which printed at 0.17 versus expectations for 0.21. A positive value indicates an above-average rate of economic expansion.

Today, we get the Euro Area's October consumer confidence, Germany's September PPI, Spain's August trade balance and in the UK, October CBI Trends total orders, selling prices and business optimism. In the US, we get the October Richmond Fed manufacturing index. Away from data, BOE Governor Carney and Chief Economist Haldane, and the Fed's Kashkari and Evans will be speaking at different times. In addition, Caterpillar, Verizon, Texas Instruments, Lockheed Martin, United Technologies, and Harley Davidson will release their earnings.

Author: Tyler Durden
Posted: October 23, 2018, 11:04 am

An employee of billionaire investor George Soros discovered a bomb placed in a mailbox at Soros’s Westchester County home on Monday. The explosive device was later "protectively detonated" by an FBI bomb squad after the employee moved it to a wooded area. 

Soros

According to the New York Times, federal and state law enforcement officials responded to the scene in Katonah, NY, a hamlet in in the town of Bedford in northern Westchester, after the Bedford Police Department received a call about a suspicious package at around 3:45 pm on Monday.

Soros wasn't home at the time.

"An employee of the residence opened the package, revealing what appeared to be an explosive device," the police said in a statement. "The employee placed the package in a wooded area and called the Bedford police."

Bedford is about 50 miles north of Manhattan and has been home to many well-to-do city transplants, including Martha Stewart, Glenn Close and Ralph Lauren. Katonah, where Mr. Soros has a home, is known for its cultural offerings, including the Caramoor Center for Music and the Arts and the Katonah Museum of Art.

The police said they had turned the case over to the FBI, which didn’t immediately respond to requests for comment by the NYT. The bureau’s New York office tweeted late on Monday that it’s investigating Soros's residence.

We are conducting an investigation at and around a residence in Bedford, NY. There is no threat to public safety, and we have no further comment at this time.

— FBI New York (@NewYorkFBI) October 23, 2018

Soros, a hedge fund billionaire, became heavily involved with Democratic politics during the George W Bush administration, when he poured millions into the unsuccessful campaign of John Kerry.  Through an $18 billion gift to his Open Society Foundations, Soros has stepped up giving to far-left groups, though he nominally claims to oppose the far left and support democracy.

Author: Tyler Durden
Posted: October 23, 2018, 10:17 am

Saudi Arabia's Future Investment Initiative kicked off on Tuesday despite reports that one of its most high-profile guests, Softbank's Masayoshi Son, has decided not to speak at the event (though he will reportedly still attend and hold meetings on the sidelines).

However, the event was overshadowed by remarks from Turkish President Recep Tayyip Erdogan, who shared details of the timeline of the killing, as Turkish investigators understand it. And as if to tease Erdogan's remarks, Reuters published a blockbuster report Monday night offering new details about the role of a (now former) Saudi intelligence official and MbS confidant, Saud al-Qahtani, in the killing of Saudi journalist Jamal Khashoggi. Al-Qahtani, who, according to several anonymous Saudi officials (a notable departure from the Turkish officials who have been the primary source of Western media leaks so far), presided over the interrogation and murder of Jamal Khashoggi via Skype, where he gave the order to the 15-man team assassination squad to dispose of Khashoggi, saying "bring me the head of the dog."

Despite al-Qahtani's years of loyal service to the Saudi ruling family, Crown Prince Mohammad bin Salman has left him to take the fall for the killing. Following reports of al-Qahtani's demotion, he changed his twitter biography recent days to exclude his former title of royal adviser to chairman of the Saudi Federation for Cybersecurity, Programming and Drones. A Saudi official said Qahtani had been detained after being fired, but he continued to tweet afterwards, suggesting that he was not under arrest, as some believed.

Qahtani

Saud al-Qahtani

Even before the confrontation inside the Saudi consulate in Istanbul, al-Qahtani had been in regular contact with Khashoggi, whom al-Qahtani had urged in several phone calls to return to Riyadh after Khashoggi had started publishing columns critical of MbS in the Washington Post. Khashoggi took the calls, but told friend that he didn't trust al-Qahtani, believing that the intelligence chief would have him thrown in prison if Khashoggi were to return.

Qahtani had tried to reassure the former newspaper editor that he was still well respected and had offered the journalist a job as a consultant at the royal court, the friends said.

Khashoggi said that while he found Qahtani gentle and polite during those conversations, he did not trust him, one close friend told Reuters. "Jamal told me afterwards, ‘he thinks that I will go back so that he can throw me in jail?"

The second senior Saudi official confirmed that Qahtani had spoken to Khashoggi about returning home. The ambush in Istanbul seems to have been another way to get him home.

Some of Reuters sources protected MbS, claiming that it's possible that MbS wasn't aware of the killing, citing a standing order to "negotiate" with dissidents to return to the Kingdom. However, it is hard to imagine that the crown prince could have not known about such a high-profile operation.

Most of the 15 hit-man team identified by Turkish and Saudi authorities worked for the kingdom’s security and intelligence services, military, government ministries, royal court security and air force. One of them, General Maher Mutreb, a senior intelligence officer, who is part of the security team of Prince Mohammed, appeared in photographs with him on official visits earlier this year to the United States and Europe.

The high-ranking Arab official and the Turkish intelligence source said it was Mutreb’s phone that was used to dial in Qahtani while Khashoggi was being interrogated.

Al-Qahtani, who rose through the ranks of the Saudi intelligence service in what some have described as a spectacular rise, was also reportedly responsible for another high-profile interrogation that occurred last year: The detention of Lebanese Prime Minister Saad al-Hariri. The Saudis were reportedly dissatisfied with Hariri's inability to stand up to Iran and Hezbollah, and decided to try and force him to resign and install a more amendable leader. It was only the intervention of French President Emmanuel Macron that led to al-Hariri's release. 

The Saudis lured Hariri to Riyadh for a meeting with MbS. Upon his arrival on Nov. 3, 2017, there was no line-up of Saudi princes or officials, as would typically greet a prime minister on an official visit. Hariri later received a call that the meeting with the crown prince would take place the next day at a royal compound.

When Hariri arrived, he was ushered into a room where Qahtani was waiting for him with a security team, according to three Arab sources familiar with the incident. The security team beat Hariri; Qahtani cursed at him and then forced him to resign as prime minister in a statement that was broadcast by a Saudi-owned TV channel.

"He (Qahtani) told him you have no choice but to resign and read this statement," said one of the sources. "Qahtani oversaw the interrogation and ill-treatment of Hariri."

Another source said it was the intervention of French President Emmanuel Macron that secured his release following an international outcry.

Macron claimed credit in May for ending the crisis, saying an unscheduled stopover in Riyadh to convince MbS, followed by an invitation to Hariri to come to France, had been the catalyst to resolving it. Lebanese officials confirmed to Reuters that Macron’s quick intervention secured Hariri’s return.

As Reuters pointed out, Qahtani, 40, has earned a reputation in Saudi as a violent enforcer for the royal family, and also as a vocal nationalist who, in blogs and on social media, relentlessly pushes the family's line. Some have even described him as the Saudi Steve Bannon. And looking ahead, the international community will be watching to see whether al-Qahtani remains frozen out, or whether MbS moves to reinstate him when the prince thinks the international media attention has largely died down.

Author: Tyler Durden
Posted: October 23, 2018, 10:00 am

Authored by Kevin Muir via The Macro Tourist blog,

The other day I wrote a piece “When will chasing the hot stock no longer work?” which outlined how “price momentum” was the main driving factor during the recent stock market rally. I went through how value stocks have been sucking wind ever since the Great Financial Crisis.

The article got a lot of feedback, but there was one email that I wanted to share. It comes from Andy Mayer - Albion Green founder - a financial markets trainer, lecturer, consultant, and just all-around-good-guy. He sent me an interaction he had with one of his students:

This brought to mind a conversation I had with an undergrad finance student last month. At a course presentation, students were comparing various stocks using a few standard valuations, and this student was recommended to buy the stocks with high PE. Myself and the other trainers told him that we compare valuations to find under-valued stocks, not to buy over-valued ones. But he was not swayed, he was firmly of the opinion that good and growing companies have high PEs and companies that are badly run have low PEs. Finally the debate was settled when he said - look, there is real empirical evidence that buying high PE stocks and selling low PE stocks is a winning strategy. And over the past few years he was right of course!

This is the way that young people in the markets think these days - they have been trained by the market to think totally differently to the old school, and until value starts doing well, they will be the ones making money.

Ahhh... Millennials... You gotta luv ‘em. Fully convinced they know better, but making the exact same mistakes every other generation has made.

Now don’t take my chiding as a belief we are somehow better. My generation had the “DotCon” bubble. There were plenty of stock-market-wunderkids who were “experts” at picking stocks for the “new economy.”

Heck, we even took one of these knobs and elevated to him to mythical status after he made this speech:

You want winners? You want me to put my Cramer Berkowitz hedge fund hat on and just discuss what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now.

OK. Here goes. Write them down – no handouts here!: 724 Solutions ( SVNX), Ariba ( ARBA), Digital Island ( ISLD), Exodus ( EXDS), InfoSpace.com ( INSP), Inktomi ( INKT), Mercury Interactive ( MERQ), Sonera ( SNRA), VeriSign ( VRSN) and Veritas Software ( VRTS).

We are buying some of every one of these this morning as I give this speech. We buy them every day, particularly if they are down, which, no surprise given what they do, is very rare. And we will keep doing so until this period is over – and it is very far from ending. Heck, people are just learning these stories on Wall Street, and the more they come to learn, the more they love and own! Most of these companies don’t even have earnings per share, so we won’t have to be constrained by that methodology for quarters to come.

The date for Jim Cramer’s keynote speech? February 29th, 2000.

Now we all have some bad calls, so I shouldn’t be too harsh on Cramer, or the current batch of millennials embracing growth stocks. After all, if you had started your investing career in 2010, you probably would also think that “growth only goes up” and that “value is at best, dead money.”

As I was thinking about this post, I was reminded of a story about a famous trader in Jack Schwager’s second book, The New Market Wizards. Randy McKay is probably one of the least known figures from Jack’s books, and deserves way more attention. So many of his stories are timeless classics that any young trader would be wise to study religiously.

Randy’s foray into stock trading was no exception. From The New Market Wizards:

In 1982, I began to notice on the evening news that the Dow was up almost every day. I started getting very strong bullish feelings about the stock market. This was the first time I had ever had any market feel based on something other than watching futures. I was reluctant to start picking stocks, because that was someone else’s game.

I opened an account with a friend of mine who was a stockbroker, instructing him to buy a cross section of stocks because I felt the market in general was going higher. At the time, I didn’t know that his method of picking stocks was exactly opposite to my approach in the futures market. His theory was to buy the weakest stocks on the premise that they could go up the most. Well, that certainly wasn’t my theory. He ended up buying me only three stocks, his favorites, which he had been in love with for the past ten years; After watching the Dow go up for about three months while my account went down at the same time, I asked him to send me charts on the stocks I owned. I discovered that he was steering me into stocks that were near their lows, while my natural inclination was to buy stocks that were moving higher. I decided the arrangement wasn’t working out, and I closed the account.

I pulled out the phone book and found that there was a Merrill Lynch office nearby at the comer of Michigan and Wacker [in Chicago]. One summer afternoon after the market had closed, I walked over to the bank and withdrew a cashier’s check for $1 million. I then went to the Merrill Lynch office, walked through the door and asked, “Who’s in charge here?” The branch manager came over, and I told him, “I want to talk to your least experienced broker.” That’s the honest truth. I wanted somebody without any opinions.

He turned me over to a broker who was about twenty-three years old. I put the check down in front of him and said, “I want to open an account, and here’s what I want you to do. I want you to start out by investing three-quarters of this money in a wide variety of stocks, all of which are at or near all-time highs. After that, each week, I want you to send me a list of stocks broken down by market sector ranking the stocks in each sector by how close they are to their all-time highs.

He followed my instructions exactly, and I did very well in that account. However, that same year, the Chicago Mercantile Exchange began trading the S&P 500 futures contract, which solved my problems on how to trade the general stock market. I thanked my broker for his efforts, closed the account, and switched into buying S&P futures. I felt bad about closing the account because he had done exactly what I had wanted him to do. He broke the market down into different sectors and bought the strongest stock in each sector.

What I love about this story was Randy’s ability to understand that in a bull market, you don’t want to own the laggards. You want to own the stuff that’s rising.

And that’s the lesson that all these millennials have embraced whole-heartedly over the past bull market. All of us old-timers that remember 2008, or even 1998, were scarred with the realization that the current darling-go-to stocks can go down just as fast as they went up. Millennials have no such nightmares. They only know Facebook, Google, Amazon and whatever crazy-over-priced-growth-stock-they-have-recently-discovered chugging higher. Dips were only buying opportunities to add to their position.

During the past year, one by one, other world stock markets have sagged and dipped into negative territory. Yet American growth stocks were impervious to this fact. They kept rising. Then recently, certain sectors of the U.S. market started showing some weakness. All this time, the millennials were there with their stacks of blue tickets - keeping growth bid.

But something has changed during this last sell off. It’s no longer such a clear dip buying opportunity. And most importantly, growth is no longer leading the way higher.

There is a famous saying about being young and your political views. It goes something like this:

If you are young and aren’t liberal, you have no heart. If you are old and aren’t conservative, you have no brain.

I feel like we should change that to:

If you are young and don’t believe in growth stocks, you have no vision. If you are old and aren’t buying value stocks after a decade of massive underperformance, you probably had a head injury as a child.

There is nothing new under the sun, and this overstaying in growth is a mistake every generation makes. I am by no means picking on the millennials, after all, my generation somehow thought this video was cool…

(Seriously, if you were born between 1965 and 1975, don’t watch this video. It will instantly become apparent how bad our youth was for fashion and will forever ruin your pleasantly distorted memories.)

Author: Tyler Durden
Posted: October 23, 2018, 9:07 am

Authored by Mike Shedlock via MishTalk,

Italy, on the Euro, has a currency that is 9% too high. Germany, on the Euro, has a currency that is 11% too low.

There was much discussion last week about the US Treasury report that determined China was not a currency manipulator.

However, there are six countries on the manipulation watch list: China, Japan, Korea, India, Germany, and Switzerland.

  • Japan, Germany, and Korea have met two of the three criteria in every Report since the April 2016 Report having material current account surpluses combined with significant bilateral trade surpluses with the United States.

  • Germany has the world’s largest current account surplus in nominal dollar terms, $329 billion over the four quarters through June 2018, which represented its highest nominal level on record. Germany also maintains a sizable bilateral goods trade surplus with the United States, at $67 billion over the four quarters through June 2018. There has been essentially no progress in reducing either the massive current account surplus or the large bilateral trade imbalance with the United States in recent years, in part because domestic demand in Germany has not been sufficiently strong to facilitate external rebalancing and because Germany’s low inflation rate has contributed to a weak real effective exchange rate.

Try Fixing This

  1. The Euro is 11% undervalued in Germany, the largest Eurozone economy.

  2. The Euro is 9% overvalued in Italy, the third largest Eurozone economy.

The normal way central banks make adjustments to fix over-valued or undervalued situation is through interest rate policy or direct currency intervention.

No matter which the ECB does, it will impact Italy and Germany in opposite directions.

Meanwhile, interest rates are on the verge of spiraling out of control in Italy.

Italy vs Germany 10-Year Bond Spread

Theory vs Practice

In theory, German, Italian, and Greek 10-year bonds should all have the same yield. In practice, they clearly don't.

The spread between German 10-year and Italian 10-year bonds is 330 basis points (3.3 percentage points).

The difference is perceived default risk. The odds of Italy leaving the Eurozone are rising.

Major Confrontation

On September 28, Italy's proposed budget deficit of 2.4% sent bond yields soaring. And they haven't stopped.

Today, ECB president Mario Draghi warned "Undermining EU budget rules carries high price for all" and yields surged again.

For discussion, please see Italy Bond Yields Surge In Confrontation with ECB President Mario Draghi.

Sudden Stop of Capital

Italian bonds are just two steps above Junk.

Again, this should not happen "in theory". All Eurozone sovereign debt should have similar ratings.

Practice is another matter, as Goldman Sees Italy Junk Risk Leading to ‘Sudden Stop’ of Capital.

Capital Flight Underway

Capital flight is already underway. Proof can be found in Target2 Imbalances.

Target2 Imbalances

Italian Money Heads to Switzerland

Zerohedge reports More Italians Move Savings to Switzerland as Fears of Banking "Doom Loop" Intensify.

With the euro weakening against the Swiss franc and Italian stocks and bonds tumbling once again on reports that the European Commission is planning to reject the Italian draft budget plan submitted earlier this week - a repudiation of Italy's populist leaders that was widely anticipated - the Telegraph's Ambrose Evans-Pritchard offered a glimpse into how middle-class Italians are reacting to the deteriorating relationship between Italy and the EU, and its attendant impact on the country's banks and capital markets.

In a trend that's eerily reminiscent of the banking run that precipitated the near-collapse of the Greek banking system (most recently in 2015), Italians are scrambling to convert their euros into Swiss francs and stash them across the country's northern border with Switzerland.

Big Players Already Out

The Swiss group Albacore Wealth Management told Italy's Il Sole had received a wave of inquiries from Italians with €5m to €10m in liquid capital. The super-rich are already a step ahead. "The big fish have been organizing the expatriation of their wealth for some time," it said.

"There is fear creeping in," said Massimo Gionso, head of family wealth managers CFO Sim in Milan.

"People are concerned that if we get into the same situation as Greece, they might find the banks are closed and they can take out only €50 a day from cash machines. They don’t want to risk it," he told the Daily Telegraph.

"These are families with savings of €200,000 or €300,000. They want to set up accounts in Lugano or Chiasso across the border in Ticino where everybody speaks Italian. The big players have already got their money out," he said.

How Much Money Is Leaving?

  • Italy July Target2 : -471.1 Billion Euros

  • Italy August Target2: -492.5 Billion Euros

Between July and August, Italy's Target2 imbalance rose by 21.4 billion euros. That was before these budget concerns became apparent.

Fatally Flawed Setup

  1. The ECB's interest rate policy, was fatally flawed from inception.

  2. Target2 is a failed construct

  3. German productivity vs peripheral Eurozone productivity is yet another issue.

  4. EU policies take all 27 nations to agree, or nothing gets done. So the broader EU is fatally flawed as well.

These flaws were generally recognized actually. So were problems with Greece. Yet, they welcomed Greece with open arms.

The global economy is slowing, Trump's trade polices are wreaking havoc and Brexit is going to damage trade ralations as well.

We have had a 10-year recovery, yet the ECB is still expanding its balance sheet. The ECB is supposedly going to cease those asset purchases in 2019.

Good luck with that.

Who will buy Italian bonds, and at what price? And what about the Italian bond inevitable downgrade to junk?

Good luck with that, too.

Word of Advice

If you have money in Italian banks, get it out now, while you can. Capital controls are coming and Italy is increasingly likely to leave the Eurozone entirely.

Author: Tyler Durden
Posted: October 23, 2018, 9:00 am

"Paid protesters are real," writes the Los Angeles Times, after a lawsuit filed by a Czech investor against a business rival spotlighted the seedy, and very real business of people hired to express fake outrage, support, and everything in between. 

According to a lawsuit filed by investor Zdenek Bakala, Prague-based investment manager Pavol Krupa hired Beverly hills company Crowds on Demand (COD) to stage a protest near Bakala's home in Hilton Head, SC.

In the Bakala case, Crowds on Demand is accused of spreading misinformation through a website, putting on protests and organizing a phone and email campaign targeting several U.S. institutions with ties to Bakala, who got an MBA from Dartmouth’s Tuck School of Business and had an estimated net worth topping $1 billion earlier this decade, according to Forbes. -LA Times

Crowds on Demand provides pop-up "protests, rallies, flash mobs, paparazzi events and other inventive PR stunts," according to its website. 

The dispute between Bakala and Krupa goes back for several years, and has been the subject of inquiries by the European Commission and the Czech government, involving a formerly state-owned coal mining business, OKD, which Bakala assumed control of in 2004. Bakala has been accused of bribing officials to buy the government's equity in the mining company at a below-market price, which broke a promise to sell company-owned apartments to employees before the company ultimately filed for bankruptcy in 2016. 

According to Bakala, the COD smear campaign didn't stop there, claiming that the company also called and sent emails to the Aspen Institute and Dartmouth College, where Bakala sits on advisory boards, urging them to cut ties with him. Bakala claims that Krupa threatened to ramp up the COD campaign unless the Czech investor coughs up $23 million.

Bakala, who holds U.S. and Czech citizenship, says in his lawsuit that all of those allegations are false and are part of Krupa’s extortion campaign. He alleges that Krupa offered to cease his campaign if Bakala paid $23 million for OKD shares owned by Krupa’s investment fund.

...

Crowds on Demand founder Adam Swart and Krupa neither confirmed nor denied that they are working together. They declined to answer specific questions about Bakala’s allegations, though Swart, in an emailed statement, called the claims meritless.

Not only will I vigorously defend myself against the allegations in the complaint but I am also evaluating whether to bring my own claims against Mr. Bakala,” Swart said. -LA Times

"Defendants are pursuing a campaign of harassment, defamation, and interference in the business affairs of Zdenek Bakala, which they have expressly vowed to expand unless he pays them millions of dollars," reads Bakala's lawsuit (see below). 

That said, it's not clear that Krupa's alleged campaign had the desired effect. 

Elliot Gerson, an executive vice president at the Aspen Institute, said in an emailed statement that the institute has received calls and emails from “individuals associated with Crowds on Demand” and that the nonprofit’s general counsel has spoken with Swart “about this campaign of harassment.”

From the beginning, we assumed that these manufactured communications were linked to political issues in the Czech Republic and Mr. Bakala’s high profile in that country,” Gerson said. “Nothing we received has altered our views about Mr. Bakala.” -LA Times

So paid protesters are a thing...

Bakala's lawsuit brings to light an ongoing debate in the national dialogue over paid protesters. President Trump, for example, has repeatedly claimed that protesters have been paid by left-wing billionaire activist George Soros and others in order to disrupt and undermine conservative events. 

"There are hundreds of lobbying firms and public affairs firms that do this work, though not all in the same way," said USLA sociology professor Edward Walker - who wrote a book on the business of paid protesting, also known as Astroturfing. "Some only do a little bit of this grass-roots-for-hire, but things adjacent to this are not uncommon today."

In 2014, ABC's "Nightline" reported that a group backed by the beverage industry was hiring people to protest a soda tax measure - posting ads on Craigslist for paid protesters at $13 an hour. 

During the confirmation hearings for Supreme Court Justice Brett Kavanaugh, many noted what appeared to be a man, Vinay Krishnan - who works for progressive activist organization Center for Popular Democracy, paying a woman named Vickie Lampron who was later seen in the Kavanaugh hearing. 

Proof the protestors were paid off in line. #Kavanaugh #ConfirmKavanaugh #ActivismInAction pic.twitter.com/hMLpP4zWPn

— Adam W. Schindler (@AdamSchindler) September 4, 2018

Krishnan said that the money was given to people to pay fines in case they were arrested. 

As the Times notes, paid protesters aren't a recent phenomenon. 

Longtime California political consultant Garry South, who was a campaign strategist for California Gov. Gray Davis, said it’s long been common for campaigns and political parties to pay people a few bucks or perhaps provide a meal in exchange for attending a rally. He recalled a 2002 rally in San Francisco where he said that tactic was used.

It turns out, the San Francisco Democratic Party, to bolster the crowd, had basically gone down to skid row and paid people $5 or something to tromp up to Union Square,” South said.

But he sees a big difference between that kind of activity and the paid protests allegedly organized by Crowds on Demand.

“What’s different is the commercialization of the process,” he said. “It just contributes to the air of unreality that exists in this day and age with essentially not being able to believe your own eyes or ears. I don’t think it’s particularly healthy. But it probably inevitably was going to come to this.” -LA Times

Crowds on Demand, meanwhile, shamelessly boasts on their website that they were hired by a business rival to "cripple the operations" of a manufacturing business owned by a convicted child molester, which resulted in the hiring company buying the molester-owned business for "5 percent of its previous value." 

In another "case study," COD brags about staging a rally to support an unidentified foreign leader who was visiting the United Nations. 

"The concern was ensuring that the leader was well received by a U.S. audience and confident for his work at the U.N. We created demonstrations of support with diverse crowds.," says COD. 

"A lot of times, companies don’t want to be known for using this kind of strategy,” Walker said. “Crowds on Demand, they’re more out about it. ... It is strikingly brazen."

Author: Tyler Durden
Posted: October 23, 2018, 8:20 am

Aside from Saudi Arabia, the other long forgotten about Middle East autocratic ally of the United States known for arresting journalists, authors and activists is President Abdel Fattah al-Sisi's Egypt. 

On Sunday Reuters reported that police arrested author Abdul Khalik Farouk for a writing book criticizing the government's handling of the economy. Egyptian authorities further seized copies of the book, “Is Egypt Really a Poor Country?” from the publisher, which analyzed various economic and social crises afflicting Egypt.

This comes as in a separate case an American citizen was recently sentenced to 15 years in prison on political charges of "attempting to overthrow the government" — though unlike the (now freed) Pastor Andrew Brunson case, it is receiving almost no media attention whatsoever

Author of "Is Egypt Really a Poor Country?" Abdul Khalik Farouk was arrested Sunday. Image source: YouTube screenshot via Al Jazeera 

Per Reuters, Farouk is currently being detained on "charges of publishing false news, security sources and the author’s wife said" — upon orders of the public prosecutor  for authoring the book which analyzed the Egyptian economy. He was taken from his home in a Cairo suburb on Sunday by police officers who confirmed he was being arrested precisely for writing the book. 

Since President Sisi came to power in 2014 after rising to power as the youngest member of the Supreme Council of the Armed Forces, a military junta that temporarily ruled Egypt after former President Hosni Mubarak was forced to to step down amidst a wave of so-called "Arab Spring" protest in 2011, he's arrested thousands in what's seen as a broad crackdown on political dissent

Human rights groups say that Sisi is attempting to muzzle all dissent and freedom of speech while the authorities have cited the necessity of fighting terrorism and stopping outlawed groups like the Muslim Brotherhood from "spreading of false information". The Egyptian military and police have also faced accusations of torture by human rights monitoring groups. 

Meanwhile, it what appears a close parallel to Turkey's two year detention of the now released Pastor Andrew Brunson, Egypt has actually held an American for five years in prison on politically related charges. 53-year-old Moustafa Kassem, who worked as a cab driver in New York, was swept up in mass arrests in 2013 related to the protests and violence that accompanied the Sisi government's rise to power. 

Kassem was finally in court in September, where he was sentenced to 15 years in prison on charges of attempting to overthrow the government in a mass trial of 700 defendants. Similar to Brunson, Kassem's case constitutes an American citizen being held as a political prisoner. 

An American sentenced to 15 years: Moustafa Kassem prior to his imprisonment. Image source: The Intercept via the Kassem family

Vermont Sen. Patrick Leahy, the top Democrat on the Appropriations Committee, has vowed to withhold up $105 million in US military aid to Egypt until Cairo shows progress toward releasing the Egyptian-American.

According to a report in Al-Monitor:

Leahy’s office previously told Al-Monitor that the senator was withholding Egypt aid until Cairo fulfills a variety of human rights conditions. These include paying for medical treatment for an American citizen wounded in an Egyptian military attack, giving prisoners fair trial rights and overturning the 2013 convictions of NGO workers. Kassem’s case is now part of that hold. The aid is part of an annual $1.3 billion military aid package.

Interestingly, the Al-Monitor report makes the case that Kassem's plight is very similar to that of Brunson's — though the latter has been largely ignored in American press and among leading politicians.

Kassem’s lawyer, Praveen Madhiraju, told Al-Monitor, “For many, many months, this was soft-pedaled in various arms of the US government.” He added, “If you look at the Andrew Brunson case, that was an all-hands-on-deck case. I don’t know why Moustafa’s case should be any different.” 

Indeed, the case of Jamal Khashoggi, murdered by a Saudi hit team and the kingdom's Istanbul consulate, could serve to shine a spotlight on other US allies in the region long known for cracking down on press freedoms. However, without the corresponding media pressure, Washington's military relationship with Egypt and others will give it every excuse to keep looking the other way.

Author: Tyler Durden
Posted: October 23, 2018, 8:15 am

Authored by Tom Luongo,

“Here’s where we hold ’em by the nose, and kick ’em in the ass”
— Patton

If you ever want to know who’s losing an argument simply look at who’s doing the most threatening. 

Not who’s shouting the loudest or who’s the angriest, but who is threatening.

Those who threaten are doing so because they feel their power is, itself, under attack.

It doesn’t matter if it is an argument with your kids or a big, geopolitical disagreement, as I always say, he who goes nuclear is losing.

Now, you might think I’m talking about the U.S. and President Trump’s incessant financial bullying of allies and enemies alike.  I am somewhat, but not primarily. 

Because as important as Trump’s mad flailing to try and remake the U.S.’s trade position around the world is, it pales in comparison to the acute crisis brewing in Europe.

Yes, Europe is more important.  Why?

Because the EU just went nuclear on Italy. 

Former Dutch Minister of Finance and former President of the Eurogroup, Jeroen Dijsselbloem, went on CNBC on Friday to declare all-out financial war on Italy.

That’s the way Zerohedge put it. 

As a ‘former’ big wig it was his job to go out and state the position of those currently in power who can safely hide behind his words.

And if you watch the clip from CNBC in the linked article you’ll note that CNBC excised the most important quotes, where Dijsselbloem threatened the Italians that no exit from the euro is on the table.

But, why would he say this when Italy hasn’t brought it up at all?

In fact, Italy’s leadership has been nothing but supportive of the European Project while standing firm on it adopting fairer rules for member countries.

The response from Italy was calm and direct, not hyperbolic.     They would not violate their budget deficit targets and are trying to work with the European Commission on this.

Ignore the reality that Italy can’t grow their way out of this without shaving the scalps of bondholders and issuing its own currency.  Italy’s calm demeanor is what is important.

Dijsselbloem is lying when he says that most of the Italian debt is domestically owned. A large portion of it is.

But, tell me again, Jeroen, what is that $1+ trillion TARGET 2 balance on the ECB’s books?

A lot of it is Italian debt.

Seeing marginal improvement in Italy’s 42% Non-Performing Loan portfolio after seven years of enforced austerity is not an endorsement of the policy but an indictment.

It’s a real liability which ECB President Mario Draghi says Italy must re-pay before it can leave the euro. 

Of course Draghi is acting like a loan shark, continuing to backstop purchases of Italian debt under TARGET 2 and then telling the debtor, Italy, it needs to pay up. 

The bigger these TARGET 2 imbalances get the more leverage Italy has in these budget negotiations.  Because no one is buying that the European banking system is not exposed to horrific losses if Italy defaults.

And while Dijsselbloem would have no problem bailing-in Italian depositors and ruining the Italian banking system I don’t think he realizes just what the secondary and tertiary effects of that action would be.

Why would anyone ever invest in a European bank that can be seized and sold leaving the investors to suffer 100% losses all because the technocrats in Brussels refuse to give up one iota of power? 

That’s what he’s saying in the video, though. 

So, note Italy’s response.  Calm, assertive. 

“We will do what is right for Italy and reform the EU.”

“We chose to start the process before it became a crisis.  Now you are threatening us with one.”

This is an astute political move which has moved Italian voters firmly on their government’s side.  Strategically this was always their best move. 

The latest polls have more than 56% of Italians would leave the EU if an Italeave referendum were held today.

Brexit never polled that well.

As always, the heavy-handed Djisselbloem has his thumb on the pulse of the EU’s problems, opening his mouth and making things worse, just like he did with Greece.

In Greek negotiations, the EU was calm.  It told Greece over and over, “No.”  Greece threatened the nuclear option, leaving the euro and its bluff was called.

So, Dijesselbloem’s warning is just like Greece’s threats and they are going nuclear on Italy.

They have to.  The EU has zero leverage over Italy.

The so-called populists in charge in Italy know exactly what they are doing.  They are killing the EU with kindness. Five Star Movement leader Luigi Di Maio reiterated over the weekend that there is “no Plan B” for leaving the EU. 

The goal is to reform it from within.

That’s a talking point from the campaign they needed to cultivate a “Good Cop” to Matteo Salvini’s “Bad Cop” that talks openly about the euro being a monstrosity and “a crime against humanity.”

Italian polls have Salvini’s League more popular now than Di Maio’s Five Star.  They are becoming more radicalized.  The more Salvini lobs rhetorical grenades at Brussels, the more popular he becomes.

Together they command more than 60% of Italians.  Syriza, in Greece, never had more than 30%.  And no more than 30% of Greeks ever backed leaving the euro.

Trump went nuclear on Kim Jong-un before Kim lit off a couple of nukes himself to prove his point.  Then he went to the Seoul Olympics and ended the war of words. Peace is breaking out on the Korean peninsula and the U.S. cannot stop it now, though many want to.

Dijesselbloem just told Salvini and Di Maio the EU has no truly has no Plan B.  

You can bet that the Italians actually do.

*  *  *

Join my Patreon because I will never go nuclear.

Author: Tyler Durden
Posted: October 23, 2018, 7:30 am

NFA News Releases

Sept 17, Chicago—NFA orders Chicago, Ill. introducing broker Global Asset Advisors LLC and its principal Glenn Swanson to jointly pay a $200,000 fine
Posted: September 18, 2018, 4:59 am
Sept 17, Chicago—NFA bars John Marc Schwaebe, a former associated person, from membership for seven years
Posted: September 18, 2018, 4:59 am

Elite Forex Blog - Market Research & Analysis

As regulators' campaign to kill off Libor continues unabated, helping to squeeze the 3 month dollar Libor rate to its highest level since the financial crisis, federal prosecutors in New York have won convictions on charges of wire fraud and conspiracy against two former Deutsche Bank traders for rigging the benchmark rate that underpins the value of nearly $400 trillion in financial instruments denominated in a range of currencies.
Matthew Connolly, who supervised the bank's money-market derivatives desk in New York, and Gavin Black, who traded derivatives in London, were convicted on the basis of testimony from three junior traders (two of whom pleaded guilty, and a third signed an agreement to avoid prosecution in exchange for his testimony), who said Connolly and Black directed them to aid in the altering of the bank's Libor submissions to benefit the desk's trading positions. The illicit behavior for which the two men were convicted took place between 2004 and 2011, according to Bloomberg.
The convictions represent a major win for federal prosecutors, but they can't celebrate just yet; last summer, convictions won by the DOJ against two London-based Rabobank traders were reversed on appeal, dealing an embarrassing blow to prosecutors in New York and the DOJ. All told, global regulators have secured $9 billion in fines from a collection of some of the world's largest investment banks, including DB and Barclays.
But for the duration of the trial, it appeared that Connolly and Black would also beat the rap, as the judge treated the fumbling prosecutors with open hostility, particularly after one of the government's key witnesses was called out by the defense in open court for lying about his bonus in a federal plea agreement.
The defense had some success in portraying the three witnesses as liars who molded their stories to avoid prosecution.
The three former traders told jurors that, at the urging of the defendants, they altered the rate or pressured others to submit false data to benefit trading positions held by Connolly and Black. Parietti said Connolly ordered him to disclose positions to the submitters in London because Connolly believed his team was being undermined by others at the bank who were rigging the rate in their favor.
The defense argued that there were no clear guidelines on how banks should submit their rates for the calculation of Libor until at least 2008, and that they weren’t expressly forbidden from taking derivative trading positions into account when making the submission until 2013.
During cross-examination, attorneys for Connolly and Black attempted to portray the government’s witnesses as liars who initially defended their practices to investigators and changed their stories only in exchange for a deal with prosecutors.
All told, at least 10 former Deutsche Bank traders have been charged with rigging interest-rate benchmarks, including Libor and Euribor, in the US and UK. Christian Bittar, a former DB prop trader who was effectively directed by the bank to influence rates (and who was pushed out after DB clawed back some of his bonus and turned him into a convenient scapegoat), was sentenced to five years and four months alongside Barclays trader Philippe Moryoussef, who received 8 years but was sentenced in absentia because he chose to stay in France. 
The challenge for the prosecution will now shift to ensuring that these convictions stick. But while prosecutors will no doubt hold up the scalps of Simon and Connolly as a warning to others who might dare to impinge upon the sacred integrity of markets, the fact remains that not a single senior executive was charged in the scandal (though it contributed to the downfall of former Barclays CEO Bob Diamond). In fact, regulators even stepped up to protect DB CEO Anshu Jain despite his bank's flagrantly illegal activity, after Bafin, the German securities regulator, declared in 2015 that Jain had no knowledge of the illicit trading despite a preponderance of evidence to the contrary.
Posted: October 17, 2018, 11:50 pm
TOKYO (Reuters) - If European Central Bank chief Mario Draghi appears slightly more downbeat at his regular news conference than before, it could foreshadow a possible move by to the bank to trim its monetary policy stimulus.
FILE PHOTO - European Central Bank (ECB) President Mario Draghi holds a news conference at the ECB headquarters in Frankfurt, Germany, March 7, 2018. REUTERS/Ralph Orlowski/File Photo
That’s the conclusion of two Japanese researchers who’ve used artificial intelligence software to analyze split-second changes in Draghi’s facial expressions at his post-policy meeting press conferences.
The findings follow a similar analysis by the same researchers of Draghi’s Japanese counterpart, Haruhiko Kuroda, last year, which claimed to have identified a correlation between patterns in his facial expressions and subsequent policy changes.
Yoshiyuki Suimon and Daichi Isami, the paper’s authors, think that subtle changes in Draghi’s facial expressions could reflect a sense of frustration Draghi might have been feeling before making policy adjustments.
Their study covered Draghi’s news conference from June 2016 to December 2017 and found signs of “sadness” preceding two recent major policy changes — when the central bank announced a dovish tapering in December 2016 and another quantitative easing cutback in October last year.
FILE PHOTO - European Central Bank (ECB) President Mario Draghi attends the 27th European Banking Congress at the Old Opera house in Frankfurt, Germany November 17, 2017. REUTERS/Ralph Orlowski/File Photo
However, Suimon noted changes in Draghi’s emotion scores were smaller than Bank of Japan Governor Kuroda’s, pointing to the European central banker’s greater degree of inscrutability.
“This suggests that Draghi is maintaining more control on his expressions, whether he is doing so consciously or not,” said Suimon, who is the lead author of the study.
In both the Kuroda and Draghi studies, screenshots of the policymakers’ faces were captured every half-second from video footage.
Suimon and Isami analyzed those images with a program developed by Microsoft called “Emotion API” that uses a visual recognition algorithm to break down human emotions into eight categories: happiness, sadness, surprise, anger, fear, contempt, disgust and neutral.
(For a graphic on Draghi's facial expressions click reut.rs/2HPNq0F)
Reuters Graphic
They also examined the facial expression of ECB Vice President Vitor Constancio, who sits next to Draghi at his news conferences. Constancio showed more joy even when Draghi’s joy score dropped.
Slideshow (4 Images)
Kiyoshi Izumi, professor of the University of Tokyo, who specializes in financial data mining and artificial market simulation, said studying simultaneous facial expressions from a team of policymakers, such as Draghi and Constancio, provided stronger sample sizes.
“Some people — President Draghi, in this case – are better at poker facing than Governor Kuroda. So it’s interesting and worth analyzing the news conference as a whole,” Izumi said.
Suimon and Isami presented their latest findings to a meeting of the Japanese Society for Artificial Intelligence (JSAI) on Tuesday. The pair studied together at the University of Tokyo’s Graduate School of Frontier Sciences and did the research in their personal capacity.
Suimon said they have looked into Kuroda’s recent news conferences, and have not found any facial data to suggest an imminent major policy change. The BOJ kept settings unchanged at its last policy meeting.
In October, Kuroda laughed at the notion that artificial intelligence could analyze his face to predict changes in monetary policy, noting such studies would only prompt those being scrutinized to manage their facial expressions more carefully.
Posted: October 16, 2018, 2:33 am
Oil is still the world’s leading energy source, with growing demand, a fluctuating pricing system, and much of its production in volatile regions. The oil market’s value is larger than the world’s valuable raw metal markets combined, with an annual production valued at US$1.7 trillion. A flourishing black market is no surprise, with about US$133 billion worth of fuels stolen or adulterated every year. These practices fund dangerous non-state actors such as the Islamic State, Mexican drug cartels, Italian Mafia, Eastern European criminal groups, Libyan militias, Nigerian rebels and more – and are a major global security concern.
The top five countries accused of oil trafficking – Nigeria, Mexico, Iraq, Russia, and Indonesia – are also producersIt is estimated that Nigeria alone loses US$1.5 billion a month due to pipeline tapping, illegal production and other sophisticated schemes. In Southeast Asia, about 3 percent of the fuel consumed is sourced from the black market, estimated to be worth up to US$10 billion a year. In Mexico, drug cartels launder drug revenues through the oil trade
Other countries are not immune. Turkey is not an oil producer yet serves as a major transit route for hydrocarbons flowing to Europe from OPEC countries like Iraq and Iran. As an energy hub, Turkey is strategically situated for the illegal trade and lost an estimated US$5 billion in tax revenue in 2017. An uptick in smuggling oil and other refined products began 2014, when ISIS took control of major Syrian and Iraqi oil fields.
As with most commodities, the volume of oil smuggling is primarily linked to fluctuating prices. With climbing oil prices, illicit trade is expected to increase. The European Union is a prime example on how price disparities of fuel within its own member state countries tend to incentivize illegal trade producing counterintuitive routes. Lower oil prices in Eastern Europe have created maritime smuggling routes to the United Kingdom and Ireland. Ireland estimates it loses up to $200 million annually with fuel fraud, while up to 20 percent of fuel sold in regular gas stations in Greece is illegal.
The legal complexities and ambiguities of the global oil and gas trade often create an opening for illegal activity.
In some cases, subnational actors openly export oil despite official prohibition by central governments. The Kurdistan Regional Government in Iraq maintains it is their region’s constitutional right to export oil independently, in defiance of the central government. With Baghdad withholding the region’s 17 percent of budget share, the regional government sought economic independence through hydrocarbons and found a degree of international sympathy, given its role in combatting ISIS and hosting 1.9 million refugees and internally displaced people. The unrefined product was sent via pipeline through Turkey’s Ceyhan port, loaded by various Greek shipping companies on tankers, then stored in Malta or Israel until buyers were found. Shifting routes of Kurdish oil tankers can be observed on sites like tankertrackers.com.
Authorities who benefit from the trade often stymie efforts to combat illegal trafficking, as seen in countries like Iraq or North Korea, with terrible consequences for citizens. Conflict and illicit trading near the Niger River Delta reduced overall foreign direct investment in recent decades.
With 90 percent of the world’s goods, 30 percent of which are total hydrocarbons, traded by sea, much of the illegal fuel trade is conducted on water. Two thirds of global daily oil exports are transported by sea, reports the UN Conference on Trade and Development, and a staggering 64 percent of international waters are areas beyond any national jurisdiction. Non-state actors offshore West Africa, Bangladesh or Indonesia take advantage of loopholes created by international law and the law of the sea. Transfer of illegal fuel is often done ship to ship on neutral waters – with one ship commercially legal, recognized as carrying legitimate imports at the final port of destination. Thus, illegal crude from countries such as Libya or Syria finds its way to EU markets. Recently Russian ships have been found involved in smuggling oil products to North Korea through ship to ship transfers.
Armed theft and piracy also occur. Hijackings off the coast of Somalia resumed in 2017, the first since 2012, after the international community reduced enforcement. Beyond jurisdictional issues, many governments are overwhelmed by other maritime security threats and cannot prioritize the illegal trade. In fact, fuel traders have reported that the problem is so pervasive that many companies calculate in advance for losses up to 0.4 percent of any ordered cargo volumes.
The industry runs on high risk tolerance.
Transparency International estimates that over the next 20 years, around 90 percent of oil and gas production will come from developing countries. The relatively low average salaries of state employees relative to the private sector in developing countries encourage the temptation to look for other income sources.
Consider Mozambique, where immense offshore natural gas reserves have been discovered. Emerging from decades of civil war, the country has a diverse wasta system – an Arabic term for bribing and asking for favours – along with strong political allegiances and state structures that struggle to withstand internal and external pressures. Estimates suggest that 54 percent of all cargo movements in the capital city, Maputo, involve bribes, and Mozambique risks following the path of Nigeria, a country in need of socioeconomic development despite vast oil and gas reserves under development since 1958. The country is reported to have already lost around US$400 billion since its independence in 1960 due to theft or mismanagement in its oil sector.
The Organization of Economic Co-operation and Development suggests that the impacts of the illegal oil trade go underestimated, and the affected countries suffer from the deteriorating rule of law, loss of biodiversity, pollution, degradation of critical farmland, increasing health problems and armed conflicts. Other opportunity costs include increased financial risk premiums for investors with billions of dollars lost annually due to illegal bunkering, pipeline tapping, ship-to-ship transfers, armed theft, adulteration of fuel and bribery. Illicit trade allows authoritarian states to maintain revenue flows for years despite international sanctions designed to weaken their rule. In the 11th year of UN oil sanctions, Iraq’s dictator Saddam Hussein had managed to become one of the world’s richest men, with an estimated US$3 billion in wealth
Some governments condone the illicit trade. An intertwining of regime structures and corruption – often supported by governments and corporations – is a major stumbling block for the international community’s attempts to contain illegal trading. So far, governmental and industry efforts to halt the practice have been ineffective – and it could be that the illegal oil trade offers enough benefits to consumers, producers and government officials to disincentivize investigation. Some officials suggest that condoning trade in illicit oil and petroleum products helps keep regional and local security intact.
The first global conference on fuel theft, held in Geneva in April, may be a watershed moment. The conference aimed at encouraging discourse among stakeholders within the hydrocarbons industry on how to tackle the scale of this global crime and was based on the work of Ian Ralby, I.R. Consilium and the Atlantic Council’s Global Energy Center, which produced Downstream Oil Theft: Global Modalities, Trends, and Remedies, the most extensive examination of illicit downstream hydrocarbons activity published to date.
Courtesy of: Visual Capitalist
Similar challenges confront the rapidly growing liquefied natural gas market. Strong international cooperation is required, or detrimental effects for global security, the environment and economic prosperity will continue. Unless monitored and addressed by robust policy and regulation, the illegal oil activities will remain a key funding source for terrorism, organized crime, authoritarian states and violent non-state actors.

Posted: October 14, 2018, 3:54 pm
Finance professor John Griffin, along with his doctoral student companion, Amin Shams, were the two academics that drew market-moving conclusions about bitcoin last year, while the digital currency was trading around $20,000. After sifting through 2 terabytes of trading data, they alleged that bitcoin was being manipulated by someone using the cryptocurrency Tether to purchase it. Tether remains a relatively little-known crypto, which is pegged to one US dollar. Part of its appeal is that it can "stand in" for dollars when necessary, according to Bloomberg.
Griffin and Shams authored a paper in June, with the results of their findings ultimately catalyzing many digital assets to move lower, despite the fact that the CEO of Tether publicly denied that its currency was used to prop up bitcoin.
Griffin works at the University of Texas at Austin, and has become quite an unpopular figure on Wall Street for similar work he has done in the past on ratings companies, the VIX and investment banks. In most of his findings, he claims that these well-known financial instruments and players are, in one way or another, rigged. And the professor seems to enjoy exposing precisely that: rigged, manipulated markets and shady players.
"I not only want to understand the world, but make it better," he told Bloomberg.
Griffin's work has become popular reading within the DOJ and the Commodity Futures Trading Commission, according to Bloomberg. These regulators – many of them low on resources, time and staff - welcome any additional help they can get (the SEC’s budget has forced it into a hiring freeze and the CFTC budget was cut by Congress in March of this year).
John Reed Stark, a former attorney in the SEC’s enforcement division, stated: “It’s incredibly helpful to have an expert of Griffin’s caliber."
After spending the beginning of his tenure as a professor tackling little-known and inconsequential parts of the market, he started to feel the need to take on bigger tasks. In fact, he claims that part of the Bible spoke to him, when he read a passage that motivated him. It stated “Have nothing to do with the fruitless deeds of darkness, but rather expose them.”
His targets – like the VIX index, owned by CBOE Global Markets - say that he misreads data. In response to work that he did on the VIX, CBOE stated his “...academic paper’s analysis and conclusions are based upon a fundamental misunderstanding about how VIX derivatives are traded and settled.”
In 2017, Griffin's work revealed that one or more market participants had been trading S&P 500 options in a way to artificially boost or depress the VIX, which would then have an impact on VIX futures. They argued that the volume of S&P 500 options would spike suspiciously at times, but only in the contracts that were used to help price the VIX. He claimed these trades simply didn’t make sense unless somebody was trying to manipulate the VIX.
And he’s not buying the explanation given to him by the CBOE: “There is no doubt we understand how the market works,” he said.
As a result, the CBOE has been sued many times over for this supposed manipulation. Meanwhile, riffin says he’s not going to work with any individual plaintiffs, but he does not rule out the possibility that he may work as a consultant in the future – if he can get paid.
Every time he publishes a new paper, he gets more attention. His paper on the alleged bitcoin manipulation has been downloaded more than 20,000 times and was cited by the SEC when the regulator rejected a bitcoin ETF that would have made it easier for retail investors to trade the crypto.
And as he continues to expose one fraud after another, Griffin - unlike Goldman - is truly doing God's work. 
Posted: October 14, 2018, 12:55 am
From Bloomberg:

Good Friday claims a sacred spot on the Maltese calendar, and this year the holiday was casting its reliable spell. In the late afternoon, hundreds of people streamed from Baroque cathedrals outside the capital city of Valletta, forming slow parades through steep and narrow streets. Men in biblical robes lugged crosses, children clutched bright flowers, and small brass bands marched behind with raised trumpets and inflated cheeks. A breeze wrinkled the Mediterranean, and the sun slipped to a flattering angle, encasing all that charm in amber.

At the same time, the nation’s top-rated prime-time television show was wrapping up a special daytime broadcast: an annual telethon to raise money for children receiving cancer treatments abroad. In the bottom-left corner of the screen, a digital counter tallied the donations. When the number finally hit €1.26 million ($1.46 million), the studio audience began to stir, eager to applaud the fundraising record.

That’s when Prime Minister Joseph Muscat called into the telethon’s phone bank. He, too, seemed in a celebratory mood. The day before, the country had announced that it had registered a €182 million surplus for 2017, its second straight year in the black after decades of deficits. Patched through to the telethon’s host, Muscat pledged €5 million to the cancer charity on behalf of the government, nearly quadrupling the previous telethon record in an instant. The audience erupted. Some of the operators on the dais behind the stage removed their headsets and laid them on the table, as if to declare victory.

But these days in Malta, feel-good stories never seem to last. When Muscat hinted that the donated money would come from a fund fed by Malta’s Individual Investor Programme—a government initiative that sells Maltese passports to foreigners for €650,000 (less for additional family members), plus a €150,000 investment in government bonds—Good Friday took a turn.


Prime Minister Joseph Muscat and his wife, Michelle.PHOTOGRAPHER: DANIEL LEAL-OLIVAS/WPA POOL/GETTY IMAGES
An opposition Parliament member wrote on Facebook that, as a cancer survivor, he was disgusted by the possibility that the patients’ care was being financed by money from “criminals and the corrupt.” Another suggested Malta was trying to clean its dirty money by funneling it through a good cause. “It’s [like] thinking that prostitution is OK once part of the proceeds are donated by the pimp to charity,” Jason Azzopardi, a Parliament member, complained on Facebook.

The story of how Malta got to this point—where a holiday donation to a children’s charity can spark outrage and lament—starts brightly enough. A tiny country carves a small but lucrative niche in the global economy. Money flows in, thousands of jobs are created, and the government intensifies the strategy, opening the country to more partners and funding sources. Then comes the twist: Allegations of money laundering, political skulduggery, smuggling, organized crime, and even a murder.

Multiple investigations—by local magistrates, American prosecutors, and European politicians and banking regulators—have been rattling Malta’s financial and political networks for more than a year. Some of the most powerful countries in the world have suggested that a nation of about 450,000 people might pose a serious threat to global efforts to track money laundering, enforce economic sanctions, and maintain fair transnational standards.

A 15-month inquiry into one of the most contentious of the allegations—one suggesting that Muscat’s wife was directly involved in setting up a shell company for money laundering—wrapped up in late July without uncovering evidence that would justify criminal charges. “One hundred threads of suspicion don’t stitch together a single strand of proof,” the investigating magistrate concluded.

The story isn’t over yet, because some of those threads still dangle, and critics of the government both inside and outside Malta remain convinced that they tie into other scandals, other crimes. The government continues to try to nurse its battered reputation back to health, and how it all turns out will likely depend on how the Maltese ultimately answer the question lingering over their country: To supercharge its financial-services sector, did the smallest country in the European Union sell its soul?

Taking a sunset dip in Sliema Harbor, near Manoel Island.
Taking a sunset dip in Sliema Harbor, near Manoel Island.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
South of Sicily, east of Tunisia, and north of Libya, Malta’s three tiny islands have been eyed as well-placed steppingstones by the Phoenicians, Greeks, Romans, Byzantines, Arabs, Normans, French, and British. All coveted Malta as a staging ground, which makes its history a swashbuckling saga of raids, sieges, bombings, and rotating occupations. When the last British military base finally left in 1979, it took with it the country’s main economic engine. Malta turned to tourism, doing its best to sell ancient ruins, fortress walls, sloping medieval streets, and sheer limestone cliffs. The country eventually discovered, as most sunbaked islands do, that while it’s possible to get by on atmospherics, it’s hard to do much more.

In the early 1990s, Malta’s two major political parties argued over whether to take a shot at EU membership—generally speaking, the Labour Party didn’t like the idea and the Nationalist Party did. By the mid-’90s, with the Nationalists in power, the country began to prepare its application to join the bloc.

To convince the rest of Europe that it could be a trusted partner, Malta began instituting a series of financial and regulatory reforms. In the process, the country was reinventing itself as a new sort of steppingstone: a transit hub not for ships or soldiers but for money, in an environment of regulatory legitimacy, transparency, and stability. Malta discovered that the residue from centuries of turmoil (an ingrained adaptability, strong links to disparate cultures, the English language) was an asset, as was the country’s size, which allowed it to nimbly sidestep bureaucratic delays and cater to rapidly evolving industries that valued good computer connections more than natural resources. The traditional downsides of island economies—the high costs of transporting supplies in and out, for one—didn’t apply to the financial-services industry.

By the time the country’s membership in the EU was formally approved in 2004, Malta had staked out its place within Europe’s economy, and the nation’s attractive tax schemes—effective rates as low as 5 percent for foreign-owned companies, vs. an average of 22 percent for other European countries—helped attract investment funds, banks, and financial-services firms from all over the world. The steady influx of new business helped the local economy avoid a significant downturn during the 2008 financial crisis. Shortly after Muscat and his Labour Party took office in 2013, effectively ending 25 years of Nationalist electoral dominance, the country instituted the controversial passport-selling scheme, which was denounced by EU officials who feared it could create a back door for shady individuals or dirty money to gain access to Europe’s financial markets. But Muscat energetically pushed the plan, traveling abroad to sell it to prospective citizens, and it quickly took off. In 2014, Malta began a three-year run as the fastest-growing economy in Europe, and Muscat and his allies described the passport program as a complete success. By the beginning of this year, the government had collected about €600 million through it.

Muscat’s opponents in the Nationalist Party, as well as some members of the Maltese press, weren’t sold. In 2016 investigative journalist Daphne Caruana Galizia dug into the documents released in the Panama Papers leak and discovered that two of Muscat’s closest aides had established companies in Panama. She accused them of using those businesses to launder money from kickbacks she said they’d received for helping to arrange the sales of passports to Russian nationals. They denied it; a separate magisterial inquiry regarding those allegations is under way.

Later, Caruana Galizia reported that Muscat’s wife, Michelle, had established her own Panamanian shell company through the same middleman who’d set up those for Muscat’s aides—the accusation that the magistrate this summer said he’d found no proof to support. Caruana Galizia also accused Pilatus Bank, a Maltese institution founded in 2014, of handling much of the money in those alleged transactions, as well as those involving the shell companies set up by the prime minister’s aides.

Additionally, the journalist alleged that the first lady had received at least $1 million from Azerbaijan’s ruling family. Last year an international consortium of investigative journalists accused members of Azerbaijan’s ruling elite of operating a $3 billion scheme to launder money, pay off European politicians, and buy luxury goods; the reports cited “ample evidence” tying the ruling family to the schemes. Azeri President Ilham Aliyev last year labeled the accusations “totally groundless, biased and provocative.”

Caruana Galizia’s blog became the most-read news source in Malta. And even though she criticized both parties, it was a clearinghouse for critics of Muscat’s government. On any given day she might have accused a Maltese official of visiting a prostitute; or exposed an alleged local oil smuggling ring that helped Libya evade sanctions; or traced personal connections between government officials and suspected criminals; or slammed Muscat for trying to pitch Malta as a cryptocurrency capital, which she suggested would attract more corruption; or detailed alleged links between the country’s growing online gaming sector and the Italian Mafia. The list of her enemies was large and growing, and by last fall she faced 47 lawsuits—42 civil, 5 criminal—about 70 percent of them from government officials, according to her sister, Corinne Vella.

Prime Minister Muscat was one of those suing her, and he labeled her accusations as “the biggest lie in Malta’s political history.” Many in Malta seemed to believe him; in June 2017, as the allegations swirled, Muscat called for a snap election, and he was reelected with 55 percent of the popular vote.

Last October, as she drove away from her house, Caruana Galizia was killed by a car bomb. Police later arrested three men, low-level criminals, for planting and detonating the device. But no one in Malta considers the crime solved. Whoever ordered the killing remains unidentified. Some speculate that criminals involved with the Libyan smuggling ring might have targeted her, or that the Sicilian Mafia put out the hit. Many others blame the government.

Muscat and his administration loudly condemned the murder, calling it a tragedy and energetically denying any link to it. But the killing marked a turning point for Malta. The notion that corruption might have overtaken Malta’s economy now spread far beyond the confines of an opposition party, and the eyes of the world turned toward the tiny country. It has been struggling to clear its name ever since.

Protesters call for action following the killing of Caruana Galizia last October.
A recent protest over the killing of journalist Daphne Caruana Galizia, murdered last October.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
Everyone knows everyone in Malta. It’s an exaggeration, of course, but among the nation’s financial elite, the people who run the banks and institutions and sit on the governing boards, the notion is all but taken for granted. “There are, unofficially, some 10,000 people who work in Malta’s financial industry, and the guys in charge—there are maybe 50 or 70 of us—we know each other fairly well,” says Joseph Portelli, chairman of the Malta Stock Exchange.

In describing the financial community as small and closely knit, Portelli is defending it. He grew up in New York with his Maltese parents, and 15 years ago moved to Malta to manage his own fund, which specializes in emerging-market investments. He entered a financial-services industry that was fiercely protective of its reputation and keenly sensitive to insinuations of corruption. Now, as allegations of wrongdoing swirl, that defensive sensitivity is more acute than ever. Portelli has adopted it as naturally as any lifelong resident.

“We’re getting this blemish that we’re money launderers,” he says, “and that’s the worst irony.” There have been a few small problems, he concedes, with a handful of small banks. “You know what they all have in common?” he asks. “Not one of the principals was Maltese, they were all foreigners.” The locals, he suggests, police one another.

It’s a variation on an argument that’s been around since Plato and Aristotle. Small states tend to be less susceptible to corruption for two reasons: It’s more difficult to hide indiscretions, and higher levels of social cohesion discourage dishonesty. In the early 2000s several academic studies used data to support this theory, and some analysts suggested that globalization might be of particular benefit to small countries—freer trade and the increased mobility of labor and capital would reduce the costs of being small, they argued, while the advantages associated with less corruption could be retained.

An alternative theory is that small states will be susceptible to cronyism—all those close connections might enable, rather than discourage, financial subterfuge. More recent studies, including research conducted by the World Bank, have found that the data used in the earlier reports were incomplete, and the suggestion that smaller countries are statistically less corrupt than large ones remains unproven.

By the beginning of this year, the government had collected about €600 million through the passport program

For critics of Muscat, one powerful symbol of cronyism is Ali Sadr Hasheminejad, head of Pilatus Bank, the institution allegedly in the middle of the suspicious transactions involving the Panamanian shell companies linked to government officials. Sadr is an Iranian national, but when establishing and registering the bank in Malta he used a passport he’d purchased from St. Kitts. While Sadr was enmeshed in controversy in Malta, a parallel investigation into him and his bank culminated in his arrest by U.S. authorities, who charged him this spring with setting up a network of shell companies and bank accounts to hide money being funneled from Venezuela to Iran—transactions that allegedly violated economic sanctions against Iran. Prosecutors also alleged that Sadr established Pilatus Bank using illegal funds. Sadr pleaded not guilty and has been released on bail in the U.S.; his lawyer didn’t respond to requests for comment.

Malta’s government attempted to distance itself from Sadr, but the same sort of intimate connections found throughout the financial sector have undermined those efforts. Local news outlets reported that among the 250 guests at Sadr’s 2015 wedding in Italy were Muscat, his wife, and one of the aides accused of moving money from kickbacks related to the passport program through Pilatus Bank.

The July magistrate’s report stated that some of the evidence used by Caruana Galizia and others to implicate Michelle Muscat—including Pilatus Bank documents suggesting she was the owner of the shell company at the center of the scandal—bore falsified signatures. Muscat and the lawyers for Pilatus Bank immediately presented the findings as a “certification” that the whole story had been a lie cooked up by Caruana Galizia and foreign critics, and they denounced it in terms familiar to anyone conversant with the new vocabulary of political grievance: It was “fake news,” part of a “witch hunt.” They also drove home the point that the magistrate’s report identified serious improprieties on the part of their critics.

But the family of Caruana Galizia pointed out that the identity of the owner of the Panamanian shell company is still a secret. Furthermore, the European Banking Authority just weeks before had cited “serious and systematic shortcomings” in how Maltese regulators monitored Pilatus Bank before and after Sadr’s ties to Iran were exposed. A confidential 2016 regulatory report that was leaked last year confirmed that the bank’s profitability depended on politically involved clients from Azerbaijan. And the U.S. allegations that Sadr founded Pilatus Bank with criminal proceeds remain unaffected by that magisterial report.

The result of all this is a contagion of suspicion. Many of the allegations of money laundering and other financial crimes have proved difficult to either verify or dismiss outright, but collectively they make it increasingly hard to swallow the idea that corruption is strictly a foreign import here. The country’s only independent think tank, the Today Public Policy Institute, ceased operations in April. Its stated reason for closure was bluntly condemnatory: “a sense of defeatism over the government running roughshod over standards of professionalism, transparency, and accountability.”

Muscat and those in his government generally have responded to such criticisms by going on the offensive: Instead of putting the brakes on controversial policies, they’ve stomped on the gas. Muscat this year pushed for an expansion of the passport sales program, arguing that such investments and the economic activity they spur could help Malta become one of the wealthiest countries in Europe within his lifetime. Last year alone, private wealth in Malta jumped by more than 20 percent, thanks in part to its newly minted citizens.

“Globalization is like a treadmill—you can’t say you are tired, because the second you stop, you will fall off,” Muscat said during a press conference earlier this year. “Once in the race, we must not simply be there to take part, but we are there to win.” Previously he’d outlined the types of policies that would power Malta’s sprint toward success: “some sensible, others risky, yet others which might sound, and be, outright insane.”

In April, just as several Asian countries were cracking down on cryptocurrencies, Muscat announced that Malta would become the first country in Europe to create a regulatory and legislative framework specifically designed to attract virtual currencies. Shortly thereafter, Binance Holdings, the world’s largest cryptocurrency exchange, announced it was moving its headquarters from Hong Kong to Malta. Within weeks, Morgan Stanley analysts were reporting that a majority of the world’s crypto trading volume was moving through companies based in Malta.

There are people who insist that the government’s continued success in attracting investment and generating revenue is itself an answer to the disputed allegations of money laundering, kickbacks, and other financial crimes. “Luckily, this comes at a time when it washes off,” says Edward Scicluna, the country’s finance minister. “The false and fake parts are washing off, because Malta is being so successful that it’s very hard to accept them and to correlate them with a successful country. Normally corruption is rife in backward countries where there are no investments. So you find it very difficult to reconcile these two.”

A yacht moored in Sliema.
Yachts have largely displaced fishing boats in the harbor in Sliema.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
In Sliema, one of the most affluent towns in Malta, open-air restaurants line the harbor road. A few decades ago, diners here would look out upon dozens of Maltese fishing boats bobbing in the water, their prows upturned and their wooden hulls painted in rainbow stripes. Now the harbor is crowded with hundreds of fiberglass yachts—large, modern, colorlessly impressive.

The view helps explain why many Maltese are ambivalent about their country’s progress: They know that economic opportunities are more plentiful than they used to be, but they fear progress might be smoothing away the country’s distinctive edges. The skyline is dotted with cranes rising above the cathedral domes, and those cranes always seem to be hovering over the same sort of building: tall, rectilinear, and cut in clean angles. Malta is the most densely populated country in the EU, and the economic boom of recent years has intensified the pace of construction. Locals often complain of the dust from all of the building sites; when it rains, the drops sometimes hit windshields as small, powdery explosions—tiny puffs of brown smoke.

Competing real estate agencies line Sliema’s coast road, stretching for several blocks. Constantly changing listings for apartments and houses paper their windows. “There’s big demand, and the prices keep getting higher,” says Carl Peralta, director and founder of 77 Great Estates, one of the agencies.

Driving that demand is a new genus of Maltese resident that, Peralta insists, can easily be spotted in the cafes and restaurants of Sliema. Many are from northern Europe, and almost all are young—20s, maybe early 30s. They carry backpacks, they don’t drive cars, and they’re rarely spotted anywhere before 10 a.m. They work for the hundreds of internet gaming companies that have flocked to Malta in recent years. The companies offer the range of gambling services, from online poker and games of chance to sports betting.

In the early 2000s, only two online gaming companies could be found in Malta; now there are up to 300, and the sector accounts for an estimated 12 percent of the economy, according to the Malta Gaming Authority. Both the governing party and the opposition agree that the growth was a result of commendable foresight: In 2004, Malta became the first country in Europe to regulate online gaming, helping to legitimize an industry that previously stood on the fringes of respectability and legality.

“Laugh all you like, prime minister. But we will insist that you don’t get off scot-free”

The new arrivals who’ve bought citizenship through the passport program maintain a much lower profile than the gaming-industry workers. You can’t pick them out of a crowd on the street, and it’s difficult to even identify them in government documents. When Malta last released its annual list of new passport holders, it was maddeningly difficult to decipher; purchasers were listed in order of their first names, without a country of origin, and mixed among thousands of others who obtained their citizenship though birth or naturalization.

The Maltese press has discovered that the list of new citizens includes Russian oligarchs and even a woman who was suspended from the Vietnamese parliament for having dual citizenship, which is illegal in Vietnam. Roberta Metsola, who represents Malta in the European Parliament, suggests that many of the passport purchasers want nothing to do with Malta; they simply want the financial and travel access that an EU passport provides. “We’ve had cases of people arriving on a private jet, meeting a real estate agent, taking out a basement flat somewhere here for a year, never even seeing it, and leaving in the afternoon,” Metsola says.

Peralta, the real estate agent, says that rings true to him. Those who are buying passports, he says, know the minimum they must spend on housing—either €350,000 for a purchase or rental payments of at least €16,000 a year for five years. Meeting those minimum requirements, Peralta says, is often the only feature they’re specifically looking for in a property. “I know there are checklists they have that say they need to open the water taps once a month, or send a cleaner once a month,” he says. “But no one is living there.”


The town of Sliema is a popular destination for expats and new citizens.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
Jonathan Ferris speeds through Valletta’s darkened streets, jumps off his motorcycle, and walks briskly into the lobby of the Phoenicia Malta Hotel, where he finds a table in the noisy lounge. His features are lean, and he moves with a restless energy. His eyes scan the room, and he raises his voice just loud enough to be heard above the lounge singer, who is halfway through a slow and torchy version of Fleetwood Mac’s Songbird.

“I was the top man,” Ferris says, “the top investigator of financial crimes in the country. Type my name in the internet. All bloody hell comes up.”

The European Parliament is concerned enough about Malta to have sent an investigative delegation to the country multiple times this year. The committee’s report, issued recently, described an atmosphere of fear had settled over the country—and a sense that criminals could operate with impunity. Ferris believes his life during the past year perfectly represents the intersection of both phenomena.

He says that in 2017 his bosses at Malta’s Financial Intelligence Analysis Unit, the national agency tasked with policing money laundering, asked him to step aside from the investigation of the allegations involving Muscat’s wife and aides. He had told them he didn’t trust one of the known sources that had fed Caruana Galizia information regarding Michelle Muscat’s alleged ownership of the shell company—a source Ferris had investigated before and who, incidentally, was later discredited by the magisterial inquiry. Ferris’s bosses told him they believed his history with that source compromised his objectivity. That angered him, and he told his bosses that within 72 hours he could determine the true owner of the company that Michelle Muscat was allegedly involved in. He explained to them how he would consult tax returns, political party documents, and bank records. The next day, he says, he was fired and stripped of access to investigative documents and records. His firing further fueled suspicions against Muscat and his wife.

Ferris
Investigator Jonathan Ferris.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
After Caruana Galizia was killed, Ferris says, he began to fear for his own life. He takes his bloodhound out for walks in the early morning, and several months ago he began to notice cars following him with the headlights off. “I decided, from now on, I’m always going to carry my gun around,” he recalls. Police officers now monitor his house for eight hours each night. “What good does it do? I don’t know, because for the rest of the 16 hours out of 24, I and my family are all alone.”

After Caruana Galizia’s murder a similar anxiety spread quickly among those seen as unfriendly to the government. Some of Malta’s neighbors pointed to that generalized unease as emblematic of the current state of the country. The European Parliament report described “systemized and serious deficiencies” in the rule of law in Malta, which had eroded the population’s general sense of security. Additionally, a police investigation in Italy has alleged that the Sicilian Mafia infiltrated companies in the online-gaming sector, using them to launder illicit funds.

When Muscat sat in front of European Parliament members during a plenary hearing to discuss the rule of law in Malta last June, he dismissed the allegations publicized by Caruana Galizia as politically motivated, setting a tone for his denials that he’s used ever since. His relaxed attitude—and particularly his periodic smiles—during the questioning rankled some of the politicians.

“You can laugh all you like, prime minister,” said Werner Langen, a German member. “But we will insist that you don’t get off scot-free.”

A vigil held to remember Caruana Galizia at the Great Siege Monument, nine months after she was killed.
A memorial for Caruana Galizia at the Great Siege Monument.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
This past year was supposed to be Malta’s chance to showcase its economic gains to the outside world, to take a victory lap after years of growth. It assumed the presidency of the EU in 2017—a first for the country—and this year Valletta was named the EU’s Capital of Culture, another rotating title that was cast as a big deal for such a small country. Earlier this year Muscat went so far as to claim that national pride in Malta had hit an all-time high.

The country’s tourism authority kicked into high gear to take advantage of the promised attention. All sorts of cultural galas and grand openings were organized, and the National Museum of Archeology, a grand 16th century building in the middle of Valletta, became a nucleus for the celebrations.

One afternoon in April, tourists filed through the museum’s entrance and wound their way past exhibits that guided them along the country’s circuitous story. On the second floor, dozens of people entered the majestic Gran Salon, which centuries ago served as a banquet hall for the knights of the Order of St. John. Enormous tapestries, ancient and colorful, hung from the walls, and a small crowd gathered in front of a podium for a special event that had been organized just the day before. Scicluna, the minister of finance, stepped to the microphone.

“I’m very proud, and very pleased, to be the person to launch this national Anti-Money Laundering and Combatting of the Financing of Terrorism strategy and plan,” Scicluna said.

Despite the introduction, he didn’t appear to be particularly pleased to be delivering a speech denouncing money laundering, drawing more attention to a problem that he clearly sees as a threat to Malta’s reputation and livelihood. The reputational damage resulting from continued scrutiny from various quarters—the European Parliament, the European Banking Authority, Italian police, the U.S. Department of Justice—could trigger a backlash against the tiny country that might pose a real threat to its economic foundations.

As the investigation into Mafia involvement in Malta’s online-gaming sector continues, European lawmakers have several times proposed restrictions on cross-border betting, a change that would classify the services provided by many Maltese companies as illegal. Ana Gomes, a Portuguese parliamentarian who leads the EU commission investigating rule of law in Malta, has said the country’s low corporate tax rate is “anti-European” and saps billions in revenue from other member states. In March, the European Parliament voted to pursue a “tax harmonization” scheme that would create one common corporate tax rate applied throughout the EU. A U.K.-based nonprofit advocacy group, Tax Justice Network, issued a report estimating that such a policy would cut Malta’s tax base by more than half.

In the midst of these pressures, Scicluna stood at the podium and delivered a string of statements that should seem so self-evident that they’d never have to be uttered. “I’d like to say that Malta—and this is an important statement to make—is deeply committed to preventing, detecting, and prosecuting money laundering and terrorist financing activities. Financial crime threatens the safety of our society, the integrity of our financial system, and the stability of our economy.”

That economy, Scicluna hastened to add, was healthy and strong, and this year the International Monetary Fund’s executive board singled out the country’s “sound policies” as the root of its success.

When he wrapped up his remarks, the crowd in the Gran Salon filed out of the museum, where they joined the current of pedestrians flowing along Republic Street toward the Great Siege Monument, which sits in front of the main courts building in one of the city’s central squares.

Since last fall, people have been placing candles, flowers, and signs at the base of the monument as a makeshift memorial to Caruana Galizia. At least eight times since then, someone has swept away the items in the dark of night; each time, the flowers and candles and signs are quickly restored. Recently, a local governing council lobbied to ban the temporary memorial for good, arguing that it was time for the country to move on.

On this day, dozens of tourists stopped in front of the monument and faced the plaques that explained the historical significance of the statues. But none of them pointed their cameras up at the statues. Every one of them focused on the marble base and the makeshift memorial, and on the sign that read, “No Justice.”

https://www.bloomberg.com/news/features/2018-09-11/why-the-eu-is-furious-with-malta?srnd=cryptocurrencies 

Get Crypto Currency Information at www.totalcryptos.com 
Posted: September 24, 2018, 3:05 pm
Global Intel Hub - Zero Hedge Exclusive (9/15/2018) -- Weather modification isn't anything new, in fact we authored a piece last year on the topic when Irma came, but it seems that with Florence we need a reminder to put this in perspective.  As is the theme in our book seriesSplitting Bits, our doctrine is that everything you know is wrong - the world is not as it seems (and not as on TV.) 
As Hurricane Florence bears down on the southeastern United States, nearly 759,000 homes are in the storm’s path, and a worst-case rebuilding scenario could cost more than $170 billion, according to an estimate from real estate data provider CoreLogic.
CoreLogic calculated the reconstruction cost value, which is the total expense of completely rebuilding a property in case of 100% destruction, for 12 metro areas in the Carolinas and Virginia. The table below shows those estimates for a Category 4 storm, which is Florence’s current designation. Additional estimates based on other categorizations is available on CoreLogic’s web site.
That's ok, but where does the $170 Billion really go?  Home builders, re-modelers, laborers, real-estate, computers, rebuilding, insurance.. some people will take their insurance check and go spend it.  Here's the breakdown from Bloomberg, but note the word 'boost' appears only 4 times; car rental companies, transportation companies (truckers), Lowes and Home Depot (supplies), and generators; 
Equity investors are closely tracking Hurricane Florence as the worst storm to hit North Carolina in decades could also have a menacing effect on the insurance, retail, agriculture and restaurant industries. More than 1 million people are evacuating their homes as the Category 4 storm is expected to make landfall over the weekend. Analysts say the event could also be a boon for companies that specialize in roof repairs or disaster-related services, as well as transportation providers.
But that's just on the surface.  When we dig deeper, the disaster economy is booming.  Don't forget, after Hurricane Katrina, the state of Louisiana received $115 Billion in Federal funding:
According to National Hurricane Center, Hurricane Harvey is second only to Hurricane Katrina as the costliest hurricane to hit the United States at $125 billion. Katrina cost about $161 billion.  By the time December 2017 had rolled around, the United States government had sent about $11 billion in federal disaster aid to Texas, and the state was asking for $61 billion more in federal assistance.  After Hurricane Katrina, Louisiana had received almost $115 billion in federal aid.  Multiple organizations and companies have raised money and provided aid for the people of Houston. The companies and aid listed below have provided a combined amount of at least $26.82 billion of the $125 billion that Harvey caused.
$115 Billion is a lot of money!  So where does it all get spent?  Even if it goes into the pockets of greasy and sleazy politicians, the point is that it is getting distributed.  The case for the Hurricane economy is a proof for the US Military's whacked out economic theory invented by someone like Robert Macnamara "$1 into the Miliary = $2 in economic output"  but if war is such a good business, we have to ask why they don't have a staged demolition of an entire city, like Los Angeles (maybe just Century City, LA is too big).  They will warn everyone to get out, no one will be hurt, unlike 911.. (MUST READ- BLACK 911)
There is no evidence needed to understand what's going on here - the disaster economy is booming and weather wars are in full swing.  It's a $170 Billion + event that is started by a group inside the military that controls the weather.  They do it all, they can create hurricanes, intensify them, reduce them, they can control storms like one would with a video game.  If you don't know about this or don't believe it, have a small education on the topic by watching the video below:
FULL EDUCATION ON THE HISTORY OF WEATHER MODIFICATION

They have the technology for a long time.  They have the motive, and well - is it really all that bad?  A good storm clears out nature and resets everything.  It's good for business.  Why not?  That's their thinking, we are not condoning weather modification.  But if you believe that it doesn't exist, you live in fantasy land, where fairy tales come true and everyone lives happily ever after.
There is a huge political side benefit, that they can blame 'global warming' on Trump for example, when in fact it may be deep state Democrats installed by Obama who are pushing the buttons on these storms.  

Posted: September 16, 2018, 10:09 pm
 Total News - Atlanta, GA 9/3//2018 - Bitcoin is cool.  You can see people's faces light up when you talk about it.  It's like Gold.  Humans are fascinated by Gold for a number of psychological reasons which are well more powerful than its scarcity.  Other elements, such as Rhodium, Platinum, Iridium, and many others - are far more rare than Gold.  Gold is just something magic, that resembles happiness, wealth, and shines brightly.  There may be an ancient connection here we haven't yet stumbled upon.  
For 15 years, FX and other alternative asset classes have proven they have what it takes to outperform the stock market.  FX algorithmic strategies for example, are in a class of their own.  But few understand and those who don't aren't willing to spend the few minutes required to get it.  But Bitcoin has changed all that.  Tell someone you are an FX quantitative fund manager and they might look at you like you have a disease.  Tell you are trading Bitcoin and they will get excited.  Go figure!
Bitcoin made investing cool again, especially with millennials.  Although there are probably hundreds to thousands of better investments - Bitcoin is just cool.  This is the viral effect that shot BTCUSD to 20,000 - not because of its robust design, or anything else.  It's just cool.  And you can quantify cool - that's not the problem.  The problem is identifying the next 'trend' before it becomes a trend.
And what's interesting is that Bitcoin is a digital 'crypto' currency but so is the US Dollar, the key difference is that Bitcoin is not issued by any centralized authority.  But many have been trading electronic digital dollars for a long time.  So EUR/USD is not so different mechanically than BTC/USD - except the allure.  FX is complicated - Bitcoin is not.  You just buy and HOLD.  They've combined FX with penny stocks!  It's electronic day trading on steroids, with an IV drip Red Bull.  It's unregulated, it's decentralized - and we don't even know the names of the owners of the exchanges!  But it's cool.
You can get cool points probably in high school by talking about it (this is a theory we didn't ask any high schoolers).  But we remember the 90's when it was that way about stocks.  Got a stock tip?  What's hot?  ATHY?  OSTK?  Bitcoin is that plus more - because of social media and the internet which is worldwide.
So we're not saying that it's good or bad - maybe it is good because more people will be interested in investing.  Maybe it's bad because it has shown them the wrong example of what an investment should look like.  What is interesting though you can do arbitrage in Crypto.  There's really no minimum so you can invest $1.  So go ahead - have your crack at it!  
Hopefully, as more sane and reasonable approaches to Crypto markets become more prevalent - such as Total Cryptos BIT FIX - we will see an institutionalization of the Crypto markets.  -jg
Posted: September 3, 2018, 7:30 pm
Following a series of attacks on the Federal Reserve's rate hike policy and complaints about the strong dollar, some Wall Street observers are saying the possibility that Trump himself will launch a sustained campaign to weaken the dollar as a way to reduce the U.S. trade deficit can no longer be dismissed.
While a strong-dollar policy has been a cornerstone for successive U.S. administrations, Trump - like with many other things - has shown a penchant for upending the currency status quo. Since taking office in 2017, he has routinely talked about wanting a weaker dollar to support U.S. manufacturing. Additionally, Trump's administration has been lukewarm toward America’s traditional strong-dollar stance.
As Bloomberg notes in a Wednesday article, in recent months Trump has further stepped up the rhetoric as the dollar has bounced off its lows. In an interview published by Reuters this week, Trump once again accused China and the European Union of manipulating their currencies. Last Friday, he also complained to wealthy Republican donors that he was “not thrilled” with the Federal Reserve’s interest-rate increases under Chairman Jerome Powell, which have boosted the dollar.
As a result, after a flurry of tweets in which Trump complained that the dollar is blunting America’s “competitive edge,” Wall Street has started to pay attention: in a report this month, JPM's chief US economist, Michael Feroli, wrote in a report this month that he can’t rule out the possibility the administration will intervene in the currency markets to weaken the greenback. Both Deutsche Bank and OppenheimerFunds echoed the view, saying dollar intervention was no longer far-fetched.
Zach Pandl, co-head of global FX strategy at Goldman Sachs, recently said that "we haven’t had a deliberate effort to weaken the U.S. dollar perhaps since the Plaza Accord in 1985, so it is very unusual and against established practice over the last several decades. A deliberate policy to pursue a weaker currency could cause foreign investors to shy away from U.S. assets -- including Treasury bonds -- raising interest costs for domestic borrowers."
In a note from Nomura's Richard Koo, the strategist asks "how President Trump might respond if uncertainty did worsen, raising the likelihood of a slowdown in the US economy" and answers that "one possibility is that the administration would shift from tariffs, which require a separate staff to handle exemption requests for each product category, to the use of exchange rates, which would allow simultaneous adjustments to prices for all imported products."
Here is why Koo is confident that it is only a matter of time before Trump directly intervenes in the FX market:
A protectionist policy that must be individually tailored to each product category requires large numbers of administrative staff, and a period must be established during which companies can apply for exemptions. Exchange rate-based adjustments, on the other hand, entail no such costs.
In that sense, the more problematic administrative delays become and the more industry opposition mounts, the greater the likelihood that President Trump will replace tariffs with exchange rates as his main tool for addressing US trade imbalances.
The loudest warning to date that Trump could rock the currency world has come from Charles Dallara, the former U.S. Treasury official who was one of the architects of the Plaza Accord, the 1985 agreement between the U.S. and four other countries to jointly depreciate the dollar. "The trade debate will increasingly include the currency issues," he told Bloomberg "It’s inevitable."
As Bloomberg adds, a shift to a more protectionist and interventionist policy, à la 1985, would not only reverberate across the $5.1 trillion-a-day currency market and undermine the dollar’s status as the world’s reserve currency, but could also weaken demand for U.S. assets.
But can Trump really intervene unilaterally in the currency market, and what tools does the president have at his disposal if he wanted to go beyond mere talk?
The most direct choice for Trump would be to order the U.S. Treasury (via the New York Fed) to sell dollars and buy currencies like the yen and euro using its Exchange Stabilization Fund, according to Viraj Patel, an FX strategist at ING. But because the fund only holds $22 billion of dollar assets, the impact would likely be minimal. Any direct intervention that is larger and more ambitious in scope would also require congressional approval, he said quoted by Bloomberg.
Then there is the nuclear option: according to Patel there is one loophole Trump could exploit to get around the fund’s constraints and bypass Congress altogether: by declaring FX intervention a “national emergency.” He could then force the Fed to use its own account to sell dollars.
Such a move would be a long shot by any stretch of the imagination, but with Trump invoking national security to impose tariffs, Patel says he can’t “completely rule out” the possibility.
Such a move would certainly roil the market and potentially lead to a USD crash, not only due to Trump's intervention but due to the sudden collapse in faith in the global reserve currency; the result would be a flood of Treasury sales from global custodians around the globe who currently hold over $6 trillion in US Treasuries. To be sure, Trump’s persistent jawboning of the dollar may already be having an adverse effect on foreign demand for U.S. assets. While overall demand at auction has been up and down this year, foreign holdings of Treasuries have slumped to an almost 15-year low of 40%, forcing domestic investors to become the marginal buyer of US Treasurys. China, the largest overseas creditor, has pulled back this year. Japan, the second biggest, has reduced its share to the lowest level since at least 2000.
A less extreme, and more plausible, option would be for the Trump administration to include currency clauses in any new trade deals, like it did with the updated U.S.-South Korea trade agreement in March, although enforcement would be complicated and the implementation lengthy.
There is also the suggestion of a global accord on currencies, broached in the past by White House trade adviser Peter Navarro, however the chances of a multilateral agreement on the dollar are remote. Plus, there’s always the threat of retaliation by other nations if the U.S. goes it alone.
While it remains unclear what Trump will do, keep a close eye on China, where the yuan has tumbled nearly 10% since April, when the trade war with Beijing started in earnest.  The magnitude of the decline, the fastest since the 1994 devaluation, boosted speculation the People’s Bank of China is deliberately weakening the yuan to offset the tariff impact.
Even though China has denied it is "weaponizing the Yuan", many are skeptical, and Trump is among them: which is why the president has criticized the country for taking advantage of the U.S. by keeping its exchange rate artificially low. (However, Trump has not gone so far as to officially brand China a currency manipulator in the twice-yearly review of international foreign-exchange policies published by the Treasury).
Trump's single focus on the Yuan may explain why Beijing has pulled all stops to prevent the currency from sliding below the 'redline' of 7.00 vs the dollar (alternatively it is preparing to devalue further if and when Trump launches the next $250BN in tariffs he has warned he would). Stephen Jen of Eurizon SLJ Capital has warned that Trump may be quick to retaliate in the FX markets if it suspects that China is "playing games with its currency," which may have disastrous effects on demand for U.S. assets.
"If you’re an international portfolio manager with 30 percent of your exposure to the U.S., and you know the currency will be guided meaningfully lower as a policy tool, why would you be investing here?” he said. "The Trump administration needs to be very, very careful with its dollar policy." This was most vividly on exhibit during the Fed's QE phase when Guido Mantega, then Brazil's finance minister, siad the Fed was throwing "money from a helicopter" and "melting" the dollar.
Ironically, it is the stronger dollar that is crippling emerging markets now.
Whether or not Trump intervenes, however, Dallara is bracing for more turbulent times:
"I’ve lived through a lot of market gyrations in my career,” he said. “And I have an uneasy feeling that I can’t validate by data that tensions are going to, at some point, emerge into volatile market dynamics. This is a risk."
Posted: August 22, 2018, 5:06 pm
Total News - 8/19/2018 - Atlanta, GA - Venezuelan President Nicolas Maduras announced Friday a massive devaluation of the existing currency, while making a verbal peg 1 "Petro" (Venezuelas new CryptoCurrency which is not yet in circulation) to $60 US Dollars, effectively wiping out the value of the existing currency and forcing the population to use the Petro.
Crypto Enthusiasts will be eager to see the Petro trade, as it will be the first sovereign Crypto Currency in the world.  IBM has disclosed that it is contracted with more than 10+ central banks to investigate the possibility of making digital sovereign currencies based on cryptographic technologies like Blockchain, but it hasn't disclosed who they are.  Venezuela is an interesting case to be the guinea pig in this digital money experiment, because Venezuela has been a unique host of an underground mining community in the past years, because electricity there is practically free.  The interesting world of underground Bitcoin mining in Venezuela has been covered in an excellent article published on Hacker Noon "Extortion, Police Raids and Secrecy: Inside The Venezuelan Bitcoin Mining World."
Maduro told viewers:

"As of next Monday, Venezuela will have a second accounting unit based on the price, the value of the Petro. It will be a second accounting unit of the Republic and will begin operations as a mandatory accounting unit of our PDVSA oil industry."
What's interesting about Venezuela is that this is an act of desperation, Maduro really has few other choices.  Venezuela has become a war zone in recent years with rolling blackouts, rampant inflation, food shortages, rise in violent crimes, and social unrest.  The Petro is Venezuela's oil backed (government backed) Sovereign Crypto Currency, based on the NEM Blockchain.  But ultimately, it is backed by whatever Maduro says it is backed by, as any fiat currency is.  In fact the word 'fiat' means 'by decree' or in plain English, because I said so.  
Fiat: a formal authorization or proposition; a decree.
Maduro said the new currency, set to enter circulation on Monday, will be called the "sovereign bolivar" and will be based on the petro, which is valued at $60 or 3,600 sovereign bolivars, after the redenomination planned for August 20 slashes five zeroes off the national currency. The minimum wage will be set at half that, 1,800 sovereign bolivars. The government would cover the minimum wage increase at small and medium-size companies for 90 days, Maduro added. It was not clear what happens after.  "They've dollarized our prices. I am petrolizing salaries and petrolizing prices," Maduro explained in a Friday televised address. "We are going to convert the petro into the reference that pegs the entire economy's movements."
We will see the market reaction shortly, however Venezuela is already living in a world of it's own, even bragging about how the IMF doesn't have any 'fingers in our pies' type of speech.  Meanwhile, the population of Venezuela is forced to turn to things like Bitcoin and Alt coins in order to survive, as the national currency is completely unstable.
Posted: August 20, 2018, 1:17 am
Online retailer Overstock reported results which, unlike its much more famous and infinitely bigger online retailing peer Amazon, were nothing special: the company reported Q2 revenues of $483 million, generating a net loss for the quarter of $2.20 on a gross margin of 19% in the quarter.
But the company's earnings were not the reason why OSTK shares soared as much as 25% after hours: the reason was the surprising announcement by the company that Hong Kong-based private-equity firm GSR Capital had agreed to invest as much as $375 MM in exchange for equity in the retailer and, more importantly, its tZero blockchain subsidiary, which as a reminder capitalized on the cryptocurrency craze in late 2017 and concluded an Initial Coin Offering on December 18, 2017, almost to the day when Bitcoin hit an all time high of just under $20,000.
As Overstock announced in its press release, GSR agreed to:
  • i) buy $30MM in tZero tokens,
  • ii) buy up to 3.1MM shares of OSTK for $104 million (a 5% discount to the Aug. 1 closing price of $33.72),
  • iii) invest as much as $270MM for up to 18% of tZero’s equity at a whopping post-money valuation of $1.5 Billion.
And since Overstock's market cap as of Thursday's close was just over $1.1 billion, this means that with one term sheet, the company's tZero sub is suddenly worth more than the entire parent company. More importantly, the GSR transaction will boost the company's cash and equivalent holdings to over half a billion dollars.
Some more details from Byrne:
Having concluded its Security Token offering, tZERO has raised aggregate consideration of $134 million. This figured includes $30 million from repayment of intercompany debt between tZERO and Overstock. GSR has signed a repurchase agreement to acquire these tokens. As I will diagram in our earnings call, we have designed quite an ecosystem with a scale that matches the enormous opportunity in front of it. When GSR completes its planned investments, we should have over half-a-billion dollars. We believe this will provide ample capitalization with which to build a company that can upend global capital markets.
Back in December, when Overstock launched its tZero ICO, it said that it was hoping to raise at least $250 million - and as much as $500 million - "to build out a blockchain system that the firm said would allow it to create an exchange to trade blockchain-based assets, like ICOs." In the end it raised aggregated funds of just approximately $134 million, and today's transactions adds to that and enables CEO Patrick Byrne to pursue his Security Token ambitions.
As a result of the deal, OSTK stock has jumped and was trading as high as $46/share after hours.
Even with the surge however, the stock remains well below its highs hit in late 2017 and early 2018, when its share price more than doubled to a high of $86.90 in January, due to its blockchain investments rather than its online retailing activities, which have seen it categorised as a cryptocurrency "play."
Overstock has been one of the few retailers that has aggressively pursued cryptos as both a method of payment and as a means by which to grew the company with its own unique token. As we reported recently, following a burst of adoption of cryptos by various vendors, as the price of bitcoin has tumbled in 2018, so has the rate of adoption. Which is why Overstock's experiment with cryptos and tokens will be closely watched to determine if the digital currency has any chance of becoming useful in practice instead of just in theory.

cryptos
Posted: August 9, 2018, 10:31 pm

Past performance is not necessarily indicative of future performance.


Past performance is not necessarily indicative of future performance.

The risk of loss in trading commodity interests can be substantial. You should carefully consider whether such trading is suitable for you in light of your financial condition. This material does explain all the risks involved in futures and options trading. Please refer to the following for a fuller disclosure and our risk disclosure statement: https://alphazadvisors.com/risk-disclosure-statement/

About this podcast: EP 137: The horse bettor exploiting anomalies in financial markets – Dr. William Ziemba Dr. William Ziemba’s an academic, a practitioner, gambler, trader and an author. He’s worked with and consulted to many well-respected names in the field, such as; Edward Thorp, Blair Hull and the very successful horse bettor, Bill Benter. In the beginning, horse betting was William’s field of expertise (he even published a book titled, Beat The Racetrack!) And in many ways, for William, horse betting worked as a gateway to trading financial markets—which he’s been doing since 1983.

Visit AlphaZAdvisors.com for more info.
  alphaz options strategy
Posted: August 8, 2018, 6:51 pm
Crypto Day Trading - Electronic Day Trading became popular in the mid 1990's with the rise of 'retail' stock trading, meaning that anyone with $50,000 could open an account and trade with "Level 2" access which was purportedly the same access the market makers had.  Of course day-traders were no match for professional market makers but suddenly the .com bubble happened and stocks like (AMZN) and many others.  After the .com bubble burst, day traders looked for other electronic markets to trade, some gravitated to Futures & Forex.  Forex day traders thrived for a long time, until the Dodd-Frank regulations ended the hope of having a profit from a Forex strategy in the USA (and in the same action, effectively blocked access to decent honest brokers for US Citizens.  This void was filled with the Binary Options scam that continues to this day (people still believe that someone, somewhere is making money with Binary Options, contrary to forensic evidence).
Enter Crypto Currency which was relatively undeveloped as a traders' market until the huge rise of BTC/USD in the fall of 2017.  Now there is a quickly growing community of Crypto Day Traders and Total Cryptos is here to facilitate that.  The problem with trading Crypto vs. other markets is there is a huge amount of fake data in Crypto.  As any trader knows, information is king - which is why it's important to have real-time information that matters.  Just like in FX, that may mean looking at multiple exchange prices.  It means having multiple sources of news and data.  It means paying for information.  How bad is the problem of bad data?  Just look at today's news, from Coin Desk, where 'A CoinMarketCap "data issue" caused significant artificial inflation of several coins listed on the platform on Friday, with some prices inflated by nearly 1000 percent.':
While bitcoin's price spiked 12 percent on the crypto data site, other coins saw more drastic increases. The price of aeternity, the eighth most valuable cryptocurrency, increased more than 951 percent, while MOAC increased by 905 percent and bitcoin diamond saw an 876 percent jump on the site. The site's exchange tracker feature was also affected, and falsely indicated that bitcoin was trading above $73,000 on some exchanges.  While crypto Twitter speculated about potential price manipulation, bugs and hacking, CoinMarketCap told CoinDesk that the inflation was caused by a data error.  "There was a price calculation error on tether which caused any listing with a tether market to become artificially inflated," marketing vice president Carylyne Chan said in an email.  While most of the data appeared to have normalized at press time, the 24 hour change percentage for VeChain's VET token was listed as a question mark and its price graph was unavailable on the home page. The VeChain page also had no historical data listed.  The popular analytics platform has promised to release a "post-mortem" with further details in the near future.
Imagine that happened in the stock market.  So the good news, any new market presents new and uncharted opportunities.  With that as always comes big risks, but it is a traders job to manage and maintain control of those risks.  Having the right tools is par for the course.  Or take a look at this article "Why intra-day trading crypto can be better than holding":
If you are relatively new to trading crypto currencies, then this tutorial is what you need. In this tutorial I will try to explain how you can use crypto to grow your capital base by at least 1% per day.The reason why holding isn’t a very practical move for well established coins is because of their volatility. For instance, Bitcoin (see chart below), increased by ±30% over a period of ±20 days. But it doesn’t mean it had a linear increase of 1.5% per day, some days went down while others went up.
Of course, it's easy to go back and say if we had just bought at the low and sold at the high every day for the past 30 days we would have made a fortune, the reality is that trading is not so easy.  However, there are tools out there so advanced and sophisticated that it helps the Crypto Day Trader.
Total Cryptos is extensively researching this new market as well as working on our development of real time trading systems for Crypto Day Traders.  We've opened a public forum on the topic for open discussion which can be found here: https://portal.totalcryptos.com/forum/trading-cryptos Registration is free so join the discussion today!


Posted: August 5, 2018, 10:50 pm
  • Private Equity investors or Pre-IPO investors may want to look at this hot new Crypto option.
  • Cornucopia is an example of how Blockchain is really innovating the alternative investment space.
The pace of new Crypto Currency offerings has increased dramatically in recent years. First, there were ICOs, then there were STOs, and now there is a mix of many kinds of new token offerings. Sites are popping up that track the prices of new Crypto Currencies just like for stocks. The nuances of regulation, as in anything new, have been the focus of the debate. What makes a securities token vs. a utility token, or if proof-of-stake is better than proof-of-work. We’re going to skip that in this article to focus on essence not form, to get to the heart of what this token is and why it represents a real new type of token based on an existing model. We are going to contrast this model, not the token, with others of a similar nature. Many who have been enchanted by the allure of Bitcoin have lost touch with what Blockchain really is – a technology. The blockchain is very innovative for banking but compared with what Silicon Valley has been inventing recently it really isn’t such a great achievement. The reason Blockchain is such a ‘revolution’ is mostly because of the lack of technological innovation in the financial services industry in general. For example in the United States, the “Fedwire” system used to send ‘wire’ payments in between financial institutions, was designed and implemented before World War 2, actually before 1940. The reason it is called a ‘wire’ payment is because this was a world where not everyone had a telephone, but every business had a telegraph, which was connected by copper wire. It is important to understand this history, in order to see that Blockchain itself isn’t something so innovative like lasers or fiber optics, or the microprocessor. But in a world where payments are made by ‘wire’ – Blockchain is a new paradigm which really changes the entire global financial system.
One more important elaboration before we dig into this token offering is the mature pre-IPO sector of ‘unicorns.’ During the .com boom IPOs were the hottest rage – get a business plan, buy a .com name, and go public. Very similar to what has happened with many ICOs, many of them fail to vet their underlying business model (in many cases they do not care to, they just want to raise funds as a means to another end). After the .com bubble burst, new IPO issues were on the decline, and since the 2008 credit crisis, they declined even more (for a number of factors which is the subject for another article). Companies that are worth more than $1 Billion in private markets but are still not public are called “Unicorns” because they are rare, but Unicorns are not so rare like they were 5 years ago. Now many companies continue to operate as private companies without going IPO, some notable examples include Uber, AirBnB, SpaceX, Palantir, Lyft, and others. The pre-IPO space is opaque, as companies are not publicly listed, they are not subject to the same reporting requirements as public companies. For example, financial statements which they do of course produce, are based on what the company says only (no third-party oversight). Financial reports produced by public companies are the opposite – they are subject to audits, third party checks, and if a mistake is made – there can be a liability for the financial officer who is responsible for the reports and/or for the company itself. In private equity, none of this applies. So, it’s a unique type of investing.
The obvious upside is that if and when a Unicorn does go public, there can be an event which will produce a 10x or 20x return. So as you can imagine, there are a number of companies that offer sale of pre-IPO stock in mature companies that have revenue. The rules are different, all investors must be accredited generally, and there can be restrictions on the stock (for example you can’t sell your shares until the IPO event). Some companies, like PTN – offer accredited investors more liquidity that it is possible to buy and sell pre-IPO shares in what could be called a dark pool.
Enter the world of Cornucopia, a token offering that provides retail investors access to these companies based on a ratings system. Horn tokens act like a private equity index fund but require community participation. Here’s how it works. Users buy Horn tokens and then vote on which issues should be included in the fund. While most everyone knows Space X, there are more than 150 such companies that are Unicorns or close to the $1 Billion mark that are all good candidates for IPO. Many of them will never go IPO because they will be bought by larger companies (but that is a positive event for shareholders too). The voting system will reward more intelligent votes with a higher allocation of tokens, so for example if you vote for Space X and it ends up being the biggest winner, you will receive more tokens than if you vote for Uber and it ends up bombing.
What is unique about this model is that it’s simple – it can be explained in a few minutes. There’s no moving parts – it’s just as simple as that. It basically opens up access to companies like Space X to investors through the use of a token they are calling HORN. Token investors should love it. Wall St. investors, maybe not. Because they can get access to these companies directly or through the brokerage services like PTN. But what Cornucopia does is it tokenizes the offering – and it’s all wrapped into one token. In the future, there will likely be other similar tokens but for now, this is the only one. HORN is the only token offering pre-IPO mature companies to token investors.
We are not claiming here that Cornucopia has done anything new or unique – on the contrary, they have taken the pre-IPO model which is now very popular on Wall St. and tokenized it. The underlying ratings system, powered by Ignite Ratings, incentivizes users to participate in the process because they will be rewarded for doing so (and rewarded more for making better decisions).
Many have been claiming that Wall St. tokens are coming – while this doesn’t represent Goldman Sachs (GS) coin, this is a Wall St. model that will certainly attract copycats. Cornucopia doesn’t have a patent on this model nor would it be possible to patent a ‘business model’ – but as with any new standard, he who makes the standard has the most to gain from it (such as HORN token holders).
To compare this to other token offerings in the financial sphere, few can compare. For this reason, we believe that Cornucopia is going to make a big splash, and have no problem raising their $15 Million hard cap.
Lastly, let’s take a look at our favorite component (or potential component) to HORN – Space X. This is a bit of a controversial company, but we like it. We want to explain why – and then conclude that HORN is a great way to get exposure to Space X and other companies.
Since World War 2, which was the first time the United States invested massive resources in research and development of technology, the US Military has been a world leader in technology research and development, mostly led by DARPA, but also CIA, NSA, Navy, Army, Air Force, et. al. all working under the Director of Central Intelligence. The types of research projects are so vast we would need a library of books just to dig into them, covering all fields of science and even pseudo-science. If there was a guy who could bend spoons, the CIA had a guy there looking into it. Those who are interested in this topic can watch George Clooney’s “The Men who Stare at Goats” for some of the more bizarre and paranormal research experiments. The strategy is simple really – fund thousands of projects with more budget than needed and get the best minds in the world and even if 9 out of 10 projects fail, the 1 out of 10 that work, they will create something like the Atom bomb. The Manhattan project was perhaps the most ambitious and purposeful research effort in human history, the success of which won the war. Because of this, Military leaders understood the value of advanced weapon technology and this ethos is in the Pentagon to this day.
There is one side benefit for Corporate America to this strategy. Once technology has become ‘declassified’ and where there is clearly no military use, the technology is leaked to corporations (for free) and ultimately sold to the public. Most of what Silicon Valley has ‘invented’ can be credited to this cozy relationship. Technologies are leaked via research labs like ‘SPARC’ labs and others. Companies like XEROX, IBM, Microsoft, Apple, and recently Google and Facebook, participate in these programs.
Often how they acquire the technology is overlooked by investors, but it really is irrelevant, the US Military is not a for profit business per se, like many parts of the US Government it enables for-profit commercial enterprises to profit. As US Citizens are the indirect owners of this IP, transferring it to Corporations that are mostly in the average American’s 401k is widely appropriate (plus it stops the question ‘where all this money is going?’)
Due to the secret nature of much of this technology, this transfer is not something widely publicized – but we can see tangible benefits such as the internet itself, actually designed and built by the US Military. Space X has contracts for delivering rockets and launching them – but do they have something more? We have developed a hypothesis based on nothing other than the previous behavior of this relationship between the Military and Big Business – dating back to the 70’s, 80’s, and 90’s. Space X could have been the recipient of some of this IP, and if they were – it wouldn’t be something they could say publicly. This could explain Musk’s wild claims and his arrogant behavior (because if he had one of these transfers, it would make any competition impossible). One bright example is provided by the potential uses of Helium 3 as an energy source. Everyone knows and widely discusses about Oil – it’s use and utility for military purposes. But this is really a simplistic explanation for common folk to understand the larger doctrine, that energy is a key military resource – perhaps the most important.
For this reason, the US Military not only collects intelligence on new energy systems, but engages in their own research on potential alternative energy sources, such as “Zero Point” energy, Thorium Reactors, and Helium 3. Helium 3 only exists in places such as the moon and is difficult to extract and refine. If Space X had a way to do it, it will in 5 or 10 years be the biggest company on planet Earth. We do not have information to back up that statement it is a hypothetical mind experiment, to show the logic based on our hypothesis. There may be a far different story that we don’t know and will not know until it is revealed, however Helium 3 provides a good example of something that if Space X had IP about how to mine it, transport it, and convert it to Energy, it would be so profitable that the valuation of Space X would go parabolic. And if they were able to do it, they would be the exclusive provider.
Some of Musk’s claims such as colonizing Mars don’t really have a direct business benefit – Helium 3 does. If Space X does have such IP, these other businesses such as launching rockets and giving rides to Billionaire’s in space would be irrelevant. And again, this is just a hypothesis, based on history – we have no direct information that this is the case. For those of us who remember things like ‘the internet’ and the ‘Personal Computer’ that came out of nowhere, we remember a group of select companies having access to such technology and running with it. Remember, Apple (AAPL) didn’t invent the PC, they popularized it. Steve Jobs was not a technology guru or an engineer, he was a marketing genius that created a ‘cult of Mac’ based on his leadership and God-like personality he picked up while studying in India. We can agree that Woz was an engineer, but Apple didn’t invent the micro-processor, they were mostly a design and marketing firm that wanted to create a retail product from assembly. This is not a critique of Apple (AAPL) which is the obvious success of the century, but to point out a past example of a company that created an Empire from something they didn’t build or engineer themselves.
This is a ‘long shot’ hypothesis meaning it is a low probability high impact event. If it is true, the announcement of such news would shoot the value of Space X to the Stratosphere. If it is false, Space X would be evaluated based on its current public claims. But one thing is sure, Space X has exclusivity on this niche in the Aerospace/Defense Sector, and there’s only one place to access it with a token: Cornucopia.  www.cornucopia.io
Posted: August 2, 2018, 11:44 pm
Bitcoin has had a net negative effect on the perception of Main Street on investing, and a potential huge long term effect on the architecture of markets.  What Bitcoin has created in the short term, is a powerful analogy based on insane assumptions: We have a coin that will be like Bitcoin, and go up 1,000,000 %.  The sad fact, Bitcoins rise has been used as a story to raise capital: This time it’s different.  We’ve built a better Bitcoin.  Our coin will go up more than Bitcoin, so they have been telling us.  But the reality speaks the opposite story, that Bitcoin is likely a one time phenomenon, as even Ethereum, although the design is different, doesn’t come close to Bitcoin. 
Especially since the cross above the psychological 10,000 mark, investors everywhere have been piling funds into ICOs and other concepts claiming to be “The Next Bitcoin – only better” yet so far they have all failed to deliver on their promises, and look likely to continue to do so.  Just like there will never be another Google or Microsoft, there will likely never be another Bitcoin.  If you enjoyed the rise – enjoy your life.  Trying to recreate something again or catch what you missed is a fools errand. 
Some new coins of course are promising, they aren’t all a bunch of garbage – but most are.  All the wrong people decided to launch ICOs for all the wrong reasons.  There have been few quality offerings, so we can mention only a few by name; Basis.. Others which go unnoticed and don’t have the ‘sales pitch’ to capture the wrong type of investors, such as Sky Desks.
What Bitcoin did that was positive it forced the hand of the establishment to innovate.  As the ultimate use-case for digital money that ‘works’ – Bitcoin would never be forgotten or disregarded.  It takes time to build something substantial.  In 2017 we can say that it was the year that the work began.  The fruits of this work may not be seen until 2027 – just as Bitcoin took nearly 10 years to mature into popularity, so will any new Blockchain technology take time.  Regulations will evolve, law will evolve, that will support these more advanced efforts. 
The correct approach to this, is not to identify a single ‘opportunity’ and evaluate it, as one would an investment.  These are ‘stock pickers’ and in the long run this will not work well, statistics show.
The correct approach is to take any advanced idea and foster it – incorporate it into your existing business.  How can I use Blockchain to empower my sales process?  To accept payments from customers?  What else?  Hedging?  Communication?  Security? 
These hopers that think they have picked the next “Bitcoin” are sure to fail if they don’t adopt.  Adoption is what made Bitcoin rise – and it’s the only thing that will make any coin rise.  Ethereum, the only token that has come close – is driven by demand for it’s development platform.  When an ERC 20 token is issued, ultimately users need to first buy ETH in order to buy the underlying.  The coin is likely denominated in ETH (although it’s not an explicit requirement, the majority of ETH tokens are denominated in ETH).
To learn more about Cryptocurrency and real trading and investing opportunities, like Cornucopia, visit www.totalcryptos.com

Posted: July 28, 2018, 1:37 am
As we have often explained in our book Splitting Pennies, the world is not as it seems.  Politics often polarizes a country it seems every election there becomes 'two' Americas but the current polarization seems to be that of 'rational' and 'irrational' whereas on one side, there are facts; and on the other, hysterical opinions.  While no evidence was provided that any Russians 'hacked' the mere accusation in absentia is 'proof' for the irrational left that it was the Russians.  "Blame it on the Russians" seems to be the scapegoat story of the day, perhaps lingering from the previous generation that came to power during the cold war.  It's a bunch of nonsense, the entire Russian narrative is a fantasy created by intelligence operatives as a propaganda effort to smear Trump and anyone who doesn't fall into the Leftist/Liberal mindframe.  As any American who has ever been through the justice system in America knows, you are guilty until proven innocent, not the other way around.  Someone can sue you or call the cops and make any false claims and the burden is on you to prove it is false.  If the complaining witness is the US Government itself, you can forget about any 'rights' you may have had or the right to a fair trial (they have immunity and other powers that prevent any fair and reasonable defense if you are targeted).   As usual, these aggressive and toxic forces that are attacking Trump politically from inside the deep-state are exploiting the masses lack of education of history, so we would like to here expose perhaps one of the most important looked over historical facts pertinent to understanding the deep roots of the relationship between USA and Russia.  MUST READ: Wall St. and the Bolshevik Revolution.
Russia was ruled by a Monarchy similar to the rest of Europe until 1917 when the Bolshevik's staged a successful coup of the Kerensky regime thus installing a Soviet Dictatorship run by the Communist Party until its collapse in 1991.
The 1917 Revolution was financed by and orchestrated by Wall St. - Not only did New York bankers provide money, they allowed safe passage to Russia revolutionaries like Trotsky and others by use of diplomatic cover by the US and other governments.  The main character in this play was Thompson, wealthy banker and Chairman of the Federal Reserve Bank of New York.  Most of the bankers had first degree relationships with J.P. Morgan himself (the man, and the firm).  MUST READ: Wall St. and the Bolshevik Revolution.
Although this was reported in the press, at the time, it didn't seem that it required further examination by historians:
William B. Thompson, who was in Petrograd from July until November last, has made a personal contribution of $1,000,000 to the Bolsheviki for the purpose of spreading their doctrine in Germany and Austria ....
Washington Post, February 2, 1918
Of course, the official story is that the "American Red Cross" mission to Russia was a humanitarian effort (but if that was the case, why was it composed of mostly lawyers, bankers, and merchants, and only 2 doctors?) 
To really understand this one must read this book MUST READ: Wall St. and the Bolshevik Revolution.
The world is different now.  The politics of the time was different.  100 years ago, groups such as the Morgan firm would finance any revolutionary in hopes to gain contracts from a newly formed government.  Monopoly Capitalists were the perfect business partners to Communists which operated a state controlled regime.  And they achieved their means, guys like Armand Hammer made vast fortunes doing business with the Soviet Union.  You see, the Monopolists realized that the best market was one that was controlled.  In the example of Russia, consumers had no choices.  So if you sold shoes or pencils to the Soviet Government, you sold to all consumers (they had no choice).  It was one big customer that always paid on time.  There was no advertising.  No consumer protection.  It was a Monopoly Capitalist's wet dream.  And, remember that in this time America was undergoing massive consumer protection reforms that were not present during the previous century.  
The bankers who financed the Bolshevik revolution had no interest in politics, in Russia, or in 'helping people' - they wanted big juicy government contracts from Dictatorships.  Because in a Dictatorship, the Dictator and his friends make the rules (as in LATAM countries).  
But does the world still work like this?  It seems so, as Putin claimed in his recent meeting with Trump about Bill Browder, a guy who made unknown fortunes (Billions) in the wild times in the 90's in Russia and paid no taxes.  Then he uses his influence to buy politicians, create laws, and is a major financier behind the Russophobia campaign.  That's how these creeps use politics for gain, guys like Soros who know how to grease the palms of the wrong people to do their bidding and profit.  They only need to trick 30% of the population to create a critical mass of support, as most of their advertising efforts fly in the face of truth and reason.  But it's enough, to create a political divide and start a discussion in the wrong topic.  Since Trump has been 'defending' himself on the Russia collusion issue, it has been difficult to do anything else.  They have used this Russia topic as a stale fish to let rot in the market for days after it has spoiled, preventing any customers from coming close to the market even to discuss other issues.  
The take away here is, the deep state has existed for 100 years, as referenced by this book MUST READ: Wall St. and the Bolshevik Revolution..  Here we are just elaborating this historic fact, how the Elite manipulate the system for the benefits of the haves and to the detriment of the have-nots.  Browder, Soros, and others like this stand in the way of real democracy, as their real dream of a democracy is that of a Dictatorship with the illusion of Democracy (fixed voting machines).  As Trump attempts to 'drain the Swamp' he must confront these demons which he did in his recent meeting with Putin.  Ironically, Putin is at the end of a similar campaign in Russia in which he attempts to flush out corruption in Russia which although still widespread is on the decline.
Readers - don't forget the irony here.  The Soviet Union was made possible by Monopoly Capitalists who later made fortunes trading with them.  During the Cold War the US spent billions in taxpayer money fighting 'Communism' and finally this victory was achieved in 1991 - when the script was flipped and now the Russophobes are against "Russian Mafia" because they are greedy Capitalists!  The US convinced the Russians to be a market economy and are now chastising them for their Oligarch class, and other trappings that come with Capitalism.  Amazing! 
But it is the way of the world, we all have a role to play - and sadly for Russia their role has always been the macabre defender of Western Civilization from the evolving demographic threats whether from the Golden Horde, Third Reich, or ISIS.



Posted: July 18, 2018, 6:05 pm
As we have explained in Splitting Pennies - the global markets are not as they seem.  As we are now all aware, Trump started a trade war which really is the equivalent of a pissing contest (as it mostly is just talk), however it seems as though Trump's heart is in the right place putting America first but he needs to hire better financial advisers as the Chinese are winning this round of the game.  The chart to follow is this, as reported first on Zero Hedge (it seems the mainstream financial media is skipping over this huge glaring super important fact):

What the PBOC (The Chinese Central Bank) has been doing is artificially debasing their currency, thus offsetting any potential tariffs.  Currency Wars are nothing new and they didn't invent anything with this move.  It's simple really, the Yuan is a controlled currency (unlike others that freely float against other currencies) that means the PBOC can basically decide what it wants the rate to be, USDCNH.  So for example if Trump enacts a 20% hike on Chinese imports via tariff or taxes, and the Yuan sinks 20% - for the buyer the product is the same and likely nothing would change.  These buyers, like Home Depot for example, Wal Mart, and others - they are very sensitive about small thin margins.  An extra 1% would cause them to shop the deal.  Practically, there are hundreds of alternatives, but China has built their economy as a wholesale dumping ground where there are absolutely no labor laws, environmental controls, or other standards how their products are made, so that it really is cheap crap.  
I'd like to use an example from the real world not connected to this China problem.  Recently I visited a Gold Mine which is a tourist attraction in Georgia.  They explained there is plenty of gold there - but due to environmental regulations it would cost much more (twice or more) the current Gold price to extract it, whatever the number doesn't matter but let's say it's 5,000 Oz from this mine, if we follow all the rules and regulations.  In South Africa, in Russia, and many other places - they have no such rules.  So they are poisoning the environment!! Those jerks.. but who can stop them?  You don't see environmental protests in Red Square, liberals throwing red meat on Oligarchs as they leave posh hotels.  
The point is - considering all these costs - what is the REAL Price of the iPhone?  5,000 ? If made in USA.  Here's the problem with Trump's strategy.  And this statement is not a solution it is merely intended to elaborate on how complex this issue really is.
The FANGs have built an entire business out of being able to build cheaply without rules.  If we stripped away all that advantage, their stocks would look more like utilities.  Perhaps that is as it should be.  When investors buy Apple (AAPL) they think of technology, they think of innovation - they don't think of exploitation of child labor, forced slave labor, workers who commit suicide the conditions are so bad.  They don't consider the environmental cost (which is also ironic considering their liberal leftist base).
In Trump's trade war, we are talking about leveling the playing field.  We want to bring those jobs back home - back to Main St. 
"Make it on Wall St. - Spend it on Main St." used to be the saying.  But now it's more like "Make it on Wall St., spend it in China, Bermuda, anywhere but USA - just get the money out!"
Tax havens, cheap manufacturing bases, and other excuses have bled America dry of capital.  QE and the policies of the Fed have made the 1% even more rich - but have done nothing positive, in fact have acted more like a leech - to the real economy.  The banks didn't lend post crisis.  The rich didn't spend (at least as to help the real economy) and were so greedy that with a few token exceptions they likely made the problems worse.  This led to skyrocketing unemployment (now they are calling it 'underemployment'), opioid epidemics, explosion in crime, violence, roads and bridges in major need of repair, deterioration of schools and finally the creation of the mutant fakebook generation that has no skill other than posting to their wall.  Yes, all the problems, the bankrupt cities, deterioration of institutions, civic society - can all be laid to blame on decades of economic policies that have made USA rotten from the inside out.  Globalists have bought and sold all elements of American life and Trump is trying to reverse that.  If successful, which in the best case can take many years, we can hope for the 50s and 60s but with the benefits of technology.  Those who either are the 1% AND those who are too stupid to understand this economic analysis which you really don't need a high IQ or an economics degree to understand, represent the anti-Trump movement, and they will do anything to maintain their status quo.  
The Elite have led a bad example, not to single anyone out but here's one Mayor that really shouldn't act like this: Bloomberg.  Here's a guy who spends his free time in another country golfing and eating steaks.  While the news agency that carries his name slowly deteriorates into a liberal political tool (from what was once the only unbiased business and finance media in the world) promoting the agenda of whoever pays the most, Bloomberg is the mayor of New York but spends his spare time in Bermuda.  He's a public figure but the point is that most of the Elite are like this.  They look at America as a cash cow, certainly it's not a place you want to spend your weekends.  Why would you?  Been to the Bronx in the summer lately?  It's a heat island.
This is non-political economic analysis - the elaboration here is to demonstrate the forces at work here.  Trump is trying to take back this unfair advantage which is being exploited by: Foreign Countries, US Corporates (some, not all), the Elite, Banks, et. al.  But just like a gambler who has a winning ticket every day at the casino - if you one day tell him that his ticket is no longer a winner - of course he will react negatively, he'll sue your casino he'll do anything in his power to get back his winning ticket!  So we can expect a real push back on such policies, the most logical and rational is the Currency devaluation promulgated by the PBOC.
We can't stop environmentally devastating Gold mining in Russia - but we can set economic examples for fair business that's pro-USA.  In fact this laptop I'm writing on is made in Delaware (Eluktronics).  The BMW you drive may have been made in Spartanburg, South Carolina.  This move isn't about China vs. USA or "US vs. THEM" it's about restoring free trade to normalcy.  USA is currently giving the rest of the world a free ride (or a considerably cheaper one).  
The problem however is in the delivery.
Trump needs stronger economic advisors.  Larry Kudlow is well represented in a Clownocracy which Trump has created in his reality show, but has little understanding of macro economics and is in deep need in lessons in Mathematics.  They all have USA's interest #1 they aren't enemies they are just misinformed.  Trump may be a master negotiator and a top actor in a TV show which makes him a perfect candidate to be President but he is not a Quant nor a Gekko.  Where is Paul Volker?  Why aren't interest rates above 10%?  If Trump wants to SMASH China where it hurts all that needs to be done is raise rates.
As it stands, all of this commotion in Washington is being muted by PBOC manipulation of the USD/Yuan rate.  In order to stop this, there is one simple order: Raise rates 5%.  There are 2 sides to every coin.  As a Global Reserve Currency it's not possible to play in Yen and deflate / debase your way into exporter heaven.  For a strong country that wants USA first, aggressive rate hikes are the only way to stay ahead.  That's not likely to happen.  Of course there is an alternative route - lowering rates to ZIRP again allowing more cheap money to flow into the system (but it hasn't worked in the past and will not likely achieve anything).
This article is not meant to suggest economic policy, simply to elaborate that the Chinese are winning this round by simply devaluing their currency and they can continue to do so the higher the tariffs are raised.  So if Trump enacts a 50% tax on Asian imports it will be irrelevant if the Yuan is devalued by another 50%.  Capiche?  
Posted: July 3, 2018, 2:24 am
The Crypto Market isn't all it's cracked up to be.  Last year we wrote a book on this topic, Splitting Bits (you can get it here).  But the book was written in October, before the huge rise in price in November and December.   Just like with traditional markets - investors only seem interested in the winners.  When we said that 90% of ICOs are frauds - did anyone really hear that?  Or were they just 'listening' ?
As the digital money frenzy of the past few years cools, the crypto coin graveyard is filling up. Dead Coins lists around 800 tokens that are bereft of life, while Coinopsy estimates that more than 1,000 have bought the farm.
The carnage is mostly the consequence of failed projects from the thousands of startups that used initial coin offerings to raise billions in funding, and a global regulatory crackdown on questionable practices and scams. Names like CryptoMeth, Droplex and Roulettecoin may have been a clue to the coins’ dim prospects.
“There has obviously been a lot of fraud and hype in the ICO market,” Aaron Brown, a business author and investor who writes for Bloomberg Prophets, said in an email. “I accept figures I have seen that 80 percent of ICOs were frauds, and 10 percent lacked substance and failed shortly after raising money. Most of the remaining 10 percent will probably fail as well.”
While everyone is watching Bitcoin, many forget about the thousands of failed projects, frauds, and other failed ICOs that didn't meet the mark.


While this may seem like an obvious statement, with all the hype - some need a reminder of this.  As they say in Israel, most projects are 'shitcoin.'  Oh you think this is another joke, do you?  No no no... no no no .. it's not.
This is a great example of what comprises the majority of the Crypto Market.  Now of course, not all coins are shit coins - in fact many show signs of promise.  And also, not all ICOs are crap, there are those that actually have an underlying technology which look very promising, such as Sky Desks, Cornucopia, and others.  Some from the 'real world' are finding no trouble raising money, that is - coins that actually have viable business models - such as Box Bit.  Consulting companies are popping up everywhere.

But going back to SHIT, it really is wide spread.  So few ICOs are regulated, in fact there is only one 'official' regulated ICO and it's not an ICO it's an STO (Securities Token Offering) tZERO.
It seems that there is only one coin, that everyone agrees (at least the market) is good - and that's Bitcoin.  But yet, we don't know who created Bitcoin, even though the NSA said they can't say if they created it as this is classified (classic!).
Millions of people around the world are trying to start their own coins.  Platforms like Waves allow you to do this in a few minutes after paying the ETH fee.  But what value does a coin have which can be created in the equivalent of Microsoft Money?  
You know that many of us were not born yesterday, so we're not falling for the banana in the tailpipe.

It can be you!  Just liquidate your 401k and invest in the next 'Bitcoin' - which you probably have a friend who told you what it's going to be.  WARNING - THIS IS SARCASTIC HUMOR.  CRYPTO INVESTING IS RISKY AND YOU SHOULD ONLY INVEST FUNDS IN WHICH YOU PLAN ON LOSING IN ORDER TO OFFSET YOUR MASSIVE TAX BILL ON YOUR BITCOIN GAINS YOU HAVE CARRIED FORWARD SINCE 2017.
Posted: June 29, 2018, 6:59 pm
The New York Department of Financial Services (DFS) has fined the bank for unlawful, unsafe and unsound behaviour in its foreign exchange trading business
Deutsche Bank agreed to pay the fines for violations of New York banking law that included, among other things, skewing prices and misleading customers.
The violations were discovered during a DFS investigation, which found that the bank had acted improperly between 2007 and 2013, during which time it was the largest foreign exchange dealer in the world.
The behaviour by traders included use of multi-party chat rooms to coordinate activity and share confidential information, misleading customers on benefits of the bank, and manipulating foreign exchange currency prices and benchmark rates.
“Due to Deutsche Bank’s lax oversight in its foreign exchange business, including in some instances, supervisors engaging in improper activity, certain traders and salespeople repeatedly abused the trust of their customers and violated New York State law over the course of many years,” said DFS superintendent Maria Vullo.
She added that inadequate supervision could pose risks to the “soundness of an institution” and that compliance failures can lead to procedures harmful to customers and markets.
Vullo added that she appreciated the bank’s full cooperation and its internal investigation.
The bank will now provide plans on enhanced internal controls, an internal audit and a compliance risk management program in regards to its foreign exchange trading business.
In April, Mark Johnson, former head of HSBC Bank foreign exchange cash trading in the US became the first person to be imprisoned as part of a global crackdown on currency rigging.
 Deutsche Bank has been contacted for comment.
Posted: June 27, 2018, 2:24 am

Summary

The world forgot about the tZERO ICO.
tZERO recently announced a partnership with BOX Digital Markets.
They raised $250M, reaching their goal (according to sources).
There is nothing stopping tZERO and OSTK from a 10x or 20x return.
The crypto market has cooled down, with some sites indicating that the market is down to $268 billion market cap (total, including all coins). There is no debate that Bitcoin has failed to meet the hopes of many (that it would go to $100,000 or higher) - it has failed. The hopers and the HOLDers are still hoping and HOLDing, while major enterprise grade projects are taking shape in the crypto community, the most prominent and significant being the tZERO token trading platform, and we will explain why here.
First let's understand why this recent news is significant:

READ THE FULL ARTICLE HERE ON SEEKING ALPHA

OPEN A FOREX ACCOUNT


Posted: June 19, 2018, 5:50 pm
We've been closely watching the Crypto Currency Market if you can call it that, with all the fake data, fraud, and related problems.  One thing stands out - it's not so different than FX, commodities, futures, or stocks.  Market dynamics are market dynamics.  And as most readers of this fine site will already know - the majority of traders lose.  There's been analysis done on this, we all know how this ends.  A few early investors make a bundle and thousands or millions even are left holding the bag.  From one perspective, a bubble is much like a ponzi scheme.  In MLM, there are a few who get rich - the founders.  
Unless you are the founder - how do you know which Crypto is going to be the next Bitcoin?  You really don't.  You have no clue.  You can go to Korea and do all the due diligence you want, the fact remains that no one can see the future and even a top analyst can be wrong at times.  
Quant traders have a similar doctrine they all share - they are smart enough to know how stupid they are.  They know their own flaws and they submit to a higher power- that is Artificial Intelligence.
Computing power is now so massive that it is possible that anyone can from their own home office create an intelligent trading system that does well.  Of course, as with the laws of market dynamics, it's also possible to create a robot which is worth exactly zero - a big pile of crap.  When a quant makes an algorithm it's either priceless or worthless.  If it works, he has effectively created a money making machine.  If it doesn't work, there isn't any value to anyone not even academics.
So how do you know what method works, how to build a working bot or buy one?  There are obvious conflicts of interest in those who sell bots.  The internet has been dominated by good marketeers, while profitable quants mostly keep their strategies to themselves.  Selling a product, and trading a robot, are really 2 different skills.
Crypto so far has proven the same as most markets: impossible to trade.  Just look at this chart and tell me where you would have entered and exited without the foreknowledge of what is actually going to happen:

While many are kicking themselves for not buying and holding, I can tell you as a trader and I speak for many in the room that there is no way I would have had the patience to sit on a hugely profitable position for 3 years while the price goes parabolic.  
That's why quants develop and trade algorithms - picking entries and exits can prove to be brain-destroying.  There are dangers and risks with robots too of course, but they are of a different nature.
Choose your bot @ www.fxbot.market   ANNOUNCEMENT:  ROBOTS WANTED!  List your robot for free - connect to Handy the trade copy bot and let fxbot.market do all the work for you.

Posted: June 18, 2018, 11:36 pm
Bitcoin and other cryptocurrencies flash-crashed Saturday night, one day after the US Commodity Future Trading Commission (CFTC) sent subpoenas four cryptocurrency exchanges in an ongoing probe into bitcoin manipulation that began in late July - following the launch of bitcoin futures on the CME, according to the Wall Street Journal
CME’s bitcoin futures derive their final value from prices at four bitcoin exchangesBitstamp, Coinbase, itBit and KrakenManipulative trading in those markets could skew the price of bitcoin futures that the government directly regulates.
In delay reaction, Bitcoin fell as much as $433 or 5.6% in Saturday night trading, with some noting that the flash crash happened shortly after a 90th ranked crypto exchange, Coinrail, had suffered a "cyber intrusion", and was likely the more relevant catalyst for the crypto price drop.
While major Cryptocurrencies were down from 4.5 - 5.5%, Bitcoin Cash dropped over 8.4%. 
The CTFC subpoenas were issued after several of the exchanges refused to voluntarily share trading data with the CME after being asked last December. Of note, the CFTC regulates the CTC. 
According to the WSJ, the CME, which launched bitcoin futures in December, asked the four exchanges to share reams of trading data after its first contract settled in January, people familiar with the matter said. But several of the exchanges declined to comply, arguing the request was intrusive. The exchanges ultimately provided some data, but only after CME limited its request to a few hours of activity, instead of a full day, and restricted to a few market participants, the people added.
What is curious, is that if there was indeed manipulation since the launch of bitcoin futures, it was to the downside, as the price of cryptos peaked around the time the crypto futures were launched, and are down well over 50% in the 6 months since.
Coinbase in particular has been under the watch government regulators. On February 23, Coinbase sent an official notice to around 13,000 customers to notify them they were legally required to turn over their information to the IRS
The IRS had initially asked Coinbase in July 2017 to hand over even more detailed information on every one of its then over 500,000 users in an attempt catch those cheating on their taxes. However, another court order in Nov. 2017 reduced this number to around 14,000 “high-transacting” users, which the platform now reports as 13,000, in what Coinbase calls a “partial, but still significant, victory for Coinbase and its customers.”
Coinbase told the around 13,000 affected customers that the company would be providing their taxpayer ID, name, birth date, address, and historical transaction records from 2013-2015 to the IRS within 21 days. Coinbase’s letter to these customers encourages them “to seek legal advice from an attorney promptly” if they have any questions. Their website also states that concerns may also be addressed on Coinbase’s Taxes FAQ. The ongoing legal battle between Coinbase and the US government dates back to November, 2016, when the IRS filed a “John Doe summons” in the United States District Court for the Northern District of California.
On Feb. 13, personal finance service Credit Karma released data showing that only 0.04 percent of their customers had reported cryptocurrencies on their federal tax returns. 
And in April, former New York Attorney General, Eric "we could rarely have sex without him beating me" Schneiderman, launched a probe of 13 major cryptocurrency exchanges according to the Wall Street Journal - claiming that investors dealing in the fast-growing markets often don’t have the basic facts needed to protect themselves.
Former AG Schneiderman’s office said the program, called Virtual Markets Integrity Initiative,  is part of its responsibility to protect consumers and ensure the integrity of financial markets, and its goal is to ensure that investors can have a better understanding of the risks and protections afforded them on these sites.
CFTC Commissioner: Crypto is a "modern miracle"
While the CFTC, IRS and New York Attorney General's office are all cracking down on cryptocurrency exchanges, it seems to all be part of the government's embrace of virtual currencies.  Last week CFTC Commissioner Rostin Benham called cryptocurrencies a "modern miracleat the Blockchain For Impact Summit held at the UN in New York last week. 
But virtual currencies may – will – become part of the economic practices of any country, anywhere.  Let me repeat that:  these currencies are not going away and they will proliferate to every economy and every part of the planet.  Some places, small economies, may become dependent on virtual assets for survival.  And, these currencies will be outside traditional monetary intermediaries, like government, banks, investors, ministries, or international organizations.
We are witnessing a technological revolution.  Perhaps we are witnessing a modern miracle. -Rostin Benham
Rostin hinted at the upcoming legal action against the exchanges during his speech:
Under the CEA and Commission regulations and related guidance, exchanges have the responsibility to ensure that their Bitcoin futures products and their cash-settlement process are not readily susceptible to manipulation and the entity has sufficient capital to protect itself.  The CFTC has the authority to ensure compliance. In addition, the CFTC has legal authority over virtual currency derivatives in support of anti-fraud and manipulation including enforcement authority in the underlying markets.

Meanwhile, the official Bitcoin website removed references to Coinbase, Blockchain.com and Bitpay, according to Crypto News - only one of which, Coinbase, was subpoenaed. 
http://Bitcoin.org  just removed/censored the 2 largest US Bitcoin companies (@BitPay Payment processing and @coinbase Bitcoin Exchange). It’s a good move: Bitcoin Core is obviously no longer Bitcoin, and should ideally be removed from both @BitPay and @coinbase too.

The CFTC officially recognized bitcoin as a commodity in September of 2015 when it went after Coinflip for operating a platform for trading bitcoin options without the proper authorization. Since the agency effectively asserted its dominance over the bitcoin market with that decision, this is the first time it has given its blessing to an bitcoin options trading platform. Expect a burst of institutional trading activity to follow - especially since they approved institutional options trading in July
This post sponsored by Total Cryptos @ www.totalcryptos.com  
Posted: June 10, 2018, 8:13 pm
The Justice Department has opened a criminal probe into whether traders are manipulating the price of Bitcoin and other digital currencies, dramatically ratcheting up U.S. scrutiny of red-hot markets that critics say are rife with misconduct, according to four people familiar with the matter.
The investigation is focused on illegal practices that can influence prices -- such as spoofing, or flooding the market with fake orders to trick other traders into buying or selling, said the people, who asked not to be identified because the review is private. Federal prosecutors are working with the Commodity Futures Trading Commission, a financial regulator that oversees derivatives tied to Bitcoin, the people said.
Authorities worry that virtual currencies are susceptible to fraud for multiple reasons: skepticism that all exchanges are actively pursuing cheaters, wild price swings that could make it easy to push valuations around and a lack of regulations like the ones that govern stocks and other assets.
Bitcoin extended its Thursday declines after Bloomberg News reported the investigation, and was down 3 percent to $7,409 as of 9:32 a.m. London time. It’s down more than 20 percent since a May 4 peak.
Such concerns have prompted China to ban cryptocurrency exchanges and nations including Japan and the Philippines to regulate them, contributing to a slump that has sent Bitcoin below $8,000 this year. Still, digital coins continue to be a global investment craze, drawing legions of loyalists to industry conferences, generating celebrity endorsements and increasingly attracting the attention of Wall Street.

Traders Colluding?

The illicit tactics that the Justice Department is looking into include spoofing and wash trading -- forms of cheating that regulators have spent years trying to root out of futures and equities markets, the people said. In spoofing, a trader submits a spate of orders and then cancels them once prices move in a desired direction. Wash trades involve a cheater trading with herself to give a false impression of market demand that lures other to dive in too. Coins prosecutors are examining include Bitcoin and Ether, the people said.
A Justice Department spokesman declined to comment and CFTC officials didn’t respond to requests for comment.
The investigation, which the people said is in its early stages, is the U.S.’s latest effort to crack down on an industry that was initially embraced by those who were distrustful of banks and government control over monetary policy.
But Bitcoin’s meteoric rise -- it surged to almost $20,000 in 2017 after starting the year below $1,000 -- has been a lure for mom-and-pop investors. That’s prompted regulators to grow concerned that people are jumping into cryptocurrencies without knowing the risks. For instance, the Securities and Exchange Commission has opened dozens of investigations into initial coin offerings, in which companies sell digital tokens that can be redeemed for goods and services, due to suspicions that many are scams.
Cryptocurrency trading is fragmented on dozens of platforms across the globe, and many aren’t registered with the CFTC or SEC. As a derivatives watchdog, the CFTC doesn’t regulate what’s known as the spot market for digital tokens -- which is the trading of actual coins rather than futures linked to them. But if the agency finds fraud in spot markets, it does have authority to impose sanctions.

Fraud Target

The limited oversight of crypto trading makes it a target for crooks, said John Griffin, a University of Texas finance professor who has studied manipulation, including in digital-coin markets.
“There’s very little monitoring of manipulative trading, spoofing and wash trading,” Griffin said. “It would be easy to spoof this market.”
Signs are emerging that some crypto exchanges realize the industry’s growth could be constrained if large swaths of investors conclude that trading platforms have a “buyer beware” approach to oversight.
Cameron and Tyler Winklevoss
Photographer: David Paul Morris
The Winklevoss twins, who are known for getting rich off Facebook Inc., hired Nasdaq Inc. last month to conduct surveillance of digital coins trading on their exchange, Gemini Trust Co. Cameron and Tyler Winklevoss have also urged trading platforms to band together to form a group that would serve as a self regulator for the industry.
Some market participants have alleged that crypto manipulation is rampant. Last year, a blogger flagged the actions of “Spoofy,” a nickname for a trader or group of traders that have allegedly placed $1 million orders without executing them.


Posted: May 24, 2018, 12:40 pm
(Bloc10 - 5/3/2018) - Bloc10, a Blockchain FinTech development and management company, has released a free software tool for Windows and Mac "Blockpad" get it free at www.blockpad.io Blockpad is a private encrypted personal ledger, notepad, password manager, secure browser to access exchanges, one time pad, and more. Blockpad is an ultra-secure environment by design, using multiple layers of security based on AES-256, a Cryptographic technology so secure, the NSA has stated it is sufficient to keep TOP SECRET information secure: The design and strength of all key lengths of the AES algorithm (i.e., 128, 192 and 256) are sufficient to protect classified information up to the SECRET level. TOP SECRET information will require use of either the 192 or 256 key lengths. The implementation of AES in products intended to protect national security systems and/or information must be reviewed and certified by NSA prior to their acquisition and use.[15] Blockpad is the Notepad for Crypto Traders, Blockchain Developers, Coders, Intelligence Operatives, Crypto Investors, et. al. Blockpad is a multi-use encrypted notepad secured with AES-256 and 2FA. Main features include code highlighting notepad for code writing, task list, document creation; keeping account usernames and passwords to Crypto related accounts securely in one place; and a Coin Records personal encrypted ledger to record coin transactions in an independently secured and controlled system. All the content in Blockpad is encrypted in a .bloc file accessible only with user credentials and 2FA. Blockpad is freeware with a paid option; Blockpad Premium is $1.99/month and offers more features, no ads, encrypted cloud backup of your .bloc file, premium skins, and an online recovery system. With security in mind, Blockpad can help you stay organized by keeping track of coin transactions, passwords, account credentials, and more. Blockpad is an application written in QT by Bloc10, a software and technology development company. It is available for Windows, Linux, Mac, Android, and iOS. With Blockpad's secure account tab, you can save all your passwords in one encrypted place. Unlike other password applicaitons, Blockpad is encrypted with AES and protected by 2FA which you can setup as complex as you'd like. There is even a timer that will lock the application after x minutes in case your curious roomate or office worker is snooping around your desk.  get it free at www.blockpad.io Perhaps one of the most useful writing applications and the most ubiquitous of the Windows generation has been Notepad++. It has a ridiculous amount of features, is useful in many ways, and is free. It will open files Windows notepad doesn't, such as large files that can cause memory issues in Windows notepad, and types of binary files with no extension. Basically Notepad++ is the most basic programming tool as it allows the creation and manipulation of simple text files. Programming environments such as Microsoft Visual Studio and other IDE are enhanced 'cockpit' environments but at the end of the day for programming all you need is a notepad and a compiler. Notepad++ is a limitless text editor and stops short of offering only compiling tools (and this is a logical and rational design decision as it remains in its own exclusive domain).  get it free at www.blockpad.io Enter Bitcoin and Blockchain in the Fall of 2017 when everything is moving 'on-chain' and suddenly people are opening Crypto trading accounts at record paces. As with many new paradigms, the hype and excitement ran far infront of development; few useable robust tools exist for Blockchain development. Crypto trading is another area where there is more interest than there is robust tools to support it. "Exchanges" often fail in simple functions like 2FA, account reporting, logging in, money transfers, and it's mostly web based. Users who are not programmers or technical people are left only to trust friends who are. Unlike in traditional banking where everything is made for 'moms and dads' - in the Crypto world, not. So we developed Blockpad, it's a multi-use Notepad tool, we hope it is the Notepad++ of Crypto.  get it free at www.blockpad.io It's free, it's safe, and it's fun! Blockpad has multiple uses:
  • As a secure notepad, for taking notes, or for programming Solidity, or your website.
  • As a secure private ledger, for recording your Crypto transactions.
  • As a store of account usernames and passwords, including 2FA info.
Everything is encrypted, you can't open Blockpad without creating an Encrypted .block file using AES. We digitally signed it so Windows should recognize it. Now we're releasing the Beta version and will work on a cloud backup solution and premium version. Stay tuned in for more updates by joining Bloc10 for free. Get bloc.  get it free at www.blockpad.io blockpad
Posted: May 4, 2018, 12:57 pm
Billionaire Peter Thiel’s venture-capital firm is investing a startup designed to optimize block trading for major cryptocurrency market participants.
The Wall Street Journal reports that Founders Fund is among the investors in the early-stage startup, called Tagomi Systems Inc., people familiar with the situation said.
Thiel's investment comes after it was revealed that Founders Fund itself has already made a "monster bet" on bitcoin.
It also confirms Thiel's bullish view on bitcoin reported in October last year when the billionaire investor argued that critics of bitcoin were "underestimating" the cryptocurrency.
“If bitcoin ends up being the cyber equivalent of gold and it has a great potential left and it’s a very different kind of thing from what people in Silicon Valley focus on—companies, not algorithms not protocols, but this might be maybe one exception that is very underestimated,” the Silicon Valley elite said.
And, in March, he said there will ultimately be only one digital equivalent to gold, and bitcoin, as the "biggest" cryptocurrency, will triumph.
The question with something like bitcoin is whether it can become a store of value. And the thing it would replace is something like gold. The analogy is it's like bars of gold in a vault that never move and you get it and it's a hedge of sorts against the whole world falling apart."
"The objections that people have to bitcoin are also objections to gold. It's this weird currency that's not backed by any government. Same thing is true of gold. It's not clear what the intrinsic value of bitcoin is. Same thing is true of gold. It may well be a bubble, but - and most bubbles are unstable and end - one of my friends has this line that 'money is the bubble that never pops', so if it is a bubble, then it is money."
"If everybody decided that a $100 bill was worthless then you wouldn't want to have a $100 bill."
According to The Wall Street Journal, the problem that the new startup aims to solve stems from a fragmented trading environment across global cryptocurrency exchanges, where, for instance, the price of bitcoin can vary between platforms. As such, the startup - co-founded by Greg Tusar, the former chief of electronic equities trading at Goldman Sachs - is building a platform that finds the best market to execute large numbers of cryptocurrency trading orders at a specific time.
Currently, buying or selling large quantities of digital currencies is tricky because the market is fragmented across more than 100 crypto exchanges around the world. Connecting to all of them requires setting up a separate account with each one, and crypto exchanges generally impose limits on daily flows in and out.
That makes it cumbersome and time-consuming to pull off a big trade, and the price of a digital currency can move dramatically before the investor finishes buying or selling.
Tagomi hopes to make it easier to make such bulk trades by borrowing a page from the stock market. In U.S. equities, broker-dealers use systems called smart order routers that dispatch their clients’ buy and sell orders to various venues, including a dozen exchanges and more than 30 off-exchange “dark pools.”
These routers make rapid-fire decisions about which market is the best place to execute a trade at any given time. Tagomi is looking to develop a similar tool for the crypto markets, according to people with knowledge of its plans.
It certainly seems clear that Thiel is making a bet (size of the bet has not been reported) that institutional interest is expected to increase dramatically in cryptocurrency trading.
Posted: May 3, 2018, 12:08 am
(Bloc10 4/29/2018) -- This is a macro-deep-analysis of how Crypto can create a new parallel system by feeding off the old carcass of the dying fiat central banking model.
As we explain in our book Splitting Pennies – the financial world is not as it seems. Gurus from many, non-correlated financial disciplines have been predicting for years that the current financial system is going to collapse.  But just like Planet X that never came, and the false alarm of the Y2K bug, it seems that collapse has been postponed.  There’s an answer for this, that isn’t being reported in the financial media.  We must look at the whole picture here, so think macro, think global, and read carefully.  First let us state plainly that this collapse theory is all based on solid data – the debt bubble, over leveraged banks like DB who is 50:1, growing stagnant economic growth, etc. the list of apocalyptic economic data goes on and on – so what’s keeping the system afloat?  Greed? There is one difference and it’s a big difference, a huge one, that all the doom and gloomers need to consider.  It’s not a ‘this time it’s different’ argument, but we have to consider global system dynamics and how they were different in Rome and other ‘empire collapse’ metaphor scenarios; today there are powerful Artificial Intelligence systems that are so powerful, they can out think any opponent 10 moves ahead.  Perhaps it is this intelligence that suggested the creation and proliferation of Bitcoin to replace the economic position that traditional fiat banks failed to provide?  If you look at the system as a whole, Bitcoin is an extremely intelligent solution to economic decay that Quantitative Easing alone cannot solve (and QE has proven to be impotent). Facebook is at the end of it’s use cycle.  Perhaps the most important Fakebook article here on ZH is this one:
"Every part of this has made me sadder and sadder and sadder. I feel like my baby has turned out to be something horrible, and these people I trusted and helped along have forgotten where they came from," he said in a conversation with Kevin Delaney, Quartz’s editor-in-chief.  McNamee has become an outspoken critic of the company, comparing its role in the 2016 US election to "the plot of a sci-fi novel" while at the same time admitting that he has "profited enormously" by backing Facebook early on. The organization he helped found, the Center for Humane Technology, has made it a mission to expose Facebook’s multiple flaws, and to try to fix them.
How is Fakebook related to Crypto?  You should have read Michael Lewis’ The New New Thing – A MUST READ.  These ideas are not dated.  Silicon Valley, Wall St., and DC still operate in this way. Fakebook created a massive bubble out of nothing, 462 Billion as of today.  Facebook isn’t anything, they don’t build anything, they are just programming the minds of the less gifted and in the process keeping tabs on what their neighbors feed their dogs.  Here’s what one Fakebook insider had to say:
During his talk, he echoed criticisms by early Facebook executive, Chamath Palihapitiya, who compared Facebook to “Internet crack” and said it’s “ripping apart the social fabric of how society works.”
Fakebook did it’s job.  It ripped apart the social fabric of how AMERICAN society works.  While Facebook is a global app, it doesn’t have the same significance in other countries.  Perhaps a few US friends like UK, Australia, etc. are in the same boat – but most countries not.  Facebook is from the beginning an intelligence collection apparatus and means of social control, first and foremost.  Incidentally, investors made a bundle on it and it’s a darling of Wall St. (until recently).  Let’s be practical, without InQTel behind it, Fakebook would have never got off the ground.  The CIA needed a slimy weasel like Suckaburger to do their electronic bidding as the spy game globally and domestically was moving to an electronic paradigm.  Don’t forget that the military created the internet, it wasn’t developed by 2 dudes in their mom’s garage.  The internet has always been and perhaps always will be a military communications system used by the public.  There’s a price to pay for ‘free’ networks!  Now of course, there are groups of private networks who have setup peer to peer encrypted communications systems and their own private social networks and chat systems like Telegram, but that represents a small percentage of the overall population which is irrelevant. If we look at Facebook on the surface, for what it is – a pump and dump scheme backed by the Military sold by Wall St. to Main St. to control them and suck more of their hard earned dollars from them, meanwhile keeping tabs on their every move, and making a buck for America’s owners – Bitcoin is the same thing!  Let’s call a kettle a kettle. Bitcoin is popular for one reason – some people made millions on it.  And the people who made millions on Bitcoin are mostly average folks, mostly advanced or above average technical people.  With a few exceptions like Mike Novogratz, few Wall St. types, few Elite aristocrats (if any).  Sound familiar?  Remember Fakebook in 2007, 2008 even before the massive control systems, the gamed news feeds, before things just ‘vanished’ like if you write something they didn’t like (disappearing sentences, accounts, etc.)  There was a time before Fakebook went ‘viral’ that it was ‘hip’ and only for ‘techies’ not the ‘main stream’ and then suddenly it ballooned. So there are some obvious technical differences here, just like there are differences between Fakebook and the Real Estate / Sub Prime pump and dump scam, and Bitcoin, and the scams before it.  Scam is a harsh word but the fraud is so elaborate and malicious that much more harsh words are called for.  Fakebook literally can be credited with destroying the social fabric of America.  Some would argue that’s a good thing – but it’s another topic. Bitcoin is a Crypto Currency but like any investment, it has a lot of features like social media.  The interesting link here is that Social Media made Bitcoin popular.  For years the price stagnated, and it didn’t get much attention.  Once the price started going up – then it went viral.  People love making money!  It was an alternative investment for the masses.  You could buy Bitcoin with as little fiat money as you had.  This, and the fact that it was digital, and global, gave it the mass appeal finally shooting the price to stratospheric levels. So hold on to your horses in case you don’t know this and you start screaming and spook them – As we explain in our book Splitting Bits – we believe based on available public evidence that the creator of Bitcoin was the NSA, either as a sub-unit or an individual working for the NSA.  We have no smoking gun evidence – but no one else does as far as any alternative creator.  Our scenario is simply the most plausible – it’s not necessarily the facts.  There is not 100% fact showing the real face of the creator of Bitcoin.  And the NSA will not confirm or deny it’s involvement, but it will provide a statement to an FOIA request that it will not confirm nor deny if such information would be or would not be classified (of course). But what’s interesting is that, the NSA is reportedly monitoring Bitcoin transactions under a program called MONEYROCKET: For instance, one memo from the NSA, the report cited, suggested the agency has collected private information such as bitcoin user passwords, internet activity and device identifiers.
According to the report, the NSA has been monitoring the internet activities of bitcoin users since 2013 through a program with codename as OAKSTAR. And yet the new leak suggested that with MONKEYROCKET, another sub-program under OAKSTAR, the NSA may be moving closer to pinpoint users who initiate a cryptocurrency transaction."SSG11 analysts have found value in the MONKEYROCKET access to help track down senders and receivers of bitcoin," one memo reads.
If these memos are real, and there is no reason to believe they are not, they are likely an indicator of what’s really going on, such a program would likely involve a team of people, millions of dollars, and hundreds or thousands of documents.  NSA didn’t setup MONKEYROCKET to track down a few money launderers.  It’s not their job, really..   Going back to the Facebook analogy, we have to consider 1) how Bitcoin goes up and 2) how Bitcoin is primarily a grassroots movement from the fringe.  Crypto is the next bubble, we can ride the bubble – but here we will make a bombastic claim: Bitcoin is the MySpace.  Bitcoin isn’t ‘the bubble’ actually Bitcoin is a poorly designed currency and remember that for Bitcoin there was no ICO.  This ICO terrible idea was popularized mostly by quasi criminals who were ineligible for registration.  We’re referring to financial criminals, the new mafia (they have evolved from the days of protection insurance, etc.), fraudsters, Ponzi scammers, and other similar elements the Crypto world has attracted. Bitcoin is the social media of finance.  But instead of sharing photos of old friends and breakfast choices, Bitcoin enabled a higher element of socialization, i.e. ‘hey I just made 10,000% return on my money, you might want to check this out.”  It’s like the .com boom on steroids, and it was global (Bitcoin isn’t a US product per se).  In order to ‘spend’ Bitcoin it was necessary for early adopters to engage in viral marketing to make Bitcoin viable.  The concept of fully electronic money is not new, but in 1989 David Chaum’s DigiCash failed, for a number of reasons but the most likely was the fact that the internet didn’t have the penetration in 1990 as it did in 2010.  Social Media and the internet was a conduit for Bitcoin. And Bitcoin quickly gave birth to Ethereum, and now there are more than 2,000 crypto currencies being built and developed on an exponential pace.  Ironically though, there is only one regulated futures contract at the CME, Bitcoin Futures, and only 1 regulated ICO – the tZERO ICO (*it is ‘registered’ not ‘regulated’ but the point here is that tZERO has followed SEC guidelines, and they are a regulated company – they aren’t based in BFE with a bunch of John Doe’s as their Advisors). Our point here is that Bitcoin did what it set out to do – start a race of development which is fueled by the mania created by the 1,000,000% BTC/USD chart.  Something like a million percent return never happened, and likely will never again.  The group that created Bitcoin whoever they are, know very well that the large banks control the system and there is no hope of creating a ‘parallel’ system without the blessing of Wall St. and DC, this was most notably proven with Chile’s Project Cybersyn:
Project Cybersyn was a Chilean project from 1971–1973 during the presidency of Salvador Allende aimed at constructing a distributed decision support system to aid in the management of the national economy. The project consisted of four modules: an economic simulator, custom software to check factory performance, an operations room, and a national network of telex machines that were linked to one mainframe computer.[2]
Project Cybersyn was based on viable system model theory and a neural network approach to organizational design, and featured innovative technology for its time: it included a network of telex machines (Cybernet) in state-run enterprises that would transmit and receive information with the government in Santiago. Information from the field would be fed into statistical modeling software (Cyberstride) that would monitor production indicators (such as raw material supplies or high rates of worker absenteeism) in real time, and alert the workers in the first case, and in abnormal situations also the central government, if those parameters fell outside acceptable ranges. The information would also be input into economic simulation software (CHECO, for CHilean ECOnomic simulator) that the government could use to forecast the possible outcome of economic decisions. Finally, a sophisticated operations room (Opsroom) would provide a space where managers could see relevant economic data, formulate responses to emergencies, and transmit advice and directives to enterprises and factories in alarm situations by using the telex network.
The project was so head of its time, what a desktop computer can calculate was 10x more powerful than warehouses full of computers in 1971.  But the idea had to be squashed and Allende was taken out and replaced with a US friendly regime.  The timing of this dismantling of the world’s first AI economic  management system, coinciding with Nixon’s creation of the floating FX regime, perhaps the opposite of intelligence, should be noted.   Analysis & Conclusion So here’s the deal with Bitcoin and Crypto.  The big wave, the paradigm shift – it’s going to be in the regulated coin space – the Dollar Cryptos, Fedcoin, Crypto Rubble, and Crypto securities.  When you can buy and sell Crypto on regulated exchanges – then you’re going to see a real paradigm shift.  And that’s coming – but slowly. 
Over the past year, Lund says he’s met with 20 central banks exploring the potential benefits of issuing their own fiat cryptocurrency on a blockchain. Specifically, he described the “most durable digital asset” as one that is “issued by a central bank that represents a claim on fiat deposits in the real world,” but still maintains “some semblance of monetary policy.” Though he wouldn’t reveal the names of most of the central banks with which he’s meeting, he described them as largely comprised of banks from the G20, an international forum with members including China, Russia, the U.S. and the EU. Lund further described the central banks as “clients in some capacity.” Based on these conversations, he said he expects the first central banks to issue a fiat currency on a blockchain will be “the smaller ones” with a high concentration of interest in Asia and North America.
Is Bitcoin going to 50,000? Probably not.  But Bitcoin’s rise to 20,000 surprised many, so it would not be surprising if it went to 100,000.  Just remember one thing – the only thing that makes Bitcoin go up is buying and no selling.  Selling pressure from Mt. Gox trustees put sell side pressure on Bitcoin as they unloaded Billions of USD worth of Coins on the market.  Bitcoin whales that control a huge chunk of available supply could sell.  The only thing that can make Bitcoin go up to 50,000 are billions in USD worth of buy orders.  There is a physical limit to the price of Bitcoin based on how much fiat currency there is in the world.  For example if every available US Dollar, Euro, and all other fiat currencies converted ALL of themselves to Bitcoin it would go very high, and we can calculate what that number might look like.  But it is a number it is not infinite.  The same can be said for stock, real estate, or other bubbles – this is bubble dynamics 101 something that the Bitcoin crowd mostly misses. Here’s the demotivational speech.  So we are claiming that Bitcoin is the MySpace and the “Facebook” of Bitcoin is still to be developed.  Just like in the pre-IPO space, investors are looking at in the best case 20x – 100x returns if they catch it.  Of course, it will not be easy to know WHICH of the 10,000 new coins is going to be the next Facebook.  But likely it will be one backed by Goldman Sachs, it will be made in Silicon Valley or in Berlin, and it will be regulated.  Regulated Crypto is the future.  10 years from now probably all assets will be Crypto assets – only because of the security and efficiency features.  The global FX markets for example, something Crypto stands to revolutionize, are really outdated, and didn’t really change their model since FX was created by Richard Nixon in 1971.  Even until 2007 banks engaged a majority of their volume on ‘voice orders’ !  The global financial system has been ripe for an upgrade, and what Bitcoin did it said this to the world.  It sent a message which was well received by Main St. investors, Wall St. financial engineers, and politicians alike. Now, they are pedal to the metal coding and designing around the clock.  The first coin in the class we are referring to here is Basis, backed by Wall St. and Silicon Valley and cooked up in a frat room at Princeton, perhaps the most Elite of the finance schools depending on who you are debating.
Investors apparently love what Basis  is cooking up. The upstart is announcing today that it has raised a somewhat stunning $133 million in funding from Bain Capital Ventures, GV, longtime hedge fund manager Stan Druckenmiller, one-time Federal Reserve governor Kevin Warsh, Lightspeed Venture Partners, Foundation Capital, Andreessen Horowitz,  WingVC, NFX Ventures, Valor Capital, Zhenfund, Ceyuan, Sky Capital, Digital Currency Group and others.
The coin idea here is a ‘Stable Coin’ – which isn’t a unique idea, it is more of a sub-movement in the Crypto community.  While Bitcoin got the world’s attention, it is a poor spending currency, certainly not a store of value, and the Blockchain technology behind Bitcoin is basic, although stable, does not represent the best of what Blockchain can do, as many other coin startups have pointed out. How this will save the financial system?  It is a transition to a new global financial regime.  Crypto Currency itself is not such an amazing development.  In Scandinavian countries they have been using digital electronic money for years.  What’s the difference really between Bitcoin in your wallet or your 100,000 USD at the bank?  The banking system has become bloated, inefficient, and in great need of reform. New markets will open up which are Crypto-denominated.  Trading strategies will evolve that were not before possible.  The establishment will not be destroyed, by design – Bitcoin requires vast amounts of electricity to be mined.  So unless the next ICO is going to raise $10 Billion to build ‘clean’ Thorium nuclear reactors, Bitcoin is not so different than the Petro Dollar as it must pay it’s utilities in USD from mining.  Of course that’s just one model as shown by Bitcoin – but there are others – countless others.  Bitcoin started a chain of events (pun intended) that will lead to the next ‘paradigm’ of currency.
Document Information This deep analysis report was commissioned by Bloc10 authored by Global Intel Hub. 4/29/2018 for the 'Blogosphere'
Bloc10 update Bloc10 released recently Total Cryptos Android App (Free) , the Desktop Website @ www.totalcryptos.com and soon will release an Apple App.  Coming soon: Machine Learning Engine to predict the price of Crypto Currencies (paid service) and Blockpad, the world’s first secure Notepad for Crypto investors, Blockchain developers, and intelligence operatives.  To stay tuned on further developments in the Crypto space plugin to Bloc10 @ www.bloc10.com/join
Links: NSA MONKEYROCKET DOCUMENTS: Global Intel Hub Library
https://wp.me/P6ZQKC-4X  New New Thing Book
Posted: April 30, 2018, 1:23 am