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Though the mainstream media (and many in Congress) has largely dismissed President Trump's cries about an emergency along the US southern border, even the New York Times and Washington Post have acknowledged in recent weeks that the number of migrants crossing the southern border is climbing rapidly. As the number of apprehensions have increased, the situation has gotten so bad that the administration has decided to start releasing some migrant families because its detention facilities along the border have become so crowded.

And as it turns out, migration is surging north of the border as well, as Canada's statistics agency reported on Thursday that the country experienced the largest inflow of migrants in more than a century last year. Though the figures excluded illegal migrants (who have also reportedly been entering the country in record numbers), more than 320,000 people migrated to Canada last year, with more than 71,000 arriving in the final quarter - including legal refugees attracted by Prime Minister Justin Trudeau's "open door" policy.


The increase is the largest since 1913, when 401,000 migrants entered Canada. The country has detailed migration data stretching all the way back to the mid-19th century.

As birthrates in the developed world continue to slide, the influx of migrants helped Canada's population swell by more than half a million people last year, the largest annual increase since the 1950s, and the fastest pace of growth since the early 1990s. Though it's worth noting that the boom includes many foreign students, some of whom aren't planning to remain in Canada for the long term.


All told, Canada's population increased by 528,421 last year, or 1.4%.

BBG touted the "economic tailwind" from the increase in migration, which helped to offset the country's deceleration in its organic population growth (the increase reportedly fueled a surge in employment).

Author: Tyler Durden
Posted: March 21, 2019, 9:00 pm

Authored by Michael Snyder via The End of The American Dream blog,

The worst flooding disaster in the history of the Midwest is just getting started, and as this crisis unfolds we are all going to be feeling the pain.  The “bomb cyclone” that recently brought hurricane-force winds and blizzard conditions to the middle of the nation was the spark that set off this catastrophic flooding, and now all of the snow from one of the snowiest winters in decades is going to be feeding into rivers that have already shattered all-time flood records.  As you will see below, most of the Great Plains and Upper Midwest is currently covered by more than 10 inches of snow, and all of that water has to go somewhere.  As all of that snow melts, we are going to witness an agricultural disaster that is far beyond anything that we have ever seen before in modern American history.

If you think that I am exaggerating even a little bit, please read this article all the way to the end.

As I did research for this article, I was floored by the immense devastation that has already taken place.  But if the crisis was over, at least farmers could start picking up the pieces.

Unfortunately, the crisis is not over.  In fact, Iowa Governor Kim Reynolds is saying that we are “just getting started”.  The following comes from a USA Today article entitled “‘It looked like an ocean’: Severe Midwest flooding could last all spring”

Gov. Kim Reynolds is warning Iowans what millions of Midwesterners have come to understand in recent days – the severe flooding that has swamped much of the regionmay be a long way from over.

Reynolds said the snowmelt and spring rains could create additional flooding in the weeks ahead because of compromised levees.

“We’re in for the long haul. We’re just getting started,” said Reynolds, who added that her tour of western Iowa this week had revealed unprecedented flooding. “It looked like an ocean.”

This was one of the worst winters for the middle part of the country that we have seen in ages, and now we are entering melting season.

According to Bloomberg, the amount of snow currently covering the upper Midwest and Great Plains is absolutely staggering…

At least 91 percent of the upper Midwest and Great Plains is snow covered to an average depth of 10.7 inches, according to the U.S. National Operational Hydrologic Remote Sensing Center in Chanhassen, Minnesota. The center tracks snow nationwide and sends out airplanes to measure its depth.

So what is going to happen when all of that snow melts and starts pouring into the major rivers?

Needless to say, this is beyond a “worst case scenario” for countless numbers of Midwest farmers.

I am going to share with you some excerpts from mainstream news reports about the devastation that we have already witnessed.  After reading each excerpt carefully, I think that you will agree with me that we are literally facing a national food production nightmare.

At this moment, millions of acres of farmland are underwater, and that is not going to change any time soon.  When the flood waters came, they moved so rapidly that they literally picked up pigs and baby calves and carried them along.  Roads, rail lines and entire small towns have been washed away, and so even if farmers had something left to sell they couldn’t get it to market anyway.

We have also witnessed the loss of massive stockpiles of wheat, corn and soybeans that had already been harvested.  The following comes from Reuters

As river levels rose, spilling over levees and swallowing up townships, farmers watched helplessly as the waters consumed not only their fields, but their stockpiles of grain, the one thing that can stand between them and financial ruin.

“I’ve never seen anything like this in my life,” said Tom Geisler, a farmer in Winslow, Nebraska, who said he lost two full storage bins of corn. “We had been depending on the income from our livestock, but now all of our feed is gone, so that is going to be even more difficult. We haven’t been making any money from our grain farming because of trade issues and low prices.”

According to the U.S. Food and Drug Administration, flood-soaked wheat, corn and soybeans are considered to be “adulterated” and they must be destroyed.

And thanks to the ongoing trade war with China, farmers had a staggering amount of wheat, corn and soybeans stored on their farms right now…

As of Dec. 1, producers in states with flooding – including South Dakota, Nebraska, Kansas, Minnesota, Iowa, Missouri, Wisconsin and Illinois – had 6.75 billion bushels of corn, soybeans and wheat stored on their farms – 38 percent of the total U.S. supplies available at that time, according to U.S. Department of Agriculture data.

Are you starting to get the picture?

In one county alone, more than a million bushels of corn are sitting under the floodwaters at this moment

Fremont County farmers estimate about 390,000 bushels of stored soybeans and about 1.2 million bushels of stored corn are under water. And Jorgenson said more of last year’s grain was being swallowed up Tuesday as the Missouri River crests.

At local cash prices for corn and soybean, that’s about $7.3 million farmers may be unable to replace. And that’s just one county, Jorgenson noted.

Ladies and gentlemen, food prices are about to start soaring in a major way.  There has not been such a massive blow to U.S. food production in my entire lifetime.

For many farmers, this truly is the end of the line.  One of the farmers that has reached his breaking point is 23-year-old Clint Pischel

“When you’re losing money to start with, how do you take on extra losses?” asked Clint Pischel, 23, of Niobrara, Neb., whose lowland fields were flooded by the ice-filled Niobrara River after a dam failed. He spent Monday gathering 30 dead baby calves from his family’s ranch in this northern region of the state, finding their bodies under huge chunks of ice.

Can you imagine losing 30 baby calves and not being able to do anything about it?

But Doug and Eric Alberts were hit even harder.  They lost nearly 700 animals to the floodwaters

Doug and Eric Alberts are trying to round up the surviving hogs on their 9-acre farm in Fremont, Nebraska. There aren’t many. The family estimates they were only able to save 14 out of 700 of their livestock.

The father and son have worked for three years to build this business. Then, a few days ago, the water came.

“About a 3-foot wall … 100-foot wide … just flowing over the road,” Doug recalled.

Within minutes, 7 feet of water covered their farm.

Even before the flooding, farm bankruptcies had hit the highest level since the Great Recession, and now those numbers are going to explode much, much higher.

In addition to everything else, all of this flooding is causing massive topsoil erosion.  We had already lost over half our topsoil, and we aren’t too far from an apocalyptic situation

And severe winter and spring floods take another toll that’s much more difficult to quantify: Soil loss, on a grand scale, right in the region that provides a huge amount of our food supply. The Midwest boasts one of the globe’s greatest stores of topsoil, more than half of which has been lost in the past 50 years. Topsoil is the fragile, slow-to-regenerate resource that drives agriculture. As University of Washington ecologist David Montgomery explained in his terrific 2007 book Dirt: The Erosion of Civilizations: “With just a couple feet of soil standing between prosperity and desolation, civilizations that plow through their soil vanish.”

I wish that I could accurately convey the seriousness of what we are facing.

Food production in the United States is going to be way, way down this year.  Prices at the grocery store are immediately going to start rising, and they are going to keep rising all year long.  So now is the best time to stock up and to get prepared for what is coming.  Our breadbasket has been absolutely devastated, and things are only going to get worse.  The mainstream media seems to think that this is just another in a long string of major natural disasters that has hit our nation in recent years, but the truth is not so simple.  This disaster is going to have a dramatic impact on our ability to grow our own food, and even if everything went perfectly from this point forward we are talking about a recovery that would take many, many years.

As I conclude this article, I would like to share with you an extended excerpt from something that was posted on Facebook by Cane Creek Mercantile

Stories have slowly been surfacing, and images have been taken showing the complete and utter chaos Nebraska is currently in. Images of farmers and ranchers wading through the water carrying hay to the haggard cattle, and frightened horses… Using a Deweze feed box to pull near frozen sheep from what would be a snowy grave… Using aluminum scoop shovels to quite literally tunnel out buried bulls. Taking tractors into the mud and slop to skillfully grab ahold of cows who are stuck in belly deep mud and carry them to safety and feed. Highway patrol officers helping free baby calves that had been quite literally frozen to the ground. The list of things go on. Our ag community is working night and day to save each and every animal that they can, sacrificing sleep, food, and their own well-being to provide the livestock those very things. Our farmers and ranchers, and neighbors of the rural communities around the nation are banding together to ensure that help will arrive.

With these things being said, there will be death loss, and sadly in staggering numbers. Fields that are normally used for growing beans, corn, and grain for example… All are under tons of snow or several feet of water. This means these fields will more than likely not produce a crop this year, which will drive prices up throughout the year and into the future until we as a nation can recover further down the road. But please, keep in mind why that is when you go to the grocery store, and remember just how many are affected by this disaster.

There will be families that have lost everything. They lost equipment, their houses, sheds, tools, and worst of all, their animals they care deeply for. Their livelihoods are being stripped from them in the most painful manner possible. Many will no longer be able to live the life they’ve known and loved their entire life. They will be displaced, and times for them will be harder than anything anyone will ever have to face. So, when you are at the grocery store, please keep in mind the cause for the prices climbing up, and instead of getting frustrated and complaining for having to pay more, be thankful for what you have and say a prayer for the folks suffering in Nebraska.

The “new normal” along the Mississippi River, the Missouri River and other major rivers in the middle part of the country is going to mean much, much higher prices at the grocery store.

These days, a full cart of groceries can easily run $200 or more.

So how bad will things ultimately get as this crisis continues to unfold?

We are facing something that we have never faced before, and nobody is quite sure what is going to happen next.

Author: Tyler Durden
Posted: March 21, 2019, 8:40 pm

President Trump has with a single bombshell tweet rattled an already tense and war-torn region by announcing "it is time" for the US to "fully recognize Israel's sovereignty" over the Golan Heights

"After 52 years it is time for the United States to fully recognize Israel's Sovereignty over the Golan Heights, which is of critical strategic and security importance to the State of Israel and Regional Stability," Trump tweeted midday Thursday, marking a dramatic reversal of US policy which has historically alongside global international allies seen it as occupied territory. 

After 52 years it is time for the United States to fully recognize Israel’s Sovereignty over the Golan Heights, which is of critical strategic and security importance to the State of Israel and Regional Stability!

— Donald J. Trump (@realDonaldTrump) March 21, 2019

The impact has been immediately felt in Israeli politics, where politically embattled Prime Minister Benjamin Netanyahu stands less than three weeks away from his toughest election yet after a campaign marred by multiple formal charges of corruption and ongoing state investigations.

Trump's tweet, and apparent willingness to move forward on the White House's long signaling that it would dramatically shift policy from prior administrations, hands Netanyahu a huge foreign policy victory and boosts his stature domestically, after he recently renewed a diplomatic push with Trump for the US to recognize the Golan Heights as part of Israel.

Netanyahu was quick to thank Trump, tweeting: "At a time when Iran seeks to use Syria as a platform to destroy Israel, President Trump boldly recognizes Israeli sovereignty over the Golan Heights. Thank you President Trump! @realDonaldTrump."

At a time when Iran seeks to use Syria as a platform to destroy Israel, President Trump boldly recognizes Israeli sovereignty over the Golan Heights. Thank you President Trump! @realDonaldTrump

— Benjamin Netanyahu (@netanyahu) March 21, 2019

Beyond Trump's shock Thursday tweet, it's unclear if the White House will release additional specifics or a timeline on any formal recognition. Israel fully annexed the Golan Heights in 1981 after capturing it from Syria during the Six-Day War of 1967. The United Nations has never recognized Israeli annexation and settlement there, but has repeatedly condemned it. 

The American Conservative's Daniel Larison points out the near-term impact of Trump's words:

Perhaps most dangerous of all is the signal that it sends to Israeli hard-liners that want to annex some or all of the West Bank. It tells them that illegal occupation will eventually be rewarded with full U.S. recognition, and it also tells them that the U.S. isn’t going to pay any attention to international law when it comes to making decisions regarding Israeli control over occupied territories.

And more broadly, it is sure to inflame tensions between Israel, Syria, Iran and Lebanese Hezbollah after weeks of relative calm following last year's dangerous uptick in (dozens of) Israeli airstrikes on Syria and sporadic fire across the contested Golan region. 

Israeli forces at border fence along Israeli-occupied side of the Golan Heights and Syria, via Reuters

A mere weeks ago Syria also notified Israel through United Nations diplomatic channels that it is prepared to go to war if Israel does not leave the Golan Heights

Syrian Deputy Foreign Minister Faisal Mikdad reportedly sent the threatening war message through the head of the United Nations Truce Supervision Organization (UNTSO), Christine Lund, earlier this month, according to a World Israel News report and later picked up other major Israeli sources, including The Jerusalem Post. “Syria will attack Israel if it does not leave the Golan Heights,” Mikdad told the UN representative.

Damascus' firm warning came in response to a controversial bill recently under renewed consideration by US Congress, co-sponsored by Republican Senators Ted Cruz and Tom Cotton, and Democratic Rep. Mike Gallagher, which aims to give formal US recognition of Israel’s sovereignty over the Golan Heights region.

No doubt, Trump's tweet will give this Congressional effort huge bipartisan momentum, even if national security experts and pundits attempt to throw caution against interrupting the tenuous status quo. 

Author: Tyler Durden
Posted: March 21, 2019, 8:21 pm

After The Fed folded in the most aggressively dovish manner ever, the dollar and stocks rebounded heroically today - as if nothing had happened - while Treasury yields shrugged off the plunge protection team's plans and reflected Powell's clearly dismal economic expectations...

We just have a feeling that this won't end well...


Overnight saw China stocks shrug off US weakness...


UK's FTSE managed gains but European markets generally lagged - despite gains after US opened...


US Equity markets were panic bid all day as buybacks, short-squeezes, and AAPL sent stocks soaring above pre-Powell levels...Trannies and Nasdaq are up 1.8% from pre-Powell...


Dow futures are up 440 points from the pre-open lows...


And here is the catalyst that ignited today's momentum...the same analyst who upgraded AAPL today to 260 (with it trading at 220) only to see the stock plunge to 140...


Big short-squeeze today...


And buybacks dominated...


Biogen was battered...


But Semi stocks (SOX Index) soared to a new record high, seemingly knowing something that South Korean exports don't...


Growth stocks soared and while Value stocks were bid today, they remain lower from Tuesday's close...


Financials kept falling...


Credit markets did rally today but not very impressively...


Japan was closed overnight (hence the flatline) but we note barely any rebound in bond yields (despite the surge in stocks)...


30Y Yields refused to play along with the equity market buying panic...


The market is now pricing in 22bps of rate-cuts in 2019...


The Dollar soared higher after China closed, retracing all the post-Powell losses...


Cable traded lower on the day as fears on a no-deal brexit rose...


Cryptos were dumped shortly after the US equity open...



Commodities were all lower on the day as USD surged but only copper is lower post-Powell...


Gold dumped back to pre-Powell levels, holding above $1300 though and managed a late-day rally..


WTI oscillated around $60 all day...


Finally, we offer the following from reader KW: A pre-market Kudlow conversation

Larry : You guys need to upgrade something big to turn the negative futures

Wall Street : Larry , what do you have in mind ?

Larry : Upgrade BA.

Wall Street : Larry ! Give us a stock that won’t fall out of the sky ! We can’t manipulate that .

Larry : okay , AAPL

Wall Street : Good one !

Larry : gotta run , I’m on PPT duty today . Steven has off .

Wall Street : shit Larry ! Last time you bought too fast at open ?

Larry : get ready !

And that might have been how this happens...

Apple added over $36 billion market cap today, topping its 200DMA for the first time since Nov 19th.

Author: Tyler Durden
Posted: March 21, 2019, 8:01 pm

In the wake of the widely publicized "largest college admissions scam ever prosecuted" that broke last week, it has become clear that the SAT and ACT tests used to gauge student intellect for college admission (or at least their aptitude to take tests) are susceptible to being gamed.

“The case is about the widening corruption of elite college admissions through the steady application of wealth combined with fraud,” said Andrew Lelling, U.S. Attorney for the District of Massachusetts.

These tests are part of what has been referred to as a "rigged system" to get children into colleges - a system that benefits the affluent and the wealthy. Children from families in the top 1% of income distribution are 77 times more likely to attend an Ivy-plus school, according to a new Bloomberg Businessweek article.

Now, one 27 year old Harvard dropout is planning to "fix" the system. 

L.A.-based startup Imbellus says it has a test that accurately gauges critical thinking. The company is being run by 27-year-old Rebecca Kantar, a Harvard dropout. Kantar believes that a big part of the college admissions problem is the $10 billion standardized testing industry that, in addition to being "rigged", only works for a small percentage of kids. The SAT and the ACT still sit atop of all standardized tests, as they help determine who gets entry to select colleges. Kantar believes that these tests "reveal little, if anything, about whether a student has the cognitive skills essential for success beyond college."

Her company has raised more than $23.5 million and has hired a dozen Ph.Ds. (any comparisons to Theranos here are purely coincidental).


Kantar said: “The system has coalesced around things that work for at most 30 percent or so of kids. They don’t work for the rest.”

She argues that tests like the SAT and ACT actually exacerbate inequality by giving advantages to wealthier students who can pay for tutoring and test-taking services. And, she argues, these tests only gauge what a student knows, not the traits that employers say they need for the future: problem-solving, critical reasoning, collaboration, creativity and empathy.

And as we reported recently, it's obvious that these tests can be gamed. 

Kantar's company has instead developed digital assessments that resemble video games. They put users in simulated environments and present them with a series of tasks, while capturing the decision making process that users employ to complete them. And because each simulation is unique, the tests are "cheatproof". 

Her tests are also being used in hiring potential employees. They have worked with companies like McKinsey to create game based tests that measure "prospective employees’ decision-making, adaptability, and critical thinking." McKinsey says they will double the number of candidates taking the Imbellus assessment by the end of 2019.

Kantar believes that the issue is not with students lacking competency, it's with students lacking preparation. “It’s not an aptitude problem—it’s a practice problem. They aren’t practicing the right kind of thinking,” she told Bloomberg. 

She continued:  “If you want to change the default settings in the system, you’ve got to start at the top. I’m not saying that kids don’t need to know history or math or biology. They do. But my thought is, can you move the North Star of the system a bit? You’re still going to biology class and history class, but in those courses there’s a little less focus on specific modules of curriculum and more focus on practicing the thinking that’s required for work and not just college. What I’m trying to do is to reconnect K-12 education with the world of work and the reality of being an adult.”

To read the full longform Bloomberg Businessweek writeup, go here

Author: Tyler Durden
Posted: March 21, 2019, 7:55 pm

Authored by Steen Jakobsen via Saxobank,

Last night's FOMC meeting made it official: the Fed has thrown in the towel, and central banks are committed to defying the business cycle. But where does this leave us in terms of positioning for 2019, 2020 and beyond?

If you are familiar with my research over the last 20 years, you know that I am no fan of central banks; they are glorified bureaucrats with an academic sense of infallibility who believe they have a supreme power’s insight into the economy and markets. But yesterday marked a new low for world central bankers as the US Federal Open Market Committee completely threw in the towel.

Anyone who ever thought the Fed or other central banks are truly ‘independent’ should spend $20 on the great 2018 Paul Volcker book "Keeping at It". In it, Volcker tells the story of how both Jimmy Carter and Ronald Reagan tried (with partial success) to force easing on him and the Fed in the 1980s.

(Also have a look at Nixon and his relationship with Volcker’s predecessor as Fed chair, Arthur Burns...)

Current chair Jerome Powell saw himself as a new Volcker, but last night he cemented his panicky shift since the December FOMC meeting, and instead cut the figure of Alan “the Maestro” Greenspan, who set our whole sorry era of central bank serial bubble blowing in motion.

The Fed’s mission ever since has been a determined exercise in defying the business cycle, and replacing it with an ever-expanding credit cycle.

This latest FOMC meeting has set in motion a race to the bottom, with the European Central bank currently in the lead, but the Fed and the Bank of England are gaining fast.

I am presently in London, and on my way to China and Hong Kong with Saxo's Gateway to China events. I am joined at these events by the impressive Dr. Charles Su of CIB Research, China. He and I agree on many things, but one in particular:

Monetary policy is dead.

My view has long been that monetary policy is misguided and unproductive, but the difference now is that we are reaching the most major inflection point since the global financial crisis as central bank policy medicine rapidly loses what little potency it had.

In the meantime, the harm to the patient has only been adding up: the economic system is suffering fatigue from QE-driven inequality, malinvestment, a lack of productivity, never-ending cheap money and a total lack of accountability.

The next policy steps will see central banks operating as mere auxiliaries to governments' fiscal impulse. The policy framework is dressed up as "Modern Monetary Theory", and it will be arriving soon and in force, perhaps after a summer of non-improvement or worse to the current economic landscape. What would this mean? No real improvement in data, a credit impulse too weak and small to do anything but to stabilise said data and a geopolitical agenda that continues to move away from a multilateral framework and devolves into a range of haphazard nationalistic agendas.

For the record, MMT is neither modern, monetary nor a theory. It is a the political narrative for use by central bankers and politicians alike. The orthodox version of MMT aims to maintain full employment as its prime policy objective, with tax rates modulated to cool off any inflation threat that comes from spending beyond revenue constraints (in MMT, a government doesn’t have to worry about balanced budgets, as the central bank is merely there to maintain targeted interest rates all along the curve if necessary).

Most importantly, however, MMT is the natural policy response to the imbalances of QE and to the cries of populists. Given the rise of Trumpism and democratic socialism in the US and populist revolts of all stripes across Europe, we know that when budget talks start in May (in Europe, after the Parliamentary elections) and October (in the US), governments around the world will be talking up the MMT agenda: infrastructure investment, reducing inequality, and reforming the tax code to favour more employment at the low end.

We also know that the labour market is very tight as it is and if there is another push on fiscal spending, the supply of labour and resources will come up short. Tor Svelland of Svelland Capital, who joins Charles and I at the Gateway to China event, has made exactly this point. The assumption of a continuous flow of resources stands at odds with the reality of massive underinvestment.

Central bankers and indirect politicians are hoping/wishing for inflation, and in 2020 they will get it – in spades. Unfortunately, it will be the wrong kind: headline inflation with no real growth or productivity. A repeat of the 1970s, maybe?

Get ready for bigger government and massive policy interventions on a new level and of a new nature. These will be driven by a fiscal impulse to stimulate demand rather than to pump up asset prices. It will lead to stagflation of either the light or even the heavy type, depending on how far MMT is taken. With all of these '70s throwbacks preparing to take the stage, we can't help but wonder if 'Paul Breitner hair' is ready for a comeback as well!

Last night, a client asked an excellent question: how much of this scenario is already priced in? Here is my take: Saxo's macro theme since December has been the coming global policy panic, and this has now been fully realised. The Fed proved slower to cave than even the ECB, but last night saw them give up entirely. The US-China trade deal, another key uncertainty, is priced for perfection despite plenty of things that can go wrong.

The Brexit deal, however, is extremely mispriced. The UK’s biggest challenge may not even be the circus act known as Brexit, but rather the collapsing UK credit cycle which our economist Christopher Dembik has put at risking a 2% drop in UK GDP. If nothing changes over the next six to nine months, and nothing will change, the UK economy will be in free fall. Forget Brexit, UK assets are simply mispriced from the lack of credit juice in the pipeline.

China is also misunderstood and mispriced. If our two talks so far with clients on China and its opening up of its markets have taught me anything, it is that the western ‘reservation’ on anything Chinese is entirely built on bias. Governance is the word that keeps coming back in discussions. I am no fan of Chinese-style governance, but... less than 10% of global AUM is currently in China. This year alone will see the inclusion of China’s bonds in global indices like Barclays, Russell, and S&P and the allocation to China in the MSCI’s emerging markets index will quadruple from 5% to 20%. The overall China-bound inflow over the next three to five years will exceed $1 trillion using very conservative estimates.

China is perhaps the country in the world least likely to treat inbound capital poorly. It has transitioned from being a capital exporter to now being an importer. It has a semi-closed capital account, which means little money flows out, but a massive inflow is beginning to stream in as global investors acquire Chinese assets.

China and its growth model now need to share the burden of becoming an industrialised country, and Beijing knows that only the only way keep the capital flowing in 2019 is to treat investors well. On the domestic front, meanwhile, the CPC seems to be signaling that it wants domestic investors to move excess savings from the ‘frothy’ and less productive housing market to the equity market, where capital can flow to more productive enterprises. Foreign investors are more likely to want to participate in the more liquid and familiar equity market.

2019 for China is like 2018 for the US. The first 10 months of 2018 saw the US stock market near-entirely driven by the buy-back programmes fueled by Trump’s tax reform. US companies plowed over $1 trillion into buybacks over the year. This year, the Chinese government is telling its 90 million domestic retail investors to raise their allocation to the stock market while global capital allocators/investors will need to increase their exposure to China as its capital markets are reweighted.

But where does this leave me on asset allocation at the moment?

Equities: the Fed, ECB, BOE and BOJ have all given up because they only believe in credit cycles. The price of money going down is not enough for growth as it’s only the second derivative of the growth engine; the first derivative is quantity of money. This is stabilising but because of base effects (a very high starting point), it will not be enough. For now, however, the market is euphoric due to the usual lack of integrity from merry bureaucrats. A new high could be on the cards, but... slowly change overweight to China from the US mainly, but also MSCI.

Fixed income: 250 bps in 10-year maturities... where are all the sell side analysts calling for 400 bps? The FOMC panic took out the 260 bps floor – is 200 next? Probably. Observe how the two/10-year yield curve is now attacking 10 bps. My economic studies really only taught me three useful things (but then, I’m a terrible economist):

  • The yield curve is never wrong.

  • Say’s law (supply creates its own demand).

  • Productivity is everything.

An inversion of the 2/10 is coming, I don’t see 200 bps before the late summer, however, when concern about the lack of growth overtakes the global policy panic in place.

Commodities: it’s all structural – Tor Svelland taught me that. We like all commodities, especially all sectors that have a foot in infrastructure. This is due to the coming of MMT, partly, but its mainly due to widespread underinvestment.

Cash: love it!

Forex: Underweight the two credit monsters: GBP and AUD. Overweight the US dollar, NOK, CHF, JPY. I like carry (for the summer) in TRY, ZAR and BRL.

Author: Tyler Durden
Posted: March 21, 2019, 7:50 pm

Over the last year, Neuberger Berman portfolio manager Steve Eisman - who gained notoriety beyond Wall Street thanks to 'The Big Short' and his portrayal by Steve Carrell in the movie adaptation - has taken seemingly every opportunity to talk his book, which apparently consists of concentrated bets against the financial systems of two developed nations: The UK and Canada.

Though UK banks largely bottomed out in October and have managed only a tepid rebound since, their Canadian peers have clawed back much of their losses from late last year. But this hasn't shaken Eisman's faith in his bet against Canadian banks, which is effectively a bet against the Canadian housing market (though Eisman doubts the fallout will be anywhere near as intense as the US housing market collapse that minted his reputation).


During an interview with the FT that was published on Thursday, Eisman explained that he's simply betting on a "normalization of credit" in the Canadian economy, where lax lending terms fueled a housing bubble that has been tentatively acknowledged as a systemic risk by the Bank of Canada. For the first time ever, the central bank late last year even started buying mortgage bonds late last year to prop up the sliding Canadian housing market help increase the tradeable float of its benchmark securities

"I’m calling for a simple normalisation of credit that hasn’t happened in 20 years," Mr Eisman told the FT, while declining to name the banks he is shorting, or the full extent of his positions. He said the effects would hurt banks and the real estate sector, but would not be as intense as the financial crisis a decade ago in the US, when he and others saw huge profits from the implosion of the subprime mortgage market. "This is not ‘The Big Short: Canada’ - I’m not calling for a housing collapse," he said.

Adding to the already precarious finances of Canadian households, more Canadians are plundering their home equity to finance everything from renovations to car purchases.


Meanwhile, Canadian home sales crashed in January...


...while new home prices dipped for the first time in a decade.


Fortunately for Eisman - who hasn't disclosed specifics about his bets against Canadian or UK banks - more investors are piling into bets against the "big six" Canadian banks, which have seen their profits sag as they have raised their loan-loss provisions.

Mr Eisman is not alone: collective wagers against Canadian banks have risen 19 per cent since the start of the year to positions worth US$12.3bn, according to S3 Partners, a data provider based in New York. The activity is largely driven by falls in the country’s property market after years of rapid growth, according to Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.

"Unsold inventories are beginning to stack up,” said Mr Dusaniwsky. “Even the turbocharged markets of Vancouver and Toronto are experiencing slowing demand and price fragility.” Toronto’s TD Bank has emerged as the most popular target for the short sellers, with bets against its stock up 17 per cent to a total of $3bn since January. Bets against CIBC, also based in Toronto, have jumped 26 per cent to $2.3bn, while those against Bank of Montreal are up 37 per cent to $1.3bn, according to S3 Partners.

But as the Canadian economy continues to slow, Eisman believes a day of reckoning for the country's banks is inevitable, and its housing market, is inevitable. "Canadian banks are an oligopoly," he said. "They’re not mentally prepared."

Author: Tyler Durden
Posted: March 21, 2019, 7:35 pm

Authored by Mac Slavo via,

In what is one of the most corrupt and vile things to have ever happened to the American political system, residents of New Jersey will now be taxed when something 100% out of their control happens. New Jersey’s governor Phil Murphy signed 19 bills into law on Monday, one of which, was the so-called “rain tax.”

Unfortunately, there were supporters of this tyrannical and wholly dictatorial law. Dubbed S-1073, supporters call it “flood defense,” and say it will serve as a long-needed tool to manage flooding and dirty runoff from rainwater.  So there are actually human beings on earth who want others and themselves stolen from because it rains.  There is nothing more disturbing that the current political path the United States is currently one.  It’s downright horrifying, actually.

Government is downright evil and shameless when it comes to taxation. These pillagers of the public just sit around all day thinking and dreaming of events and things to tax. – Judy Morris Report

“Most importantly, it gives communities a way to access new resources in a fair and equitable manner, and invest in related benefits such as additional green space. We urge the governor to sign it,” said New Jersey Future’s Chris Sturm, who serves as the advocacy group’s managing director for policy and water, according to a report by Patch.

Some have criticized the bill (albeit, now enough) saying that it would impose taxes “based on the weather” which is an unfair system of stealing the money of others. Obviously, if you have any heart at all.  It also gives the government much more power and more authority to steal more money by expanding what’s already an overly unfair burden (all taxation is “unfair”) on New Jersey residents who were saddled with several new taxes in 2019.

Assemblyman Christopher DePhillips has said the “rain-tax” bill permits local communities to tax “based on the weather,” and allows unlimited bonding and debt to be placed on the backs of property taxpayers. Not that bonding and debt aren’t already on the backs of the taxpayer, it is, but now New Jersey gets to carry the financial burden when it rains.  “The last thing this state needs is more debt and another runaway tax. Especially one that taxes the weather” said DePhillips.

The so-called soft socialism of western nations is just an illusion. Western nations are bankrupt, their economies are disintegrating before their very eyes and the promises of lifetime pensions, welfare and healthcare are nothing more than propaganda lies that voters willingly drink. In the end, they will have nothing and be much worse off. Such is the fate of a person who votes for the police powers of the state to steal from another to give them what they want but never earned. –Judy Morris Report

Author: Tyler Durden
Posted: March 21, 2019, 7:23 pm

Google is once again helping the Chinese government and its Orwellian control over the flow of information. 

Earlier this month, evidence emerged suggesting that Google has continued to develop the "Dragonfly" censored search engine despite claiming they had abandoned it after an internal revolt. 

Now, ZDNet reports that Google has banned ads for virtual private network (VPN) products targeting Chinese users - citing "local legal restrictions." 

VPNs are the only way Chinese users can circumvent draconian internet filters which have blocked sites such as Facebook, Twitter, Gab, Instagram, Reddit, Discord, WhatsApp, WikiLeaks, Google and Gmail. Blocked news websites include Zero Hedge, BBC, Bloomberg, Reuters, WSJ, NYT and Business Insider. 

"It is currently Google Ads policy to disallow promoting VPN services in China, due to local legal restrictions," Google said in a Wednesday email. 

The email was received and shared with ZDNet by VPNMentor, a website offering advice, tips, and reviews of VPN products.

The company said Google prevented its employees from placing Google search ads for the Chinese version of its site. -ZDNet

In January 2017, Beijing cracked down on VPN services - requiring that all providers active in China register for authorization from the CHinese government. In July, China forced Apple to remove all VPN apps from its App Store. After that, a "full-out ban on all VPNs was imposed on March 31, 2018," according to ZD - though some apps continued to function regardless. 

Nonetheless, Chinese officials are now using the ban to go after users caught using VPNs. The first fine for using a VPN product was issued earlier this year to a Guangdong.

Despite banning consumers from using VPN apps, China remains one of the top sellers of VPN technologies. A November 2018 study found that almost 60 percent of the top free mobile VPN apps are run by companies with Chinese ownership or based in China.

We wonder if Google employees will protest yet another example of helping China to keep its citizens in the dark?

Author: Tyler Durden
Posted: March 21, 2019, 7:06 pm

Authored by Sven Henrich via,

Let’s be very clear what yesterday’s full frontal capitulation by the Fed means: It’s coming. The next recession that is. It’s just a matter of the how and the when. Now mind you the Fed will never, ever overtly tell you a recession is coming. They can’t. Their underlying primary mission is to keep confidence up. A Fed predicting a recession would cause all kinds of havoc in capital markets and almost certainly bring about a recession. So they won’t tell you, but their actions speak loud and clear.

First understand what the capitulation means: It means that all their 2018 statements of optimism and predictions of raising rates in 2019 and previous insistences on a balance sheet roll-off being on”autopilot” were all wrong. Reality and markets rolled over them. They didn’t see the slowdown coming and only after markets dropped 20% in December did they change their policy stance and have now cemented a dovish stance for years to come.

Yesterday’s capitulation was so complete and even more dovish than markets had expected. How scared is the Fed? How scared should markets be? What are they seeing that forces them to not only halt the balance sheet roll-off, but to only project a token rate hike for 2020 in effect ending the rate hike cycle?

To visualize the extent of the capitulation look where the Fed’s “normalization” process will now end in September:

A pitiful end to a process that was falsely advertised as “normalization”. And it’s a global problem.

Every major central bank on the planet is now carrying enormous balance sheets. All have turned fully dovish, none will reduce their balance sheets. 10 years after the financial crisis no central banks will have normalized and can’t. The ECB is still running negative rates with no end in sight.

Let’s call a spade a spade: Normalization would crash capital markets globally. The world is destined to never see a true normalization and central banks will be forced to remain accommodative in the face of slowing growth. The promise of organic growth following what was supposed to be temporary central bank intervention was simply a pipe dream. The Fed tried and failed. Markets and the economy have forced their hand and now the US Fed is trapped and is forced to be the dovish for years to come. Intervention and accommodation have become permanent. Globally.

Growth peaked in 2018 as a result of the temporary sugar rush following the US tax cuts.

And note the glaring gap in public narratives even in the US. This is the Fed’s latest economic forecast:

GDP growth below 2% and below 4% unemployment forever and ever amen. Who can believe it 10 years into an economic expansion financed by ever more debt?

Not I, especially if you consider that the administration’s federal budget is entirely dependent on 3% GDP growth in perpetuity. After all they project trillion dollar deficits with 3% growth. Excuse me, but I have a question: What’s the deficit with less than 2% GDP growth as opposed to 3% GDP growth? What’s the deficit with a recession coming? A lot higher than 1 trillion dollars I venture to guess which means funding requirements will explode higher beyond even the current absurdity of already running trillion deficits at the end of a long business cycle.

Markets are increasingly pricing in rate cuts in 2020 following the Fed decision. Why? Well, because that’s what usually happens next when the Fed ends its rate hike cycle.

Let’s dissect this chart:

During the past 2 market bubbles the Fed ended its rate hike cycle in June of 2000 and August of 2006 respectively as unemployment was at a cyclical low. In 2000 the unemployment rate was below 4% as it is now. In 2006 unemployment settled in the 4.5% range. In both cases a recession soon followed as the business cycle turned. In 2000 the recession ensued a mere 9 months following the end of the rate hike cycle and the Fed was forced to cut rates a mere 6 months following the rate hike pause as markets were dropping to new lows.

In 2006 markets proceeded to rally until November of 2007 and then the recession unfolded beginning in December of 2007.

They key question for everyone here is will we see a 2000 or 2007 repeat? Both have major implications for equity markets.

In 2006 markets rallied hard after the Fed ended its rate cycle. Markets proceeded to place a major topping pattern in 2007 and then the financial crisis unfolded.

Bulls will want to cling to this scenario as it suggests a recession is still 2 years away.

Two problems with this scenario: 1. Markets are already starting to price in a rate cut for January (47% probability as of yesterday). In the 2006 example the Fed did not cut rates until August 2007, 14 months after the pause and the recession began in December 2007, hence the lead time here is much shorter. And remember the Fed doesn’t cut by advanced schedule, it’s unfolding events forcing them to. The timing will be driven by markets and the economy. Everything in the Fed statement and the global macro data is suggesting that things have deteriorated much faster than anyone anticipated just 6 months ago. So a rate cut could also come sooner than anyone expects. 2. Markets are already engaged in a potential major topping pattern:

Just like they were in 2000.

In 2000 the Fed stopped the rate hike cycle in June of 2000, markets had already topped in March or 4 months before. In 2000 the market counter rally peaked in September 3 months following the rate hike pause printing lower highs. The Fed started cutting rates in December another 3 months later. The recession began in March of 2001, 4 months later.

Compare to now:

Markets peaked in September 2018 and the Fed for all intents and purposes stopped its rate hike cycle in December, 3 months after markets peaked. And here we are another 3 months later and markets are at risk of peaking here, engaged in a major topping pattern. So you see this script aligns much more closely to the 2000 scenario versus the 2007 scenario. This suggests a rate cut may come A LOT sooner than people anticipate.

What would force a rate cut? Simple. Worsening economic data, dropping markets and an inversion of the yield curve.

Yield curves have already flattened significantly and as history shows an inversion can happen suddenly following such periods of consolidation and a recession follows shortly. And what does the 30 year vs 5 year yield curve suggesting here in context of markets and cyclical low unemployment?

To my eye it suggests highly elevated inversion risk consistent with a business cycle coming to an end, the only question is the when and how.

Look, nobody has the all answers here, the world doesn’t follow a predetermined script, all I can point to are the technicals in context of macro events and the fact is the Fed is chasing and they know it. To go this dovish implies they know there’s more than just noise in the data. There’s a real concern that a recession may be unfolding and they’re trying their dearest to provide some runway here.

Fact is global growth, while claimed to be stabilizing, has yet to show any serious surprise to the upside. China trade deal, Brexit, all these supposed trigger events for growth are taking longer than expected and there are still no clear resolutions on the table. At this rate they may be too little too late to stop the cycle.

How will we know which scenario applies? The 2007 or 2000 scenario? New market highs would suggest there is time and room before the recession hits.

However if markets sell off over the next few weeks and months central banks may have lost control. They are already all dovish, they can’t surprise on the dovish side any longer. That carrot has been removed by yesterday’s Fed capitulation. All they have left is QE4 and rate cuts to come. And those will come at the point of either new market lows and/or deteriorating data. So, ironically, markets may decide the timing of the rate cut. If the 2000 script unfolds we may see rate cuts a lot sooner than anyone can anticipate. A ridiculous notion at this precise moment in time I know. But everyone talks tough after a 500 handle rally on the S&P 500.

Fedex this week suggested the slowdown is not over. The Fed yesterday suggested the same. Yesterday’s drop in financials following the Fed announcement suggested someone is paying attention. Will the rest of the market? The next few weeks will provide a lot more clarity as Q1 earnings and outlook adjustments come in.

*  *  *

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Author: Tyler Durden
Posted: March 21, 2019, 6:51 pm

NFA News Releases

March 12, Chicago—NFA has barred former El Segundo, Calif., commodity pool operator Quants Capital Management, Inc. (Quants) and its former principal and associated person Gokhan Kisacikoglu from membership for one year. NFA also permanently barred Quants and Kisacikoglu from acting as a principal of an NFA Member.
Posted: March 13, 2019, 4:59 am

Elite Forex Blog - Market Research & Analysis

Global Intel Hub 3/17/2019 (Zero Hedge Exclusive) -- This recent shooting in NZ was not just a 'shooting' it was a crossing of the Rubicon into a new sea of Orwellian fear and loathing.  As we explain in our book, NOTHING is as it seems.  Everything is about OPTICS and what really goes on is largely disregarded.  New Zealand is a testing ground:
For years New Zealand has been utilised by app developers, social media companies and software developers to test new technologies, but the risks and benefits for Kiwi consumers and businesses remain unclear. Ged Cann reports.  If you want to test it, come to New Zealand.  That's the mantra overseas, where New Zealand's advantages as a testing ground have been common knowledge in the international tech industry for decades, according to one world-wide developer.
Alright but so what?  The fact remains that 90% of tech innovations come from the Military.  Also there is a growing problem for the Military as the enemy du jour, Terrorists, are becoming far less common, for a number of reasons including but not limited to the success of firms like Palantir.
Fake News is just the left angry that they couldn't lie their way into the White House - what we really need to be concerned about is Fake Wars.  Internet Censorship in New Zealand existed far before the shooting.  The draconian call to delete the horrid video from your personal computer can only be for one reason - they don't want people looking at this again and again and realizing there are facts that don't match up with reality.
911 was a complete control job.  Social Media practically didn't exist and internet penetration was nothing like it is today.  In 2001 people didn't have HD camera in their pocket that could live stream events as they happen.  Tactically speaking 911 was even sloppy, as some footage showed things that probably shouldn't have been there - but it was a HUGE JOB, equivalent of David Copperfield making the Statue of Liberty disappear.
There are a number of analogous facts shared by the attack on the North Korean embassy in Spain and the terror event in Christchurch which suggest that the same team was involved in both incidents. In both cases the perpetrators showed that they were well versed in "breach and clear" tactics against buildings filled with people. In both cases the buildings were cleared efficiently and quickly even though the goal of the North Korean incident was focused on intelligence gathering as opposed to mass murder. Aerial analysis of the North Korean embassy in Spain, the Al Noor Mosque and the Linwood Islamic Centre show that all buildings are of similar size and each would have required the same know-how and training to breach.
Remember though that because the internet is completely censored in New Zealand on an ISP level, it means that at some level, they 'allowed' this video to be broadcast.  That type of Censorship wasn't possible in the Las Vegas mass murder concert shooting.
Is this a 'test run' for the new War 3.0 of the future?  Fake Wars: Race wars, proxy wars, information wars, and 'fake threats' ?
One thing does reek of false flag is the NZ Government's immediate reaction to clamp down on internet freedom and gun laws, although it's still unclear where the Shooter obtained these weapons from as he would have probably failed a background check with his recent travels to Pakistan (a huge red flag).
One thing about NZ is that it's easily controlled for 2 reasons - it's far removed from the rest of the world and if they control the internet they basically have a lock down on what's going on inside NZland.
Fake Wars means wars engineered by high tech Military outfits like Cubic Simulation Systems.  
Guys this is important this is the new battlefield.
There is never going to be a 'traditional' war like we had World War 2.  There is no threat from China or Russia.  The Nuclear arsenals of the Nuclear powers prevent any kind of real war from happening again.  There is enough Nuclear fire power on this planet to not only destroy Russia completely that even mosquitos will not survive, we could literally blow up the planet Earth into little bits and all float together into space for a final romantic voyage into the nothingness of space.  All this at the press of a button.  Let's hope that the AI systems aren't connected to the Nuke systems!
Military spending in the United States is about $700 Billion and that's just what's on the books.  If you include countries in the Five Eyes - it's much more.  Realistically we are talking about $3 Trillion per year in USD globally by US and friends.  But it's good for the economy giving birth to companies like Google, Facebook, and so many other opportunities to make investors rich beyond their wildest dreams.  That's the 'buy in' - so first you have to suffer.
Earlier this year, the United Kingdom, Australia, Canada and New Zealand – which along with the United States are members of the “Five Eyes” alliance – came together to collectively attribute to Russia what may be the most costly cyber attack in history. This public affirmation provided a rare glimpse into the depth of defense cooperation among the world’s English-speaking democracies.
Formalized in 1955, Five Eyes collaboration has proven a remarkable success both throughout the Cold War and in the post-9/11 era of counterterrorism. The informal alliance has until now remained rooted in intelligence sharing. However, in a world of complex and rapidly evolving security challenges, the Five Eye countries should consider a new area of shared focus: leveraging the commercial technology sector to address common national security concerns.
What that means in 'Plain English' 5 countries got their stories straight for the public.  The answer was "Blame Russia" and the reason was that because with the kind of tools the CIA and NSA has developed they can put Russian fingerprints on virtually any Cyberattack coming out of DC.  Did I just say that out loud?
So to what end?  What is the reason for this horrible mass murder in a Mosque?  At this point we only have circumstantial evidence so let's not jump to any conclusions.  Let's stick with facts.
  • This is the worst attack on peaceful Muslims in their own holy place
  • New Zealand is the most anti-Gun jurisdiction in the world - it's impossible for a normal citizen to obtain and keep a firearm in this place
  • New Zealand is the country with the most internet Censorship in the western world, beaten only by China and North Korea
  • NZ is controlled by the Crown.  Unlike other British Territories like the Bahamas for example, NZ never declared their 'independence' and the Queen is the Queen of New Zealand, visits there, and technically owns all the land.
  • Property in New Zealand is mostly bought 'freehold' (update: should be "leasehold" but the point is that you don't really own it) in that you have a 99 year renewable lease and you never actually 'own' the land like you do in other places.  That may seem like a simple technicality but the fact is there would never be a Rockefeller story in NZ if you discovered $100 Million worth of Gold on your land you can bet you would only get a pittance finders fee for it.  God save the Queen.
Under the Crown Entities Act, Ministers are required to "oversee and manage" the Crown's interests in the Crown entities within their portfolio (sections 27 and 88). The board of the entity has the key role in ensuring the entity is achieving results within budget. This is done by a monitoring department on behalf of the Minister unless other arrangements for monitoring are made. Monitoring departments make explicit agreements with their Minister, setting out what monitoring they will undertake and how they will do it. Crown entity boards should also facilitate clear and transparent monitoring, for example, by providing the Minister and monitoring department with good information on which to make judgements about performance.
Of course, the Reserve Bank, offices of Parliament are completely independent, wink wink righty ho.
Let's take a look at the Kiwi Wall in a little more granular detail to see what's going on here and why this may have been a test run for a larger plot:
The Department of Internal Affairs maintains a hidden list of banned URLs and their internet addresses on a NetClean WhiteBox server, which as of 2009 contained over 7000 websites.[12] The DIA then uses the Border Gateway Protocol to tell ISPs that they have the best connection to those internet addresses.[13]
When a user tries to access a website, the ISP will automatically send their data through the best connection possible. If the user is trying to access a website hosted at an internet address that the DIA claims to have the best connection to, the ISP will divert the traffic to the DIA.[13]
If the website the user is trying to access is on the DIA's list of banned URLs, then the connection is blocked by the WhiteBox server.[13]The user instead sees a filter notice page and has the option of getting counselling or anonymously appealing the ban.[14]
If the website is not on the list of banned URLs, then the DIA transparently passes on the data to the actual website and the user is left unaware that the request was checked.[13]
The happy face is, as you can imagine, pictures of tourists enjoying those expensive bottles of Marlborough white wine riding horses or rich Americans fly fishing.  What is on the 'banned' list?  You guessed it - anything the government or 'ahem' the Crown decides.
So this is much deeper than in the US where the Media is completely controlled by the left - in NZ they control information on a router level!  
So as you can see - in a world where information can be snapped away with an HD cam which is in everyone's pockets, this was the perfect place to run a 'test' of a Military mission of the new kind.
Let's be clear we are not promoting violence.  We believe actually in the dismantling of 90% of the Military as it is useless wasted money.  Keep the nukes, keep the 'banks not tanks' approach and we can spend money on building things that help people with diseases for example or help people live longer or better.  
911 just wouldn't be possible today - or at least to say using the tools that were used back then.  Perhaps with the decline of 'real' Terrorists, this is training for a new generation of artificially created enemies, whether they be 'Nazis' or other types of extremists.  What's clear as more and more info is released it seems as if this was a pro hit job.
And about the gun control debate, this puts to shame anyone that claims banning guns can prevent such attacks, as there is no place in the world that is more strict about Gun Control than New Zealand.  Kiwis are modern Guinea pigs:
IN MEDICINE, trials are conducted on guinea pigs, rats, mice and rabbits. In digital businesses, tests are performed on New Zealanders. Their country is proving the perfect location for software firms, social networks and app developers discreetly to try out and refine their products. Take Microsoft, which last year made New Zealand its first test market for Sway, a new app that helps users create websites, and which has since been released into other markets. Other big technology firms, including Facebook and Yahoo, also use New Zealand as a development lab, as do games companies and small startups.
One wouldn't think of New Zealand as the perfect Terrorist training camp.  But with the internet censorship, its remote location - it appears to be perfect.  We'd like to wish them good luck, but it's unlikely this article will be read inside of the Kiwi Firewall.
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Posted: March 19, 2019, 3:16 am
The small town of Aurora, Illinois – best known for being Wayne‘s hometown in Wayne’s World – has another peculiar appeal to its location: it is one of the closest places that high frequency traders can get to the $63 billion CME Group exchange, where futures and derivatives on commodities and US treasuries trade making it a mecca for HFTs seeking to frontrun slower orderflow. That makes local real-estate extremely coveted, as detailed in a recent Bloomberg follow up to Michael Lewis' "Flash Boys"
The story is familiar to anyone who has been reading this website for the past decade, or leafed through Michael Lewis' HFT thriller: the closer traders can collocate to the CME, the more likely they are to shave off milliseconds from their trades, resulting in frontrunning of slower orderflow that can net them millions. For instance, this small brick hut is owned by New Line Networks a joint venture of HFT giants Jump Trading and Virtu Financial: the two paid $14 million for the land just to be close to the CME Group.

Not happy with the arrangement, Chicago HFT titan DRW Holdings wishes to be even "faster" than Jump and Vitru, and plans to move just a few yards closer to the exchange, having recently put an antenna on a light pole. Next to that is yet another light pole that has been rigged with antennas owned by McKay Brothers, an Oakland-based company. Meanwhile, on nearly all the roads in the area, trading companies have erected antennas or rented space on towers and poles, all of them littered with white circular dishes to try and get closer to the CME data center, all for the purpose of frontrunning slower traders, even if there are still no lasers to be seen, unlike what a visitor to the NYSE in Mahwah, NJ can observe.
As Michael Lewis first hinted in 2014, the real-estate scramble around the exchange had become a turf war between rival HFT corporations until one company decided it was going to do something about the constant jostling back-and-forth between high frequency traders. Dallas-based CyrusOne, which owns the CME center, decided last year that it would finally end the scramble for real-estate by putting up a 350 foot tall wireless tower that would allow anybody to rent space on it. It’s closer than any trading firm could get to the center and targeted putting everybody "on equal footing"... in exchange for a very generous fee to CyrusOne, of course.
And although the tower has room for about 35 satellite dishes but, to this day, remains unused.
Why? Because yet another smaller company, Scientel Solutions LLC, has announced plans to build its own tower about 1000 feet east of CyrusOne's tower, which CyrusOne says would block its own "line of sight" to downstream microwave dishes, and interfere with its communication to and from the CME data center. To prevent this potentially catastrophic development, CyrusOne sued to block Scientel's tower.
And with the litigation ongoing, Scientel's development site remains 2.6 mostly vacant acres that house only a trailer, a portable toilet, and a pile of metal poles.

Amid the legal fray, elected officials in Aurora find themselves confused, trying to figure out which projects should be approved and which projects should be rejected. It appears that the elected officials didn’t initially understand the weight of the decisions that they were making in approving and rejecting these towers. For instance, Alderman Bill Donnell described his technological know-how by saying: “I came from being a guy who didn’t know where the cloud was to realizing speed matters. I didn’t realize being a millisecond faster was all that important."
Actually being a nanosecond faster is just as important, hence the litigation: microwave networks rely on line-of-sight transmissions as microwaves need to be able to "see" the dish they are communicating with. Because of the Earth's curvature, the signal must be relayed from towers that are spaced apart generally every couple of miles. Companies like McKay say that they can process a trade from Aurora to Carteret, location of the Nasdaq data center, or Carteret to Aurora, in 4 milliseconds.

Back in March 2016, when it appeared that HFTs are starting to cannibalize one another, the CME sold its data center building for $131 million. The local government thought it had the issue squared away when it required CyrusOne to lease space to traders on its tower at "fair market rates". The intention was to “equalize wireless access to the CME.”
But when mayor Richard Irving took office, Scientel caught his attention with the company's proposal. They said that they wanted to move their headquarters from another Illinois town to a patch of land near the CME data center. They claimed they would bring 50 jobs at a $100,000/year average salary if the city allowed it to erect a 195 foot tall communication tower on the site. At the time, they pitched it to the city as a way to get more value from the fiber optic ring Aurora had built over the past decade.
They didn’t mention doing business with traders at all.
What they also didn't mention is that by erecting a tower blocking the CME's own microwave "line of sight", it would instantly crush the value of the tower that CyrusOne had built in hopes of collecting millions in rental fees from HFT traders. Instead, should Scientel end up building its own "mega tower" (one which makes the CME's own frontrunning contraption obsolete), it would be the recipient of all those millions in HFT squatting fees.
To this day, the case is still ongoing.
You can red Bloomberg's full long-form write up on the story here.

Posted: March 10, 2019, 3:34 am
Two years ago, when profiling the world's most successful hedge fund in history, Bloomberg stared like this:
Sixty miles east of Wall Street, a spit of land shaped like a whale’s tail separates Long Island Sound and Conscience Bay. The mansions here, with their long, gated driveways and million-dollar views, are part of a hamlet called Old Field. Locals have another name for these moneyed lanes: the Renaissance Riviera.
That’s because the area’s wealthiest residents, scientists all, work for the quantitative hedge fund Renaissance Technologies, based in nearby East Setauket. They are the creators and overseers of the Medallion Fund—perhaps the world’s greatest moneymaking machine. Medallion is open only to Renaissance’s roughly 300 employees, about 90 of whom are Ph.D.s, as well as a select few individuals with deep-rooted connections to the firm.
The fabled fund, and we are of course talking about Renaissance Technologies' employees-only Medallion fund, known for its intense secrecy and "black box"-like mystery of what actually goes on there, has produced about $55 billion in profit over the last 28 years, making it about $10 billion more profitable than funds run by billionaires Ray Dalio and George Soros. What’s more, it did so in a shorter time and with fewer assets under management. Just like Berie Madoff, the fund almost never loses money. Its biggest drawdown in one five-year period was half a percent.
“Renaissance is the commercial version of the Manhattan Project,” says Andrew Lo, a finance professor at MIT’s Sloan School of Management and chairman of AlphaSimplex, a quant research firm. Lo credits Jim Simons, the 78-year-old mathematician who founded Renaissance in 1982, for bringing so many scientists together. “They are the pinnacle of quant investing. No one else is even close.”
Yet while many have tried to emulate and reverse engineer Medallion's success, nobody has come close to the inner workings of the world's most successful money machine.
At least until Wednesday, when fabled code-breaker and Renaissance founder, Jim Simons spoke at MIT, at the second of three talks about his iconic career; the talk, which followed last week’s conversation about mathematics and precedes next week’s on philanthropy, attracted an overflowing crowd that included MIT investing chief Seth Alexander. Andre Stern of the U.K.’s Oxford Asset Management introduced Simons.
Simons launched Renaissance after leaving academia and in 1988 started the Medallion Fund, which through last year generated an unrivaled annual average return of about 40 percent, according to calculations by Bloomberg. “That’s net of fees,” Simons said in response to a question from a reporter.
As discussed here extensively in the past, while Renaissance manages money across a handful of funds, the in-house only Medallion evokes the greatest mystery, and as Bloomberg notes, it employs trading strategies to predict price changes in global markets that over three decades no one on Wall Street has been able to replicate. That’s why the U.S. Securities and Exchange Commission came calling after the Bernard Madoff scandal broke in 2008, Simons said.
“They did study us,” said Simons as he spoke about his career in money management. “Of course, they didn’t find anything.”
What was more unique, is that the traditionally media-shy Simons offered a some clues into what sets Renaissance apart:
At the core of the company, which employs about 300 people, Simons said "is a great computing system, good scientists and low turnover." Employees, who get a piece of the profits, sign non-disclosure agreements when they are hired and non-compete contracts after a couple of years on the job.
“It’s fun to work there,” Simons said in a question and answer format led by MIT professor Andrew Lo, who started the quant fund AlphaSimplex Group. “People get paid a lot of money." Some, like former co-CEO Robert Mercer may not find it that much fun to work there, but that's why he recently quit the firm.
According to Simons, the East Setauket-New York company never stops improving its models as it tries to stay a step ahead of the competition, which has flourished in recent years as quant firms attracted more assets than traditional, fundamental shops. Simons stepped down as head of the company in 2010 but remains as non-executive chairman. He said he meets with the company monthly, encouraging management to keep hiring good, young scientists.
Sharing some more details into the company's "secret sauce", Simons said that the Medallion strategy is continually being reinvented, though some parts have remained for as many as two decades. Initially launched as a systematic, trend-following fund that traded in commodities markets, it was losing money after the first six months. So the fund was completely revamped.
Still, the company realized after about 15 years that there were limits on how much Medallion could manage without pushing markets too much, Simons said in a conversation after the talk. So Renaissance finished booting outside investors in the fund in 2005, and since then has sought to limit its size.
While Simons refused to say how much Medallion has in assets, Bloomberg calculations put it at about $10 billion. Simons did say there is about $45 billion in the firm’s other funds, which are still open to outside investors, and generate far smaller returns than Medallion.. They employ longer-term trading strategies, so the funds haven’t delivered the same level of returns as Medallion.
“Yes inefficiencies do get traded out, but the market is dynamic,” Simons said, quoted by Bloomberg, in response to a question from the audience. “There’s room for new inefficiencies to materialize. We keep finding new things and throwing out old things.”
After his talk, students descended on the former mathematician who had broken ground in the field decades ago, winning the American Mathematical Society’s Oswald Veblen Prize in Geometry in 1976.
In the middle of the scrum, Simons vaped, producing a cloud of smoke as he answered more questions.
Below we publish a video recording of the first part of Simons' three part presentations, discussing the role of mathematics in money.
art presentations, discussing the role of mathematics in money.
Posted: March 8, 2019, 3:49 am
From Zero Hedge:

Theresa May's "victory" last week when MPs backed the Brady amendment, giving May a Parliamentary mandate to renegotiate her withdrawal agreement with the EU, has been short-lived. As Irish and EU officials dig in their heels and continue to insist that they won't allow modifications to the text of the deal, Wall Street banks have been raising the probability of a no-deal Brexit while some analysts have warned that May has inadvertently boxed herself in: By taking a delay of Article 50, and therefore removing the possibility of a "People's Vote" (second referendum), the prime minister might have set herself up for failure, as Brexiteer MPs appear ready to pull the ripcord on a no-deal Brexit.
As we've noted time and time again, thanks to the efforts of No. 10 Downing street and a network of economists and business groups, the British people have been conditioned to believe that a no-deal Brexit will result in Britain transforming into a "Mad Max"-style hellscape complete with shortages of basic goods and civil unrest that could necessitate a declaration of Martial Law.
Warehouses will quickly run out of fresh vegetables, medicine and other basic goods. The UK's highways will become clogged with lorries waiting for their turn to clear new customs checks. And the financial services industry will struggle to clear trades and perform other basic functions. One recent report even warned that a no-deal Brexit could lead to "thousands of deaths" from mass hunger.
As if all of this wasn't bad enough, a series of reports published this weekend added to Briton's anxieties.
The Independent reported the severing of ties between EU and UK security agencies as a result of a 'no deal' Brexit.
Rob Price, head of the Acro criminal records office, said access to EU conviction records was "critical" to deciding whether to release or detain a foreign suspect. Without them, the UK could be forced to allow dangerous criminals to roam the streets.
"Now is the time for people to really understand this is not just something you can pass off and say 'it will be alright'," Mr Price said. "Politicians use the term ‘sub-optimal’ and what does that mean? It means high risk and less secure."
And while UK law enforcement agencies are "trying their best" to build a backup system, without access, "stuff will get missed." The UK makes 600 requests to foreign law enforcement agencies every day, and of these, roughly two-thirds are for Europeans. Because of the cooperation agreement, responses from Europe can take one to two days. But the lag time for agencies outside of Europe can be longer than three months.
As it stands, the agreement allows the UK access to ECRIS, the European Arrest Warrant, Schengen Information System II and other systems. This access will be maintained until the end of the transition period (the end of 2020), so that would give the UK some lead time to negotiate replacement agreements.
"We’re going to have to explain that to the public at some point, we may even have to explain that to victims and witnesses."
"Somebody may be arrested for shoplifting here but back home they could have a serious conviction. There could be a reason why they are here."
And while Acro said he's working to set up bilateral agreements, completing security cooperation agreements with individual members of the EU27 could take a long time.
“In a short timescale we’re not going to be able to get 27 agreements,” Mr Price said. "Bilaterals are a lot slower, a lot clunkier. ECRIS is a really important part of our business – turning that off is going to have a significant impact on our ability to make this country safer and to make European countries safer as well."
And as if rampant crime wasn't enough of a concern, a more immediate concern could be a "garbage crisis" in the heavily populated streets of the Southeastern UK, the area in and around London. Because if the UK leaves the EU without a deal on March 29, export licenses for livestock and the millions of tonnes of waste that the UK exports to the EU could become invalid "overnight," according to the Guardian.
The result could be nothing short of a public health emergency. Not only would the UK lose the ability to export its trash, increasing the likelihood of polllution seeping into its water supplies, but a backlog of livestock could cause manure overflows.
If the UK leaves the EU without a deal on 29 March, export licences for millions of tonnes of waste will become invalid overnight. Environment Agency (EA) officials said leaking stockpiles could cause pollution.
The EA is also concerned that if farmers cannot export beef and lamb, a backlog of livestock on farms could cause liquid manure stores to overflow. A senior MP said the problems could cause a public health and environmental pollution emergency. An EA source said: “It could all get very ugly, very quickly."
The emails leaked to the Guardian were sent to EA staff, asking for 42 volunteers to staff crisis management centres that would deal with incidents. On Tuesday the chief executive of the civil service revealed plans to move up to 5,000 staff into an emergency command and control centre in the event of no deal.
It would also open the door to criminal fraudsters seeking to exploit the situation.
"No deal would be a green light to criminal fraudsters and create a public health and environmental pollution emergency. EA officials should not carry the can for the failings of government to get a deal through and this shows how hollow the prime minister’s promises were about protecting the environment if we leave the EU."
But in what was perhaps the most outlandish entry in the "Project Fear" project, two UK newspapers, the Daily Mail and the Times of London, led their Sunday editions with stories about plans to move the Queen and the royal family out of London to a "secure location" if a no-deal Brexit results in public unrest -  a plan we're calling "Operation Gan-Gan Drop".
If rioters take to the streets of London following a hard Brexit, a Cold War plan to evacuate the royals to an undisclosed location in the countryside would be immediately implemented.
The Queen and other senior royals will be evacuated from London in the event of riots triggered by a no-deal Brexit, under secret plans being drawn up by Whitehall.
Emergency proposals to rescue the royal family during the Cold War have been "repurposed" in recent weeks, as the risk continues to rise of the UK crashing out of the EU without a deal before next month’s deadline.
Still, during times of abject hysteria, some MPs - notably arch-Brexiteer Jacob Rees-Mogg - have spoken up to remind Britos that while there would be a degree of economic fallout from a hard Brexit, it would be "survivable," according to Sky News.
"It seems to me we have got to guard against two things. One is an irrational pessimism that says that everything will be a catastrophe and irrational optimism which says everything will be okay.
But the way things are going, if May wants to successfully whip up the votes for the version of her Brexit deal that has already been voted down by a historic margin, she is going to need to try a little harder.
Posted: February 3, 2019, 8:08 pm
Juan Guaidó is the product of a decade-long project overseen by Washington’s elite regime change trainers. While posing as a champion of democracy, he has spent years at the forefront of a violent campaign of destabilization.
Before the fateful day of January 22, fewer than one in five Venezuelans had heard of Juan Guaidó. Only a few months ago, the 35-year-old was an obscure character in a politically marginal far-right group closely associated with gruesome acts of street violence. Even in his own party, Guaidó had been a mid-level figure in the opposition-dominated National Assembly, which is now held under contempt according to Venezuela’s constitution.
But after a single phone call from from US Vice President Mike Pence, Guaidó proclaimed himself president of Venezuela. Anointed as the leader of his country by Washington, a previously unknown political bottom-dweller was vaulted onto the international stage as the US-selected leader of the nation with the world’s largest oil reserves.
Echoing the Washington consensus, the New York Times editorial board hailed Guaidó as a “credible rival” to Maduro with a “refreshing style and vision of taking the country forward.” The Bloomberg News editorial board applauded him for seeking “restoration of democracy” and the Wall Street Journal declared him “a new democratic leader.” Meanwhile, Canada, numerous European nations, Israel, and the bloc of right-wing Latin American governments known as the Lima Group recognized Guaidó as the legitimate leader of Venezuela.
While Guaidó seemed to have materialized out of nowhere, he was, in fact, the product of more than a decade of assiduous grooming by the US government’s elite regime change factories. Alongside a cadre of right-wing student activists, Guaidó was cultivated to undermine Venezuela’s socialist-oriented government, destabilize the country, and one day seize power. Though he has been a minor figure in Venezuelan politics, he had spent years quietly demonstrated his worthiness in Washington’s halls of power.
“Juan Guaidó is a character that has been created for this circumstance,” Marco Teruggi, an Argentinian sociologist and leading chronicler of Venezuelan politics, told The Grayzone. “It’s the logic of a laboratory – Guaidó is like a mixture of several elements that create a character who, in all honesty, oscillates between laughable and worrying.”
Diego Sequera, a Venezuelan journalist and writer for the investigative outlet Misión Verdad, agreed: “Guaidó is more popular outside Venezuela than inside, especially in the elite Ivy League and Washington circles,” Sequera remarked to The Grayzone, “He’s a known character there, is predictably right-wing, and is considered loyal to the program.”
While Guaidó is today sold as the face of democratic restoration, he spent his career in the most violent faction of Venezuela’s most radical opposition party, positioning himself at the forefront of one destabilization campaign after another. His party has been widely discredited inside Venezuela, and is held partly responsible for fragmenting a badly weakened opposition.
“‘These radical leaders have no more than 20 percent in opinion polls,” wrote Luis Vicente León, Venezuela’s leading pollster. According to León, Guaidó’s party remains isolated because the majority of the population “does not want war. ‘What they want is a solution.’”
But this is precisely why he Guaidó was selected by Washington: He is not expected to lead Venezuela toward democracy, but to collapse a country that for the past two decades has been a bulwark of resistance to US hegemony. His unlikely rise signals the culmination of a two decades-long project to destroy a robust socialist experiment.

Targeting the “troika of tyranny”

Since the 1998 election of Hugo Chávez, the United States has fought to restore control over Venezuela and is vast oil reserves. Chávez’s socialist programs may have redistributed the country’s wealth and helped lift millions out of poverty, but they also earned him a target on his back.
In 2002, Venezuela’s right-wing opposition briefly ousted Chávez with US support and recognition, before the military restored his presidency following a mass popular mobilization. Throughout the administrations of US Presidents George W. Bush and Barack Obama, Chávez survived numerous assassination plots, before succumbing to cancer in 2013. His successor, Nicolas Maduro, has survived three attempts on his life.
The Trump administration immediately elevated Venezuela to the top of Washington’s regime change target list, branding it the leader of a “troika of tyranny.” Last year, Trump’s national security team attempted to recruit members of the military brass to mount a military junta, but that effort failed.
According to the Venezuelan government, the US was also involved in a plot, codenamed Operation Constitution, to capture Maduro at the Miraflores presidential palace; and another, called Operation Armageddon, to assassinate him at a military parade in July 2017. Just over a year later, exiled opposition leaders tried and failed to kill Maduro with drone bombs during a military parade in Caracas.
More than a decade before these intrigues, a group of right-wing opposition students were hand-selected and groomed by an elite US-funded regime change training academy to topple Venezuela’s government and restore the neoliberal order.

Training from the “‘export-a-revolution’ group that sowed the seeds for a NUMBER of color revolutions”

On October 5, 2005, with Chavez’s popularity at its peak and his government planning sweeping socialist programs, five Venezuelan “student leaders” arrived in Belgrade, Serbia to begin training for an insurrection.
The students had arrived from Venezuela courtesy of the Center for Applied Non-Violent Action and Strategies, or CANVAS. This group is funded largely through the National Endowment for Democracy, a CIA cut-out that functions as the US government’s main arm of promoting regime change; and offshoots like the International Republican Institute and the National Democratic Institute for International Affairs. According to leaked internal emails from Stratfor, an intelligence firm known as the “shadow CIA,” “[CANVAS] may have also received CIA funding and training during the 1999/2000 anti-Milosevic struggle.”
CANVAS is a spinoff of Otpor, a Serbian protest group founded by Srdja Popovic in 1998 at the University of Belgrade. Otpor, which means “resistance” in Serbian, was the student group that gained international fame – and Hollywood-level promotion – by mobilizing the protests that eventually toppled Slobodan Milosevic. This small cell of regime change specialists was operating according to the theories of the late Gene Sharp, the so-called “Clausewitz of non-violent struggle.” Sharp had worked with a former Defense Intelligence Agency analyst, Col. Robert Helvey, to conceive a strategic blueprint that weaponized protest as a form of hybrid warfare, aiming it at states that resisted Washington’s unipolar domination.
Otpor at the 1998 MTV Europe Music Awards
Otpor was supported by the National Endowment for Democracy, USAID and Sharp’s Albert Einstein Institute. Sinisa Sikman, one of Otpor’s main trainers, once said the group even received direct CIA funding. According to a leaked email from a Stratfor staffer, after running Milosevic out of power, “the kids who ran OTPOR grew up, got suits and designed CANVAS… or in other words a ;export-a-revolution’ group that sowed the seeds for a NUMBER of color revolutions. They are still hooked into U.S. funding and basically go around the world trying to topple dictators and autocratic governments (ones that U.S. does not like ;).”
Stratfor revealed that CANVAS “turned its attention to Venezuela” in 2005 after training opposition movements that led pro-NATO regime change operations across Eastern Europe.
While monitoring the CANVAS training program, Stratfor outlined its insurrectionist agenda in strikingly blunt language: “Success is by no means guaranteed, and student movements are only at the beginning of what could be a years-long effort to trigger a revolution in Venezuela, but the trainers themselves are the people who cut their teeth on the ‘Butcher of the Balkans.’ They’ve got mad skills. When you see students at five Venezuelan universities hold simultaneous demonstrations, you will know that the training is over and the real work has begun.”

Birthing the “Generation 2007” regime change cadre

The “real work” began two years later, in 2007, when Guaidó graduated from Andrés Bello Catholic University of Caracas. He moved to Washington DC to enroll in the Governance and Political Management Program at George Washington University under the tutelage of Venezuelan economist Luis Enrique Berrizbeitia, one of the top Latin American neoliberal economists. Berrizbeitia is a former executive director of the International Monetary Fund who spent more than a decade working in Venezuelan energy sector under the oligarchic old regime that was ousted by Chavez.
That year, Guaidó helped lead anti-government rallies after the Venezuelan government declined to to renew the license of Radio Caracas Televisión (RCTV). This privately-owned station played a leading role in the 2002 coup against Hugo Chavez. RCTV helped mobilize anti-government demonstrators, falsified information blaming government supporters for acts of violence carried out by opposition members, and banned pro-government reporting amid the coup. The role of RCTV and other oligarch-owned stations in driving the failed coup attempt was chronicled in the acclaimed documentary, The Revolution Will Not Be Televised.
That same year, the students claimed credit for stymying Chavez’s constitutional referendum for a “21st century socialism” that promised “to set the legal framework for the political and social reorganization of the country, giving direct power to organized communities as a prerequisite for the development of a new economic system.”
From the protests around RCTV and the referendum, a specialized cadre of US-backed class of regime change activists was born. They called themselves “Generation 2007.”
The Stratfor and CANVAS trainers of this cell identified Guaidó’s ally – a street organizer named Yon Goicoechea – as a “key factor” in defeating the constitutional referendum. The following year, Goicochea was rewarded for his efforts with the Cato Institute’s Milton Friedman Prize for Advancing Liberty, along with a $500,000 prize, which he promptly invested into building his own Liberty First (Primero Justicia) political network.
Friedman, of course, was the godfather of the notorious neoliberal Chicago Boys who were imported into Chile by dictatorial junta leader Augusto Pinochet to implement policies of radical “shock doctrine”-style fiscal austerity. And the Cato Institute is the libertarian Washington DC-based think tank founded by the Koch Brothers, two top Republican Party donors who have become aggressive supporters of the right-wing across Latin America.
Wikileaks published a 2007 email from American ambassador to Venezuela William Brownfield sent to the State Department, National Security Council and Department of Defense Southern Command praising “Generation of ’07” for having “forced the Venezuelan president, accustomed to setting the political agenda, to (over)react.” Among the “emerging leaders” Brownfield identified were Freddy Guevara and Yon Goicoechea. He applauded the latter figure as “one of the students’ most articulate defenders of civil liberties.”
Flush with cash from libertarian oligarchs and US government soft power outfits, the radical Venezuelan cadre took their Otpor tactics to the streets, along with a version of the group’s logo, as seen below:

“Galvanizing public unrest…to take advantage of the situation and spin it against Chavez”

In 2009, the Generation 2007 youth activists staged their most provocative demonstration yet, dropping their pants on public roads and aping the outrageous guerrilla theater tactics outlined by Gene Sharp in his regime change manuals. The protesters had mobilized against the arrest of an ally from another newfangled youth group called JAVU. This far-right group “gathered funds from a variety of US government sources, which allowed it to gain notoriety quickly as the hardline wing of opposition street movements,” according to academic George Ciccariello-Maher’s book, “Building the Commune.”
While video of the protest is not available, many Venezuelans have identified Guaidó as one of its key participants. While the allegation is unconfirmed, it is certainly plausible; the bare-buttocks protesters were members of the Generation 2007 inner core that Guaidó belonged to, and were clad in their trademark Resistencia! Venezuela t-shirts, as seen below:
Is this the ass that Trump wants to install in Venezuela’s seat of power?
That year, Guaidó exposed himself to the public in another way, founding a political party to capture the anti-Chavez energy his Generation 2007 had cultivated. Called Popular Will, it was led by Leopoldo López, a Princeton-educated right-wing firebrand heavily involved in National Endowment for Democracy programs and elected as the mayor of a district in Caracas that was one of the wealthiest in the country. Lopez was a portrait of Venezuelan aristocracy, directly descended from his country’s first president. He was also the first cousin of Thor Halvorssen, founder of the US-based Human Rights Foundation that functions as a de facto publicity shop for US-backed anti-government activists in countries targeted by Washington for regime change.
Though Lopez’s interests aligned neatly with Washington’s, US diplomatic cables published by Wikileaks highlighted the fanatical tendencies that would ultimately lead to Popular Will’s marginalization. One cable identified Lopez as “a divisive figure within the opposition… often described as arrogant, vindictive, and power-hungry.” Others highlighted his obsession with street confrontations and his “uncompromising approach” as a source of tension with other opposition leaders who prioritized unity and participation in the country’s democratic institutions.
Popular Will founder Leopoldo Lopez cruising with his wife, Lilian Tintori
By 2010, Popular Will and its foreign backers moved to exploit the worst drought to hit Venezuela in decades. Massive electricity shortages had struck the country due the dearth of water, which was needed to power hydroelectric plants. A global economic recession and declining oil prices compounded the crisis, driving public discontentment.
Stratfor and CANVAS – key advisors of Guaidó and his anti-government cadre – devised a shockingly cynical plan to drive a dagger through the heart of the Bolivarian revolution. The scheme hinged on a 70% collapse of the country’s electrical system by as early as April 2010.
“This could be the watershed event, as there is little that Chavez can do to protect the poor from the failure of that system,” the Stratfor internal memo declared. “This would likely have the impact of galvanizing public unrest in a way that no opposition group could ever hope to generate. At that point in time, an opposition group would be best served to take advantage of the situation and spin it against Chavez and towards their needs.”
By this point, the Venezuelan opposition was receiving a staggering $40-50 million a year from US government organizations like USAID and the National Endowment for Democracy, according to a report by the Spanish think tank, the FRIDE Institute. It also had massive wealth to draw on from its own accounts, which were mostly outside the country.
While the scenario envisioned by Statfor did not come to fruition, the Popular Will party activists and their allies cast aside any pretense of non-violence and joined a radical plan to destabilize the country.

Towards violent destabilization

In November, 2010, according to emails obtained by Venezuelan security services and presented by former Justice Minister Miguel Rodríguez Torres, Guaidó, Goicoechea, and several other student activists attended a secret five-day training at the Fiesta Mexicana hotel in Mexico City. The sessions were run by Otpor, the Belgrade-based regime change trainers backed by the US government. The meeting had reportedly received the blessing of Otto Reich, a fanatically anti-Castro Cuban exile working in George W. Bush’s Department of State, and the right-wing former Colombian President Alvaro Uribe.
At the Fiesta Mexicana hotel, the emails stated, Guaidó and his fellow activists hatched a plan to overthrow President Hugo Chavez by generating chaos through protracted spasms of street violence.
Three petroleum industry figureheads – Gustavo Torrar, Eligio Cedeño and Pedro Burelli – allegedly covered the $52,000 tab to hold the meeting. Torrar is a self-described “human rights activist” and “intellectual” whose younger brother Reynaldo Tovar Arroyo is the representative in Venezuela of the private Mexican oil and gas company Petroquimica del Golfo, which holds a contract with the Venezuelan state.
Cedeño, for his part, is a fugitive Venezuelan businessman who claimed asylum in the United States, and Pedro Burelli a former JP Morgan executive and the former director of Venezuela’s national oil company, Petroleum of Venezuela (PDVSA). He left PDVSA in 1998 as Hugo Chavez took power and is on the advisory committeeof Georgetown University’s Latin America Leadership Program.
Burelli insisted that the emails detailing his participation had been fabricated and even hired a private investigator to prove it. The investigator declared that Google’s records showed the emails alleged to be his were never transmitted.
Yet today Burelli makes no secret of his desire to see Venezuela’s current president, Nicolás Maduro, deposed – and even dragged through the streets and sodomized with a bayonet, as Libyan leader Moammar Qaddafi was by NATO-backed militiamen. 
View image on TwitterView image on Twitter
.@NicolasMaduro, jamas me has hecho caso. Me has fustigado/perseguido como @chavezcandanga jamás osó. Óyeme, tienes sólo dos opciones en las próximas 24 horas:

1. Como Noriega: pagar pena por narcotráfico y luego a @IntlCrimCourt La Haya por DDHH.

2. O a la Gaddafi.

Escoge ya!
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Update: Burelli contacted the Grayzone after the publication of this article to clarify his participation in the “Fiesta Mexicana” plot.
Burelli called the meeting “a legitimate activity that took place in a hotel by a different name” in Mexico.
Asked if OTPOR coordinated the meeting, he would only state that he “likes” the work of OTPOR/CANVAS and while not a funder of it, has “recommended activists from different countries to track them and participate in the activities they conduct in various countries.”
Burelli added: “The Einstein Institute trained thousands openly in Venezuela. Gene Sharpe’s philosophy was widely studied and embraced. And this has probably kept the struggle from turning into a civil war.”
The alleged Fiesta Mexicana plot flowed into another destabilization plan revealed in a series of documents produced by the Venezuelan government. In May 2014, Caracas released documents detailing an assassination plot against President Nicolás Maduro. The leaks identified the Miami-based Maria Corina Machado as a leader of the scheme. A hardliner with a penchant for extreme rhetoric, Machado has functioned as an international liaison for the opposition, visiting President George W. Bush in 2005.
Machado and George W. Bush, 2005
“I think it is time to gather efforts; make the necessary calls, and obtain financing to annihilate Maduro and the rest will fall apart,” Machado wrote in an email to former Venezuelan diplomat Diego Arria in 2014.
In another email, Machado claimed that the violent plot had the blessing of US Ambassador to Colombia, Kevin Whitaker. “I have already made up my mind and this fight will continue until this regime is overthrown and we deliver to our friends in the world. If I went to San Cristobal and exposed myself before the OAS, I fear nothing. Kevin Whitaker has already reconfirmed his support and he pointed out the new steps. We have a checkbook stronger than the regime’s to break the international security ring.”

Guaidó heads to the barricades

That February, student demonstrators acting as shock troops for the exiled oligarchy erected violent barricades across the country, turning opposition-controlled quarters into violent fortresses known as guarimbas. While international media portrayed the upheaval as a spontaneous protest against Maduro’s iron-fisted rule, there was ample evidence that Popular Will was orchestrating the show.
“None of the protesters at the universities wore their university t-shirts, they all wore Popular Will or Justice First t-shirts,” a guarimba participant said at the time. “They might have been student groups, but the student councils are affiliated to the political opposition parties and they are accountable to them.”
Asked who the ringleaders were, the guarimba participant said, “Well if I am totally honest, those guys are legislators now.”
Around 43 were killed during the 2014 guarimbas. Three years later, they erupted again, causing mass destruction of public infrastructure, the murder of government supporters, and the deaths of 126 people, many of whom were Chavistas. In several cases, supporters of the government were burned alive by armed gangs.
Guaidó was directly involved in the 2014 guarimbas. In fact, he tweeted video showing himself clad in a helmet and gas mask, surrounded by masked and armed elements that had shut down a highway that were engaging in a violent clash with the police. Alluding to his participation in Generation 2007, he proclaimed, “I remember in 2007, we proclaimed, ‘Students!’ Now, we shout, ‘Resistance! Resistance!'” 
Guaidó has deleted the tweet, demonstrating apparent concern for his image as a champion of democracy.

On February 12, 2014, during the height of that year’s guarimbas, Guaidó joined Lopez on stage at a rally of Popular Will and Justice First. During a lengthy diatribe against the government, Lopez urged the crowd to march to the office of Attorney General Luisa Ortega Diaz. Soon after, Diaz’s office came under attack by armed gangs who attempted to burn it to the ground. She denounced what she called “planned and premeditated violence.”
Guaido alongside Lopez at the fateful February 12, 2014 rally
In an televised appearance in 2016, Guaidó dismissed deaths resulting from guayas – a guarimba tactic involving stretching steel wire across a roadway in order to injure or kill motorcyclists – as a “myth.” His comments whitewashed a deadly tactic that had killedunarmed civilians like Santiago Pedroza and decapitated a man named Elvis Durán, among many others.
This callous disregard for human life would define his Popular Will party in the eyes of much of the public, including many opponents of Maduro.

Cracking down on Popular Will

As violence and political polarization escalated across the country, the government began to act against the Popular Will leaders who helped stoke it.
Freddy Guevara, the National Assembly Vice-President and second in command of Popular Will, was a principal leader in the 2017 street riots. Facing a trial for his role in the violence, Guevara took shelter in the Chilean embassy, where he remains.
Lester Toledo, a Popular Will legislator from the state of Zulia, was wanted by Venezuelan government in September 2016 on charges of financing terrorism and plotting assassinations. The plans were said to be made with former Colombian President Álavaro Uribe. Toledo escaped Venezuela and went on several speaking tours with Human Rights Watch, the US government-backed Freedom House, the Spanish Congress and European Parliament.
Carlos Graffe, another Otpor-trained Generation 2007 member who led Popular Will, was arrested in July 2017. According to police, he was in possession of a bag filled with nails, C4 explosives and a detonator. He was released on December 27, 2017.
Leopoldo Lopez, the longtime Popular Will leader, is today under house arrest, accused of a key role in deaths of 13 people during the guarimbas in 2014. Amnesty International lauded Lopez as a “prisoner of conscience” and slammed his transfer from prison to house as “not good enough.” Meanwhile, family members of guarimba victims introduced a petition for more charges against Lopez.
Yon Goicoechea, the Koch Brothers posterboy and US-backed founder of Justice First, was arrested in 2016 by security forces who claimed they found found a kilo of explosives in his vehicle. In a New York Times op-ed, Goicoechea protested the charges as “trumped-up” and claimed he had been imprisoned simply for his “dream of a democratic society, free of Communism.” He was freedin November 2017.
Hoy, en Caricuao. Llevo 15 años trabajando con @jguaido. Confío en él. Conozco la constancia y la inteligencia con la que se ha construido a sí mismo. Está haciendo las cosas con bondad, pero sin ingenuidad. Hay una posibilidad abierta hacia la libertad.
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David Smolansky, also a member of the original Otpor-trained Generation 2007, became Venezuela’s youngest-ever mayor when he was elected in 2013 in the affluent suburb of El Hatillo. But he was stripped of his position and sentenced to 15 months in prison by the Supreme Court after it found him culpable of stirring the violent guarimbas.  
Facing arrest, Smolansky shaved his beard, donned sunglasses and slipped into Brazil disguised as a priest with a bible in hand and rosary around his neck. He now lives in Washington, DC, where he was hand picked by Secretary of the Organization of American States Luis Almagro to lead the working group on the Venezuelan migrant and refugee crisis.
This July 26, Smolansky held what he called a “cordial reunion” with Elliot Abrams, the convicted Iran-Contra felon installed by Trump as special US envoy to Venezuela. Abrams is notorious for overseeing the US covert policy of arming right-wing death squads during the 1980’s in Nicaragua, El Salvador, and Guatemala. His lead role in the Venezuelan coup has stoked fears that another blood-drenched proxy war might be on the way.
Cordial reunión en la ONU con Elliott Abrams, enviado especial del gobierno de EEUU para Venezuela. Reiteramos que la prioridad para el gobierno interino que preside @jguaido es la asistencia humanitaria para millones de venezolanos que sufren de la falta de comida y medicinas.
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Four days earlier, Machado rumbled another violent threat against Maduro, declaring that if he “wants to save his life, he should understand that his time is up.”

A pawn in their game

The collapse of Popular Will under the weight of the violent campaign of destabilization it ran alienated large sectors of the public and wound much of its leadership up in exile or in custody. Guaidó had remained a relatively minor figure, having spent most of his nine-year career in the National Assembly as an alternate deputy. Hailing from one of Venezuela’s least populous states, Guaidó came in second place during the 2015 parliamentary elections, winning just 26% of votes cast in order to secure his place in the National Assembly. Indeed, his bottom may have been better known than his face.
Guaidó is known as the president of the opposition-dominated National Assembly, but he was never elected to the position. The four opposition parties that comprised the Assembly’s Democratic Unity Table had decided to establish a rotating presidency. Popular Will’s turn was on the way, but its founder, Lopez, was under house arrest. Meanwhile, his second-in-charge, Guevara, had taken refuge in the Chilean embassy. A figure named Juan Andrés Mejía would have been next in line but reasons that are only now clear, Juan Guaido was selected.   
“There is a class reasoning that explains Guaidó’s rise,” Sequera, the Venezuelan analyst, observed. “Mejía is high class, studied at one of the most expensive private universities in Venezuela, and could not be easily marketed to the public the way Guaidó could. For one, Guaidó has common mestizo features like most Venezuelans do, and seems like more like a man of the people. Also, he had not been overexposed in the media, so he could be built up into pretty much anything.”
In December 2018, Guaidó sneaked across the border and junketed to Washington, Colombia and Brazil to coordinate the plan to hold mass demonstrations during the inauguration of President Maduro. The night before Maduro’s swearing-in ceremony, both Vice President Mike Pence and Canadian Foreign Minister Chrystia Freeland called Guaidó to affirm their support.
A week later, Sen. Marco Rubio, Sen. Rick Scott and Rep. Mario Diaz-Balart – all lawmakers from the Florida base of the right-wing Cuban exile lobby – joined President Trump and Vice President Pence at the White House. At their request, Trump agreed that if Guaidó declared himself president, he would back him.
Secretary of State Mike Pompeo met personally withGuaidó on January 10, according to the Wall Street Journal. However, Pompeo could not pronounce Guaidó’s name when he mentioned him in a press briefing on January 25, referring to him as “Juan Guido.”
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Secretary of State Mike Pompeo just called the figure Washington is attempting to install as Venezuelan President "Juan *Guido*" - as in the racist term for Italians. America's top diplomat didn't even bother to learn how to pronounce his puppet's name.
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By January 11, Guaidó’s Wikipedia page had been edited 37 times, highlighting the struggle to shape the image of a previously anonymous figure who was now a tableau for Washington’s regime change ambitions. In the end, editorial oversight of his page was handed over to Wikipedia’s elite council of “librarians,” who pronounced him the “contested” president of Venezuela.
Guaidó might have been an obscure figure, but his combination of radicalism and opportunism satisfied Washington’s needs. “That internal piece was missing,” a Trump administration said of Guaidó. “He was the piece we needed for our strategy to be coherent and complete.”
“For the first time,” Brownfield, the former American ambassador to Venezuela, gushed to the New York Times, “you have an opposition leader who is clearly signaling to the armed forces and to law enforcement that he wants to keep them on the side of the angels and with the good guys.”
But Guaidó’s Popular Will party formed the shock troops of the guarimbas that caused the deaths of police officers and common citizens alike. He had even boasted of his own participation in street riots. And now, to win the hearts and minds of the military and police, Guaido had to erase this blood-soaked history.
On January 21, a day before the coup began in earnest, Guaidó’s wife delivered a video address calling on the military to rise up against Maduro. Her performance was wooden and uninspiring, underscoring the her husband’s limited political prospects.
At a press conference before supporters four days later, Guaidó announced his solution to the crisis: “Authorize a humanitarian intervention!”

While he waits on direct assistance, Guaidó remains what he has always been – a pet project of cynical outside forces. “It doesn’t matter if he crashes and burns after all these misadventures,” Sequera said of the coup figurehead. “To the Americans, he is expendable.”
Posted: January 31, 2019, 3:18 pm
In a rare deep-research expedition, Global Intel Hub has uncovered what could possibly be one of the biggest stock manipulation scams of all time.  The reason this case is so monumental is because it flies in the face of 'regulation' that claims to 'prevent fraud and manipulation' when this is happening on a public market!  
First let's have a little background - the stock is Revlon (REV) and the source article is here: Raiders of the Lost Corporate Ark: Revlon
Revlon is controlled by a single insider for 30 years billionaire Ronald Perelman.
Perelman has developed in his career a method of hostile takeovers that dates far before Revlon.
Due to a rule, if he is able to get 90% of Revlon he'll get voting rights of all 100%.
The float (available shares for purchase) is low 2.29 M, almost all of which are held short.
Recently, Barna Capital purchased a 2% stake, putting the institutional control above 10.1%, making a Perelman takeover impossible.
We wanted to dig deeper so we contacted the source on this article, Barna Capital.  What they had to say blew our mind (although we know markets are manipulated, it's one thing to say it and another thing to dissect the technicalities of how the manipulation works, and see it in real time).
Information we collected from Barna Capital (some of this copied from source article)
We asked Chief Strategist of Barna Capital Egor Romanyuk a single question:  How can you prove that Revlon (REV) is being manipulated?  He provided a detailed answer, over the course of several days of back and forth communication, paraphrased here:
Today is one of those days. Right off the open an algo starts selling 100 shares into the bid. The spread is 3%. If I place a bid higher than last sale, let's say 500 shares. It will sell me 500 shares. And will sell 100 shares at whatever bid is lower than last. This is just bluntly manipulation.  It's just moving share price lower. It's only job.

Take a look at lv2 for instance. There's at least a 5 to 1 ration ask to bid at all times. Strange for a stock that doesn't exist for sale.

When Perelman buys stock, his 15k algo buys move the stock from 50 cents to a dollar. When 8 buy 15k shares. The stock usually goes down. So I'm working against a short. And he's not.

About 2 million shares out the remaining float is in ETF. So that basically not tradable as they only rebalance their portfolios and do not trade actively. That lease roughly 500k shares tradable period. With 2.6 million already shorted. Magic i suppose 🙂
Also Barna confirmed that Mittleman and the other shareholders are not allowing their stock for borrowing - which means the short seller can only be Ronald Perelman (RP).

Take a look at this Level2 window for REV in which you will see a wall of offers:
barna revlon level 2
Source: Barna Capital
As you can see, there are offers on multiple exchanges, NYSE, BATS, EDGA, ARCA, and BYX - all at the same price. At another point in time, you can see even more offers:
level 2 revlon manipulation evidence
Source: Barna Capital
To get to the bottom of this we interviewed Egor Romanyuk, Chief Strategist of Barna Capital. He told us:
Today is one of those days. Right off the open an algo starts selling 100 shares into the bid. The spread is 3%. If I place a bid higher than last sale, let's say 500 shares. It will sell me 500 shares. And will sell 100 shares at whatever bid is lower than last. It's just moving share price lower. It's only job. And here's one more thing. When the algo buys stock, the 15k algo buys move the stock from 50 cents to a dollar. When I buy 15k shares, the stock usually goes down. So I'm working against a short.
If you think this is an anomaly, let's look at the Level 2 from the previous day:
revlon manipulation
You can see on the screen there is a wall of sell orders. But the float is so small, who can be the seller? We don't know for sure, as data is not transparent; however, the point is there is a short interest here. That short interest - caught in a squeeze - could be forced to panic cover driving REV through the roof. That's how a short squeeze by definition works.
So why would the majority owner of a stock manipulate it lower?  
Now for a small background on RP - he has a history of Corporate Raids and his own Wikipedia page: (see below from 'controversies' section) - 


In the late 1980s, Perelman was accused of engaging in greenmail.[72] "Greenmail" occurs when someone buys a large block of a company's stock and threatens to take over the company unless he is paid a substantial premium over his purchase price. In the case of someone with a reputation as a corporate raider, the mere act of buying up shares could send a company into a panic and investors into a buying frenzy.[73] Perelman insists he seriously intended to buy every corporation he bought into.[74]
He was first accused of greenmail in late 1986 during a run at CPC International when he bought 8.2% of CPC at around $75 a share and indirectly sold it back to CPC through Salomon Brothers a month later at $88.5 a share for a $40 million profit. Both CPC and Perelman denied it was greenmail despite appearances to the contrary, including what looked like an artificial price increase by Salomon shortly before they sold Perelman's shares.[75]
Another accusation of greenmailing levied against him was the best-known and stemmed from his attempt to purchase Gillette in November 1986. Perelman opened negotiations with a bid of $4.12 billion. Gillette responded with an unsuccessful lawsuit and public insinuations of insider trading. Perelman accumulated 13.8% of Gillette before he made what he would later call the worst decision he ever made and sold his stake to Gillette later that month for a $34 million profit. Gillette had put word out that Ralston Purina had agreed to buy a 20% block of stock, making any attempt by Perelman to buy Gillette much more difficult. Perelman decided to sell his share to Ralston Purina, but before he did so Gillette's executives called him up, asking if he'd sell his shares to them and they'd sell the shares to Ralston Purina. He sold his shares to Gillette and Ralston backed out of the deal.[76]


In April 2001, M&F Worldwide bought Perelman's 83% stake in Panavision for $128 million. This would be unremarkable except that Perelman controlled M&F Worldwide and the price paid for his stake was four times market value. At the time, M&F Worldwide was a healthy company with an excellent balance sheet while Panavision was bleeding red ink. M&F Worldwide's other shareholders cried foul, alleging the only person who stood to benefit from the deal was Perelman and took their complaints to the courts.[77] Perelman insisted the deal was an excellent one and in the best interest of the shareholders because Panavision was well-positioned to profit from the move to digital cinematography.[78]The share price tumbled from six to three after the deal and reflected M&F Worldwide shareholders' lack of confidence.[79] Perelman tried to pacify M&F Worldwide's shareholders with a $15 million settlement, but the judge rejected it as grossly inadequate. Ultimately, Perelman agreed to undo the deal.[80]

Fred Tepperman

Perelman hired Fred Tepperman as his CFO after Tepperman left Warner Communications in 1985. Starting with Pantry Pride, Tepperman worked on every single business deal Perelman orchestrated throughout Tepperman's seven-year stint at MacAndrews & Forbes. Tepperman's tenure came to an abrupt end just after Christmas in 1991 when Perelman fired him for being derelict in his duties. Tepperman had been distracted, he claimed, by caring for his Alzheimer's-afflicted wife of 30 years. A clause in Tepperman's contract entitled him to a large portion of his salary and benefits in the event of an injury that prevented him from being able to work; Tepperman claimed he had suffered such an injury, albeit psychologically, as a result of the effect his wife's condition had on him. His demands totaled $30 million. That number stems partially from Tepperman's salary, which started at $275,000 and rose to $1.2 million in 1990[81] and partially from his large benefits package.[82] Perelman was quick to file a countersuit for fraud, claiming that Tepperman had sneakily changed the company's retirement plan in such a way that Tepperman would personally gain millions of dollars.[81] It took over three years for the case to make it to court. The case ended with a sealed settlement.[81]
Now fast forward to the Revlon case, in which RP has a single goal - take the company private.  He wants to buy the remaining shares for as low price as possible.  If this seems outlandish, just take a look at his career.  But really the proof is in the analysis of the trading data - there is no possible way that anyone other than RP can loan shares out which are keeping the price artificially deflated.  
What's the end game?  A potential short squeeze is one, and RP should thank us for exposing this situation as a short squeeze could create a huge profit for him, as he owns more than 84% (plus or minus a few points here) of the entire Revlon.  
If this were a penny stock, it wouldn't be news.  But Revlon is a huge brand name and it trades on the NYSE which is owned by the ICE, based in Atlanta, GA.
Here goes the ICE, being cautious about Crypto because it can be 'manipulated' where they have good ol' traditional stocks being manipulated right under their nose!
For traders this is a buy signal for a potential squeeze.  For lawyers and securities activists, this is a must watch as this case unfolds into a potential game changer for regulated markets.  One thing is clear, with the internet and move towards transparency and democratization of markets - everything will be exposed in the end.  
This conversation is being recorded, on multiple layers - starting with your ISP!
For groundbreaking intelligence and REAL news, checkout Global Intel Hub.  Props to our friends at Pre IPO Swap that broke this story on SA first - great work guys.
Posted: January 30, 2019, 4:22 am
Pre IPO Swap (New York, NY) 1/29/2019 – Pre IPO Swap wants to explain to investors how important it is to get on the cap table and why it matters.  First let’s explain what is a cap table – it is basically the ledger of shares in a private company.  That means it is the list of who owns what stock.  That’s it!  It looks something like this:
Image Source:
The idea is simple, however this fact is obfuscated from investors for a very nefarious and greedy reason.  Pre IPO Funds which offer access to Pre IPO companies do allow you to participate in the investment but only as a passenger.  They, their fund name, are the ones whose name will be on the cap table – NOT YOU.
They take 20% of your profits, charge other fees like exit fees – and strip you of your shareholder rights.  They may give you your rights should a bad situation occur – but why should investors sign away their shareholder rights in the first place?
Pre IPO Swap is not a fund so that means if you buy shares of Lyft you will buy directly from the seller, and subject to a minimum investment will be placed on the cap table with all the other shareholders.  Your name may even appear in the Prospectus (this would depend on many factors too complicated to explain here).
Note that Pre IPO investing is for accredited investors only.
We want to also point out that getting on the cap table isn’t for anyone special – it’s for all investors.  Access is not ‘restricted’ – it is just that you have to know what it is and know how to get it.  Get it directly @ Pre IPO Swap.
Posted: January 29, 2019, 2:13 pm
Pre IPO Swap – (New York, NY 1/26/2019) – Pre IPO is when you transact shares of a company which is about to become a public company, a process known as IPO.  The Pre IPO market is for accredited investors only.  Popular names currently on the table include Lyft, Palantir, SpaceX, Klarna, Pinterest, and Stripe.  This is well known.
What is NOT known is how most companies are structuring this transaction.  They create a fund to do it.  So investors are actually making an investment into the fund – NOT into the shares.  What’s the difference?  Well for one, if something goes wrong – you have no rights.  Second, there are more fees – including but not limited to 20% of your profits.  And an exit fee.  That’s right – you have to pay up to 5% commissions when you buy AND when you sell!  Of course they will say – it’s all part of investing and if you make more than the fees then you are still ahead.  That’s fine – they need to eat too – but they aren’t providing any sort of advice or additional Alpha when you can get the shares directly without all the fees at places like Pre IPO Swap.
They are holding your shares hostage – for a huge ransom – 20% of your profits.
You don’t get on the Cap Table – they don’t even tell you what a Cap Table is because you are wrapped in an LLC which acts like an investment pool (this is the fund).  It tracks the shares as if you bought the shares – but you don’t actually own the shares.  So you are really investing in Example Pre IPO Fund LLC and not Palantir, SpaceX, Uber.
What do Pre IPO Swap purchasers all have in common?
  • They understand value.
  • They are looking for an edge.
  • They are looking for that next disruptive technologies and companies.
  • They value their time and they know that time is best spent with loved ones and enjoying the world’s treasures.
  • They don’t need to look at quotes every minute because they purchased prior to the IPO.
  • They have a vision of their financial future.
  • They want to have control over their financial future.
  • They recognize that finance is not a spectator sport.
  • They (themselves, not through an LLC) get on the cap table.
So why do Pre IPO investors invest alongside billionaires?
Answer: Because they can!
What are some other problems with funds?  Funds can’t be hedged.  What does that mean?
If you own shares of an IPO which is about to go IPO shares will be restricted however the restrictions vary greatly in time and other details.  But you can always hedge your shares because you own them – they are yours.  That means you can sell covered calls on them, and many other things.  Here’s a famous example by none other than Mark Cuban, who protected 1.4 Billion in restricted stock during the sale of
Back in 1998, Mark Cuban and his partner Todd Wagner sold, a giant multimedia company focused on streaming audio and video, to Yahoo! for $5.7 billion. At the time, Mark Cuban received 14.6 million shares of Yahoo trading at $95, thus his concentrated position had a market value of $1.4 billion. In order to protect the value of the 14.6 million stocks he decided to set up a costless Options Collar, which allowed him to protect his billions without paying any insurance premium. Probably because there was a lock-in period for him to sell the Yahoo share, or he used these Yahoo shares as collateral for a bank loan, or he didn’t want to miss the opportunity if Yahoo continued to rally, he chose to enter a collar to lock in his share value without selling the shares.
This is one way to protect your position in Pre IPO without actually selling the shares.  But if you’re stuck in a fund – you can’t do that.  And there’s lots of other things you can’t do.  Hopefully you’ll make friends quickly with the other LLC members, after all you are all on the raft together.
And one more thing.  We shouldn’t presume to make statements about “Pre IPO Funds” as there are many and they are all different – there can be worse scenarios like fund specific lock ups, fees or penalties, and other features of a fund that are just the nature of being in them.
We’re not judging – we just feel that funds should be more forthcoming about explaining these nuances as it seems they are presented differently.  The language is clearly misleading however since investors must be accredited it’s ‘OK’ to use misleading language because accredited investors are supposed to know the difference between buying into a fund and buying shares directly.  But that’s not the point – investors just don’t know that it’s possible to do otherwise, that means the funds lead them to believe only through these fund vehicles is it even possible to get these shares – when that clearly is not the case.  Investors can transact direct and get on the cap table no LLC, and no 20% profit sharing fee.  (We note here, fees have their place – such as managed accounts, or a hedge fund quantitative strategy.  But sharing 20% of the profit from a single stock trade with your broker seems egregious.
To learn more about Pre IPO Investing, see 

Posted: January 27, 2019, 4:11 am
Pre IPO Swap @ Seeking Alpha (Analysis Division) – 1/25/2019

Pre IPO Swap is now a contributor for Seeking Alpha, a site that is focused on actionable intelligence for securities.  Interestingly, Seeking Alpha does publish stories on Pre IPO which is why we signed up.   Our first article covers what could be one of the most interesting stock trading cases of all time.
  • Revlon is controlled by a single insider for 30 years billionaire Ronald Perelman.
  • Perelman has developed in his career a method of hostile takeovers that dates far before Revlon.
  • Due to a rule, if he is able to get 90% of Revlon he’ll get voting rights of all 100%.
  • The float (available shares for purchase) is low 2.29 M, almost all of which are held short.
Recently, Barna Capital purchased a 2% stake, putting the institutional control above 10.1%, making a Perelman takeover impossible.
Revlon (REV) is an American multinational cosmetics, skin care, fragrance, and personal care company founded in 1932 and based in New York City. That is commonly known; it is a brand name.
However, what you may not know unless you are a securities attorney is that Revlon is the cause of one of the largest and most significant corporate securities decisions of a generation regarding corporate takeovers. Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986) was a landmark decision of the Delaware Supreme Court on hostile takeovers:
The Court declared that, in certain limited circumstances indicating that the ‘sale’ or ‘break up’ of the company is inevitable, the fiduciary obligation of the directors of a target corporation are narrowed significantly, the singular responsibility of the board being to maximize immediate stockholder value by securing the highest price available. The role of the board of directors transforms from ‘defenders of the corporate bastion to auctioneers charged with getting the best price for the stockholders at a sale of the company.’ Accordingly, the board’s actions are evaluated in a different frame of reference. In such a context, that conduct can not be judicially reviewed pursuant to the traditional business judgment rule, but instead will be scrutinized for reasonableness in relation to this discrete obligation.
This case is so significant in securities and corporate law that it has been cited 3,640 times:
49952134-15476741490427434And what’s interesting is that the guy who caused the case – Ronald Perelman – is still at the center of a shareholder dispute that started in 2013:
Posted: January 26, 2019, 2:47 am
This is a tale of how greed and lack of risk management can blow up in a big way. Brace yourselves.
Allow me to introduce you to one Matt Todorovski, a resident of Australia who wanted to become a trillionaire - - yes, a trillionaire - - by sitting in front of his computer trading the FOREX markets.
Now there is absolutely nothing wrong with being ambitious, setting goals, and trying to beat the markets. Millions of people around the world do it, and the vast majority of them fail. It's a tough business. That's why the handful of winners make so much money. Because almost everyone else loses.
For years, Mr. Todorovski did plenty of losing. From his start in 2009 up through the beginning of 2018, his efforts yielded nothing but financial pain (being a resident of Australia, his reporting was naturally in Australian dollars, each of which is about 0.72 of a U.S. dollar). About a year ago, he was looking at lifetime "winnings" of about negative seven hundred thousand dollars.
Then, for reasons unknown to me, his trading luck started turning around. He finally wiped out his losses in September 2018, and then he started making..........profits! And, million by million, he proudly noted the date of each milestone. He also, strangely, decided that the sky was the limit, and he would put in placeholders for future profit milestones, up to and including $1 trillion. Because God knows the way to get ten times richer than Jeff Bezos is to trading FOREX on your personal computer.
This fellow wasn't shy about sharing the specifics of his account, either. He would regularly update followers on the various automated systems he was using and the gains or losses from each one. As shown below, he had amassed over $13 million in profits as recently as about a month ago.
And then, late in December, things took their first serious turn for the worse:
Perhaps to bolster his spirits - - and keep naysayers at bay - - he started amassing a bunch of bromides, motivational lines, and inspirational quotes.
And then, positive thinking notwithstanding, he losses accelerated.
As illustrated below, there was a big move in the USD/JPY, and this one-day wonder was enough to wreck the guy. (In just a few weeks, however, the damage to the chart vanished).
Which reminds me of a similar wipeout James Cordier went through with and its own centimillion-dollar wipeout. (Here, again, the destruction would have never happened if he had somehow been able to hold on just a few weeks).
But getting back to our hero in Australia..........having lost so much in such a short amount of time, and with public visibility, he started getting pounded with I-told-you-so style hate mail, some of which he shared.
Within the span of hours, he was wiped out. The entire $14 million of his account was gone.
You probably know where this is leading..........
Although he shouldn't hold his breath. Someone (maybe a relative) kicked in $100, and about ten days later some big-hearted soul augmented it with five dollars of his own.
I suppose the lesson learned here, at a minimum, is one that Matt expressed in his own "Methods Of Procedure": 

    Posted: January 22, 2019, 4:05 pm
    The Jamaican stock exchange, unknown to most of the world and which is open for trading only three and a half hours a day, was 2018's best performing stock market.
    The exchange - which started 50 years ago, by Edward Seaga, a Jamaican Harvard graduate who worked as a record producer in the 1950s and 1960s - saw its main index up 29% during 2018, the most among 94 national benchmarks according to Bloomberg . Over the last five years, Jamaica's impressive market returns are even more pronounced: Jamaican stocks are up almost 300%, more than quadrupling the next national benchmark and outperforming the S&P 500 nearly seven times.
    The blistering ascent of the local stock market took place despite real growth in Jamaica averaging less than 1% over the last four years; in 2018, growth in Jamaica was expected to come in at 1.7%. However, the small size of the local market has kept it relatively insulated from the broader economy, and helped Jamaican equities move as quickly as they have. As a result, the total value of the 37 stocks on the main index is less than $11 billion.
    And now, capital is starting to trickle into Kingston as it tries to reinvent itself as a financial hub. Paul Simpson, a 36-year-old banker and investor in Kingston told Bloomberg:  “Clearly, capital goes where it’s comfortable. To see capital coming here means people must be comfortable." That, or they are simply hoping to recreate past returns.
    The floor of the Jamaican stock exchange
    The financial industry in the country is located mostly in the neighborhood of New Kingston. It isn’t a tourist destination like Negril and it isn't impoverished, like Trench Town. Instead, it’s an area where you’ll find Porsche dealerships and Starbucks.
    Similar to China, over the past decade, the country's financial sector assets have tripled and its number of financial institutions have multiplied by a factor of eight.
    It gets better: the World Bank now ranks Jamaica as the sixth best nation for ease of starting a business. Economist Uma Ramakrishnan, the IMF’s Jamaica mission chief said that "If I could hold a megaphone and tell investors now’s the time, I’d do it."
    Still, before US hedge funds start arriving with dreams of massive alpha, the limitations of local stocks are pronounced, especially when one considers the small size of the market. Additionally, the shares available to the public are limited as many of the companies are mostly owned by large institutions and conglomerates. Like with Japanese government bonds, it is commonplace for some stocks not to trade for days and the number of unchanged stocks on a daily basis often outnumbers both gainers and losers.
    In other words, in a world desperate for liquidity, Jamaica may not be your best bet.
    Which is also why the managing director of the exchange, Marlene Street Forrest, is working on improving its logistics. Trades now settle in two days instead of three to comply with international standards and the exchange is looking to introduce market making this year. Margin accounts and short selling are both also on the agenda for the coming year  - yes, there is no way to short stocks right now, and in a throwback to more normal times there are no HFTs or ETFs (there are no Jamaican stocks in U.S. ETFs, even those tracking “frontier” countries such as Kazakhstan, Sri Lanka, and Vietnam, the most emerging of the emerging markets).
    Still, the market is growing: there are 20 new IPOs scheduled for this year, and while the exchange evolving, as things often go in the islands, it's doing it at its own pace. 
    “We ensure that we are going to get it right before we move,” Street Forrest said. 
    Posted: January 21, 2019, 2:22 am
    While there were countless argument offered to explain December's near-record market drubbing, we said on several occasions last month that the simplest reason for last month's plunge was also the simplest one: faced with a mountain of redemption requests, hedge funds were forced to sell their holdings into a market that had never been more illiquid, which meant hitting each and every bid and culminating with the brief, December 24th bear market.
    We now have confirmation, because according to Hedge Fund Research, investors fled hedge funds as markets plunged in the fourth quarter (or is that markets plunged as investors fled hedge funds), pulling a massive $22.5 billion, the most in more than two years. The exodus added to the total withdrawals of $34 billion in 2018, or about 1% of hedge fund industry assets, the largest quarterly outflow since Q4 2016 when investors redeemed about $70 billion.
    Large fund outflows were concentrated in several firms which closed and returned capital to investors, with approximately two dozen firms experiencing net asset outflows of greater than $500 million for the quarter. Despite the overall negative trends on flows and performance, but reflecting the trend of larger hedge fund relative outperformance, approximately one dozen firms received net asset inflows of greater than $500 million for the quarter.
    Flows by firm size also showed net outflows across all firm sizes, with firms managing greater than $5 billion experiencing outflows of $15.6 billion. Mid-sized firms managing between $1 and 5 billion saw outflows of $2.8 billion for the quarter, while firms managing less than $1 billion saw outflows of $4.1 billion.
    "Hedge fund outflows in 4Q were driven by several factors, most notably investor reaction to steep losses in traditional asset investments and the sharp spike in equity market volatility leading to redemptions" stated Kenneth J. Heinz, President of HFR.
    The spike in redemptions came as hedge funds suffered their worst performance since 2011 in a year marked by two corrections, a bear market, and a spike in year-end volatility.
    Additionally, as Bloomberg notes, several big names exited the industry last year, including T. Boone Pickens, Leon Cooperman and Philippe Jabre, while virtually everyone else struggled to generate any alpha (with a few exceptions ). "Outflows also included several large fund closures," said HFR President Kenneth Heinz in the quarterly report, including instances of family office conversions and orderly, manager-initiated returns of investor capital.
    Broken down by strategy, equity hedge funds suffered the biggest outflows, with investors pulling $16.8 billion in the quarter and a total of about $23 billion for the year, according to HFR. Hedge funds in this group fell 5.9% on an asset-weighted basis in 2018, the worst performers of all strategies tracked by HFR. Confirming that the redemptions were liquidity and not performance driven, even the year’s top performing macro managers, up 1.6%, ended 2018 with outflows of $12.3 billion.
    There was a silver lining: event-driven (ED) funds brought in $6.4 billion in the quarter - the only strategy to see inflows - and $6.9 billion for the year, although performance weakness decreased total ED capital to $819 billion from the prior quarter. ED sub-strategy flows were driven by Distressed/Restructuring and Special Situations funds, which experienced inflows of $6.5 billion and $1.4 billion, respectively.
    Fixed income-based Relative Value Arbitrage (RVA) strategies led industry performance in 2018, as the HFRI Relative Value Index (Asset Weighted) added +0.5 percent for the year, while the HFRI Relative Value (Total) Index posted a narrow decline of -0.2 percent for 2018. In 4Q18, RVA strategies experienced outflows of $5.4 billion, decreasing total RVA capital to $835 billion from the prior quarter.
    "Trends in Macro, CTA, and RVA/Credit Multi-Strategies, and stronger relative outperformance of larger funds were all favorable throughout the intense market dislocations of December and 4Q. While the overall investor flows and performance trends were negative, it is likely that discriminating institutional investors which experienced or observed areas of strong performance through the most difficult equity and commodity trading environment in a decade will factor these positive dynamics into portfolio allocations for 2019."
    With volatility set to return with a vengeance once this algo-driven bear market rally ends, 2019 promises to be just as challenging for the 2 and 20 crowd.

    Posted: January 18, 2019, 8:46 pm
    New York, NY ( 1/17/2019 — Pre IPO Swap focuses on Pre IPO companies.  These are not necessarily ‘Unicorns’ but many are.  We get asked what is a private late stage mature company that qualifies for Pre IPO?  There isn’t a specific answer, some companies will be very late stage, others can be closer to the startup phase for example LYFT is not so old but already has filed for IPO.
    We like to compare any business to food as it’s something everyone understands.  Let’s take the example of a Hamburger.  The first step in the cycle is the farm where the cow grows up.  Then at some point the cow is butchered and sent for processing.  Wholesale, the beef is then sold to food companies where it ultimately becomes a Hamburger and sold at McDonalds.  Finally, the end product is sold in thousands of locations across the world.  The last step in the process is garbage – capitalism produces a lot of garbage.  But science is inventing ways that garbage gets fed back into the system (for example, fertilizer).
    So the question is – at what point do you want to invest in the company?  When it’s still a cow?  When the end product is being marketed on TV like McDonalds commercials?  Or in the cleanup phase?
    We have called these steps in the cycle Growth, Processing, Branding, Distribution, Waste.  There are more detailed product cycles – this is simply to explain where Pre IPO is – typically it’s somewhere around Processing.  It’s the wholesale market.
    When a company goes public – that’s the branding phase.  There is a road-show, the underwriter promotes the IPO so that when it hits the market there is interest (such as for Pinterest).
    By the time the product – whatever it is – hits the end user (that’s the IPO) it’s been so watered down and over hyped it has little room for explosive growth.  And frankly, they don’t want stocks moving triple digits in a year it makes other stocks look bad.  They need to be tamed.  Companies that don’t fit the profile stay private.
    With Pre IPO we are looking for just the right amount of risk and reward.  We want companies to already have been proven in the market – but before the marketing blitz.  Before the compliance changes that go on to fit the profile of a public company.  Ultimately, no matter what type of business you are – when you have to comply with rules it takes some of the zest out of your business; that’s usually a good thing.  Public markets allow capitalism to function at its best.  But for Pre IPO investors – they want to find the ‘Goldilocks Zone’ – not too risky, and just enough reward.  See our Pitch to learn more, or follow our blog.
    Posted: January 18, 2019, 3:03 am
    Pre IPO Swap New York, NY 1/12/2019

    Did you know that the CIA has its own Venture Fund?  And did you know that Venture fund was key in starting Facebook and Google?  As explained in the book Splitting Pennies – the world is not as it seems.

    For many readers especially on Zero Hedge this comes as no surprise, as you are well aware of the octopus that wraps its tentacles around the globe.  But it may surprise you how active In-Q-Tel is and how chummy they are with the rest of the VC community.  It’s as if they are just another VC, but with another purpose.  Let’s look at some of the stats, from Crunchbase:

    Here’s a list of recent investments…

    If you dig back you won’t see Google or Facebook on there – which is company policy for retail consumer investments that can impact the public (it’s kept secret behind an NDA).  Here’s how it works – In-Q-Tel may invest in your startup but there’s a big catch.  First, you have to sign an NDA which is enforced strongly – that you are not to disclose your partner.  Second, you must agree to ‘cooperation’ when it comes to information sharing now or down the road, such as location data on people using Facebook, Google, or other systems – perhaps only to feed it into a big data brain at Palantir.  Or perhaps for more street level surveillance.  The surveillance is known by fact, not conspiracy theory – but by fact – due to the disclosure of classified documents by Edward Snowden.  If it were not for Snowden, we could only guess about this.  The name of the main program is PRISM but there are many others.

    For those in the VC community that are deep in the know- the “Deep VCs” like Peter Thiel for example, the Snowden revelations would come as no surprise.  MUST READ – No Place To Hide – the story of the NSA, PRISM, and Snowden (written by Greenwald).

    But for others, it may come as a surprise that not only the CIA has its own VC fund, but that it sits on many corporate boards alongside many Wall St. firms and other VCs.

    And of course, they always do well.

    Let’s consider the doors they opened for Google, or in the case of Google it was more like the doors that were closed.  Google was not the best search engine, it was not superior technology – it wasn’t even really very good.  It just became a monopoly and crushed the competition.  Many wonder how they were able to do it, and that this is part of the Entrepreneur “Magic” that few have.  Well we can say in the case of Google there was no Magic they had a helping hand from a friend in the deep shadows.  Google wanted to become huge – the CIA wants information (they always do, so we don’t use the past tense ‘wanted’).  So it was a cozy and rational partnership – in exchange for making the right handshakes at the right time, allowing Google to become a global behemoth, all they needed to do was share a little information about users.  Actually, a lot of information.  No harm in that, right?

    But in doing so Google violated itself as well as prostituted its model and its users.  Google still does this and is not nearly as flagrant as its brother Facebook, however Google shares more detailed ‘meta data’ which is actually more useful to Echelon systems like Palantir that rely on big data, not necessarily photos of what you ate for breakfast (but that can be helpful too, they say).

    The metaphor is making a deal with the devil; you get what you want but it comes at a price.  And that’s the price users pay to Google – they get service ‘free’ but at a huge cost, their privacy.  Of course – this is all based on the concept of Freedom which really does exist in USA.  You don’t have to use Google – there are many alternatives like the rising star Duck Duck Go:

    But who cares about privacy; only criminals, hackers, programmers, super wealthy (UHNWI) and a few philosophers.

    Google remains the dominant search platform and much more.  Google exploits niche by niche even competing with Amazon’s Alexa service.

    The argument here is that Google wouldn’t be Google without the help of the CIA.  This isn’t our idea it’s a fact, you can read about it here on

    Two decades ago, the US intelligence community worked closely with Silicon Valley in an effort to track citizens in cyberspace. And Google is at the heart of that origin story. Some of the research that led to Google’s ambitious creation was funded and coordinated by a research group established by the intelligence community to find ways to track individuals and groups online.  The intelligence community hoped that the nation’s leading computer scientists could take non-classified information and user data, combine it with what would become known as the internet, and begin to create for-profit, commercial enterprises to suit the needs of both the intelligence community and the public. They hoped to direct the supercomputing revolution from the start in order to make sense of what millions of human beings did inside this digital information network. That collaboration has made a comprehensive public-private mass surveillance state possible today.

    There you have it – Google is the child of the digital revolution of the surveillance state.  Why spy, when you can collect data electronically and analyze with machine learning?

    The new spy is the web bot.

    And the investors in Google did well – so that’s the investing story that matters here.  It pays well to have friends in high places, and in dark places.  Of all the investments In-Q-Tel made, almost all of them have done very well.  That doesn’t mean that Palantir is going to grow to the size of Google, but it does provide natural support should a company backed by In-Q-Tel run into problems.

    By the time Facebook came out, digital surveillance was already in the n-th generation of evolution, and they really stepped up their game.  In the creepiest examples, Facebook doesn’t necessarily (and primarily) collect data on Facebook users – it does this too.  But that’s just a given – you don’t need to perform surveillance on someone who gives all their data to the system willingly – you always know where they are and what they are doing at any given moment.  The trick is to get information about those who may try to hide their activities, whether they are real terrorists or just paranoid geniuses.

    How does Facebook do this?  There are literally hundreds of programs running – but in one creepy example, Facebook collects photos that users take to analyze the environment surrounding.  Incidentally, the location data is MUCH MORE accurate than you see on the retail front end.  So you get the newspaper and see a gift in your mailbox for your birthday – you take a photo because the ribbons are hanging out.  What shows up in the background?  All kinds of information.  What the neighbor is doing.  License plate of the car driving by.   Trash waiting to be picked up by the street.  A child’s toy left by the sidewalk.  You get the picture.  Facebook users have been turned into sneaky little digital spies!  While they are walking around with their ‘smartphones’ (should be called ‘dumbphones’) scrolling their walls and snapping photos away – they are taking photos of you too.  That means, Facebook collects data for the CIA about users who don’t have Facebook accounts.  This is the huge secret that the mainstream media doesn’t want to tell you.  Deleting your Facebook account will do nothing – every time you go out in public you are being photographed, video recorded, and more – all going into big data artificial intelligence for analysis.

    But here’s the best part.  You own it!  The CIA may have a bad reputation but it is part of the US Government, and thus – profits go back to the Treasury (those which are declared) or at least they are supposed to.  Considering this, why is there a stigma about even talking about In-Q-Tel when in fact we should be more involved in any US Government operation when it is technically owned by the people and funded by taxpayers?  Meaning, do taxpayers have rights to know what goes in in taxpayer funded entities, like In-Q-Tel?  The big difference between In-Q-Tel and the CIA is that In-Q-Tel functions just like any other VC – they disclose most of their investments, they attend conferences, they accept business plans.  You can literally submit your idea to In-Q-Tel and get funding.  Of course, like any VC there’s a very small chance of being funded.

    So what’s an investor’s take on this story?  In-Q-Tel is not Freddie Mac there is nor a quasi-government entity; it’s not an NGO and there is no implicit guarantee that In-Q-Tel’s deals will do any better than Andreessen Horowitz.

    However, their deals do very well.  Companies they fund not only have the backing of the CIA explicitly, it’s not only about business – it’s about national security!  Under that guise, it’s no wonder that companies like Google and Facebook rocket to the top.

    We are not suggesting that investors double down on In-Q-Tel bets.  We are only suggesting that at a minimum, we follow what they do.  It’s a data point – a good source of information.  And the best part is that it’s public.

    Their most recent investment is in a virtual reality company in Boca Raton, FL called Immersive Wisdom:

    Immersive Wisdom® is an enterprise software platform that allows users to collaborate in real-time upon diverse data sets and applications within a temporal and geospatially-aware Virtual, Mixed, and Augmented Reality space. Immersive Wisdom is hardware-agnostic and runs on VR, AR, as well as 2D displays.  Regardless of geographic location, multiple users can be together in a shared virtual workspace, standing on maps, with instant access to relevant information from any available source. Users can simultaneously, and in real time, visualize, fuse, and act upon sensor inputs, cyber/network data, IoT feeds, enterprise applications, telemetry, tagged assets, 3D Models, LiDAR, imagery and UAV footage/streaming video, providing an omniscient, collaborative view of complex environments.  Immersive Wisdom also acts as a natural human interface to multi-dimensional data sets generated by AI and machine learning systems. The platform includes a powerful SDK (Software Developer Kit) that enables the creation of customer-specific workflows as well as rapid integration with existing data sources/applications.

    Cool stuff for sure – but it’s in early stages.  Pre IPO Swap suggests real Pre IPO ‘unicorns’ not because of size, but because of the right mix of risk and reward. See why we think so in our pitch.

    In any analysis, it’s worth watching In-Q-Tel, which is a top source of funding and investment data we watch on  Pre IPO Swap.

    To get real-time updates on companies like this, companies that In-Q-Tel invests in -   follow our blog free.
    Posted: January 13, 2019, 5:38 pm
    In what was an abysmal year for most hedge funds, three investing icons successfully pulled their weight and generated outsized returns amid an otherwise dreary landscape.
    Last week we reported that after correctly predicting the "significant risk of a correction", quant giant Renaissancemade an impressive 8.5% return in 2018 despite a 2.1% drop in December, solidly outperforming the broader market.
    It wasn't just the secretive fund founded by chain-smoking codebreaker Jim Simons that blew past its competition last year. On Sunday, Bloomberg reported that Bridgewater's flagship Pure Alpha fund rose a remarkable 14.6%. This was no small feat for Bridgewater which also happens to be the world's biggest hedge fund with $160 billion in unlevered assets, and came at a time when hedge unds on average lost 6.7%  in 2018, according to the HFRX Global Hedge Fund Index, as market trend and momentum both collapsed.
    A just as impressive record is that since its inception in 1991, Pure Alpha Strategy has generated an average annualized return of 12% after fees, a track record which some have wondered if it is too good to be true.
    And yet in a bizarre twist at the start of 2018, Bridgewater's Ray Dalio said on January 23 that "If you're holding cash, you're going to feel pretty stupid." Ironically, cash ended up being the best performing assets, while virtually every other asset class posted negative returns in 2018, making those holding anything but cash feeling pretty stupid. Which means that at some point between January and December, Ray Dalio quietly moved out of most assets although "surprisingly" he never made that shift public.
    In any case it wasn't just Simons and Dalio: according to a Monday note from Bloomberg, the flagship fund of another computer scientist, David Shaw's, D.E. Shaw, also generated double-digit returns, gaining 11.2% last year.
    The New York-based investment firm’s Composite fund invests across multiple strategies and is the company’s largest and longest-running. It returned 3.5 percent last month, the person said, as the S&P 500 Index sunk 9.2 percent.
    And in yet another indication that Madoff was an amateur, DE Shaw's composite fund, which has about $14 billion in assets, amazingly hasn’t had a losing year over the past decade. In 2017, it gained 10.3%, the Bloomberg source said.
    D.E. Shaw was founded by computer scientist David Shaw and has more than $50 billion in assets under management, including $28 billion in hedge funds. Its Composite fund has largely been closed to new investors since mid-2013, but the group continues to build out new strategies and products. Recent areas of development have included private credit opportunities in Europe and renewables investing.
    Some trivia: when DE Shaw was just two years old, a largely unknown 26-year-old took a job at D.E. Shaw and became one of the company's vice presidents in just four years; he was tasked with researching new business opportunities on the rapidly growing Internet, which was held tremendous potential in the early 1990s. That youngest made a list of 20 products he could sell online, and decided that books were the most viable option. When he couldn't get D.E. Shaw on board with the idea, he decided to branch out on his own.
    A little under three decades later, that "relatively unknown" person is now the world's richest person.

    Posted: January 7, 2019, 8:56 pm

    The company founded by Peter Thiel, Elon Musk and Max Levchin has spawned three billionaires, many, many millionaires and generation-defining companies. Here, we break down the key players from the most notorious group in Silicon Valley.

    The picture above features some of the most poorly dressed men of the 2000s. Behold the outsized sportswear, the leather blazers, the silky shirts. But these men can afford to both laugh off our criticism and buy several new wardrobes. For they are the ‘PayPal Mafia’ and between them, these 13 men are worth billions and billions of dollars. And to be fair to them, they were styled as faux gangsters for the 2007 Fortune magazine shoot that birthed their infamous moniker. Mick Brown recently met PayPal co-founder Peter Thiel for an extraordinary Telegraph Magazine feature. The vast success enjoyed by Thiel and his former colleagues got us thinking: how did one company breed such a remarkable crop of entrepreneurs and capitalists? Click on the famous Fortune photograph below and discover exactly who the PayPal Mafia are.
    The 'PalPal Mafia' photographed for a Fortune magazine feature in 2007. PHOTO: Robyn Twomey - Corbis Outline
    1. Jawed Karim
    Role in PayPal: Designed and implemented PayPal’s incendiary real-time anti-fraud system, among other key components of the business.
    After PayPal: Karim, Chad Hurley (designer of PayPal’s first logo) and Steve Chen (another PayPal colleague and early Facebook employee) founded a video sharing site in 2005. They named it YouTube. Soon after developing the fledgling site, Karim enrolled at Stanford University where, despite having already displayed a certain acumen in this area, he chose to study computer science. He continued to act as an advisor to YouTube before cashing in 137,443 shares of stock (worth a cool $64 million) when Google purchased YouTube for $1.65 billion in November 2006. Now 35, Karim launched a business called Youniversity Ventures in 2008 aimed at helping students and graduates develop business ideas with early PayPal investors Kevin Hartz and Keith Rabols.
    Estimated net worth: $140 million
    2. Jeremy Stoppelman (below)
    Role in PayPal: Joined PayPal as an engineer whilst it was known as, eventually becoming the Vice President of Engineering.
    Post-PayPal: Resigned soon after PayPal was picked up by eBay for $1.5 billion in 2003, taking a year to attend Harvard Business School. Inspired whilst poorly with flu and finding it tricky to find decent doctor recommendations, he and a former colleague Russel Simmons dreamed up the idea for online reviews site Yelp in 2004 and convinced former PayPal Chief Technology Officer Max Levchin to put up $1 million in initial funding. Steve Jobs convinced him to reject Google’s acquisition offer in 2010 and in 2012, Yelp became a public limited company. But it’s not been a smooth recent few years: Yelp reviewers leaving negative reviews have faced legal action from affronted businesses and the site’s faced accusations of handing positive reviews to advertisers.
    Estimated net worth: $111-$222 million
    PHOTO: Getty
    3. Andrew McCormack
    Role in PayPal: Joined in 2001, working closely as an assistant to Peter Thiel as the company prepared for its initial public offering (IPO)
    After PayPal: Helped set-up another Thiel venture, hedge fund company Clarium Capital before founding a restaurant group in San Francisco. Currently a partner at venture capital firm Valar Ventures, he found his way back to Thiel in 2008 to join Thiel Capital via corporate development roles at eCount (now part of US banking conglomerate Citigroup) and Yahoo!.
    Estimated net worth: Unknown
    4. Premal Shah
    Role in PayPal: Spent six years at the company as a product manager.
    After PayPal: Became President of non-profit organisation Kiva, which allows people to lend money to struggling entrepreneurs and students in over 70 countries via the internet. Founded by former programmer Matt Flannery and his businesswoman ex-wife Jessica Jackeley, the site was raising around $1 million every three days by November 2013.
    Estimated net worth: Unknown
    5. Luke Nosek
    Role in PayPal: One of the co-founders, alongside Thiel, Elon Musk and Ken Howery and his friend from the University of Illinois, Max Levchin and Vice President of Marketing and Strategy.
    After PayPal: Departed after the eBay takeover and travelled the world, before founding San Francisco venture capital firm Founders Firm (slogan: ‘We wanted flying cars, we got 140 characters’) with Thiel and Howery in 2005. Has spoken extensively about the benefits of brain training through meditation.
    Estimated net worth: Unknown
    6. Ken Howery
    Role in PayPal: A co-founder and Chief Financial Officer between 1998-2002.
    After PayPal: Hung around as eBay’s Director of Corporate Development for just under a year after the takeover, before rejoining Thiel as vice president of private equity at Clarium Capital in 2004. Started Founders Fund less than 12 months later with Thiel and Nosek. In 2012, he co-founded Popexpert, an online learning platform that allows users to connect face-to-face with experts across a broad range of fields. Howery’s available for consulting sessions if you have a spare few $100,000.
    Estimated net worth: Unknown
    55382205_3044414cPHOTO: Getty
    7. David Sacks (above)
    Role in PayPal: Joining from management consultancy firm McKinsey & Company, Sacks became PayPal’s chief operating officer.
    After PayPal: Sacks boasts one of the Mafia’s more diverse post-PayPal CVs. After eBay assumed control, he left for Hollywood and produced and financed the Golden Globe nominated 2005 movie Thank You for Smoking. The next year, he founded genealogy website Frustrations with inter-office communication led him to develop a productivity tool to help employees share information. This was to become the social network Yammer. Mircosoft acquired the company for $1.2 billion in July 2012. Sacks was named corporate vice president in Microsoft’s Office Division. He hit the headlines in 2012 after throwing himself history’s most gauche 40th birthday party. The theme? ‘Let them eat cake’ French revolution. The entertainment? Snoop Dogg. The cost? A reported $1.4 million.
    Estimated net worth: Unknown
    8. Peter Thiel
    Role in Paypal: Co-founder and CEO.
    After PayPal: After earning $55 million from his 3.7 per cent stake in the eBay deal, Thiel immediately founded hedge fund Clarium Capital, a global macro hedge fund and made the ludicrously savvy decision to angel invest $500,000 in fledgling social network Facebook. Thiel was the first outside investor in the company and sold almost has made over $1 billion selling his shares. You can read Mick Brown’s in-depth profile on Thiel right here.
    Estimated net worth: $2.2 billion
    9. Keith Rabois
    Role in PayPal: Held the nicely extravagant title of Executive Vice President, Business Development, Public Affairs and Policy between November 2000 and November 2002.
    After PayPal: Regarded as a very useful person to have around at a start-up, Rabois went onto hold senior positions at LinkedIn (more on that in a minute), Max Levchin’s Slide (a company responsible for slideshows and animations in social networks) and electronic payment firm Square (founded by Twitter’s Jack Dorsey). Controversy accompanied his exit from Square, with a threat of a lawsuit over sexual harassment claims by a male employee who allegedly obtained a job at the company after beginning a relationship with Rabois. Which makes Gawker’s accusations of Rabois’ undergraduate homophobia all the more disturbing. Rabois is now a partner at venture capital outfit Khosla Ventures and serves on the board of directors at Yelp and Xoom.
    Estimated net worth: $1 billion
    PHOTO: Getty
    10. Reid Hoffman
    Role in PayPal: Joined from the world’s first (failed) social network SocialNet to become a member of the board of directors, then went full-time to become PayPal’s COO. By the time of the 2002 eBay takeover, he was executive vice president.
    After PayPal: ‘The most connected man in Silicon Valley’ co-founded inbox bothering business social network LinkedIn in December 2002, owning a stake now worth an estimated $2.39 billion with its IPO in May 2011. The eldest of the Mafia is also lauded for his clever/lucky angel investing. He’s made upwards of 80 angel investments (including Facebook, Zynga, Flickr, Digg and and in 2010 joined Greylock Partners, running their $20 million Discovery Fund; designed to seed fundings of worthy start-ups.
    Estimated net worth: $3.9 billion
    11. Max Levchin
    Role in PayPal: A co-founder and the firm’s chief technology officer, well regarded for his contributions to PayPal’s anti-fraud efforts.
    After PayPal: Took his $34 million from the PayPal sale and founded Slide. Google picked it up for $182 million in August 2010, with Levchin becoming Google’s Vice President of Engineering on 25 August. A year and a day later, Google closed Slide and Levchin departed. Between Slide’s rise and fall, he helped start Yelp in 2004 (and is the company’s largest shareholder), was appointed to the board of directors of Evernote and and co-founded financial services company Affirm. In recent years, he’s started a company called HVF (standing for, enjoyably, ‘Hard, Valuable, and Fun’), a firm designed to fund projects looking to leverage data and joined Yahoo!’s Board of Directors. He’s keeping himself busy.
    Estimated net worth: $300 million
    12. Roelof Botha
    Role in PayPal: A qualified actuary, South African Botha negotiated PayPal’s sale as its Chief Financial Officer. He had joined the company prior to his graduation from the Stanford School of Business, becoming director of corporate development.
    After PayPal: A regular on the Forbes Midas List of top tech investors, Both joined venture capital giant Sequoia Capital in January 2003 as a partner, where’s he’s stayed ever since. His extra curricular business pursuits include sitting on the boards of 13 companies, including Jawbone, Evernote, Tumblr and Xoom. He was also on YouTube’s board before the company was acquired by Google.
    Estimated net worth: Unknown.
    13 Russel Simmons
    Role at PayPal: The firm’s Lead Software Architect.
    After PayPal: Co-founded Yelp with Jeremy Stoppelman and served as its CTO until he ‘transitioned’ into an advisory role in June 2010 to take some ‘much needed time off to travel’. Fresh from his high end gap year, Simmons launched Learnirvana in 2012, a web tutor program that helps users learn languages.
    Estimated net worth: Very difficult to discover. It’s very easy to tell you that near-namesake and hip-hop mogul Russell Simmons is worth around $340 million, however.
    PHOTO: Art Streiber/August Image
    Not in the picture, but absolutely worth profiling:
    Elon Musk (above)
    Role at PayPal: PayPal had merged with Musk’s financial services and email payment firm in 1999 and Musk became the new company’s largest shareholder by the time of its sale to eBay. He earned $165 million from the deal.
    After PayPal: Strap yourselves in. Musk launched Space Exploration Technologies (SpaceX) in June 2002, where he serves as the CEO and CTO. In May 2012, their Dragon spacecraft ensured SpaceX became the first commercial vehicle to launch and dock a vehicle to the International Space Station. He assumed leadership of electric car firm Tesla Motors in 2008 and in 2013 unveiled a proposal for a new form of transportation between the Greater Los Angeles area and the Bay Area in San Francisco. His ‘Hyperloop’ is a subsonic air travel machine completely reliant on solar energy.
    Estimated net worth: $9.7 billion
    Posted: January 6, 2019, 2:56 am
    Atlanta, GA ( – 12/18/2018
    Microsoft (MSFT) is a company that many geeks love to hate.  Windows glitches and patches, embarrassing moments in tech history – yet Windows is the dominant computing platform not only for PCs but for Server environments and many other systems.  Yeah, they missed the internet, they lost out on Blockchain – and Social Media confuses them.  But still, MSFT has a market cap as of today of an astounding 798 Billion with a B.  It’s a huge company and has one of the highest paid CEOs in the world.
    What’s a more compelling story though is the investment history of Microsoft, such as the stock split history.
    Microsoft has been a cash cow from the moment they landed the Windows contract.  Since then, the stock has been on a near 70,000% ride, paying juicy dividends all the while.  An investment at the IPO of $2100 would have returned $1,467,072 far outpacing inflation.
    On 13 March 1986, Microsoft went public at $21 a share. 100 shares would be worth $2100.
    Microsoft has since had 9 splits (Microsoft Stock Split History) for a total of 288x.
    Split adjusted IPO price would be 21/288 = $0.073.  Your 100 shares would have become 28,800 shares.
    MSFT closed at  $50.94 on 27 April 2016, which would make that $2100 investment worth $1,467,072, a 69860% return on investment. $2100 in 1986 would be approximately $4563 in 2016 so a 69860% ROI adjusts to 32154% after inflation.
    This leads to the question – is Pre-IPO investing for real?  Is this really the big secret of the wealthy – how they make their wealth?  Of course, as Bill Gates has retained the title off an on for decades of the worlds richest – we must remember what made him so – it is the stock price.  He is the wealthiest person in the world (depending on market fluctuations, he may be only top 5 or 10, and Forbes list doesn’t include Shadow banking where Rothschilds and others keep their private assets private) because he’s an early IPO stakeholder and investor.  Well done, Bill.
    It is no wonder why Steve Ballmer is so excited – you would be too if you became rich just from your companies stock price.
    So how can I join the club, you ask?  Checkout LYFT, Palantir, SpaceX, AirBNB and more @ – get them BEFORE they IPO.

    Posted: December 19, 2018, 8:03 pm
    Posted: December 7, 2018, 8:42 pm
    Global Intel Hub – (Zero Hedge Exclusive) 11/28/2018 – Atlanta, GA
    The system is crooked.  So why bother, right?  Most Americans don’t vote don’t care.  Up to 30% don’t file don’t pay taxes.  That’s real freedom!  As we explain in our book Splitting Pennies – the world is not as it seems.
    Personally, I watched the fixing of the 2000 election from ground zero in Palm Beach County Florida.  The registration of dead voters, the confusion over the chads, getting prisoners to vote Republican.  Gore should have won by a much larger margin (not that I wanted Gore to win, I’m speaking like an objective observer).  Being a trader, I wasn’t much interested in voting or politics which was unusual, as I went to a school where Dan Quale and George Bush Sr. were visitors at our mock political rallies, friends of mine were some of Bush’s biggest donors (that was in the year he lost, of course).  Barbara Bush came to one of my baseball games, I had the photo where I shook her hand on my bedroom wall for years (I was 8 years old I thought it was significant like meeting the Queen). 
    But knowing these people intimately, hanging out with some Kennedy’s from time to time on the Island (or at least, seeing an altercation between them and police at the piano bar), seeing the weirdo stuff, the manipulations of other people, using money to silence people, illegal side businesses, their mafia friends when they needed to ‘get things done’ – I realized that there are 2 parallel worlds.  There is the world as I called it ‘As seen on TV’ and then there’s the real world.  ZH readers know this well, but as a young child one doesn’t manifest this vision automatically.  It takes experience seeing this evil, or in my case both – it was later confirmed by the extensive research into the financial system.  When I read “Confessions of an Economic Hitman” it wasn’t surprising, it was just a more detailed and well thought out account.  Just like it’s unfair to profile Muslims based on race, it’s unfair to profile the Elite as a bunch of killers and perverts.  Let’s take the recent example of an article recently published on Zero Hedge, where Florida’s richest man said that people like Soros should be in jail:
    Thomas Peterffy is a billionaire in his own right, he founded Interactive Brokers – one of the most cutting-edge electronic brokerages in the world.  IB is in a class of its own.  It’s the go-to broker for hedge funds, RIAs, and many industry insiders.  Soros on the other hand represents the real Jewish Mafia elements that flourish in the United States, who exploit what corruption and bribery elements are still available.  They are so much more successful than the Italian Mafia because they have masked their activities like legitimate businesses (plus, they know how to play as victims or use the ACLU).  The foundations such as “Open Democracy” are real Orwellian Radical Socialist Movements to the core.  Remember that the Bolshevik Revolution in Russia was financed by Wall St.  Capitalism in a way financed Communism, as it was really meant to solidify Monopoly Capitalists and their business interests in Russia (imagine having a pure Monopoly on a country the size of Russia – which is what they had.)
    Going back to the main topic which is the Criminalization of Politics, using these 2 opposing Hungarians as examples; one guy built a great business.  Another has built a business by manipulating political systems at home and abroad (in secret), and all the insider trading that comes along with good political connections.  Soros is not a lucky fool he’s a shrewd dude make no mistake this guy is much more sophisticated than many Italian Mafia bosses who are mostly successful street thugs.  It would be impossible for them to penetrate Wall St.’s AML rules as they have been ‘nicked’ from time to time.
    So how is politics criminalized?  Here’s how it works, and the best example is Bill Clinton.  Obviously, the Governor of Arkansas can only do so much – he can’t start selling drugs out of his office.  What he can do is organize one of his friends to make sure the cops don’t go by a certain airport, or even go so far as to provide protection to airplanes flying in and out of Columbia, South America with tons of cocaine.  Your benefactors will be so happy with your security service they certainly will pay it back, either through a proxy campaign contribution or maybe they will buy a brick you have for sale on ebay for a million bucks.  Everyone knows Clinton bricks are magic so who wouldn’t pay a million for it?  “Pay for Play” politics wasn’t invented by the Clintons or the Bushes in fact this type of bribery has been going on for thousands of generations.  Only the real strong civilizations, excluding Rome which was built on corruption and then deteriorated, have solved this problem.
    Which by the way brings up an interesting irony about the Soviet Union – USSR.  Here was a communist dictatorship with absolutely NO CORRUPTION.  It was impossible.  Party leaders enjoyed benefits such as choice apartments or a color TV, but you couldn’t buy a party member, nor could you do something like Clinton did for example.  Party members that were loyal were rewarded in a top down strictly controlled hierarchy.  If they felt you were trying to start a business or enjoyed listening to Voice of America you could be imprisoned or shot by one of Stalin’s good squads.  If you were even suspicious of violating the rules, like you had a nice car – you were called ‘speculant[1]’ which is like ‘capitalist’ because it was against the communist ethos.  We are not communists nor are we promoting communism obviously it has proven to be a bad system, but it does serve as a good example of a system where there was absolutely no corruption, the CIA sure did try.
    Obviously, this is extreme and ultimately didn’t work, and the quality of life in USSR was mostly poor.  There are however many examples today of successful non-corrupt societies, such as most of northern Europe and Switzerland.  Swiss Banking is built on anti-corrupt principles, if Switzerland was run like Wall St. it would not exist like a country, it would be usurped by neighbors Germany, France, and Italy, in that order.  The Swiss have a unique national identity which is part European part ‘Swiss’ and part of this unique identity is a unique set of banking values and fiduciary rules that make them Swiss.  Swatches, Toblerone, and Swiss Cheese comprise a fraction of Swiss GDP comparing with the banking sector[i].  The important note here is that the Swiss do not depend on ‘banks’ has to do with ‘river banks’ such as the ‘banks on the Thames’ which is the place where rivers deposit their valuables (Gold for example) because the water runs slowly, and they collect there due to weight.
    Politics has been criminalized by the unethical use of money; what used to be a doctrine, or an argument, has been replaced by a lobbyist group.  Lobbying by itself is not the evil, but what has happened is that a mafia like force has taken over politics through lobbying groups, as they have become legitimized bribery.  Mob rule means rule of men not rule of law; meaning that going back to the examples of Clinton, although there are many strange unsolved crimes constantly happening around both Bill and Hillary, none are investigated more than a few phone calls at best.  A documentary film “The Clinton Chronicles” documented many of the strange occurrences of previous staff who have died of mysterious causes or have committed suicide by stabbing themselves in the back 10 times.
    This book The Russia Hoax elaborately explains how the entire plot against Russia a smokescreen is only to cover up the dirty dealings of the Clintons.  And the sad thing, most of it is all legal.  It’s possible for example to buy protestors, as we have seen since the “Black Lives Matter” fiasco, riots in Charlotte, leading to the recent ‘screamers’ in the Capital building and other Kavanagh protestors.
    And, released only recently; hacking group Anonymous released documents showing the real wizard behind the curtain trying to frame and entrap Russia in quicksand is no other than the United Kingdom[2].
    If Russia creates an information campaign, we can too – so the thinking goes.  But why doesn’t Switzerland have an army of online provocateurs?  The answer is simple, there are really a few countries that are the instigators here in ‘The Great Game’ – and the British invented it.  During the Bush years there was a meme that Tony Blair was a lap dog of Bush doing whatever he said, but it was likely the other way around. 
    This trend of the criminalization of politics has been going on for decades, so much so that it now has become endemic.  Trump’s #draintheswamp idea was great rhetoric but we haven’t seen any action towards that end yet, and perhaps never will.  It’s like the mob expression ‘in a crooked environment, crooks are the most honest people’ – at least you know where they stand!  The lies that have been uncovered about the Russia Hoaxare just astounding – if an individual who was not a politician had done any of these things, even 1% they would be in prison. 
    Through the process of the criminalization of politics, the criminals themselves become immunized.  It becomes so toxic that if anyone honest comes into the playfield, like Trump for example, they must be destroyed.  Trump isn’t necessarily a good guy obviously he’s not, but he’s not a criminal, and he’s not a politician – those are the sole qualities that made him President.  Voters have been tricked by the Bush, Clinton, Obama mafia and whether you like or dislike Trump you have to agree that he has done what he said he would do, which makes him unique comparing with the last 50 years of Presidents.  Probably, since he’s been in office, he’s been compromised, which is why we haven’t seen any of the Criminals in jail – and here’s the point.  Is there anything that anyone can do about this system?  Not really.  A complete cleansing of the entire political class would be necessary. 
    But if that were even possible, who would replace them?   Ron Paul is an anomaly.  It would be necessary to create a new type of civil servant, one who acted like he grew up in the 18th century.
    A training program could be created, with works like Plato’s Republic and other texts.
    Rules could be created like for judges, the political class would be forbidden to engage in any outside businesses. 
    You see where this is going.  But it’s highly impractical in our society, it’s the stuff they teach in Universities which is a complete waste of efforts because then you enter the real world, which is much more sordid and darker than anyone can really explain.
    The reality is – Capitalism encourages criminal activity (white collar crime).  For many reasons.  Physical crimes are extremely difficult to execute and are harshly punished (armed robbery for example).  But Ponzi schemes and other types of frauds are subtly encouraged, and are not harshly punished.
    The Federal Trade Commission (FTC) under the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), has recently announced that it seeks law-enforcement action against a residential resort development in Belize, calling it “the largest-ever overseas real-estate investment scam” the agency has ever seen.
    At a recent press conference in Washington, D.C., the agency said the development known by names that include Sanctuary Bay, Sanctuary Belize, Buy Belize, Buy International, and Buy Paradise, fleeced 1,000 American investors, out of more than $100 million.
    According to court documents filed by the FTC in the US District Court of Maryland, 24 individuals and shell companies falsely claimed to be constructing a luxurious resort community that would feature a hospital, hotels, a golf course, a spa, a casino, high-end boutiques, cafes, restaurants, and an “American-style” supermarket.
    Now, being a Boca native, this type of fraud is just part of real estate business, so they tell us in South Florida.  Real-Estate “Developers” will sell a bunch of units that don’t exist, they will ‘sell the dream’ if you will, or a Buffalo Ranch, or whatever sounds good now – and vanish.
    Widows swindled out of their divorce settlements, retirees tricked into liquidating their IRA into the hands of a swindler. 
    There should be more protections in place to protect victims of financial fraud, that’s number one.  Being involved in court cases as an expert witness in multiple FX related Ponzi Schemes, I asked a single question:  Where’s the money?  Answer was always the same, we don’t know, well, we will try to recover it.  So, I asked, what’s the point of sending this perp away for life if we can’t get the money back to the victims?  And the retort always the same, to serve as an example for other would be scammers.  But obviously this model doesn’t work.  And the Feds, meaning the Federal Reserve Bank, and the banks, allow this to happen. 
    They encourage crime by allowing it – that’s number two.  They need to stop it.  Stop allowing financial crimes to happen.  99% of the financial markets are electronic that means any transaction is a keystroke away from being stopped.  Bank of America’s idiotic “AI” will block my debit card when we take a road trip but can’t stop a $50 Million Ponzi Scheme?  Remember, there was a guy, who alerted the SEC about Madoff.  The problem is systemic, it’s not that there’s no solution.  Politicians especially – they want it to be allowed because they are in on it too – and here’s the problem.
    There is a financial incentive that allows such crimes to continue Wall St. and in politics.  Let’s be clear about this – stopping criminals doesn’t make you a socialist, nor does it make you a liberal.  When Ponzis blow up everyone suffers not only the victims.  Our company has had clients in Aramanth, MF Global, PFG, just about all the big financial frauds of the decade.  In many cases, lost funds were a significant percentage of the client portfolio and thus prevented further investment in more fruitful projects.
    An honest man couldn’t make it into the White House, or into Congress; and again, we’ll remind readers that Ron Paul, an OB/GYN – and Dennis Kucinich are anomalies.  We are living in a world where the more stupid the better – the more dangerous, ridiculous, fattening – the better.   Basically, the IQ of humans is declining – rapidly.  As you are reading this, you can hear people getting dumber.
    A defining trend in human intelligence tests that saw people steadily obtaining higher IQ scores through the 20th century has abruptly ended, a new study shows. The Flynn effect – named after the work of Kiwi intelligence researcher James Flynn – observed rapid rises in intelligence quotient at a rate of about 3 IQ points per decade in the 20th century, but new research suggests these heady boom days are long gone.  An analysis of some 730,000 IQ test results by researchers from the Ragnar Frisch Centre for Economic Research in Norway reveals the Flynn effect hit its peak for people born during the mid-1970s, and has significantly declined ever since. "This is the most convincing evidence yet of a reversal of the Flynn effect," psychologist Stuart Ritchie from the University of Edinburgh, who was not involved in the study, told The Times.  "If you assume their model is correct, the results are impressive, and pretty worrying."
    And we should not need to mention, that criminals on average have a lower IQ than non-criminals.  In a society that respects the Mafia, popularized by the CIA via Martin Scorsese films, it should be no surprise that leading figures in business act accordingly.  It is also no surprise that the president is a reality TV star (not really a professional actor, but worse).  Sadly, being the clown by design that Trump is, he has achieved more than any of the previous Presidents combined.
    The dumbing down of America is a well thought out plan concocted in the 70’s which is corroborated by the above hard data.  It is the same year that big business interests created New World Order control mechanisms like the “Trilateral Commission[3]” – it’s not a conspiracy, it’s right out there in the open.  You see, during the 1960s there was a movement of real change in USA and that scared the hell out of the establishment.  Flower Power was more than drugs and hippies, it was a potential of revolution, or the disruption of the status quo.  So they spent billions of dollars and learned how to channel that youthful energy in the wrong way – into crap like Facebook Selfies and violent films.
    They (the people who own us) like criminals because they can easily be controlled.  When you’re facing a life sentence, you’ll do anything they ask to get out of it.  That’s number three – in a normal society laws need to be enforced without prejudice. 
    Such methods like Blackmail to control were not invented by J. Edgar Hoover but they sure were effective.  When you have ‘the goods’ over your employees, whether they be C-Suite execs or your common retail clerks out on Parole, they will do what you want.  The entire criminal justice system is a sham, they even make money on you when you get locked up as the majority of the penitentiary system is privatized.
    So this method of control creates a ‘favors’ system similar to how the mob operates.  They will do you a ‘favor’ and not tell your employer about  your secret gambling problem.  And in exchange, you are to pass a pork belly project guaranteeing a bridge to no where in a lucrative construction contract.  This isn’t really ‘politics’ as it was meant to be, it’s become – the Criminalization of Politics.  (Applause)
    REFERENCE ARTICLES                                                                                                                                                                                                                                                                                                                                           
    To see the world for what it really is, checkout  To order more crap you don’t need and book’s you’ll never read,  For crashing Crypto prices see
      Posted: November 29, 2018, 3:23 am
      Elite E Services (11/19/2018) Delaware, USA As reported originally by Zero Hedge, a fund that did business through the website has actually justified the use of the clause that you can lose more money than you invest.  This is only possible in options trading, and specifically, naked short selling of options.  Due to a 'rogue wave' the options went deep into the red and caused the broker, INTL FC Stone, to request clients deposit the loss beyond the zero on their account.  While the manager is solely to blame for improper risk management, this will have the opposite effect on the alternatives investing community in general.  Now every manager with this clause which is all regulated managers, are going to have clients asking 'can this happen to us?' to which there is no good answer.  This is the spike:

      Options strategies are not all disasters waiting to happen, there are hundreds of examples too many to name, such as Alpha Z Advisors.

      This should serve as a wake up call to all managers and investors to re-asses the risk management plan - as in today's market anything is possible.

      To see an example of an options strategy that has a 5+ year record, see Alpha Z Advisors - Strategies based on Anomalies.

      Read the Entire Zero Hedge article:

      Shorting vol (naked) with "Other People's Money..."? What could possibly go wrong?
      Q: Have I lost all the money in account, then?
      A: Yes
      "Stocks are great, until they aren't," proclaims the now 'dark' website of Tampa-based, explaining to 'high net worth investors' that "options are better but most make the mistake of buying them."
      And so, the thoughtful-looking, wealthy grey-haired gentlemen of today should given their Fed-earned money to the managed accounts of, which touted itself as premier and highly experienced commodities options trading firm. The firm’s president and head trader, James Cordier, explained in a recent interview: “Our goal is to take an aggressive vehicle and manage it conservatively.”
      Unfortunately for the clients' managed accounts, Cordier's actions were anything but 'conservative'.
      On November 15, 2018, notified its investors in an email entitled “Catastrophic Loss Event” that it not only lost all their money, but that they would also owe money to Intl FC Stone for margin calls.
      I am writing to give you an update on the situation here with your account.
      We have spent the week unwinding our short natural gas call position as expediently as possible.
      Today which was to be the final day of liquidation, the market flared as prices appear to have been caught in a "short squeeze."
      The speed at which it took place is truly beyond anything I have seen in my career. It overran our risk control systems and left us at the mercy of the market.
      In short, it was a rogue wave and it overwhelmed us.
      Unfortunately, this has resulted in a catastrophic loss.
      Our clearing firm, FC Stone now requires us to liquidate all positions. We hoped to have this done today. If not, it will be completed tomorrow.
      Your account could potentially be facing a debit balance as of tomorrow. will be processing fee credits over the course of the coming days to help alleviate debit balances. What these will be will be determined after all positions are cleared.
      This has in effect, crippled the firm. At this point, our brokers at FC Stone have been assisting us in liquidation.
      Our offices will remain open and we will all still be here to answer your questions and process account closings. We will do everything in our power to ease what discomfort we can.
      I am truly sorry this has happened.
      I will be updating you again via memo in 24 hours.
      In case you were wondering just that means, Dear Client, here is's Q&A on "Debit Balances"...
      What do I do about this Debit Balance?
      You likely received a debit call notice from FC Stone this morning via email. You may receive it in the mail as well. This is a call to add funds to bring the balance back up to zero. Instructions for paying the balance on the notice. Any questions on debit balances can be directed directly to FX Stone at the number on the notice. Stone requests the funds asap but if it takes a few days, that is OK.
      What happens if I don't pay the balance?
      We recommend balances be paid. If it is not paid, it becomes like any other unpaid bill.
      For some context, not only did the NatGas calls rocket in price due to 'delta' changes in the underlying, 'vega' exploded them exponentially as NatGas vol spiked to a record high over 90... A double-whammy for the short call positions which "crippled the firm."
      For a sense of what the pain felt like - here is Goldman's NatGas Vol Carry strategy index (a more-hedged version of the naked calls was writing)...
      Ring any XIV (short vix ETF) bells?
      We suspect these 'picking up pennies in front of a steamroller'-conmen were not alone in their strategic losses.
      As we noted previously, what is notable is that the move in nat gas was so powerful, it nearly caused a VIXtermination-type event in the VelocityShares Daily 3X Inverse Natural Gas ETN, which seeks to produce three times the opposite daily move of US natural gas prices and is known by its stock market ticker DGAZ.
      Derivatives strategist Pravit Chintawongvanich, who rose to popularity with his hourly hot takes during the February VIXplosion that anihilated several inverse VIX ETNs, pointed out that DGAZ and its “long” leveraged cousin UGAZ could be liquidated if natural gas prices move sharply: "Because these products offer 3x daily leverage, a one day move greater than 33 per cent in either direction would blow up one of them," he wrote.
      In other words, the market was this close to another inverse ETN extinction event, only this time not in volatility but in natural gas. Meanwhile, the DGAZ's days may be limited: starting off the month with $500MM in assets, in just two weeks it has been cut in half, and as of this morning had just $247MM in assets.
      As JohnSChapman notes, unfortunately, it did not trade options conservatively. It traded “naked” rather than “covered” options, leaving investors subject to unlimited exposure. This unlimited exposure is what caused to lose all their money and more in the last few days. Thus, and its principals negligently engaged in a risky trading strategy that was unsuitable for its clients and breached its fiduciary duties to them by putting its interests ahead of its clients.
      The team includes Rosemary Veasey, Matthew Donovan, James Cordier, Michael Gross, and Alicia Zedella. But here is thefirm's president and head trader, James Cordier, in an Oscar-winning performance, apologizing to his 'family' of clients in one of the most surreal videos ever...
      "I promise you every day when I woke up, I was checking for rogue waves..."
      If you can get through the theatrics of thanking several clients for BBQ sauce and not visiting them in the south of France, Cordier explains how it was all an unforeseeable event...

      "I truly invested your funds like you were a family...I'm sorry this rogue wave capsized your boat... I wish you great luck and good health."
      Are all 290 clients convinced?
      'Rogue wave' our collective ass.. Being 'naked' short calls is grossly negligent with even the most risky of speculative capital - and sheer recklessness in a so-called 'conservative' strategy. Yep - who could have seen that coming?
      *  *  *
      Posted: November 20, 2018, 3:34 am
      Sadly, Man has proven throughout history that given the opportunity, he will find the lowest common denominator.  Sociologically speaking we are in a time of “Peak Freedom” man has never been so free.  But this comes at a cost, and as we will see in this article, a cost so great entire civilizations can rise and fall because of it.  If you give a naughty teenager a million dollars and tell him ‘do whatever you want’ probably he will not build a business empire or cure cancer.  Likewise, supported by the European Union, Malta was given a pack of matches and using simple household chemicals made it into an IED but as powerful as a Nuclear Bomb; which is about to explode in their face.
      Malta created a wormhole allowing black criminal elements a ‘shortcut’ to legitimize themselves with an EU Passport; but it was the EU which allowed them to do this, and thus it will be the EU that first faces Malta about this issue.  Before digging deeper let’s go through a little background about Malta this little ‘hole in the sea’ near Italy.  Malta is a culture with ancient roots dating back to Phoenicians.  Throughout history Malta has served as neutral territory for negotiations and even ‘staging grounds’ for the crusades, Knights of Malta (Knights Templar) and other groups.  So, Malta has a history of selling their soul to the highest bidder.  As there are no natural resources on Malta, they rely on tourism and financial services like many islands in similar situations.  But you can only sell so much sun; more than 1 Million Tourists visit Malta each year[1], and their current infrastructure can’t even support that.  The real-estate construction boom (which is fitting for Malta as they have a natural obsession with Cranes) is expanding more than most developed countries, but it still can’t keep up.  There are even internet problems as experienced by companies like Bet Fair who have had to limit the amount of on-shore staff in Malta due to connectivity issues[2].
      Malta joined the European Union (EU) in 2004, and for a period of about 10 years promoted Malta as a place to do financial business and gambling; ending in 2013 with the election of Joseph Muscat (note that, this is a Maltese name and not related to the rodent Muskrat[3]).  During this 10-year period Malta was promoted in the Forex community, among others, and saw a boom in retail and institutional Forex operation moving to the island and had barely a single fraud.  Compared to similar jurisdictions like Cyprus especially, Malta was white.
      Muscat changed all this with an aggressive Passport selling program that netted Malta substantial profits both in actual fees and in capital flowing to the island.  It was the sort of thing that was common in Cyprus, and one reason why many avoided Cyprus in favor of Malta and other white places.  But what rules were in place, to check the participants in this program, their backgrounds, and other important information?  Or did the Maltese simply take the money and look the other way, which is so easy to do when you have the strong EU behind you.  Malta seems to believe that it can have its cake and eat it too; getting quick money from the black market without the risks and liabilities associated with it.  Unfortunately, the world doesn’t work that way, and Malta is in for a big wake up call.
      Prior to his sudden death, Gaddafi began to implement a plan to create and sustain a Gold backed Dinar for black Africa – a real threat to USD and EU global hegemony.  Wikileaks emails have revealed explicitly that this was the reason for the Libya intervention and subsequent toppling and killing of Gaddafi[4].  This story is really an algorithm that has been replayed hundreds of times since World War 2 which is the sole and exclusive reason the US Dollar remains the supreme and only settlement currency for global business.  It is also the reason why countries like the United Kingdom, Germany, Japan, and many others – freely accept US Dollars and do not attempt to start their own competitive versions of the US Dollar.
      This more obvious, practical, economic policy motif is not on the surface, but it is real.  As a matter of policy enforcement, the US takes an aggressive stance on terrorist financing on the financial level (if terrorists cannot be financed, they don’t exist.)  This policy was enforced globally well before the Patriot Act and other post 9/11 measures.  Financial tools were even used in the Cold War – ‘spending them to death’.
      The US Dollar is backed by bombs, vis a vis the US Military[5].  The alliance between Washington, Wall St. has been very close since World War 2, because after World War 2 USA was the only country that wasn’t bombed into oblivion and was tasked to literally ‘rebuild the world’ which included structuring of a new global monetary system agreed upon at Breton Woods[6].  Although the world has changed much in 60 years, the unipolar power system of global management, using the US Dollar as the funding currency, has not.  Despite rhetoric from socialists, libertarians, and anarchist commentators – emerging markets such as BRICS pose a limited or non-existent threat to this system of global management.
      The way that this system survives and has survived for 60 years, is by eliminating any threat to its existence.  There are a few types of threats; the most obvious and pulpable being that of a currency alternative to the US Dollar which is not controlled by the Fed, such as proposed by Gaddafi.  Another threat that is subtler is a means by which unsavory actors like criminals can completely avoid the US Dollar system, such as proposed by some Crypto Currency alt-coins.  Malta has created these means with their no questions asked passport program, and thus has opened the gates of hell into a previously impervious barrier of entry into the EU-US system.  Having an EU passport is nearly just as good as having a US passport not only for travel but for banking reasons.  An example from our Forex business; Russian nationals are subject to several layers of additional checks when opening a new investment account, which can be so complicated they are impossible even for the legitimate Russian investor to complete.  They can ask for notarized documents from previous addresses you lived, which is not possible to collect in Russia.  Or they can ask for multiple forms of ID, which may not be easily accessible.  Russia is considered a ‘red flag’ country and thus additional scrutiny and AML checks are required in most compliance systems.  As they should be – the amount of crime and corruption in Russia is widespread, so much so that it is considered to be endemic (part of the system).  In this example by having the Malta issued EU passport the Russian criminal could completely circumvent AML rules designed stop terrorist financing, money laundering, and other criminal activities.
      These topics are not abstract issues for academic discussion they are serious issues that can have devastating effects.  Bloomberg broke the ice on this topic very politely in Bloomberg style:
      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.
      Ali Sadr Hasheminejad is a character which deserves his own article so in order not to get distracted we will just say that he’s been charged in New York with setting up a “Sanctions evasion scheme” to the tune of $115 Million USD – using his bank in Malta as the go between[7] This is unrelated to the passport scheme mentioned earlier, which is why we needed to allow the reader to connect the dots for yourself to see what’s going on here.  A client of Pilatus bank could, in theory (we haven’t seen the client lists yet) could buy an EU passport and as an account holder of Pilatus bank, launder money to any country in the US-EU sphere, which is 90% of the Western world.  What this means is a figure from organized crime for example, could ‘wash’ himself both his money and his identity, through Malta.
      This dual fake ID money laundering scheme is the first of its kind in the modern world.  What’s sad is that Malta was previously mostly a white country (meaning not criminal) 95% catholic, with a strong tradition of ‘trading’ as merchants.  Cyprus has been polluted with criminal elements for a long time, but people know it, and many avoid it.  But even in the twisted world of Cyprus black mafia, something like this never existed.  What the Maltese have done is in one-way criminal genius, and in another way extremely stupid.  We can say that ‘studies show crime doesn’t pay’ but that’s not necessary here.  Just look at the political fallout from Malta’s handling of the Pilatus situation (car bombing reporters who won’t shut up).  The Global Perception of Malta has done a complete 180, but the war against Malta is only beginning.  They violated untold and unagreed rules of the game, by exploiting the fairness of the EU system for their own profit and passing the liability to their EU owners. 
      (Guys, a country is a Currency, you gave up sovereignty in 2004 Brussels is not going to allow this.)
      Furthermore, Malta has a convoluted understanding of law, but it is with reason.  Malta doesn’t have a unique legal system and history of precedent as exists in Great Britain, or Switzerland.  They have a ‘mixed system’ which is a little of this and little of that[8], and when you mix it together it becomes a big pile of crap.  It’s like keeping 3 sets of laws and using which one is convenient to you at the time.  Nice try, but the world doesn’t work like that, especially when you have allowed criminals to violate US sanctions.
      We can assume that, Iranians avoiding sanctions are just part of the VIP client list at Pilatus bank.  Since 2013 the number of wealthy Russians in Malta has exploded, as they are preferring the passport program and ease of banking in Malta’s new program over their previous choice of Cyprus.  Russia is a growing economy and part of early stage capitalism is the growth of quasi illegal robber baron class as was in the United States during the late 19th century.  It’s unfair to call them ‘Mafia’ because they aren’t really ‘criminals’ any more than John Rockefeller was a criminal, but for the purposes of this article we can add “Russian Mafia” to the list.  And certainly many Russians who have bought passports are legitimate businessmen, but consider this.  US imposed sanctions on Russia over the 2014 Ukrainian dispute, and by having an EU passport from Malta, it circumvents those sanctions.
      Those who forked out for Maltese and - by default - EU citizenship last year included Arkady Volozh, the founder of Yandex, a Russian Uber-type firm, and his entire family.  They also included: Alexey Marey, the former CEO of Alfa Bank Russia, the country's largest private lender; Alexey De-Monderik, a co-founder of Russian cyber security firm Kaspersky Lab; and Alexander Mechatin, the CEO of Beluga Group, Russia's largest private spirits company.  The newly-minted Maltese nationals emerged in a list of more than 2,000 names published in the country's legal gazette at the end of last year.  The gazette does not say who bought passports in 2016 and who was naturalised for other reasons.  But the names of wealthy foreign nationals stand out as the most likely to have paid the €1.1 million in fees, Maltese bond, and Maltese real estate investments that it costs to get nationality.  The Russian roll-call for 2016 went on to name: Dmitry Semenikhin (a media millionaire); Alexander Rubanov (energy firm executive); Roman Trushev (oil and gas); Andrey Gomon (transport magnate); Alexey Kirienko (investment broker); Dmitry Lipyavko (petroleum products tycoon); Andrei Melnikov (cobalt and uranium magnate); and Anatoly Loginov (owner of an online payment systems firm).  It also named Russian real estate developers, retailers, and agricultural land owners.  It came out after the previous gazette showed that 40 percent of new passport buyers in 2015 were also Russians.  Owning a Maltese passport gives people the right to visa-free travel to 160 countries, including the US, and to live and move around their money anywhere in the EU.  The surge in Russian applications comes after the EU and US imposed economic sanctions and visa-bans and asset-freezes on Russia over its invasion of Ukraine in 2014.  It also comes amid US plans to create a new blacklist on 29 January 2018 of cronies of Russian president Vladimir Putin over his meddling in the 2016 US election.
      Right now, the Department of Justice (DOJ) is embroiled in a scandal targeted at Trump using Russia as a scapegoat.  Forces inside the US Government, for the first time, are staging what can only be referred to (and has been) as a cold coup on the legitimately elected President.  These powerful deep-state actors are in agencies like FEMA, CIA, FBI, IRS, and others.  These are powerful agencies.  Now is not a good time to be hiding or laundering money for Russians! 
      And we’re only getting started!  Malta recently adopted the world’s first Crypto Currency legislation, right at a time when the public is learning thatbillions of dollars have been laundered through Bitcoin, and that hot money from Asia was a leading cause to the rapid rise of Bitcoin.  The point is that Crypto Currency is now the leading solution for money laundering.
      So why are they being so flagrant?  Are they stupid, bold, or a little of both?
      Non-Maltese foreigners in the island have reported that the regulators do not understand the underlying business.  There are other anecdotal accounts, such as from a tourist:
      We were staying in a hotel that had a kitchen and living room it was like a hybrid half hotel half apartment, there was daily cleaning service, but we cooked our meals on the stove.  So early in the week we bought salt, oil, spices, and other basic kitchen elements.  Near the end of our stay, near the last day, the maid approached me and asked if she could have the salt.  It was almost empty.  It cost about $0.25 cents.  To which I said, “But we might use it we are still here for another day, but I will leave it here for you, ok?”  To which the maid replied, “But the other maid has a shift tomorrow and she will get it.”  Over a pinch of salt! 
      Anyone who has been to Malta can attest to their peculiar behavior.  If you want to close a corporation, you have to appoint a special liquidator (similar to a bankruptcy judge) who must wear a special hat and sit on a special ‘throne’ in the town square, where he must by voice ask if there are any company debts.  These outdated traditions are more than antiquated, they are a problem if you are a serious professional company that wants to do business in Malta.
      Malta is rated 84 out of 100 by the World Bank ‘ease of doing business[9]’ What it takes 1 man to do in New Zealand, it takes 8 men in Malta.  Must be all the heavy lifting from those big stones.
      This can work for you because it protects your empire from new competition, but sadly, they are using this ‘bureaucratic fog’ for aiding and abetting international criminals.
      Let’s take a look at Iran’s currency 10 year chart:

      Here’s why we believe Malta is about to be pummeled into submission. 
      1. Malta is providing a way for those on the OFAC list to avoid / circumvent sanctions
      2. By providing an OFAC loophole, Malta is as a state, aiding and abetting criminals (who are criminals according to the United States)
      3. As a side business, it is easy for these participants to launder money directly (for themselves) or for their criminal network friends.  It is possible, and likely, that copy cats of Pilatus have setup laundry businesses using similar and less obvious loopholes.
      4. On the regulated front, Malta is providing a backdoor to the European Union (EU) with light regulation.  This isn’t necessarily, by itself, a bad thing – but combined with the other more serious problems, it becomes a matter of discussion.
      5. Malta’s financial system can survive Pilatus bank and Ali Sadr trial.  But what’s next?  What next scandal lies in the shadows, another fraud to be unraveled?  Could it involve a high-profile Russian diplomat on DOJ’s black list?  If Pilatus is isolated, Malta can survive.  As soon as the next mole pops up in the garden, it will be impossible for Malta to whack them all.
      Some material facts:
      • Not only is the case about Ali Sadr Hasheminejad disturbing by itself, his bank, which was financed with his own illegal gains, was used to open a bank.  That bank, among other things, was a laundry for Iranian capital.  The bank was approved by MFSA, Malta’s regulator, who recently asked the ECB to rescind its bank license[10].
      • The creator of this passport program, Joseph Muscat, is accused of taking bribes from wealthy criminals from banned/blocked places due to his name appearing in the Panama Papers[11].  We need to note here that we have not seen the contents of these documents, so there is no smoking gun evidence.  But the timing is otherwise too coincidental for a forensic auditor.
      The most significant financial whistleblower in US history, and perhaps in all history, said that it was the CIA behind the Panama Papers.  While this story has been featured on CNBC, the analysis of the implications has died on the vine:
      Bradley Birkenfeld is the most significant financial whistleblower of all time, so you might think he'd be cheering on the disclosures in the new Panama Papers leaks. But today, Birkenfeld is raising questions about the source of the information that is shaking political regimes around the world.
      Birkenfeld, an American citizen, was a banker working at UBS in Switzerland when he approached the U.S. government with information on massive amounts of tax evasion by Americans with secret accounts in Switzerland. By the end of his whistleblowing career, Birkenfeld had served more than two years in a U.S. federal prison, been awarded $104 million by the IRS for his information and shattered the foundations of more than a century of Swiss banking secrecy.
      "The CIA I'm sure is behind this, in my opinion," Birkenfeld said.
      Let’s run with that for the moment, especially since the CIA has such a deep history in Central and South America.  How is Malta connected to NATO, Ukraine, and the periphery of the EU?  Does Malta represent the opposite of what’s happening in Britain, Catalonia, and other potential breakaway states?  Is Malta leading the way to corporate national Fascism? Is this pleasing, or worrisome to their friends in Washington?  These are the types of questions we need to answer to really understand how this small country plays a big role in regional politics, with their bold cash for passports program.
      What are the interests here, in the proxy jurisdictions like Malta?  Libya for one, not only due to Malta’s close presence to Africa, but both Libya and Malta gained independence within 13 years of each other[12].  Certainly, there was a lot of oil business run through Malta, for reasons of convenience if anything. 
      Malta is not, the vortex of criminal activity in the Mediterranean, that is Cyprus.  In Cyprus, you can find drug trafficking, human trafficking, gambling, money laundering, and more – all in a country that can lose power for days on end.  Cyprus is the real black hole in the Sea.  There is no comparison in size, the criminal industry in Cyprus is 100x greater than Malta could ever grow to.  But 2 wrongs don’t make a right and being another criminal island in the sea doesn’t make the case here against Malta any less disturbing.  But there are some big differences we need to understand, such as:
      1. For Malta, this is a recent phenomenon, that started around 2013. 
      2. Cyprus isn’t flagrantly taunting violating US rules.  Russian Mafia has been in Cyprus for decades, but so are many other interests as well.  Malta’s passport program and the Panama Papers leaks made Malta stick out as a world leader in EU passport selling to those on a black list OFAC or other.
      3. There is Mafia in Italy, but Mafia doesn’t run the government (anymore).  What Muscat has done is created his own Maltese Mafia.
      It seems like Malta has really lost their soul.  You know there’s a catch with America as the land of milk and honey.  It is possible to come to America with nothing and become a billionaire.  But there’s a catch – you must give up your soul.  Has Malta tried to Americanize themselves? 
      Finally, Malta is now the number one jurisdiction in terms of Crypto volume (but not OTC, where Russia leads)[13].  This is really the reason for this in-depth analysis of the place.  If Malta is going to blow up, and we’ve outlined reasons well in this article – is this really a place you want to keep your Crypto?  As we’ve learned from past experiences, when dominoes fall – you don’t want to be one in the line (even if your exchange is the best one). 
      Malta as a jurisdiction has become shaky.  If Pilatus can launder money using a bank which was approved by MFSA, how easy will it be to launder Crypto through exchanges when MFSA has a clear lack of understanding for financial markets, and when Crypto is by its nature completely opaque.
      If Malta cannot provide protections from criminals like Ali Sadr Hasheminejad, then what remains for Crypto exchanges which are not only mostly unregulated – they are mostly opaque and anonymous.
      The conclusion is that we expect massive capital outflows from Malta.  Some of that capital will flow to home – but others will look for alternative jurisdictions, like Bahamas. 
      Crediblock is a Bahamas Blockchain and FinTech consultancy that can assist in your Bahamas Blockchain enterprise setup such as Crypto Exchange, Hedge Fund, Insurance Company, Brokerage, or Bank[i].

      Important Reference Articles to read on this topic

      Posted: November 5, 2018, 1:07 am
      Bloc10 @ Atlanta, GA 10/27/2018 — Bloc10 today has launched Total Cryptos University offering multiple courses about Crypto Currency, Blockchain Technology, and Day Trading Crypto.  “We launched this program because there is a huge education factor in Crypto.” says Joseph Gelet, Chief Strategy Officer of Bloc10.  “Like with anything new, there is a lot to learn. Not everyone spent their last 10 years on Wall St. or in Finance School.  So we launched an online university.”
      Courses come complete with actual products that can be used like trading signals, alerts, algorithmic trading systems ‘robots’ – books, software, and more.  The plan is to offer members new strategies each week and each month.  “We want to provide our members with the most value to maximize their trading potential.  So we are going to launch new products every week.” he says.
      The course uses the practical ‘hands on’ learning approach which means that students are provided products to use and trade with, rather than a ‘textbook method’ used in Universities.  Practically, there aren’t Universities offering Blockchain or Crypto classes yet – but that will certainly change in the future.  For now, we have Total Cryptos University.  
      Some snapshots of what you’ll learn inside the course:

      Predator Arbitrage trading dashboard

      Predator arbitrage dashboard

      Traditional Macro Economic Analysis

      Arbitrage vs. Traditional Trading

      Learn more @

      Posted: October 27, 2018, 8:18 pm
      The US legal system has a message for those who not only feel like manipulating the currency market, but have picked a delightfully appropriate name for their FX rigging operation: just do it.
      Moments ago, the three former British currency traders who formed the core of the infamous currency rigging "Cartel", were found not guilty of using an online chatroom to fix prices in the $5.1 trillion-a-day foreign exchange market.
      Chris Ashton, Rohan Ramchandani and Richard Usher
      According to Bloomberg, a New York federal jury rejected the government’s claim that Richard Usher, Rohan Ramchandani and Christopher Ashton, better known as "The Cartel," rigged the market from 2007 to 2013 by coordinating trades and manipulating prices on the spot exchange rate for euros and U.S. dollars.
      They wept in relief as the verdict was handed down in Manhattan federal court Friday after the jury deliberated for less than a day.
      Usher, a former JPMorgan foreign-exchange trader, Ramchandani, former trader at Citigroup, and Ashton, the ex-head of spot FX trading at Barclays, were charged in January 2017. The case followed an investigation into conduct that was exposed by Bloomberg in 2013.
      The three men faced as long as 10 years in prison had they been convicted, but since their conviction would make any future FX rigging that much more problematic, or simply because the government was incompetent and was unable to prove a slam dunk case, they are now free.
      The acquittal is that much more bizarre because previously four banks, JPMorgan, Citigroup, Royal Bank of Scotland and Barclays all pleaded guilty to manipulating currency markets in 2015 and agreed to pay $2.5 billion in fines. At the time, UBS - which ratted everyone else out - received immunity from antitrust charges for being the first institution to report misconduct in the FX market, although it pleaded guilty to a related fraud and paid a $203 million penalty. Overall, more than a dozen financial institutions have paid about $11.8 billion in fines and penalties globally, with another $2.3 billion spent to compensate customers and investors.
      As Bloomberg notes, The three men, who were based in London, waived extradition to New York to fight the single charge of conspiracy to restrain trade. None of the defendants took the stand to testify.
      So how did they walk free when their own employers admitted to currency manipulation?
      Matt Gardiner, a former currency trader at Barclays and UBS Group AG who helped organize the group, testified for the government in exchange for an agreement that he won’t be prosecuted. Gardiner said the group agreed on trading strategies and would congratulate each other when their bets paid off. He also testified that he had no idea the group was doing anything illegal until he began negotiating with U.S. prosecutors. In closing arguments, lawyers for the defendants urged jurors to reject his testimony.
      Jurors heard testimony that the men spent almost all of their work days in the chatroom, where they exchanged market color, inside jokes and personal information.
      Prosecutors showed transcripts of some of the chats, recorded phone calls and trading records which showed coordination among the group. The defense said the chats reflected innocent banter and that the traders sought to profit off one another. We profiled some of these exchanges previously in "Accused "FX Cartel" Members Joined Forces After Trying To "End" Each Other."
      Speaking before the acquittal, Mayra Rodriguez Valladares, a former foreign-exchange analyst for the New York Fed, said that the verdict would "send a general signal to the market that the FX code is not going to be seen as having any teeth,” referring to the FX Global Code, a set of guidelines aimed at raising standards after the rigging scandal. "They’ll go back to same old, same old,” of the acquittal in an interview before the verdict. “It’s business as usual, everybody does it."
      Especially the Fed, her former employer.
      Javier Paz, founder of research and advisory firm Forex Datasource told Bloomberg before the verdict that the investigation has signaled to traders that “illegal actions carry a high risk of betrayal.” Whether the case will have a longer term impact remains to be seen.
      “There’s definitely more awareness by clients of what could go wrong in trades, there is much more employer oversight, and, as we saw on this case, there’s government oversight and appetite to prosecute wrongdoers,” Paz said.
      However, Pax was "under no illusion that banks and bankers will stop misbehaving long term. The kinds of lessons being experienced today have a way of being forgotten in a few years."
      They certainly won't stop misbehaving if after years of documented manipulation, a jury of their peers finds them innocent.
      Game On!
      Posted: October 26, 2018, 7:18 pm
      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
      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