Financial sources feeds

Moments ago the Fed released the first phase of its annual stress test which, once again, found that all thirty-four of the US largest banks "passed", exceeding minimum projected capital and leverage ratios under severely adverse scenarios, based on their projected ability to withstand economic shocks, which  as Bloomberg notes, shows that "firms are getting the hang of the once-dreaded reviews." The result marks the third straight year all firms cleared the minimum requirements in the exams’ first phase, begging the question just how "stressful" this test truly is.

Of the participant banks, every single one exceeded minimum thresholds, although Morgan Stanley trailed the rest of Wall Street on a key measure of leverage, the second year it performed worse than peers on this key metrics. During the second phase of last year's stress test the bank was forced to resubmit its plan to address a “material weakness”, before it was allowed to pay out capital to shareholders. Results from that round are due next week.

One notable finding: in the Fed's forecasts for loan losses in a "severely" adverse scenario, Goldman’s projected loan-loss rate of 8.1% was surpassed only by commercial lenders or card issuers such as American Express, Capital One, and Discover Financial Services. Wells Fargo & Co.’s $7.7 billion in trading and counterparty losses came close to firms with larger Wall Street operations, with Morgan Stanley at $9.5 billion. JPMorgan Chase & Co. led the group with $25.2 billion in losses.

“This year’s results show that, even during a severe recession, our large banks would remain well capitalized,” Fed Governor Jerome Powell said in a statement announcing the central bank’s findings Thursday.

It remains to be seen if that will also be the case when over $2 trillion in excess reserves which pad the bank's balance sheets are eventually drained.

The "successful" outcome will boost the industry's arguments that the banking system is safe enough to allow for cutting back some regulations. Furthermore, once the second round is released, expect all banks to further boost payouts to investors.

The "test" designed to boost confidence in the banking sector after the financial crisis, assesses how banks would handle hypothetical turmoil, such as surging unemployment, a sharp drop in housing prices or an extended stock slump. Firms that handily clear the first phase typically have more room to make payouts to shareholders.

The tests have become less dramatic in recent years with fewer quantitative failures. And under regulators selected by President Donald Trump, that may continue. The Treasury Department issued a report last week proposing tests occur less frequently, that highly capitalized banks be exempt from the process and that one of the toughest hurdles be scrapped.

Today's results covered the "Dodd-Frank Act Stress Test" that measures banks’ capital under stress over nine quarters. This year, the Fed projected supplementary leverage ratios at the largest banks. Morgan Stanley’s projected 3.8 percent ratio in a potential economic downturn was lowest - though it still cleared the 3 percent minimum, according to Bloomberg.

Here are the parameters for what the Fed defined as the "Severely Adverse", or worst-case, scenario:

The adverse scenario is characterized by weakening economic activity across all of the economies included in the scenario. This economic downturn is accompanied by a global aversion to long-term fixed-income assets that, despite lower short rates, brings about a near-term rise in long-term rates and steepening yield curves in the United States and the four countries/country blocks in the scenario.

 

The severely adverse scenario is characterized by a severe global recession that is accompanied by a period of heightened stress in corporate loan markets and commercial real estate markets. In this scenario, the level of U.S. real GDP begins to decline in the first quarter of 2017 and reaches a trough in the second quarter of 2018 that is about 6½ percent below the pre-recession peak. The unemployment rate increases by about 5¼ percentage points, to 10 percent, by the third quarter of 2018. Headline consumer price inflation falls to about 1¼ percent at an annual rate by the second quarter of 2017 and then rises to about 1¾ percent at an annual rate by the middle of 2018.

 

As a result of the severe decline in real activity, short-term Treasury rates fall and remain near zero through the end of the scenario period. The 10-year Treasury yield drops to ¾ percent in the first quarter of 2017, rising gradually thereafter to around 1½ percent by the first quarter of 2019 and to about 1¾ percent by the first quarter of 2020. Financial conditions in corporate and real estate lending markets are stressed severely. The spread between yields on investment-grade corporate bonds and yields on long-term Treasury securities widens to about 5½ percentage points by the end of 2017, an increase of 3½ percentage points relative to the fourth quarter of 2016. The spread between mortgage rates and 10-year Treasury yields widens to over 3½ percentage points over the same time period.

 

Asset prices drop sharply in this scenario. Equity prices fall by 50 percent through the end of 2017, accompanied by a surge in equity market volatility, which approaches the levels attained in 2008. House prices and commercial real estate prices also experience large declines, with house prices and commercial real estate prices falling by 25 percent and 35 percent, respectively, through the first quarter of 2019.

 

The international component of this scenario features severe recessions in the euro area, the United Kingdom, and Japan and a marked growth slowdown in developing Asia. As a result of the sharp contraction in economic activity, all foreign economies included in the scenario experience a decline in consumer prices. As in this year’s adverse scenario, the U.S. dollar appreciates against the euro, the pound sterling, and the currencies of developing Asia but depreciates modestly against the yen because of flight-to-safety capital flows.

In other words, neither inflation, nor 10Y yields drop negative even as VIX surges to 70. Mmmk then.

And here is the VIX scenario that the Fed believes all banks will survive:

Some other findings courtesy of Bloomberg:

  • Firms boosted share of agency MBS, Treasuries in securities portfolios, cut holdings of less-liquid assets like securitized products
  • Loan portfolios grew, driven by strong growth in corporate, commercial real estate (CRE), credit-card loans
    • Residential mortgage growth lagged, as healthy growth in first-lien mortgages was offset by notable decline in home- equity loans
  • Credit quality of some loan portfolios -- including first-lien mortgages and commercial mortgages -- has improved, largely due to recent gains in real estate prices
  • At the same time, improvements in portfolios secured by real estate were partially offset by continued stress on some corporate loans due to persistently low oil prices, recent uptick in delinquency rates in credit-card portfolios
  • Results overall show banks have strong capital levels, retain ability to lend to households and businesses during severe recession
    • Most-severe hypothetical scenario projects $493b in losses at the 34 participating banks during the 9 quarters tested, with $383b in accrual loan portfolio losses, $86b in trading and/or counterparty losses at the 8 cos. with substantial trading, processing, custodial operations
    • Companies’ aggregate common equity tier 1 capital ratio would fall to minimum level of 9.2% from actual 12.5% in 4Q 2016
    • In "adverse" scenario (featuring moderate recession), aggregate common equity capital ratio fell to minimum 10.7% from actual 12.5% in 4Q
  • Since 2009, the firms have added >$750b in common equity capital

On June 28, at 4:30pm, the Fed will release the results of the second round of the Stress Test, the Comprehensive Capital Analysis and Review (CCAR).

Author: Tyler Durden
Posted: June 22, 2017, 8:41 pm

Laying the groundwork of Leftist talking points for the next few days, former President Barack Obama took to his Facebook page to defend Obamacare against the GOP's Healthcare Plan... [emphasis added]

Our politics are divided. They have been for a long time. And while I know that division makes it difficult to listen to Americans with whom we disagree, that’s what we need to do today.

 

I recognize that repealing and replacing the Affordable Care Act has become a core tenet of the Republican Party. Still, I hope that our Senators, many of whom I know well, step back and measure what’s really at stake, and consider that the rationale for action, on health care or any other issue, must be something more than simply undoing something that Democrats did.

 

We didn’t fight for the Affordable Care Act for more than a year in the public square for any personal or political gain – we fought for it because we knew it would save lives, prevent financial misery, and ultimately set this country we love on a better, healthier course.

 

Nor did we fight for it alone. Thousands upon thousands of Americans, including Republicans, threw themselves into that collective effort, not for political reasons, but for intensely personal ones – a sick child, a parent lost to cancer, the memory of medical bills that threatened to derail their dreams.

 

And you made a difference. For the first time, more than ninety percent of Americans know the security of health insurance. Health care costs, while still rising, have been rising at the slowest pace in fifty years. Women can’t be charged more for their insurance, young adults can stay on their parents’ plan until they turn 26, contraceptive care and preventive care are now free. Paying more, or being denied insurance altogether due to a preexisting condition – we made that a thing of the past.

 

We did these things together. So many of you made that change possible.

 

At the same time, I was careful to say again and again that while the Affordable Care Act represented a significant step forward for America, it was not perfect, nor could it be the end of our efforts – and that if Republicans could put together a plan that is demonstrably better than the improvements we made to our health care system, that covers as many people at less cost, I would gladly and publicly support it.

 

That remains true. So I still hope that there are enough Republicans in Congress who remember that public service is not about sport or notching a political win, that there’s a reason we all chose to serve in the first place, and that hopefully, it’s to make people’s lives better, not worse.

 

But right now, after eight years, the legislation rushed through the House and the Senate without public hearings or debate would do the opposite. It would raise costs, reduce coverage, roll back protections, and ruin Medicaid as we know it. That’s not my opinion, but rather the conclusion of all objective analyses, from the nonpartisan Congressional Budget Office, which found that 23 million Americans would lose insurance, to America’s doctors, nurses, and hospitals on the front lines of our health care system.

 

The Senate bill, unveiled today, is not a health care bill. It’s a massive transfer of wealth from middle-class and poor families to the richest people in America. It hands enormous tax cuts to the rich and to the drug and insurance industries, paid for by cutting health care for everybody else. Those with private insurance will experience higher premiums and higher deductibles, with lower tax credits to help working families cover the costs, even as their plans might no longer cover pregnancy, mental health care, or expensive prescriptions. Discrimination based on pre-existing conditions could become the norm again. Millions of families will lose coverage entirely.

 

Simply put, if there’s a chance you might get sick, get old, or start a family – this bill will do you harm. And small tweaks over the course of the next couple weeks, under the guise of making these bills easier to stomach, cannot change the fundamental meanness at the core of this legislation.

 

I hope our Senators ask themselves – what will happen to the Americans grappling with opioid addiction who suddenly lose their coverage? What will happen to pregnant mothers, children with disabilities, poor adults and seniors who need long-term care once they can no longer count on Medicaid? What will happen if you have a medical emergency when insurance companies are once again allowed to exclude the benefits you need, send you unlimited bills, or set unaffordable deductibles? What impossible choices will working parents be forced to make if their child’s cancer treatment costs them more than their life savings?

 

To put the American people through that pain – while giving billionaires and corporations a massive tax cut in return – that’s tough to fathom. But it’s what’s at stake right now. So it remains my fervent hope that we step back and try to deliver on what the American people need.

 

That might take some time and compromise between Democrats and Republicans. But I believe that’s what people want to see. I believe it would demonstrate the kind of leadership that appeals to Americans across party lines. And I believe that it’s possible – if you are willing to make a difference again. If you’re willing to call your members of Congress. If you are willing to visit their offices. If you are willing to speak out, let them and the country know, in very real terms, what this means for you and your family.

 

After all, this debate has always been about something bigger than politics. It’s about the character of our country – who we are, and who we aspire to be. And that’s always worth fighting for.

Yeah, but apart from that...

We are still somewhat bemused at why the Trump's administration didn't just let this disaster fail totally and utterly before saving it, especially as NBC proclaims today - in a poll - that Americans now love Obamacare more than ever (must be the collapsing coverage and spiking premiums).

Author: Tyler Durden
Posted: June 22, 2017, 8:25 pm

Oil bounced a bit (on Saudi noise)... banks dropped (ahead of CCAR)... Healthcare ripped again (on a bill that appears to be DOA)... and stocks gave up hope in the last few minutes...

 

Everything was awesome briefly - an opening ramp on crude and some healthcare hope steadied stocks early but that was it. After Europe closed, stocks went nowhere until slumping into the close...

 

FANG Stocks ended marginally lower, stuck in a very tight range fo rthe last 4 days...

 

Equities advanced after two days of losses as crude broke a three-day downturn. Treasury yields continued lower with a flatter 2s/10s curve as a strong reopening of a $5b 30-year TIPS auction helped to keep yields in check throughout the afternoon. Fed’s Bullard, in an interview with WSJ, said the Fed’s projected rate path may be too aggressive. S&P reversed early session losses led by advances in health-care stocks with biotech and pharmaceuticals leading the way. The Canadian dollar advanced after a strong retail sales beat while Mexico’s peso gained over 1% vs the greenback.

VIX was clubbed like a baby seal today, but notably S&P Futs did not react too exuberantly... and once VIX had reached Tueaday;s losw it snapped back higher...

 

Banks were the biggest losers today as Healthcare soared after the GOP Bill was released... (and retail bounced)

 

Bank Stocks have taken a hit in the last few days...

 

Hospital stocks soared after the release of the Obamacare replacement bill...

 

And Biotech stocks are now up almost 10% in the last 4 days to its highest since Jan 2016...

 

HY Energy credit risk has spiked back to 7-month wides...

 

But Credit markets continue to show signs of stress...(HY CDX at 2-month wides)

NOTE: Virgin Media pulled a $3.43b 1L TL refinancing from syndication due to market conditions, according traders and portfolio managers who aren’t authorized to speak publicly. Co. launched the repricing on June 15, seeking to shave 25bps off its existing loan. Virgin Media is the 16th loan to be pulled this year...About 10 loans in all were withdrawn from syndication in 2016.

Treasury yields fell on the day across the entire complex (even as stocks rallied) with further flatteniing in 2s30s...

 

All yield curve bets are collapsing...

 

Banks remain at a premium to the yield curve's collapse (ahead of tonight's CCAR)

 

The Dollar Index fell for the 2nd day in a row, having stalled at the payrolls-ledge...

 

WTI and RBOB rallied modestly on the day after Saudi comments on $60 oil price hope for the Aramco IPO....

 

Gold rose for the second day (as the dollar slid), pushing back above the 200-day moving average

 

Dip-Buyers remain absent as Central Bank balance sheets drop most since December...

Author: Tyler Durden
Posted: June 22, 2017, 8:01 pm

Update:  As it turns out, the Senate's healthcare bill may be even 'dead-er' on arrival than originally thought as Senators Rand Paul (KY), Ted Cruz (TX), Ron Johnson (WI) and Mike Lee (UT) have issued a joint statement saying they will oppose the bill, as it is currently written, because it does not fulfill a promise made to the American public to "repeal Obamacare and lower their health care costs."

"Currently, for a variety of reasons, we are not ready to vote for this bill, but we are open to negotiation and obtaining more information before it is brought to the floor.  There are provisions in this draft that represent an improvement to our current health care system, but it does not appear this draft as a written will accomplish the most important promise that we made to Americans: to repeal Obamacare and lower their health care costs."

Statement from. Rand Paul, Ted Cruz, Mike Lee, Ron Johnson (!) opposing health care bill as it currently stands pic.twitter.com/oxwwvdTapo

— James Arkin (@JamesArkin) June 22, 2017

* * *

The Senate healthcare bill has been "in the open" for less than an hour, and already NBC's Chuck Todd reports that it may be DOA after "at least" 3 GOP senators plan to publicly announce their opposition to the bill.

In a tweet, NBC anchor Chuck Todd said that according to a “solid” unnamed source "at least 3 GOP sens (perhaps more) plan to announce public opposition to McConnell health bill later today."

Per solid source: at least 3 GOP sens (perhaps more) plan to announce public opposition to McConnell health bill later today. Developing

— Chuck Todd (@chucktodd) June 22, 2017

As a reminder, Republicans can lose no more than two Republicans, assuming all Democrats in the Senate oppose measure, as expected.

For now, hospital stocks far more excited by the announced provisions noted earlier, don't buy it, or at least assume that it will be relatively easy to "flip" one or more of the three holdouts.

Author: Tyler Durden
Posted: June 22, 2017, 7:54 pm

Authored by Tsvetana Paraskova via OilPrice.com,

OPEC’s production cut deal is unlikely to survive beyond its current deadline in March 2018, with the agreement seen falling apart towards the middle of next year, in which case a huge amount of extra oil would hit the market, Ian Reid, head of European oil and gas research at Macquarie, told CNBC on Thursday.

OPEC’s deal has not had the cartel’s desired effect on the markets, neither in terms of oil prices nor in drawing down the global glut.

According to Reid, the volume of U.S. shale output is basically nullifying OPEC’s efforts.

The key question for OPEC now is if they can extend the production cut deal into 2019, Macquarie’s manager said, but added that he did not see the cartel being able to do that.

“I think that’s going to be a very hard ask to be honest, Reid noted.

 

“They can’t get the price up to a level where they can keep the shale guys out of the game so unfortunately they’re just chasing their tail at the moment,” he said, commenting on OPEC’s current strategy.

On Wednesday, Macquarie slashed its Brent price forecasts for the rest of this year as well as for 2018 and 2019, saying,

We believe OPEC has few options. Option 1 is to maintain cuts through 2019 and allow time for demand to grow and easy growth to slow; option 2 is stop the cuts immediately. The current strategy is probably the worst. The reality is even the most optimal of OPEC's potential strategies probably will not work.”

Mounting fears of rising oversupply, coupled with no tangible signs for traders and analysts that OPEC’s agreement is working, sank oil prices to a 10-month low on Wednesday, with WTI touching its lowest intraday level since August last year.

Author: Tyler Durden
Posted: June 22, 2017, 7:50 pm

Just this morning we reported that as the global equity research market wrestles with how it will comply with the EU's MiFID II regulations, in a new study McKinsey said that banks will have no choice but to fire a ton of equity research analysts who write a bunch of stuff that no one ever reads...which seems like a reasonable guess. The consultancy calculated that Europe’s impending ban on free research will cost hundreds of analysts their jobs with banks set to cut about $1.2 billion of investment on the area, and estimates the $4 billion that the top-10 sell-side banks currently spend on research annually is likely to fall by 30% as clients become pickier about what they pay for.

Of course, banks - and especially sellside research - will fight valiantly before that happens with aggressive attempts to find a market clearing price for the true value of their now unbundled research. A first attempt comes from Nomura, which according to Bloomberg has proposed that clients pay as much as 120,000 euros ($134,000) a year to access their favorite analysts. For that staggering price, clients would get what Nomura calls an all-inclusive "premium offering."

Nomura’s premium offering includes all analyst reports on global economics, fixed income, credit and foreign exchange, as well as services such as access to analysts and invitations to events. Different "a la carte" options would let clients purchase research reports only, with extra per-hour fees to talk to analysts of varying seniority at rates still to be determined, in other words a quasi "expert network", in which the analyst however is still conflicted to promote the bank's own investment banking agenda.

Among the cheaper options: to only get currency and economic reports, Nomura was quoting 60,000 euros. For emerging markets research, or a fixed income and credit analysis package, the prices rose to 80,000 euros. The document didn’t give any quotes for equity research, and said the prices, denominated in euros, are all indicative and “subject to contract.”

As a reminder, the EU's MiFID II regulations will start being enforced on Jan. 3, and aim to eliminate conflicts of interest by requiring asset managers to separate the trading commissions they pay from investment-research fees.

Banks have worked to find a model to sell their research at a price that won’t drive away clients, while also not being so low that regulators accuse them of gaming the system.

While Nomura said pricing is still fluid and it’s being flexible in
talks with clients, the guidance shows how banks and their clients will approach valuing something they’ve rarely charged for.

Unfortunately for Nomura and its peers, something tells us they are set up for substantial disappointment in a world where not only passive investors now dominate, but where less than 1% of all sellside research reports are actually read.

Author: Tyler Durden
Posted: June 22, 2017, 7:30 pm

Wherever one looks there are disconnects... between bonds and stocks, between risk and uncertainty, between hope and reality. But, as former fund manager Richard Breslow notes, most critically, there is a divergence between data and Fed actions, and this time is different as central banks appear to have shifted into 'whatever it takes' to tighten policy from emergency levels mode. 

As Bloomberg's Richard Breslow writes,

Ranges have been mostly tight in the foreign exchange market encouraging options traders to further reinforce the boundaries. After all, it’s now officially summer and attention is wandering. Trade the range that the market allows and go home as early as possible. Except that’s really bad advice.

One thing that has changed more and more over time is you just can’t predict when a move is going to happen. Summer doldrums, December somnolence are all true until they’re not. And increasingly less so. Day traders may schedule more holidays, but fund managers don’t and can’t reduce positions because it’s nice outside. One thing they know, far better than commentators, is you have to be in it to win it.

 

What makes this year even more interesting than most is that indecision isn’t being driven by our waiting on some financial crisis or election timeline, but by an extraordinary level of cognitive dissonance. The ability of people to string together utterly inconsistent arguments to describe what’s going on in markets, and the world for that matter, is staggering.

 

And most importantly, it makes, what are manifesting themselves as quiet markets, actually highly unstable.

 

The global economy can’t be simultaneously growing well and picking up momentum while limping into recession. Nor can it be buy every dip in carry if we are increasingly risk averse.

 

And if there’s one question that needs to be addressed, it’s whether investors or monetary policy makers better understand what central bank reaction functions will be to both data and market setbacks. It can’t be ignored that with everyone stressing over the four-week caning of oil prices, the Norges Bank removed its easing bias today.

 

In fact, look around the globe and tote up the preponderance of those surprising, hawkish or dovish, and you’ll see a pretty compelling picture.

 

And yet traders don’t buy it for a second. Something will have to give. It’s understandable that there’s been this impetus to flatten yield curves, but what happens if that global recession doesn’t come soon.

 

People forget that the Fed has two official mandates and a lot of discretionary leeway in addition. Poorly constructed measures of inflation don’t require them by some law to ignore labor market strength or other factors. They don’t have to be governed only by the lowest common denominator. Nor forever ignore the negative externalities of oppressively low global rates and how they further suppress yields and encourage profligate risk-taking.

Breslow's apparently pro-rate-hike advice is simple...

Don’t spend your time zoning out. Use it to resolve some of these inconsistencies as you forecast and think about where asset prices will go.

Author: Tyler Durden
Posted: June 22, 2017, 7:10 pm

In the wake of last week’s shooting at a practice session for members of the House Republicans’ baseball team, federal authorities announced that they’ve arrested an Illinois man for threatening President Donald Trump. In a Facebook post published June 15, Joseph Lynn Pickett of Edwardsville Ill. said planned to assassinate the president, according to the Belville News-Democrat.

“Guess what Trump? I’m waiting for the right time...and I KNOW your (sic) Putin’s (expletive)! The secret service now has a heads up as to my plan to assassinate Trump...let’s see if they act.”

U.S. Secret Service Special Agent Vincent Pescitelli said Pickett’s post constituted a threat to “take the life of, to kidnap, and to inflict bodily harm” against Trump, according to a criminal complaint filed with the charges. After the original post, Pickett continued to comment, saying he was “still waiting” for the Secret Service to knock on his door and arrest him.

In another deranged post, Pickett mused about how Trump deserves “a blade in his neck." He also threatening violence against Trump’s supporters.

“Honestly am I really going to have to kill Trump before our fine Government (the jack booted thugs they are) actually takes me into custody for threatening to assassinate President Donald Trump?” Pickett wrote. “I mean he sold our country to The Russians. He is a Benedict Arnold but hey the (expletive) is our President even though he needs a blade in his neck. And you dumb, asses who stick up for him...who’s gonna protect you when someone like me comes t (sic) take you out.”

Until about six to eight months ago, Pickett had been working at Lowe’s in Granite City, Ill. until he was fired for – wait for it - making threats to a coworker, according to the News-Democrat.

Two of Pickett’s former coworkers contacted the St. Louis chapter of the US Secret Service and told them that Pickett had threatening posts on his Facebook page. They also said he had bragged about having weapons. A judge ruled that Pickett, who was determined to be “mentally unstable,” should be detained until his trial to ensure the safety of others.

Edwardsville isn't far from Belleville Ill., the home town of Congressional shooter James Hodgkinson.

Hodgkinson, an ostensibly “progressive” never-Trumper, wounded five people when he opened fire on the GOP baseball practice in Alexandria Va. on June 14. Scalise, who was badly wounded after being shot in the hip, was rushed to the hospital after the incident with life-threatening injuries, though his condition has since been upgraded to stable. Hodgkinson was killed during the shootout that ensued.

Hodgkinson, who identified as a supporter and former campaign volunteer for Democratic candidate Bernie Sanders, also shared anti-Trump memes and rants on his Facebook page.

Author: Tyler Durden
Posted: June 22, 2017, 6:55 pm

Start buying oil.

That's not only this morning's recommendation by Dennis Gartman but, as this afternoon, also Citi's commodities team (led by OPEC's impressario Ed Morse) which moments ago issued a report according to which crude oil markets will not only bottom, but more importantly, "investors should position now for a potential V-shaped rebound in crude oil prices, as price risk seems asymmetrically skewed to the upside."

Do two wrongs make a right? But we digress...

Citi explains the recent collapse (which it did not in any way anticipate as it was bullish all the way into a bear market), by noting that WTI flat price has sold off another ~5% this week, as bearish sentiment continued to prevail among oil market participants. However, it counters, "both weekly and monthly storage data are pointing to a tighter market by end-2017, and Citi expects global oil stocks to draw ~200-m bbls to year-end. While it is possible for prices to dip even lower near-term,  we do not view this as sustainable, and once market sentiment turns, prices could rally sharply."

Some additional observations from uber-bullish Citi on the crude vol surface:

The flattening of the vol skew has gathered pace. The discount of the 3rd contract’s 25-delta call implied vol to the ATM vol narrowed to ~0.9 vol pts or just ~3%, the smallest in over a year, while the call skew on longer-dated contracts shrank significantly as well (Figure 1).

 

Meanwhile, WTI short-dated implied vol remains cheap, despite having bounced off the lows. The negative relationship between implied vol and oil prices has restored after breaking down briefly last week, marked by the 1-month implied vol (OIV) repricing ~4 vol pts higher during the sell-off in flat price to ~32 pts, in line with the current realized vol. While the implied breakeven is back up to $0.86 from just below $0.80, it still looks cheap historically, even compared to the $0.75-1.05 range established in the low vol environment so far this year (Figure 2).

 

We do not expect a quick reversal of such dynamics, as muted producer activity as well as stronger consumer hedging demand at this price level should continue to suppress downside vols and support upside vols. Should market sentiment improve, a build-up in investor length, which is near the lowest since last November (Figure 3), could keep calls better bid, too.

Assuming Citi is right this time, and in case readers want to trade alongside (or maybe's that opposite from) the bank, here are the three trade recommendations from Morse's team:

  • Trade Idea 1: Buy Dec17 WTI 46/53 call spreads; sell Dec17 WTI 40 puts for  zero cost. Pricing as of 9:35am EST, Jun 22nd, 2017. Transaction costs are included. Reference prices: NYMEX WTI Dec17 futures at $43.75/bbl. Expiry: Nov 15th, 2017. Net delta: 0.56. Max payout: $7 (16% of reference prices).
    • Risks: The trade is subject to losses if WTI trades below the $40 put strike by maturity, which remains an unlikely scenario in our view. As aforementioned, we cannot rule out the possibility of another leg lower in oil prices in the near-term, but it should be short-lived, in our view.
  • Trade Idea 2: Buy 1x Dec17 WTI 44 call; sell 2x Dec17 WTI 52 calls for $1.67. Pricing as of 9:48am EST, Jun 22nd, 2017. Transaction costs are included. Reference prices: NYMEX WTI Dec17 futures at $43.69/bbl. Expiry: Nov 15th, 2017. Net Delta: 0.12. Max payout: $8 (18% of reference prices and x4.8 of costs).
    • Risks: The payout of this trade will turn negative should WTI trade above $60/bbl (or ~37% higher than the reference price) by maturity
  • Trade Idea 3: Buy Sep17 WTI 44 calls for $1.63. Pricing as of 9:55am EST, Jun 22nd, 2017. Transaction costs are included. Reference prices: NYMEX WTI Sep17 futures at $43.09/bbl. Expiry: Aug 17th, 2017. Delta: 0.45.
    • Risks: The trade will lose the premium if oil prices remain under pressure in the near-term and WTI trades below the $44 strike by maturity. We like the risk-reward of this trade which takes advantage of the relatively cheap implied vol on shortdated contracts.
Author: Tyler Durden
Posted: June 22, 2017, 6:48 pm

Not to be outdone by Jeff Bezos' "out of the box thinking", Elon Musk has turned the amplifier of fast money to '11'...

Car-maker, tech stock, solar company... and now music streaming service.

Oh the genius of Elon Musk... "you just don't get it"


As ReCode reports, put this one in the “You can do that, but why would you want to do that?” file:

Tesla is talking to the music industry about creating its own streaming music service.

 

Music industry sources say the carmaker has had talks with all of the major labels about licensing a proprietary music service that would come bundled with its cars, which already come equipped with a high-tech dashboard and internet connectivity.

 

Label sources aren’t clear about the full scope of Tesla’s ambitions, but believe it is interested in offering multiple tiers of service, starting with a Pandora-like web radio offering.

The bigger question: Why doesn’t Tesla simply integrate existing services, like Spotify or Apple Music, into all of its cars from the start — especially since Tesla already does a deal with Spotify for Teslas sold outside the U.S.?

“We believe it’s important to have an exceptional in-car experience so our customers can listen to the music they want from whatever source they choose,” a Tesla spokesperson said.  

 

“Our goal is to simply achieve maximum happiness for our customers.”

Of course shareholders can see only the upside (even though the stock did drop ever so slightly on this headline) even if Musk just found another way to burn more money.

Will this be the next excuse to raise more capital?

Oh and just one more thing...

Author: Tyler Durden
Posted: June 22, 2017, 6:31 pm

NFA News Releases

May 4, Chicago—National Futures Association (NFA) has permanently barred Pratik Patel, sole associated person and sole principal of Houston, Texas, introducing broker Patel Futures LLC (PFL), from membership and from acting as a principal of an NFA Member.
Posted: May 5, 2017, 4:59 am

Elite Forex Blog - Market Research & Analysis

(GLOBALINTELHUB.COM) 6/12/17 — Bitcoin has surged to all time highs, urging us to compose this article on a hot trending topic that we’ve wanted to compose for a long time.  Our parent company, Elite E Services, is primarily a FX algorithm development company – so we get asked about Bitcoin quite a bit.  Life is a deteriorating asset so let’s get right down to it.  Who created Bitcoin, and why?  Before we get started just a quick note to all those that haven’t read Splitting Pennies – which is a great primer for those interested in Bitcoin and where it will go next.
The creator of Bitcoin is officially a name, “Satoshi Nakamoto” – very few people believe that it was a single male from Japan.  For more detailed analysis about who is Satoshi Nakamoto see this article and the official Wikipedia entry.  In the early days of Bitcoin development this name is associated with original key-creation and communications on message boards, and then the project was officially handed over to others at which point this Satoshi character never appeared again (Although from time to time someone will come forward saying they are the real Satoshi Nakamoto, and then have their posts deleted).
Bitcoin could very well be the ‘one world currency’ that conspiracy theorists have been talking about for some time.  It’s a kill five birds with one stone solution – not only is Bitcoin an ideal one world currency, it allows law enforcement a perfect record of all transactions on the network.  It states very clearly on bitcoin.org (the official site) in big letters “Bitcoin is not anonymous” :
Some effort is required to protect your privacy with Bitcoin. All Bitcoin transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any Bitcoin address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances. This is one reason why Bitcoin addresses should only be used once. Always remember that it is your responsibility to adopt good practices in order to protect your privacy. Read more about protecting your privacy.
Another advantage of Bitcoin is the problem of Quantitative Easing – the Fed (and thus, nearly all central banks in the world) have painted themselves in a corner, metaphorically speaking.  QE ‘solved’ the credit crisis, but QE itself does not have a solution.  Currently all currencies are in a race to zero – competing with who can print more money faster.  Central Bankers who are in systemic analysis, their economic advisors, know this.  They know that the Fiat money system is doomed, all what you can read online is true (just sensationalized) – it’s a debt based system based on nothing.  That system was created, originally in the early 1900’s and refined during Breton Woods followed by the Nixon shock (This is all explained well in Splitting Pennies).  In the early 1900’s – there was no internet!  It is a very archaic system that needs to be replaced, by something modern, electronic, based on encryption.  Bitcoin!  It’s a currency based on ‘bits’ – but most importantly, Bitcoin is not the ‘one world currency’ per se, but laying the framework for larger cryptocurrency projects.  In the case of central banks, who control the global monetary system, that would manifest in ‘Settlement Coin’ :
Two resources available almost exclusively to central banks could soon be opened up to additional users as a result of a new digital currency project designed by a little-known startup and Swiss bank UBS.  One of those resources is the real-time gross settlement (RTGS) system used by central banks (it’s typically reserved for high-value transactions that need to be settled instantly), and the other is central bank-issued cash.  Using the Utility Settlement Coin (USC) unveiled today, the five-member consortium that has sprung up around the project aims to help central banks open-up access to these tools to more customers. If successful, USC has the potential to create entirely new business models built on instant settling and easy cash transfers.  In interview, Robert Sams, founder of London-based Clearmatics, said his firm initially worked with UBS to build the network, and that BNY Mellon, Deutsche Bank, ICAP and Santander are only just the first of many future members.
In case you didn’t read Splitting Pennies or don’t already know, the NSA/CIA often works for big corporate clients, just as it has become a cliche that the Iraq war was about big oil, the lesser known hand in global politics is the banking sector.  In other words, Bitcoin may have very well been ‘suggested’ or ‘sponsored’ by a banker, group of banks, or financial services firm.  But the NSA (as we surmise) was the company that got the job done.  And probably, if it was in fact ‘suggested’ or ‘sponsored’ by a private bank, they would have been waiting in the wings to develop their own Bitcoin related systems or as in the above “Settlement Coin.”  So the NSA made Bitcoin – so what?
It isn’t really important who or why created Bitcoin as the how – and the how is open source, so experts have dug through the code bit by bit (pun intended).  If the who or why isn’t important – why did we write an article about it?
The FX markets currently represent the exchange between ‘major’ and ‘minor’ currencies.  In the future, why not too they will include ‘cryptocurrencies’ – we’re already seeing the BTC/EUR pair popup on obscure brokers.  When BTC/USD and BTC/EUR are available at major FX banks and brokers, we can say – from a global FX perspective, that Bitcoin has ‘arrived.’  Many of us remember the days when the synthetic “Euro” currency was a new artificial creation that was being adopted, although the Euro project is thousands of degrees larger than the Bitcoin project.  But unlike the Euro, Bitcoin is being adopted at a near exponential rate by demand (Many merchants resisted the switch to Euros claiming it was eating into their profit margins and they were right!).
And to answer the question as to why Elite E Services is not actively involved in Bitcoin  the answer is that previously, you can’t trade Bitcoin.  Now we’re starting to see obscure brokers offering BTC/EUR but the liquidity is sparse and spreads are wacky – that will all change.  When we can trade BTC/USD just like EUR/USD you can bet that EES and a host of other algorithmic FX traders will be all over it!  It will be an interesting trade for sure, especially with all the volatility, the cross ‘pairs’ – and new cryptocurrencies.  For the record, for brokers- there’s not much difference adding a new symbol (currency pair) in MT4 they just need liquidity, which has been difficult to find.
So there’s really nothing revolutionary about Bitcoin, it’s just a logical use of technology in finance considering a plethora of problems faced by any central bank who creates currency.  And there are some interesting caveats to Bitcoin as compared to major currencies; Bitcoin is a closed system (there are finite Bitcoin) – this alone could make such currencies ‘anti-inflationary’ and at the least, hold their value (the value of the USD continues to deteriorate slowly over time as new M3 introduced into the system.)  But we need to pay
Another thing that Bitcoin has done is set the stage for a cryptocurrency race; even Google is investing in Bitcoin alternatives:
Google Ventures and China-based IDG Capital Partners are the second group of tech investors in two months to place a bet on OpenCoin, the company behind the currently-in-beta Ripple open-source payments protocol.  OpenCoin announced today that it had closed an additional round of funding — the amount wasn’t specified — with Google Ventures and IDG Capital Partners. (Hat tip to GigaOM for the news.)  Last month, OpenCoin wrapped up an earlier angel round of funding from another high-profile group of technology VCs: Andreessen Horowitz, FF Angel IV, Lightspeed Venture Partners, Vast Ventures and the Bitcoin Opportunity Fund.
Here’s some interesting theories about who or whom is Satoshi:
A corporate conglomerate   
Some researchers proposed that the name ‘Satoshi Nakamoto’ was derived from a combination of tech companies consisting of Samsung, Toshiba, Nakayama, and Motorola. The notion that the name was a pseudonym is clearly true and it is doubtful they reside in Japan given the numerous forum posts with a distinctly English dialect.
Craig Steven Wright
This Australian entrepreneur claims to be the Bitcoin creator and provided proof.  But soon after, his offices were raided by the tax authorities on ‘an unrelated matter’
Soon after these stories were published, authorities in Australia raided the home of Mr Wright. The Australian Taxation Office said the raid was linked to a long-running investigation into tax payments rather than Bitcoin.
Questioned about this raid, Mr Wright said he was cooperating fully with the ATO.
“We have lawyers negotiating with them over how much I have to pay,” he said.
Other potential creators
Nick Szabo, and many others, have been suggested as potential Satoshi – but all have denied it:
The New Yorker published a piece pointing at two possible Satoshis, one of whom seemed particularly plausible: a cryptography graduate student from Trinity College, Dublin, who had gone on to work in currency-trading software for a bank and published a paper on peer-to-peer technology. The other was a Research Fellow at the Oxford Internet Institute, Vili Lehdonvirta. Both made denials.
Fast Company highlighted an encryption patent application filed by three researchers – Charles Bry, Neal King and Vladimir Oks­man – and a circumstantial link involving textual analysis of it and the Satoshi paper which found the phrase “…computationally impractical to reverse” in both. Again, it was flatly denied.
THE WINNER: It was the NSA
The NSA has the capability, the motive, and the operational capacity – they have teams of cryptographers, the biggest fastest supercomputers in the world, and they see the need.  Whether instructed by their friends at the Fed, in cooperation with their owners (i.e. Illuminati banking families), or as part of a DARPA project – is not clear and will never be known (unless a whistleblower comes forward).  In fact, the NSA employs some of the best mathematicians and cryptographers in the world.  Few know about their work because it’s a secret, and this isn’t the kind of job you leave to start your own cryptography company.
But the real smoking Gun, aside from the huge amount of circumstantial evidence and lack of a credible alternative, is the 1996 paper authored by NSA “HOW TO MAKE A MINT: THE CRYPTOGRAPHY OF ANONYMOUS ELECTRONIC CASH” available here.
The NSA was one of the first organizations to describe a Bitcoin-like system. About twelve years before Satoshi Nakamoto published his legendary white paper to the Metzdowd.com cryptography mailing list, a group of NSA information security researchers published a paper entitled How to Make a Mint: the Cryptography of Anonymous Electronic Cash in two prominent places, the first being an MIT mailing list and the second being much more prominent, The American Law Review (Vol. 46, Issue 4 ).
The paper outlines a system very much like Bitcoin in which secure financial transactions are possible through the use of a decentralized network the researchers refer informally to as a Bank. They list four things as indispensable in their proposed network: privacy, user identification (protection against impersonation), message integrity (protection against tampering/substitution of transaction information – that is, protection against double-spending), and nonrepudiation (protection against later denial of a transaction – a blockchain!).
“We will assume throughout the remainder of this paper that some authentication infrastructure is in place, providing the four security features.” (Section 1.2)
It is evident that SHA-256, the algorithm Satoshi used to secure Bitcoin, was not available because it came about in 2001. However, SHA-1 would have been available to them, having been published in 1993.
Why would the NSA want to do this?  One simple reason: Control.  
As we explain in Splitting Pennies – the primary means the US dominates the world is through economic policy, although backed by bombs.  And the critical support of the US Dollar is primarily, the military.  The connection between the military and the US Dollar system is intertwined inextricably.  There are thousands of great examples only one of them being how Iraq switched to the Euro right before the Army’s invasion. 
In October 2000 Iraq insisted on dumping the US dollar – ‘the currency of the enemy’ – for the more multilateral euro.  The changeover was announced on almost exactly the same day that the euro reached its lowest ebb, buying just $0.82, and the G7 Finance Ministers were forced to bail out the currency. On Friday the euro had reached $1.08, up 30 per cent from that time.
Almost all of Iraq’s oil exports under the United Nations oil-for-food programme have been paid in euros since 2001. Around 26 billion euros (£17.4bn) has been paid for 3.3 billion barrels of oil into an escrow account in New York.  The Iraqi account, held at BNP Paribas, has also been earning a higher rate of interest in euros than it would have in dollars.
The point here is there are a lot of different types of control.  The NSA monitors and collects literally all electronic communications; internet, phone calls, everything.  They listen in even to encrypted voice calls with high powered microphones, devices like cellphones equipped with recording devices (See original “Clipper” chip).  It’s very difficult to communicate on planet Earth in private, without the NSA listening.  So it is only logical that they would also want complete control of the financial system, including records of all electronic transactions, which Bitcoin provides.
Could there be an ‘additional’ security layer baked into the Blockchain that is undetectable, that allows the NSA to see more information about transactions, such as network location data?  It wouldn’t be so far fetched, considering their past work, such as Xerox copy machines that kept a record of all copies made (this is going back to the 70’s, now it’s common).  Of course security experts will point to the fact that this layer remains invisible, but if this does exist – of course it would be hidden.
More to the point about the success of Bitcoin – its design is very solid, robust, manageable – this is not the work of a student.  Of course logically, the NSA employs individuals, and ultimately it is the work of mathematicians, programmers, and cryptographers – but if we deduce the most likely group capable, willing, and motivated to embark on such a project, the NSA is the most likely suspect.  Universities, on the other hand, didn’t product white papers like this from 1996.
Another question is that if it was the NSA, why didn’t they go through more trouble concealing their identity?  I mean, the internet is rife with theories that it was in fact the NSA/CIA and “Satoshi Nakamoto” means in Japanese “Central Intelligence” – well there are a few answers for this, but to be congruent with our argument, it fits their profile.
Claims that the NSA created Bitcoin have actually been flung around for years. People have questioned why it uses the SHA-256 hash function, which was designed by the NSA and published by the National Institute for Standards and Technology (NIST). The fact that the NSA is tied to SHA-256 leads some to assume it’s created a backdoor to the hash function that no one has ever identified, which allows it to spy on Bitcoin users.
“If you assume that the NSA did something to SHA-256, which no outside researcher has detected, what you get is the ability, with credible and detectable action, they would be able to forge transactions. The really scary thing is somebody finds a way to find collisions in SHA-256 really fast without brute-forcing it or using lots of hardware and then they take control of the network,” cryptography researcher Matthew D. Green of Johns Hopkins University said in a previous interview.
Then there’s the question of “Satoshi Nakamoto” – if it was in fact the NSA, why not just claim ownership of it?  Why all the cloak and dagger?  And most importantly, if Satoshi Nakamoto is a real person, and not a group that wants to remain secret – WHY NOT come forward and claim your nearly $3 Billion worth of Bitcoin (based on current prices).
The CIA Project, a group dedicated to unearthing all of the government’s secret projects and making them public, hasreleased a video claiming Bitcoin is actually the brainchild of the US National Security Agency.
The video entitled CIA Project Bitcoin: Is Bitcoin a CIA or NSA project? claims that there is a lot of compelling evidences that proves that the NSA is behind Bitcoin. One of the main pieces of evidence has to do with the name of the mysterious man, woman or group behind the creation of Bitcoin, “Satoshi Nakamoto”.
According to the CIA Project, Satoshi Nakamoto means “Central Intelligence” in Japanese. Doing a quick web search, you’ll find out that Satoshi is usually a name given for baby boys which means “clear thinking, quick witted, wise,” while Nakamoto is a Japanese surname which means ‘central origin’ or ‘(one who lives) in the middle’ as people with this surname are found mostly in the Ryukyu islands which is strongly associated with the Ryūkyū Kingdom, a highly centralized kingdom that originated from the Okinawa Islands. So combining Nakamoto and Satoshi can be loosely interpreted as “Central Intelligence”.
Is it so really hard to believe?  This is from an organization that until the Snowden leaks, secretly recorded nearly all internet traffic on the network level by splicing fiber optic cables.  They even have a deep-sea splicing mission that will cut undersea cables and install intercept devices.  Making Bitcoin wouldn’t even be a big priority at NSA.
Certainly, anonymity is one of the biggest myths about Bitcoin. In fact, there has never been a more easily traceable method of payment. Every single transaction is recorded and retained permanently in the public “blockchain”.  The idea that the NSA would create an anarchic, peer-to-peer crypto-currency in the hope that it would be adopted for nefarious industries and become easy to track would have been a lot more difficult to believe before the recent leaks by Edward Snowden and the revelation that billions of phone calls had been intercepted by the US security services. We are now in a world where we now know that the NSA was tracking the pornography habits of Islamic “radicalisers” in order to discredit them and making deals with some of the world’s largest internet firms to insert backdoors into their systems.
And we’re not the only ones who believe this, in Russia they ‘know’ this to be true without sifting through all the evidence.
Nonetheless, Svintsov’s remarks count as some of the more extreme to emanate from the discussion. Svintsov told Russian broadcast news agency REGNUM:All these cryptocurrencies [were] created by US intelligence agencies just to finance terrorism and revolutions.Svintsov reportedly went on to explain how cryptocurrencies have started to become a payment method for consumer spending, and cited reports that terrorist organisations are seeking to use the technology for illicit means.
Let’s elaborate on what is ‘control’ as far as the NSA is concerned.  Bitcoin is like the prime mover.  All future cryptocurrencies, no matter how snazzy or functional – will never have the same original keys as Bitcoin.  It created a self-sustained, self-feeding bubble – and all that followed.  It enabled law enforcement to collect a host of criminals on a network called “Silk Road” and who knows what other operations that happened behind the scenes.  Because of pesky ‘domestic’ laws, the NSA doesn’t control the internet in foreign countries.  But by providing a ‘cool’ currency as a tool, they can collect information from around the globe and like Facebook, users provide this information voluntarily.  It’s the same strategy they use like putting the listening device in the chips at the manufacturing level, which saves them the trouble of wiretapping, electronic eavesdropping, and other risky methods that can fail or be blocked.  It’s impossible to stop a cellphone from listening to you, for example (well not 100%, but you have to physically rewire the device).  Bitcoin is the same strategy on a financial level – by using Bitcoin you’re giving up your private transactional information.  By itself, it would not identify you per se (as the blockchain is ‘anonymous’ but the transactions are there in the public register, so combined with other information, which the NSA has a LOT OF – they can triangulate their information more precisely.
That’s one problem solved with Bitcoin – another being the economic problem of QE (although with a Bitcoin market cap of $44 Billion, that’s just another day at the Fed buying MBS) – and finally, it squashes the idea of sovereignty although in a very, very, very subtle way.  You see, a country IS a currency.  Until now, currency has always been tied to national sovereignty (although the Fed is private, USA only has one currency, the US Dollar, which is exclusively American).  Bitcoin is a super-national currency, or really – the world’s first one world currency.
Of course, this is all great praise for the DOD which seems to have a 50 year plan – but after tens of trillions spent we’d hope that they’d be able to do something better than catching terrorists (which mostly are artificial terrorists).
Posted: June 13, 2017, 4:50 pm
(GLOBALINTELHUB.COM) – 6/9/2017 For those who are not drooling on their lazy-boy high on Prozac and Lays (both strong brands) know that the world is not as seen on TV.  But even in TV, on shows such as "White Collar" - the strange relationship between the 'police' and the 'bandits' can be seen and understood.  The differences in many cases between a career Special Agent and cat burglar can be thin circumstantial nuances; and they often 'flip' sides, most notably in the case we all know about Frank Abagnale, now a successful security and fraud consultant, working with the FBI to detect serious financial fraud.  Let's take a step back for a moment; the "FBI" hires mostly accountants, and they pursue a number of crimes but most notably financial fraud.  They serve as the police for the CFTC, the SEC, for extreme enforcement actions, as well as investigating a number of issues - from their website:
Our Priorities
Protect the United States from terrorist attack
Protect the United States against foreign intelligence operations and espionage
Protect the United States against cyber-based attacks and high-technology crimes
Combat public corruption at all levels
Protect civil rights
Combat transnational/national criminal organizations and enterprises
Combat major white-collar crime
Combat significant violent crime
Our People & Leadership
The FBI employs 35,000 people, including special agents and support professionals such as intelligence analysts, language specialists, scientists, and information technology specialists. Learn how you can join us at FBIJobs.gov. For details on our executives and organizational structure, see our Leadership & Structure webpage.
What should stick out to readers in an environment where a potentially politicized and corrupt FBI (at least, the leadership) is the "Combat public corruption at all levels" - and going back to the age old regulatory paradox, 'who watches the watchers' let's take a look at the old dog who made the FBI what it is today; J. Edgar Hoover.
In case you have not, and are interested in this topic, take a weekend and read this must read book about the FBI: J. Edgar Hoover: The Man and the Secrets - why bother reading about a figure who is long gone and has no surviving heirs?  Because in order to understand where we are today, with the situation with the FBI and Trump, we need to understand where we came from.  Certainly the FBI has transformed since 1972; however the power, scope, size, methods, political leanings, and other elements of the FBI still remain as established by Hoover.
Let's dismantle some of the false images many have about the FBI.  The FBI doesn't 'solve crimes' as on popular TV shows like "CSI" - although they do have excellent forensics labs, this rarely (but sometimes) leads to a conviction.  Primarily, the FBI relies on informants, "Confidential Informants" (CIs), tips, and 'turning' - a technique popularized by Hoover and used to this day.  Global Intel Hub interviewed several anonymous sources to confirm this information.  Here's how it works.  The FBI will arrest a petty low level criminal and get him to 'turn' on his boss; they will threaten him with life in prison, maybe poke his eyes a little or something, and get him to become a witness in court.  Also they will want a full blueprint of the organization - and in exchange they will get into the Witness Protection Program - yes this program really exists and there are literally thousands of people in this program:
As of 2013, 8,500 witnesses and 9,900 family members have been protected by the U.S. Marshals Service since 1971.
But before entering WITSEC, which is an endgame, the FBI can use informants for years.  CIs can be bank employees (i.e. Wall St.), mafia agents, corporate executives .. basically anyone.  Take a look at the case of CI gone bad:
For 30 years, DeVecchio was one of the FBI 's most important mob busters.
DeVecchio was Scarpa's handler, and Scarpa was more than an ordinary stool pigeon -- he had also allegedly served as muscle for the FBI when the bureau needed some extra legal assistance in making difficult cases. As a result, he was allegedly accorded special, sometimes questionable, favors, including tips on coming indictments that allowed Scarpa's associates to skip town in advance. But, in aiding his informant to commit murder, prosecutors now allege that DeVecchio went too far in protecting his valuable mob asset. Law enforcement sources say DeVecchio may have also enriched himself in the process.
Yes, you read correctly - for 30 years, "DeVecchio" was a CI that gave the FBI information about mob activities.  A useful asset, but the underlying conclusion is simple - the FBI doesn't 'solve' crimes.   With the recent testimony of James Comey, a lawyer by trade, all of this needs to be taken into consideration.  How has the FBI and its internal politics & policies affected significant events in American history; JFK, 911, the credit crisis, and others?
Another strategy which now is no secret used by Hoover, was obtaining secret information by trickery or surveillance, and then using it to blackmail the target to get them to do what they want.  Hoover supposedly kept dossiers on over 10,000 americans; however long the list is - the method was simple.  Get the dirt on the target then use it to manipulate them.  If you think this is fanciful; again - read this book  J. Edgar Hoover: The Man and the Secrets.
The point is that, there's no way to know for sure what's going on inside the FBI today.  The reason we need to look at Hoover's FBI is because now that he's long gone, and there's even been a DiCaprio film about him, we can see a bigger picture of what was really going on in the FBI at that time.
So it should be no surprise, that an FBI director, would be meddling in domestic politics - whether it be in elections or by dealing with sitting Presidents.  Everyone was scared of Hoover, even US Presidents both before and after they were elected.  Now, clearly this was a unique individual who built the FBI in his own image during a unique period in history - there will never be another Hoover.  But all this history about the FBI should be noted, following to today's FBI that literally is 'creating' terrorists right here in the USA:
WASHINGTON — The F.B.I. has significantly increased its use of stings in terrorism cases, employing agents and informants to pose as jihadists, bomb makers, gun dealers or online “friends” in hundreds of investigations into Americans suspected of supporting the Islamic State, records and interviews show.
Undercover operations, once seen as a last resort, are now used in about two of every three prosecutions involving people suspected of supporting the Islamic State, a sharp rise in the span of just two years, according to a New York Times analysis. Charges have been brought against nearly 90 Americans believed to be linked to the group.
The increase in the number of these secret operations, which put operatives in the middle of purported plots, has come with little public or congressional scrutiny, and the stings rely on F.B.I. guidelines that predate the rise of the Islamic State.
While F.B.I. officials say they are careful to avoid illegally entrapping suspects, their undercover operatives are far from bystanders. In recent investigations from Florida to California, agents have helped people suspected of being extremists acquire weapons, scope out bombing targets and find the best routes to Syria to join the Islamic State, records show.
Here's how it works.  The FBI 'suspects' someone may be an extremist (they are Muslim, or at least look like).  They pose as another Muslim and start to engage in a conversation about making a 'plot' such as a 'bomb' - but at the last moment, arrest the entrapped individual.  This accomplishes a few things, one - they can make a long list of cases 'solved' that would have otherwise become terrorist attacks (they are working hard for their 8 Billion budget).  Two, it scares the population that the threat of terrorism is 'real' (when in reality, you are more likely to be struck by lightning than to be attacked by a terrorist).  This is reinforced by the media 'terrorism terrorism terrorism'.
The paradoxical question here is - left to their own would these potential 'terrorists' have committed any acts of terror, or not?  Of course, foiling a crime before it happens is always ideal.  But at what point does entrapment become 'encouragement' - we're not talking about drug dealing here, terrorism is a serious thing (people can be killed).
But defense lawyers, Muslim leaders and civil liberties advocates say that F.B.I. operatives coax suspects into saying and doing things that they might not otherwise do — the essence of entrapment.“They’re manufacturing terrorism cases,” said Michael German, a former undercover agent with the F.B.I. who researches national security law at New York University’s Brennan Center for Justice. In many of the recent prosecutions, he said, “these people are five steps away from being a danger to the United States.”
The American Mafia, once seen as one of the most popularized 'threats' has been on the wane, as most of them have moved from petty crimes to legitimate businesses (or semi-legit) .. An organization like the FBI needs terrorists and other artificial 'threats' to justify 35,000 + employees, just as the military and other parts of the DOD need "Russia" to act as a looming potential threat to justify trillions in military spending.  (Anyone with mild room temperature IQ knows Russia, China, Iran, North Korea all working together pose no real threat to USA militarily, economically, or culturally).
Bear this in mind next time the news media tries to distract viewers from real news - Comey is not news.  It's irrelevant.  Trump's reaction, irrelevant.  Remember, the entire "Russia Investigation" never existed, it was all a liberal conspiracy created or to use their term 'fake news' in order to destroy Trump and use it in Illuminati style 'killing two birds with one stone' as a prelude to war and specifically to build a pipeline through Syria as the next "Iraq" to plunder, with project Ukraine a failure the virus needs to expand into untapped resources to colonize, and Trump simply stood in the way of that policy.  The FBI being a critical component of the giant global octopus with hands everywhere, needed to jump in with their own tune to play in the melody.
For a detailed breakdown of how the global system works in reality (not 'as seen on TV') checkout Splitting Pennies - Understanding Forex
Order stuff online - save money, save time - enjoy your life!  @ www.pleaseorderit.com
Posted: June 10, 2017, 6:26 pm
FX is quite literally, a rigged game.  Not like the stock market, well not exactly.  FX has been, a game of 'how many numbers am I holding behind my back?' and the guess is always wrong!  As we explain in Splitting Pennies Understanding Forex - FX is rigged.  But that doesn't mean there isn't opportunity!  One just needs to understand it.
French bank BNP Paribas was fined $350 million by the New York State Department of
Financial Services
 for lax oversight in its foreign-exchange business that
allowed “nearly unfettered misconduct” by more than a dozen employees involved
in exchange rate manipulation, officials announced Wednesday.



From 2007 through 2013, a trader on the bank’s New York desk, identified in the
consent order as Jason Katz, ran a number of schemes with more than a dozen
BNPP traders and salespeople on key foreign exchange trading desks to
manipulate prices and spreads in several currencies, including the South
African rand, Hungarian forint and Turkish lira, officials said.



He called his group of traders a "cartel" and they communicated in a
chat room called "ZAR Domination," a reference to the rand’s trading
symbol, according to the consent order. The group would push up the price of
the illiquid rand during New York business hours when the South African market
was closed, moving the currency in whichever way they chose, and thus
depressing competition, officials said.



Katz also enlisted colleagues at other banks to widen spreads for orders in
rands, increasing bank profits and limiting competition at the customer’
expense, the order says. Some of the traders engaged in illegal coordination
and shared confidential customer information, officials said. As part of a
cooperation agreement with prosecutors, Katz pled guilty in Manhattan federal court in
January to one count of conspiracy to restrain trade in violation of the
Sherman Act.



“Participants in the foreign exchange market rely on a transparent and fair
market to ensure competitive prices for their trades for all participants,”
Financial Services Superintendent Maria T. Vullo said in a statement. “Here the
bank paid little or no attention to the supervision of its foreign exchange
trading business, allowing BNPP traders and others to violate New York state
law over the course of many years and repeatedly abused the trust of their
customers."



BNP Paribas, which employs nearly 190,000 people and has total assets of more
than €2.1 trillion (approximately $2.36 trillion), said in a statement that the
$350 million fine will be covered by existing provisions. It said it had
implemented a group-wide remediation initiative and cooperated fully in the
investigation.



“The conduct which led to this settlement occurred during the period from 2007
to 2013. Since this time, BNP Paribas has proactively implemented extensive
measures to strengthen its systems of control and compliance,” the bank said in
its statement. “The group has increased resources and staff dedicated to these
functions, conducted extensive staff training and launched a new code of
conduct which applies to all staff.”



Three BNPP employees were fired, seven more resigned and several others were
disciplined for misconduct or supervisory shortcomings in relation to the
probe, the order says.



Katz’s attorney, Michael Tremonte of 
Sher Tremonte LLP, did not respond Wednesday to a call seeking
comment.
But really, what's another $350 Million in the grand scheme of things for BNP?  Just another day's profits in the FX market.
This probe isn't new; regulators have been looking into FX rigging for years.  And practically, the fine won't make any customers whole - it will just shore up the coffers for the NY State department of financial services.  With inflation out of control, they need the money.  
For a detailed breakdown of this virtual monopoly 'they' have on the global financial system, checkout Splitting Pennies Understanding Forex.
Posted: May 25, 2017, 11:49 pm
NEW YORK -- Wherever there are British expats with money, there’s a DeVere Group office not far away. And in many of those places, the company’s aggressive sales tactics or high fees have drawn the attention of regulators.
Now the financial advisory firm, which says it has attracted $12 billion in assets, including more than $500 million in the US, is under investigation by the Securities and Exchange Commission, according to five former employees informed of the probe by management before they left. About half of the salesmen in DeVere’s New York office have quit or been fired in recent weeks, they say.
Among the irregularities, according to the former employees: The firm for years charged upfront commissions on some investments, even though its SEC registration didn’t allow such fees. Three of the former employees, all of whom asked for anonymity out of fear of retaliation, said some salesmen had cocaine and other drugs delivered to fuel their high-pressure cold-calling. The former employees said the SEC probe concerns compliance issues and has intensified in recent months.
George Prior, a spokesman for DeVere, dismissed questions about the probe and the allegations of former employees, saying he wouldn’t discuss “unsubstantiated rumours or speculation”. Judy Burns, a spokeswoman for the SEC, declined to comment.
“A high quality, results-driven service for our clients is always at the forefront of the firm’s focus,” Mr Prior said in an email, adding that the company was conducting a “strategic review”.
‘Massive Opportunity’
Nigel Green, a British stockbroker, started DeVere in Hong Kong about 15 years ago. He previously had worked at offshore brokerage Britex International, which ran into trouble when a high-yield fund it had been selling stopped paying investors, according to reports in the Financial Times. DeVere bought Britex in 2002, International Money Marketing reported.
Mr Green expanded to the Middle East and Europe, and then to Shanghai, Tokyo, Thailand and Africa, according to promotional videos posted on YouTube. DeVere says it now has 80,000 clients in more than 100 countries.
“When I went abroad, I was really shocked, it was a massive opportunity,” Mr Green said in a video posted on YouTube in 2016. “Today people want international advice.”
Mr Prior, the spokesman for Mr Green, declined to make him available for an interview.
Attractive Pitch
DeVere opened its US outpost in 2012. It hired mainly young British men to pitch their countrymen on the tax benefits of moving their pensions overseas. Former employees say they spent most of their time cold-calling and sending messages on LinkedIn.
The salesmen had an attractive pitch. Under British law, some workers who had retirement savings in the UK could move them overseas and avoid taxes they’d have to pay when they withdrew the money.
There were a lot of fees. In addition to an annual management fee, DeVere would charge a fee on the pension transfer that could be as high as 7%, spread over several years, three former employees said. Clients who transferred pensions would have to decide how to invest the money, giving DeVere salesmen another chance to earn fees.
Among the investments DeVere sold in the US were structured notes from banks including Goldman Sachs Group Inc. and Morgan Stanley, according to the former employees. These investments, a form of derivatives, are a way to bet on the stock market. One Goldman note offered an 11% return if three indexes all went up by a designated date. DeVere received a 4% upfront commission, the former employees said.
Collecting Commissions
Because DeVere registered with the SEC as an investment adviser, not as a brokerage, its employees aren’t allowed to collect commissions.
“If you receive transaction-based commissions then you need to be registered as a broker-dealer,” said Seth Taube, a former SEC enforcement official who’s now a lawyer at Baker Botts LLP in New York.
DeVere didn’t respond to questions about commissions. In 2014, Benjamin Alderson, then head of the New York office, told International Adviser about SEC regulations: “You cannot be anything but squeaky clean or it will show.”
Andrew Williams, a spokesman for Goldman Sachs, said the bank terminated its distribution relationships with DeVere last year, declining to say why. Mark Lake, a Morgan Stanley spokesman, declined to comment.
Zip Line
DeVere employees who did well made a lot of money. The firm had about 50 US salesmen at its peak, and the top tier made more than $500,000 a year, former employees said. The best performers were invited to DeVere’s Christmas party in London. At the 2015 event at the Grosvenor Hotel, Mr Green, DeVere’s founder, descended to the stage on a zip line amid fireworks, and the former lead singer of the Pussycat Dolls performed, the employees said.
Mr Green, a trim and diminutive man, visited New York every few months. An employee would be assigned to bring a kettlebell to his hotel room for his morning workouts. Some former salesmen said he reminded them of the sinister nuclear-plant owner Mr Burns from “The Simpsons”.
Three of the former employees said they would drink booze out of paper cups during the day when Mr Green wasn’t watching. Younger guys were sent downstairs to buy drugs from delivery men. Most of the misbehaviour stopped around 2015, the former employees said. Salesmen who worked at DeVere more recently said they hadn’t seen anything untoward.
In 2015, one of DeVere’s few female employees sued for sexual harassment, saying salesmen made vulgar and racist comments about her husband, a black professional football player. The New York Post published a story about the lawsuit with the headline “I worked in real-life ‘Wolf of Wall Street’ den: NFL player’s wife”. Mr Prior, the DeVere spokesman, said at the time that the allegations were “false and incredulous”. The case was settled out of court, though the former employee, Philippa Okoye, has since filed a second lawsuit alleging she wasn’t paid.
Singapore Sanction
DeVere has a history of run-ins with regulators. In 2008, a Singapore subsidiary was fined for using unlicensed advisers and selling insurance products outside its licence mandate, according to a statement by the city-state’s regulator. The firm closed the office that year.
In Hong Kong, a former DeVere subsidiary was fined HK$3.1 million ($398,000) last year for breaches including using unlicensed advisers and failing to hand over information to a local regulator. Mr Green had already acquired another firm, Acuma Hong Kong Ltd., and he uses that brand in the city now instead of DeVere.
DeVere is on a list of firms published by Japan’s regulator that aren’t authorised to solicit investors. It was on a similar list in Thailand, though it isn’t anymore. Its UK subsidiary stopped providing some pension advice this year amid a regulatory review. DeVere has blamed some problems on scammers using its name.
South Africa’s Financial Services Board is also investigating DeVere, according to Nokuthula Mtungwa, a spokeswoman for the agency. Ross Pennell, a former manager of DeVere’s Cape Town office who said he’s been contacted by the regulator, said the probe concerned fees and disclosures. He said clients weren’t told about some of the commissions they were paying or that some investments locked up their money for years.
“In my experience, DeVere was sometimes more focussed on making sales than actually giving proper financial advice,” Mr Pennell said in an interview.
After leaving DeVere in 2014, Mr Pennell sued the company over an unpaid bonus and other money he says he was owed. He said he then received threatening anonymous phone calls, and a mobile phone message with what appeared to be surveillance photographs of his wife and children. He reported the threats to South African police, who determined there wasn’t enough evidence to pursue the matter. A judge ruled in favour of Pennell in the pay dispute this month, but DeVere is appealing.
Pension Warning
An SEC investigation may not be the biggest threat to offshore advisers like DeVere: In March, the UK government imposed a 25% tax on some pensions transferred overseas. The UK Financial Conduct Authority also posted a warning on its website in January about the risks of pension transfers, such as advisers who recommend high-risk investments or scams.
DeVere said in a May 13 press release that its strategic review will involve a corporate restructuring and should be completed by the end of the month. The company sold its Bahamas operation to its managers and has been busy this year setting up new businesses. It got an investment-banking licence from Mauritius, an island east of Madagascar, opened a private bank on the Caribbean island of St. Lucia and started a “global e-money app” that it says will rival traditional banks.
“Banking as we have known it until now is finished,” Mr Green said in an April 10 press release announcing the app.
Posted: May 25, 2017, 12:09 pm
Every now and again we at Elite E Services stumble upon business models in the course of our operation that are sometimes interesting but alarming at the same time - in this case, timeshare fraud.  After having our head held under water by combination of ugly circumstances (tough regulation making business impossible but at the same time losing millions to Forex fraudsters which ironically the regulations failed to stop); we are sensitive on fraud - especially that which does not appear to be on the surface!  And as markets evolve, so do fraud models.. 
SAN DIEGO – Jeffrey Spanier, a 51-year-old former owner of Amerifund Capital Finance, LLC located in Boca Raton, Florida, was convicted by a federal jury today for his role in an elaborate stock-loan fraud scheme in which executives and shareholders of publicly traded corporations collectively lost over $100 million when the stock they pledged as collateral for loans was immediately sold in order to fund the loans.
Why this is a good example though - this fraud was perpetrated at the highest levels.  Victims of this fraud included the who's who of Wall St., corporate executivies, ultra high net worth individuals, and even Bono (
This may have to be a multi-part series as we uncover this new type of fraud which may be the next big 'securities fraud' as what we are looking at - appears to be unregistered securities.  Let's start with a short history of what a timeshare is and how we got where we are.  
Long ago, before the dinosaurs, the Johnson family wanted to share their lake cottage with the Smith family for the summer, and asked them to kick in for the repairs of the old dock.  Or something like that.  And then it became a business - of course starting from the infamous Fort Frauderdale, Florida (during this time Boca Raton was still a swamp, inhabitied only by IBM and some Japanese..)
The first timeshare in the United States was started in 1974 by Caribbean International Corporation (CIC), based in Fort Lauderdale, Florida. It offered what it called a 25-year vacation license rather than ownership. The company owned two other resorts the vacation license holder could alternate their vacation weeks with: one in St. Croix and one in St. Thomas; both in the U.S. Virgin Islands. The Virgin Islands properties began their timeshare sales in 1973 with owners Hillie Meyers, Don Saunders, and Arthur Zimand.
How we got to where we are today follows the same path of all industries; fuelled by Fed policy of cheap money, an expanding real estate market, retiring rich baby boomers, and all the other favorable demographics.  But what insiders in this industry learned quickly was that, they were really selling the dream.  It was possible to sell the nothing, the artificiality.  "Real" estate is just that - it's real.  Timeshare owners don't really 'own' anything, if you read the agreements - it's a contract to pay, an obligation - in perpetuity.  Every time share contract is different but in no case is there actual ownership of 'real estate' - you may own the 'rights' to a 'membership' but if it cannot be 'sold' then what kind of ownership is that really?  What they learned was that the profit here was all in the sizzle, not in the steak - and if they could enhance the sizzle to be 99% and serve Grade B flank steak, they'd have a winning model to become very rich, which was borderline legal.  While the timeshare industry itself is 'legal' and in some states there are 'regulations' - many of the tactics they use, contracts they offer, are illegal.  Many of the 'salespeople' they hire, have criminal records for financial fraud.  In fact, the FTC currently has hundreds of criminal investigations against timeshare companies, timeshare resale scams, timeshare fraud, and related illegal activities.  Similar to how the Forex fraud we saw had nothing to do with Forex, many of these frauds have nothing to do with timeshares.  People are so desperate to sell their obligations, when a scammer calling from Mexico says he can 'resell' your timeshare (which is practically impossible) hopeful victims wire thousands of dollars to the foreign bank account with little respute.  Doesn't sound like a lot of money for a scam, but - multiplied by the 10 Million timeshare owners out there, this can add up to millions of dollars for the fraudsters.
When you 'buy' a timeshare 'contract' it's sort of like a debt, you are obligated to pay and if you die, your children will inherit the payments.  Sounds a lot like a bond!  Yes, these are unregistered securities.  The 'exchange' as they call it, RCI, is an unregistered exchange.  There are issues with the SEC, the CFTC, the states, and possibly even anti-trust issues.  Some of these issues are starting to be talked about in the financial media:
Summary
  • Analysts upgrading HGV are not considering the 'dark side' of this industry.
  • Potential liabilities can spring up anytime that can change this tune.
  • Angry customers complain, which can soon become lawsuits, with deleterious consequences.
About half of the big timeshare companies are public companies, so here's where the biggest issues lie.  Because public companies are required to follow rules such as disclosure rules that don't apply to private companies.  So this may be where we see the first complaints.
Really what it comes down to, is a broken model.  Not all timeshares are frauds - but in an inflationary environment, is such a model - fraud removed - profitable anymore?  It's like the Series 7 stockbroker, who used to charge a percent of the trade - now anyone can place their own trade for $9.99 or less whilst sitting in their bathrobe petting their cat.  The timeshare model is a broken bricks and mortar model from the past, it's dead like the shopping mall is dead, just like Amazon is killing retail stores, new upstarts that remain to be seen (still do not exist) will cannabalize this rotten model.  In the meantime, there's a lot to be decided in court.
Even according to industry 'official' statistics, about 17% of timeshare owners are not happy.  Although Diamond is now private and bigger companies have 'cleaned up' their act, reports of false imprisonment, fraud by trickery, misleading sales statements, and outright refusals to comply with customers requests, and just a few of the things still going on.. just read sites like this Consumer Reports (RCI): 
We see no reason to sign up for RCI except to give the company money. We are new members who tried to use RCI for the first time. We wanted to visit El Dorado Suites, Riviera Maya, using our exchange. Through RCI, we have to pay a $399 fee for a mandatory 7-day visit. RCI requires we also pay a $2500 "Mandatory all inclusive" fee for the El Dorado. So that's the cost of our RCI membership, plus a $399 fee, plus a $2500 all-inclusive fee. Curious, we logged into El Dorado's home page and found we could sign up for the exact same vacation, not using RCI, for a total cost of $2200, also all-inclusive. So the all-inclusive fee alone is more than the actual cost of staying at the El Dorado Suites, without having ever met an RCI salesperson.

...

I have been with RCI approx 12yrs. My previous issues have been the fact that they charge for unused points... Live and learn. My complaint is that I had to cancel a reservation. It's unfortunate but situations do arise and plans have to get changed. I cancelled 5-days prior to my check-in date. RCI WILL NEITHER REFUND NOR CREDIT my charge of $99.00! They say they have a 24-hour 'grace period'. I feel this is a major RIP-OFF to consumers and extremely bad business practice. I have contacted them by email, customer service and 'blabbering' supervisor. I was told "they have to keep the lights on" in order to provide their service. Well, RCI, my lights need to be on as well!! BUYER BEWARE.
You get the idea.  One can spend a weekend reading these, it does make more interesting reading than outright financial fraud, but eventually it will make you want to vomit.  You can't call this a business model - you have to call it 'fraud' or 'scam' because it's like that.  If normal companies operated like this, they'd be shut down.  Imagine walking into Wal Mart and instead of their 'no questions asked' return policy they argued with you and told you there was a 'grace period' or some such nonsense, there would be riots, boycotts - Wal Mart would be no more.  90% of business operates like that.  The only exception is software sales because practically, once you 'download' the software you can copy it and there's no way to prove that you didn't.  Other than that - and some other rare exceptions, you can't lock people in a room for 8 hours without their permission.  Readers - this is a time-bomb waiting to explode!  How can we profit from it?  Short the stocks; (HGV) (WYN) (VAC) et al   
If you own a timeshare and want out, there are only a few lawfirms who are actually law firms who can do this for you, like this one Fortis Law Group PLC.  There are also hundreds of scam companies claiming to be 'timeshare resale experts' who even have 'licenses' to do this - but beware - this is a scam too!  This industry is filled with fraud from one end of the business cycle to the other.  It can only be explained by George Carlin, with this clip:

We know what we have to do.  Let's get working!
Posted: May 22, 2017, 6:07 pm

Summary

Analysts upgrading HGV are not considering the 'dark side' of this industry.
Potential liabilities can spring up anytime that can change this tune.
Angry customers complain, which can soon become lawsuits, with deleterious consequences.
There's no dispute that Hilton Grand Vacations Inc (NYSE:HGV) has been doing well over the past few weeks. But, and it's a big but, most of this buying has been fueled by analyst reports, such as this one:
Nomura reiterated their buy rating on shares of Hilton Grand Vacations Inc in a research note published on Friday morning. The brokerage currently has a $43.00 price target on the stock.
We all know how this goes; a huge Wall St. bank has to unload a fund position so they ask their buddies in the analysis department to publish a buy or hold rating on the issue which they know will be good for a few points. Of course it doesn't always happen that way, but the conflict and potential for conflicts should not be ignored by investors. Many investors already don't pay attention to what the analysts say, or else Seeking Alpha wouldn't be so popular!
Posted: May 15, 2017, 9:50 pm
It was an odd transaction from the outset: $14 million, double the going rate, for a 31-acre plot of flat, undeveloped land just west of Chicago. In the nine months since, the curious use of the space has only added to the intrigue. A single, nondescript pole with two antennas was erected by a row of shrubs. Some supporting equipment was rolled in. That’s it.
But those aren’t ordinary antennas. And the buyer of the property isn’t your typical land investor. It’s an affiliate of a company called Jump Trading LLC, a legendary and secretive trading firm that’s a major player in some of the most important financial markets. Just across the street, it turns out, lies the data center for CME Group Inc., the world’s biggest futures exchange. By placing its antennas so close to CME’s servers, Jump may be trying to shave maybe a microsecond -- one-millionth of a second -- off its reaction time, potentially enough to separate a winning from a losing bid in trading that takes place at almost the speed of light.
It’s the latest, and perhaps boldest, salvo in an escalating war that’s being waged to stay competitive in the high-speed trading business. The war is one of proximity -- to see who can get data in and out of CME the quickest. A company called McKay Brothers LLC recently won approval to build the tallest microwave tower in the area while another, Webline Holdings LLC, has installed microwave dishes on a utility pole just outside the data center.
“It tells you how valuable being just a little bit faster is,” said Michael Goldstein, a finance professor at Babson College in Babson Park, Massachusetts. “People say seconds matter. This is microseconds matter.”

Platform Shoes

Traders have long fought ferociously to gain an edge, even to the point of wearing ultra-high platform shoes to stand out in the era when they shouted and waved their hands to execute an order. The dubious fashion was mercifully ended in 2000 by CME’s predecessor, the Chicago Mercantile Exchange, which cited a rash of injuries in banning shoes with soles higher than 2 inches.
The battle for speed was later waged over fiber-optic cable and then, within the past decade, microwave technology, which can convey data in nearly half the time.
Jump Trading declined to comment, but in Aurora it appears that it, too, was reacting to competitors in the latest round of jockeying. In October 2015, McKay Brothers, a company that sells access to its microwave network to high-speed traders, leased land diagonal to the CME data center, under the name Pierce Broadband LLC, according to DuPage County property records.
Last month, the county gave McKay approval to erect a 350-foot high microwave tower that could be 600 feet closer to the data center than its current location, records show. Two trading firms, IMC BV and Tower Research Capital LLC, own minority stakes in McKay. Co-founder Stephane Tyc said his firm may never build the tower but it would be part of the firm’s continual efforts to speed transmission time. 

Utility Pole

Then there’s Webline Holdings. In November 2015, it was granted a license to operate microwave equipment on a utility pole just outside the data center, according to Federal Communications Commission records. Webline has licenses for a microwave network stretching from Aurora to Carteret, New Jersey, where Nasdaq Inc.’s data center is located. Messages left for Webline were not returned.
Last year, the Jump Trading affiliate World Class Wireless purchased the 31-acre lot for $14 million, according to county records. “They paid probably twice as much as it’s worth,” said David Friedland, an executive director in commercial real estate firm Cushman & Wakefield’s Rosemont, Illinois, office. “I don’t see anyone else paying close to that price.”
The license for the transmission dishes is held by a joint venture between World Class and a unit of KCG Holdings Inc., a trading firm that Virtu Financial Inc. is acquiring.

Fiber Cable

It’s unclear which firm is now closest to CME servers. Trading data first leaves CME computers via fiber cable, and then to nearby antennas that send it by microwave to other towers until it reaches New Jersey, where all the major U.S. stock exchanges house their computers. The moves in Aurora are intended to reduce the time that the data is conveyed through cable.
Sending data back and forth between the U.S. Midwest and East Coast allows high-frequency traders to profit from price differences for related assets, including S&P 500 Index futures in Illinois and stock prices in New Jersey. Those money-making opportunities often last only tiny fractions of a second.
There may be a simple way to avoid the skirmishing among traders. A microwave tower could be installed on the roof of the CME data center to eliminate the need for jockeying around the site. The exchange is indeed looking at allowing roof access, along with CyrusOne Inc., the company that bought the data center last year, CME said in a statement. Traders being traders, however, they may continue to battle, this time for the most advantageous position on the microwave tower itself.
“We are confident the CME can provide an alternate and better solution which offers a level playing field to all participants," said McKay’s Tyc.
Posted: May 13, 2017, 2:47 pm
Forex is the most simple market in the world.  As we explain in our book Splitting Pennies - Forex is the underpinning of the world's financial system.  Although it is also the least understood market, there's nothing 'sophisticated' about FX.  Take a dollar, exchange it for a euro.  The rate changes - exchange it back.  Simple!  Trading money.
There is no '2 day settlement' in Forex, a custodian, there's no Reg D, no Reg NMS - there's no HFT front running your orders, there's no 'order types' - there's no exchange rules (because there's no exchange).  Actually, when you strip away the complexities of most markets like securities, bonds, real estate, commodities, FX is many times over the most simple market.  
Understandably, the securities market is the most widely promoted to investors because of the potential for making high returns from participating in corporate ownership (and thus ownership of profits).  But securities are a derivative.  Investors don't really own the companies - they own the shares.  And actually to be technical, they don't own the shares too - they are controlled by a huge custodian DTCC.  The securities, bond, and futures markets are the core of modern capitalism.  But they aren't a necessity, they are an abstration and thus - have complex rules.  Or to say differently - the banking system needs the real economy - the real economy doesn't need the banking system.
How do these abstract markets drive inflation?  Here's how.  QE doesn't directly go into the economy.  However, by keeping interest rates low, both in real terms and buy the Fed's various asset purchase programs - it means money has never been cheaper.  With cheap money, it's easy for i-banks to borrow at zero or near zero rates, invest in any index at 2x or 4x leverage and get their 20% - 40% per year with virtually no risk (that is, no seen risk - there is huge tail risk that one day the market will collapse, which it will for sure, like the big bubble that it is.)  
The 'stock markets' have become so intertwined with the real economy, they have made themselves a necessity.  Like a virus that has taken over a host, now it would be practically impossible to kill the market without affecting the overall economy.  All of this has become so complicated, with so many involved parties - it has become a giant spider web.
On the topic of the Fed and their direct stock market alleged manipulation, consider the following.  The Fed is owned by the member banks.  The Fed gives it's QE to the member banks, almost all of which are now publicly traded companies.  Here's where the paper trail begins for the 'conspiracy crowd' about the Fed being owned by nefarious 13 families:  Public disclosure rules mean that anyone can lookup what's going on at Bank of America (BAC).  Hiding significant information at public companies is very difficult, and becoming more and more difficult with the digitization of records, communications, and basically all aspects of business, which by the way is all 'doubled' and recorded on a network level by ATT (T) another public company - and stored in an NSA database.  America Inc. is technically a corporation and the states such as South Carolina are more like countries (hence the name 'states') - although you can't buy and sell shares of America Inc. you sort of can, it's called immigration - citizens of USA are sort of like shareholders.  And there's a short side too, record numbers of US Citizens are giving up their citizenship.  So, does the Fed manipulate the stock market?  It's not a fair question, because Fed ownership and operations are completely intertwined with the stock market.  During the time when the Fed was created, America was just passing the wildcat banking era, where there were thousands of private banks.  Do not confuse 'private banking' with a 'privately owned bank' - private banking is discreet services for rich people who may want to hide their assets or not let others know how rich they are.  Privately owned banks are nearly non-existant in the USA today, for a number of reasons - mostly caused by generational wealth transfer and generally a trend towards the institutionalization of assets.  What does that mean?  It means that 100 years ago, things were in YOUR name, if you were JP Morgan or Andrew Carnegie.  Today, it's all in tax havens, the Carnegie foundation, trust funds, and almost nothing is in YOUR name.  That includes banks, which are mostly publicly traded and thus, publicly owned.  The individual has become obsolete.  
So all these tendencies, make the market so complicated it's even confusing to describe.  

All this drama created by Nixon is really in the eye of the beholder - this idea of 'economic collapse' is a fantasy promulgated by religious types in armaggedon style packaging, as if the Earth will explode and burn in a big singularity event.  The reality is that 'economic collapse' is happening every day, simply that only some of us notice it.  
Forex simply guages the tides as they ebb and flow, EUR/USD rate changes, but not really that much.  Brexit gave us a 9% move which is huge for FX but not really statistically significant in the grand scheme of things.
Take a look at EUR/GBP for last 10 years:
forex
This is a monthly chart.  You can see why FX is not interesting for the general public.  But it takes a lot less time to understand FX than the stock markets.  FX is simple.
As we head into a potential complete meltdown of the Euro, and tomorrow's NFP, we're heading into an event that may change the face of FX forever.
Dear Trader,
With the upcoming second round of the French Presidential Election this weekend, we require that your account balance plus any open profit or loss covers at least 3% of the total notional exposure across all EUR crosses and EUR Equity Index CFDs by 4pm (UK time) Friday, 5th May 2017. Where the cover is lower than 3%, we may reduce your positions to increase the cover on your account before the market close.
Exit polls will be released prior to the market open on Sunday, 7th May 2017 and there is increased risk of wide spreads and large price gaps on the market open and through the night. Please ensure you are comfortable with the exposure on your open positions leading into the market close on Friday, 5th May 2017.
If you have any queries, please do not hesitate to contact Client Services by calling +44 20 3192 XXXX or emailing XXXXXX.
FX and CFDs are leveraged products that can result in losses exceeding your deposit. They are not suitable for everyone so please ensure you fully understand the risks involved.
Kind regards
LMAX Exchange
Client Services Team
Posted: May 5, 2017, 11:31 am
Is Canada a 'real' country?  What is a 'real' country anyway?  Is a 'country' defined by ethnic lines, borders, corporations, or what the United Nations says?  Is Kosovo a country?  Some say yes, some do not agree:
Kosovo, self-declared independent country in the Balkans region of Europe. Although the United States and most members of the European Union (EU) recognized Kosovo's declaration of independence from Serbia in 2008, Serbia, Russia, and a significant number of other countries—including several EU members—did not.
Well Canada is lucky to have self-declared itself as a country during a period where many breakaway regions and colonies became countries (let's not get into the debate about USA because America Inc. is an artificial country, actually it is a corporation).  But the point here is that, as we explain in Splitting Pennies - Understanding Forex - A COUNTRY IS A CURRENCY.  Yes, this means that Germany, Italy, and others - have given up their sovereignty for the chance to participate in the Euro.  This point is one of the main reason nationalists throughout the European Union rally for its demise.   
But what about Canada?  One of the ex-colonial British states which still is part of the 'commonwealth' Canada enjoys the best of both worlds - independence but protection from two big brothers; USA and the UK.  And at least for the time being, Canada is really a real country, at least more than EU nation states are.  Canada is not part of a 'super state' although a 'super alliance' called the Commonwealth is similar, London doesn't directly control Canada's monetary supply (vis a vis the currency) so for now, Canada is really an independent country.
Take a look at recent FX activity in the 'loonie' USD/CAD pair:
usd cad
For those new to FX, the above chart shows USD vs. CAD which means that the US Dollar is UP against the Canadian dollar.  This area of 1.36 has been a top at least for 2017 and the latter part of 2016; a break here could signify a bull run where there's no further technical resistance until the Jan 2015 high of 1.47.
The loonie as the CAD is called (because of the bird, not because of lunatics in Canada) is considered a commodity currency due to oil and other resources up there.  Another reason that it's time the US just annexed Canada and made it the 51st state (much better than Puerto Rico, me thinks).  Here's a list of reasons the US should invade Canada as explained in a previous article exclusively on ZH by Global Intel Hub.
What's the FX trade here?  Simple; place limit orders above and below the several day range; whichever way USD/CAD breaks out (up or down) it will break hard, as Canada struggles to establish its own identity as a real G8 Currency.
usd cad break up

Of course, if you're in one of the 50% of publicly listed companies that doesn't hedge FX (don't see=don't exist), this is a potential risk if you do business in or with Canada (and thus have CAD exposure).  
If all this is confusing, you can always invest in futures strategies and forget it.
For a detailed play by play breakdown of how to trade such an event; checkout Fortress Capital Trading Academy, or Splitting Pennies the Book.
Posted: April 27, 2017, 3:31 pm




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Posted: April 10, 2017, 1:37 am
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Posted: March 15, 2017, 8:41 pm
(GLOBALINTELHUB) — 3/11/17 —
The news, even the ‘fake news’ and ‘alternative news’ has been reduced to the bottom of the Maslow pyramid, personalizing things while dismantling the small amount of journalistic integrity that existed.  The only next lower step is name calling “you are stupid-head, poopy face” or throwing food.  Liberals are angry that Trump won, Trump supporters are angry that liberals are so angry, blacks are angry because one of their own is out; women are angry because a “Man” is President, what’s next?  When will protests and holidays be labelled as big “Pity Parties” where protestors gather with psychologists and beat cotton dummies with rubber bats, all while wearing protective gear, monitored by ‘government specialists’ – I can see it now.  It’s an extension of the ‘cry rooms’ from Universities; sections of major cities can be closed for these ‘necessary events’ where angry people will get out their feelings in a controlled setting without damaging real property or getting themselves arrested.  You think it’s a big joke, do you – checkout these startups offering services to ‘break things’ for a fee:  The Smash Shack;  Anger Room – Relieve Stress & Anxiety | Anger Room™ | “Nothing You Expect, Everything You Deserve”
Where is national coverage of these businesses – these guys need to get on Shark Tank there’s a national need here.  Parts of Detroit can be used for a mass destruction in controlled ‘riots’ like they did for the Zombie apocalypse trend.
Unfortunately it seems, that’s just about all the unenlightened uneducated masses are good for, so you can’t fault the globalists too much for trying to turn them into good worker consumer zombies.
There’s a lot happening in the ‘backoffice’ of America, Inc. that we’re seeing the surface of the big iceberg such as the Vault7 revelations, and more goodies to come.  We’re still catching up to previous data dumps such as the CIA releasing electronic access to a huge amount of records previously not online. CIAs role in financial markets EXPOSED by documents release.
What impact all this will have is unclear – what is clear is that we’re on the precipice of a major paradigm shift, that from an ‘old model’ to a ‘new model’ speaking from the perspective of systems theory, which is really the best objective perspective.  Robots are simply the catalyst ushering in the paradigm shift.  The idea of ‘manufacturing jobs’ is widely misunderstood by luddites that populate the mainstream – they will have us believe that the idea of a resurgence in US manufacturing is a bad move, i.e. we’re building the wrong economy, and reverting back to a 50s style system.  But this just shows the lack of understanding on their part, the world has changed in the last 10 years, checkout this clip from leftist Bloomberg: Trump’s Plan to Bring Back Manufacturing Isn’t Crazy – Bloomberg View
 But there are plenty of other reasons to want to bring supply chains back to the U.S. High-value-added manufacturing — robot factories pumping out goods — creates jobs for Americans in other ways. As economist Enrico Moretti explains in his book “The New Geography of Jobs,” high-tech manufacturing creates higher-paying service-sector jobs in a local area. The dollars that come into a town with a robot factory get spent on doctors and waiters and personal trainers, and the money circulates throughout the community, leaving everyone better off.
from another article:
Moretti demonstrates that there really are two Americas — one that’s healthy, rich and growing, and a second that’s increasingly being left behind. The two nations-within-a-nation are divided not so much by region or race or religion, but by the kinds of industries they support. Those cities and towns that are home to innovative industries — information technology, pharmaceuticals, advanced manufacturing and the like — are wealthier, healthier and safer, while the places without these industries are steadily declining.
Checkout this chart “Vanishing Blue Collars”:
The book fails to mention the fact that there were ALWAYS two Americas, USA was founded by a group of rich white male slaveowners who said all men are created equal.  But the demographic trend away from manual labor exploitation is exemplified well, although the point here is not about booming tech centers vs. rural economic deserts – it’s about the changing world and how robots really are replacing mundane tasks.  Those without skills in I.T. or computers will be left unemployed or on the dole chronically.  This is why – ahem – Republicans – ahem – you can never ever touch the welfare state, it’s about a class of technologically redundant workers, white or black or latino all the same.  You can’t take away food stamps, medicaid, and other programs – these people are not going to be the innovators of tomorrow, and without food they’ll simply riot and cause trouble – better keep them fat and happy and watching TV popping pills.  Seriously.  And the good news – money can easily be printed and given to them at a very low cost (about .01 per $100 electronically).
Robots are better, robots don’t make mistakes, robots can go places man can’t go (like inside Volcanoes, deep under the sea, and so on).  Don’t forget about software robots, that we speak about when talking about trading.  Algorithmic trading is far superior to human trading – 10 years from now will anyone ‘trade’ their own account?  Or they will just ‘trade’ robots – buy and sell various algorithms that work well.
The point here is that what we are seeing is not a political trend at all.  The Clinton ‘pay for play’ model of politics is outdated, they are cave-men banging there clubs and grunting around a fire.  While Trump doesn’t represent technology per se, he represents business – and as traders know, the market itself has an intelligence, maybe the markets are the first form of Aritificial Intelligence.  So what’s going on is that the demographic shift is allowing a pro-business and thus pro-technology shift which will allow business and technology to thrive.  In fact, the idea of ‘politics’ is outdated too – why can’t all this be organized online – like the markets?  Because the 10% of the population that doesn’t have computers?  The good news is like the market, we’ve been proven, that intelligence finally wins; because what is unnatural cannot continue – if your car has no gas, you’ll stop driving.  Physics is really simple.
What’s happening is a massive paradigm shift into a new paradigm where the ‘old model’ is being transitioned to a ‘new model’ – this is seen in business, politics, medicine, education, construction, engineering, and basically all fields.  The CIA was a product of World War 2, as eloquently explained here on Zero Hedge by Dr. Steve Pieczenik, the CIA was a byproduct of World War 2 and was created by real spies that had a real purpose, and it served its purpose well – against a real enemy (Hitler).  (Of course, the CIA was created after the war but it was based on the spy network that fought Nazi Germany).  Dr. Pieczenik notes intelligently that the current generation of Rockefellers, and would be world dictators are not interested in world domination or one world government plans created by their parents and grandparents.  The CIA, sort of died when its founders died; and the new generation turned it into something else – instead of serving the purpose for which it was originally intended, it was used to further special interests, build the business of the military industrial complex, and most recently influence domestic political elections.  It’s just another example of this old model vs. new model paradigm shift – it’s become outdated, it should be closed.
The idea of a ‘spy agency’ needs to be re-evaluated in the context of modern society, where there are cameras everywhere and instantaneous global communications that are all recorded by NSA.  Maybe a new, modern agency will be a team of trained analysts and ‘hackers’ commissioned for good purposes, such as monitoring electronic communications for crimes, terrorism, violent acts, and other behaviors to be stopped.  In any case, whatever it looks like – one thing is clear – it will be run by robots, not humans.
Posted: March 13, 2017, 2:42 am

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Posted: March 3, 2017, 3:15 am
The world is not as we think.  We are taught one thing, but it is far from the truth.  Meanwhile, we must pay fees, taxes, and work harder for more and more money – because money is always worth less and less.  The only way out from this rabbit hole, is through knowledge and education.  Splitting Pennies is the conversation starter for this new paradigm we're moving into on this planet.


I’ve been in the Forex business for 15 years, and in that time I’ve learned about the extremes surrounding the most important market in the world.  Forex literally determines the value of every book sold in the world, every financial transaction – yet the majority know very little about it.  Splitting Pennies is an entertaining introduction to the mechanism how Forex works, history of money, and education about monetary policy from Forex perspective.  The work itself is not groundbreaking – but if it was understood by the masses, it would literally increase financial literacy, and increase the standard of living.  Whether readers are financial professionals, teachers, the average consumer, business people, politicians, or students; Splitting Pennies will change the way you think about money in a positive way. 

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Posted: February 17, 2017, 2:20 pm
Economist-mathematician Nassim Nicholas Taleb contends that there is a global riot against pseudo-experts
After predicting the 2008 economic crisis, the Brexit vote, the U.S. presidential election and other events correctly, Nassim Nicholas Taleb, author of the Incerto series on global uncertainties, which includes The Black Swan: The Impact of the Highly Improbable, is seen as something of a maverick and an oracle. Equally, the economist-mathematician has been criticised for advocating a “dumbing down” of the economic system, and his reasoning for U.S. President Donald Trump and global populist movements. In an interview in Jaipur, Taleb explains why he thinks the world is seeing a “global riot against pseudo-experts”.
I’d like to start by asking about your next book, Skin in the Game, the fifth of the Incerto series. You do something unusual with your books: before you launch, you put chapters out on your website. Why is that?
Putting my work online motivates me to go deeper into a subject. I put it online and it gives some structure to my thought. The only way to judge a book is by something called the Lindy effect, and that is its survival. My books have survived. I noticed that The Black Swan did well because it was picked up early online, long before the launch. I also prefer social media to interviews in the mainstream media as many journalists don’t do their research, and ‘zeitgeist’ updates [Top Ten lists] pass for journalism.
The media is not one organisation or a monolithic entity.
Well, I’m talking about the United States where I get more credible news from the social media than the mainstream media. But I am very impressed with the Indian media that seems to present both sides of the story. In the U.S., you only get either the official, bureaucratic or the academic side of the story.
In Skin in the Game, you seem to build on theories from The Black Swan that give a sense of foreboding about the world economy. Do you see another crisis coming?
Oh, absolutely! The last crisis [2008] hasn’t ended yet because they just delayed it. [Barack] Obama is an actor. He looks good, he raises good children, he is respectable. But he didn’t fix the economic system, he put novocaine [local anaesthetic] in the system. He delayed the problem by working with the bankers whom he should have prosecuted. And now we have double the deficit, adjusted for GDP, to create six million jobs, with a massive debt and the system isn’t cured. We retained zero interest rates, and that hasn’t helped. Basically we shifted the problem from the private corporates to the government in the U.S. So, the system remains very fragile.
You say Obama put novocaine in the system. How will the Trump administration be able to address this?
Of course. The whole mandate he got was because he understood the economic problems. People don’t realise that Obama created inequalities when he distorted the system. You can only get rich if you have assets. What Trump is doing is put some kind of business sense in the system. You don’t have to be a genius to see what’s wrong. Instead of Trump being elected, if you went to the local souk [bazaar] in Aleppo and brought one of the retail shop owners, he would do the same thing Trump is doing. Like making a call to Boeing and asking why are we paying so much.
You’re seen as something of an oracle, given that you saw the 2008 economic crash coming, you predicted the Brexit vote, the outcome of the Syrian crisis. You said the Islamic State would benefit if Bashar al-Assad was pushed out and you predicted Trump’s win. How do you explain it?
Not the Islamic State, but al-Qaeda at the time, and I said the U.S. administration was helping fund them. See, you have to have courage to say things others don’t. I was lucky financially in life, that I didn’t need to work for a living and can spend all my time thinking. When Trump was running for election, I said what he says makes sense to a grocery store owner. Because the grocery guy can say Trump is wrong because he can see where he is wrong. But with Obama, he can’t understand what he’s saying, so the grocery man doesn’t know where he is wrong.
Is it a choice between dumbing down versus over-intellectualisation, then?
Exactly. Trump never ran for archbishop, so you never saw anything in his behaviour that was saintly, and that was fine. Whereas Obama behaved like the Archbishop of Canterbury, and was going to do good but people didn’t feel their lives were better. As I said, if it was a shopkeeper from Aleppo, or a grocery store owner in Mumbai, people would have liked them as much as Trump. What he says makes common sense, asking why are we paying so much for this rubbish or why do we need these complex taxes, or why do we want lobbyists. You can call Trump’s plain-speaking what you like. But the way intellectuals treat people who don’t agree with them isn’t good either. I remember I had an academic friend who supported Brexit, and he said he knew what it meant to be a leper in the U.K. It was the same with supporting Trump in the U.S.
But there were valid reasons for people to be worried about Trump too.
Well, if you’re a businessman, for example, what Trump said didn’t bother you. The intellectual class of no more than 2,00,000 people in the U.S. don’t represent everyone upset with Trump. The real problem is the ‘faux-expert problem’, one who doesn’t know what he doesn’t know, and assumes he knows what people think. An electrician doesn’t have that problem.
Is the election of Trump part of a global phenomena? You have commented on the similarity to the election of Narendra Modi in India.
Well, with Trump, Modi, Brexit, and now France, there are some similar problems in those countries. What you are hearing is people getting fed up with the ruling class. This is not fascism. It has nothing to do with fascism. It has to do with the faux-experts problem and a world with too many experts. If we had a different elite, we may not see the same problem.
There are other similarities, to quote from studies of populist movements worldwide: these leaders are majoritarian, they build on resentment, they use social media for direct access to their voters, and they can take radical decisions.
I often say that a mathematician thinks in numbers, a lawyer in laws, and an idiot thinks in words. These words don’t amount to anything. I think you have to draw the conclusion that there is a global riot against pseudo-experts. I saw it with Brexit, and Nigel Farage [leader of the U.K. Independence Party], who was a trader for 15 years, said the problem with the government was that none of them had ever had a proper job. Being a bureaucrat is not a proper job.
As a businessperson, you have a point about experts and pseudo-experts who you say are ‘left-wing’. How do you explain the other parts to the phenomenon that aren’t economic: the xenophobia, Islamophobia, misogyny, etc.?
I don’t understand how a left-wing person can defend Salafism, or religious extremism. In a democracy, you can allow people to have any view, but they can’t come with a message to destroy democracy. Why should people who come to the West come with a message to finish the West? This is where the discourse goes haywire. So in Yemen, the [Saudi] intervention is good, but the intervention [by Russia] in Aleppo shouldn’t be allowed. I don’t think Trump was racist when he said Mexican criminals shouldn’t be allowed into the U.S.; he was targeting criminals. If you are Naziphobic, you are not against Germans. If I oppose Salafism, I am not an Islamophobe. Obama also deported Mexicans and refused to accept immigrants.
Is anti-globalisation a part of this sentiment?
I am not anti-globalisation, but I am against big global corporations. One of the reasons is what they cost. Today, every project sees cost overruns because these projects have to factor in global risks as well. In nature there is an ‘island effect’. The number of species on an island drops significantly when you go to the mainland. Similarly, when you open up your small economies, you lose some of your ethnicity or diversity. Artisans are being killed by globalisation. Think of the effect on so many artists who have been put out of work while people are buying wrinkle-free shirts and cheap mobile phones. I’m a localist. The problem is globalisation comes through large global corporates that are predatory, and so we want to counter its ill-effects.
Where do you see the world moving now? Further right, or will it revert to the centre?
I don’t think it will go left or right, and I don’t know about the short term. But I think in the long term, the world can only survive if it lives like nature does. Many smaller units of governance, and a collection of super islands with some separation, quick decision-making, and visible implementation. Lots of Switzerlands, that’s what we need. What we need is not leaders, we don’t need them. We just need someone at the top who doesn’t mess the system up.
Posted: February 7, 2017, 9:53 pm
NFA bars New York retail foreign exchange dealer Forex Capital Markets, LLC and its principals Dror Niv, William Ahdout and Ornit Niv from membership
February 6, Chicago—National Futures Association (NFA) has barred New York retail foreign exchange dealer Forex Capital Markets, LLC (FXCM) from membership. NFA also barred FXCM principals Dror NivWilliam Ahdout, and Ornit Niv from membership and from acting as a principal of an NFA Member.
The Decision, issued by NFA's Business Conduct Committee (BCC), is based on a Complaint issued by the BCC and a settlement offer submitted by FXCM, Dror Niv, Ahdout and Ornit Niv. The BCC found that FXCM, Dror Niv and Ahdout engaged in numerous deceptive and abusive execution activities that were designed to benefit FXCM, to the detriment of its customers. The BCC also found that FXCM and Dror Niv provided misleading information to NFA. Finally, as a result of a number of significant supervisory failures, the BCC found that FXCM, Dror Niv, Ahdout and Ornit Niv failed to adequately supervise the firm and its employees.
FXCM has had a long history of disciplinary actions involving, among other things, deceptive and abusive execution practices to benefit FXCM to the detriment of its customers. NFA's BCC has authorized four prior Complaints against FXCM. In 2011, FXCM was charged with engaging in asymmetrical price slippage practices and ordered to pay a $2 million monetary sanction and not engage in the types of deceptive and abusive practices detailed in NFA's 2017 Complaint. More information regarding FXCM's disciplinary record is available by using NFA's BASIC system, which is accessible through NFA's website.
The 2017 Decision will become effective on February 21, 2017, and FXCM will withdraw from NFA membership within 15 days of February 21, unless this 15 day period is extended by the BCC.
NFA thanks the Commodity Futures Trading Commission (CFTC) for its assistance.

Posted: February 7, 2017, 3:02 am
Pension Funds represent the retirement accounts for basically 99% of the working class.  Because they don't have many choices, unlike Ultra High Net Worth Individuals.  Global Pension Assets stand at a staggering $35 Trillion according to Willis Towers Watson:

  • At the end of 2015, total pension assets were estimated at USD 35.4 trillion, which represents a decrease of 0.5% compared to USD 35.6 trillion at the end of 2014
  • Pension assets relative to GDP reached 80% in 2015, which represents a decrease of 4% from the 2014 ratio of 84%
  • The largest pension markets are the US, UK and Japan with 62%, 9% and 8% of total pension assets in the study, respectively

USD 35.4 Trillion is a lot of assets, no matter how you look at it.  In any systemic analysis we often forget about such huge pools of capital.  Mostly, these assets are sitting in stocks and bonds, some real estate - all traditional.  They don't invest in alternatives (because of regulatory rules, mostly).  
In what may be the most stunning move in the asset management space in years, the WSJ reports that Harvard University’s endowment, which manages just shy of $36 billion, will undergo a "radical overhaul" in the way the world’s wealthiest school invests its money by outsourcing management of most of its assets and lay off roughly half the staff in the process.
According to the WSJ, about half of the 230 employees at Harvard Management Company will leave as part of a sweeping change by the university’s new endowment chief, N.P. “Narv” Narvekar. This means that the endowment will shut down its internal hedge funds and let go traders by the middle of the year. Additionally, the internal team in charge of direct real-estate investments is expected to spin out into an independent entity that Harvard is expected to invest with. Only management of Harvard’s natural resources portfolio and passively managed exchange-traded funds will remain in house.
Many fund managers and traders often scratch their heads at how something can be possible, when there is an apparent sea of consistent strategies offering moderate, if not conservative, returns (like 20% per year.)
But such funds like Harvard and Calpers are rife with politics, and staffed with people that generally don't understand markets.  Of course there are exceptions - but having a $30 Billion loss without any hedging in place - well, that's really unprofessional, to say the least.
Of course, once again, who suffers?  It's not going to be the Pension managers, or the hedge funds they 'outsourced' to manage the funds - it's the beneficiaries - working people.  Retirement plans, pension plans - can blow up.  Or in the best case, as is the case now, they can dwindle down so poorly to the point that retirees get only a fraction of what they are expecting.
There's really no solution to this problem, except for working people to stand up to their pension managers - which they do from time to time, but the Pension Funds are staffed with a political Chinese Wall of staffers with 'quick answers' to shut down their inquiries.  
With the renovations Trump is doing to the system of American Government - is the public pension system next?  Harvard's move may be a sign of things to come.  And it needs reform, losing $30 Billion like Calpers is at best, shameful.  At worst, illegal.
Posted: January 28, 2017, 8:45 pm

Summary

Blockchain to revolutionize financial services.
Overstock's competitors are very successful, now Overstock has an edge.
Company is moving fast and furious in disruptive tech.
Overstock.com appears to be one of the many overlooked tech stocks that is extremely undervalued. As we said in an article last year, based on several key business elements, we believe (NASDAQ:OSTK) is a value buy and a long term play. While day to day operations, earnings, and other variables keep this stock off the radar of most investors, there can be a day that puts Overstock.com on the map - which can happen any day. It can be a news release related to a blockchain related order, or a new contract where Overstock.com is supplying the technology to a huge vendor.
Here's one reason why we believe this company is overlooked. Even in December, when the company received exposure on equities.com, the description failed to mention blockchain or overstock.com's other tech assets:
Overstock.com Inc is an online retailer offering closeout and discount brand and non-brand name merchandise, including bed-and-bath goods, home décor, kitchenware, watches, jewelry, electronics and computers, apparel, and designer accessories.
Overstock.com Inc. is based out of Salt Lake City, UT and has some 1,900 employees. Its CEO is Patrick M. Byrne.
It is true, that Overstock.com's core business is, and has been, online retailing. But Overstock.com isn't likely to take over Amazon (NASDAQ:AMZN) anytime soon. But Overstock.com has diversified into so much more than online retailing. Blockchain and related technologies, are no doubt going to be the game changer technology in financial services in the coming decade.
See a recent release about Overstock.com's blockchain technology:
Overstock.com, Inc. (OSTK) has reached a new milestone in its efforts to bring Wall Street and bitcoin pioneered crypto-revolution closer. The world's first trading portal for the exchange of securities on blockchain technology is ready and has been built by Overtstock.com's majority-owned fintech subsidiary t0. Overstock.com recently announced approval of a non-transferable rights offering by its board of directors which allows its stockholders of record to purchase shares of its preferred stock, including preferred shares to be issued and traded exclusively on a registered alternative trading system using the t0 issuance and trading platform.
Like much disruptive technology, it's hard to see which company will be 'the one' that leads the herd in tech that most agree will be a dominating factor in the future of an industry. For every Google (NASDAQ:GOOG) there's a hundreds perhaps thousands of failures. But Overstock.com has a track record of success, and isn't any neophyte when it comes to the markets.
Posted: January 13, 2017, 3:20 pm
(GLOBALINTELHUB) – There’s been a lot of discussion lately on the ‘internets’ (The internet is a medium which was invented by Al Gore and named ‘internets’ by George Bush) about CIA mind control, and CIA propaganda techniques being heavily used in the campaign to deceive the public about Russian ‘hacking’ and to create false enemies like ‘terrorists’ such as the alleged mind controlled shooter (shooter admits he was ‘mind controlled’ by intelligence agency, eyewitness claims there were at least three other “sleepers,” shooters, with high-powered rifles shooting into crowd » Intellihub):
 Santiago, who was arrested in January and waiting to stand trial in March on criminal charges, recently showed up to an F.B.I. office in Anchorage unannounced seeking help.
Santiago told the F.B.I. he thought he was being mind controlled, possibly by the U.S. government or the C.I.A. and admitted hearing voices, which Santiago said told him to study “extremist materials on the Internet,” the New York Times reports.
This is no surprise as those following this topic for years know that this is a common method used by the CIA originally developed during the 60’s most notably but not exclusively through a program known as MK Ultra.  You can read more about this in this book: Virtual Government: CIA Mind Control Operations in America.
The fact is that the CIA, as a branch of America, Inc. is simply the arm of a business.  It’s a subversive division of a huge corporate enterprise called America, Inc. which has turned everything into a business, even politics.  Health care is a ‘business’ now and even there is something called the ‘restaurant industry’ – where people used to cook now even that has been outsourced to corporate America Inc.  The CIA and it’s games are no different – they are simply a well funded group that protects American business interests at home and abroad (with a flat world, who is to say there are not reasons the CIA needs to operate domestically, for example terrorist cells in Florida, foreign owned corporations which is nearly 50% of all US corporations… )
We explain the connection between the CIA and the markets in our book Splitting Pennies.  The CIA works for the banks.  Banking, is simply the most profitable business in America.  There are nearly 10,000 banks in USA.  In previous times, the CIA worked for other corporations such as The United Fruit company, ending in a coup in Guatemala in 1954.  It’s not a conspiracy, it’s not a secret, it’s just business.  The connection between the CIA and America Inc. is fairly simple, it’s explicit, obvious, and useful for American business.  Now, the modus operandi is the information war – the war for your mind – which is largely fought on the battlefield of the internet.  So the CIA backed Facebook, Google, and other data-collecting internet ventures through their VC arm (ironically, the only non-profit VC fund in Silicon Valley) In-q-tel.  Of course, early stage investment comes with one condition – management has to sign an NDA that protects ‘classified’ investors CIA, NSA, etc.  And their other condition – to provide them with ‘data’ as they request it.
Those in financial services know quite well how quickly the FBI can shut down your offices, and most financial professionals are given training about Patriot Act compliance and AML (Anti-Money Laundering) training always includes the humorous ‘terrorist identification training’ – bankers are supposed to ask their clients if they are terrorists, and report any suspicious activity to FinCen.  The reality of these programs is they do not stop any terrorist financing they only stop Americans with dogs with strange names like “Dash” and serve as a potential threat to ‘fake news sites’ (anyone can be reported as a terrorist, without any evidence – and because of new rules you are guilty until proven innocent).  Fortunately this power isn’t being used YET but it exists, and it’s there.  They’re still using the planting child porn trick which seems to work well because how can you prove that you didn’t plant it, everyone who actually is a pedophile hides the fact that he is.
The CIA was a business from day one, but it has rapidly evolved and changed with the times.  It’s first several significant clients were Oil Sheik states, leading to the extremely economically positive Nixon US Dollar / Petro Dollar deal currently supporting the US Dollar today; opening up the seizure of huge assets in Latin and Central America for US and UK corporations; and in the last 20 years the creation of a new generation of vassal states like Ukraine, Libya, Iraq, and the final attempt at Syria which is a huge failure.  Now, the CIA has simply shifted to adapt to the new world, their focus is now the information war, mostly on behalf of their banking clients, but also the information war can be used to create “Arab Spring” or even to fake a hacked election as we’re seeing now with this Wag the Dog style campaign.  A major difference in the CIA’s project “Russian Hacked the Elections” and other campaigns is this is one of the first large domestic, politicized campaigns.  Few Americans would critisize the agency for working hard for the taxpayer getting that Oil we are so thirsty for, or for helping US companies plunder foreign assets.  We have big appetites and as a net importer we need the spice to flow.
But here they may have crossed the line, getting themselves involved in domestic politics is an obvious conflict of interest and interesting abuse of power (as the Democrats still hold the keys to the kingdom for another few days).  Trump says he’s going to revamp the intelligence aparatus – we’ll see what happens when he’s in the Oval Office.
If you’re an ECP / QEP or from another country checkout these great investment strategies from Fortress Capital CTA & RIA.  Due to the wacky Dodd-Frank regulations half of Wall St. can only offer their services to non-US citizens, and billionaires.  
Posted: January 7, 2017, 6:45 pm
Posted: January 7, 2017, 12:06 am
2016 was a bad year for hedge funds, pension funds, and university endowments.  In fact, the last several years have been horrible.  But until now, there haven’t been many alternatives.  Hedge Funds became popular for investors who wanted to achieve more than the 4% or 6% offered by traditional managed investments like mutual funds.  Although their history evolved from the idea of ‘hedging’ the market (hedge funds could sell AND buy, can you imagine?) this quickly evolved into an asset class where managers employed strategies based on mathematics in order to achieve above than average and above than expected returns.  And some private funds such as Renaissance do very well year in and year out – continued to this day.  But the majority suffer from strategy fatigue, and failure to bring in a new generation of ‘quants’ that can do anything more than copy, paste, and cold call.  If we skip all the Soros bashing about how he manipulates politics (which, on the surface, is not a bad investing strategy if you have the money to do it, and to control both sides – this is a Rothschild invention not a Soros invention) – the Soros family of funds outperformed their peers by a significant multiple.  These funds were trading the markets, unlike what some may want us to believe.  Some of their policies to ‘influence’ foreign markets (historically, from the 80s) may have been seen as unethical – and it may be.  But the returns have always been spectacular.  We’ll see soon if Robert can continue the family legacy of great returns – it looks like – yes he can!  
But the few examples of extraordinary funds with consistent returns like Renaissance, they’re an anomaly.  The industry in general has suffered from poor returns, which when combined with the standard 2/20 fee model – can be disastrous for investors’ confidence.  Bloomberg ran a story recently with verbage such as "The year Big Money ditched Hedge Funds:
“There has been a massive blowback from public pension funds and private endowments,’’ said Craig Effron, who co-founded his Scoggin Capital Management nearly 30 years ago. An investor told him recently that many chief investment officers are so fed up that they would prefer to entrust their cash to a trader who charged no management fee, over one who did, even if they expected the latter to make them more money.
Public retirement plans from Kentucky to New York, New Jersey and Rhode Island have decided to pull money from hedge funds. So did a state university in Maryland and other endowments. MetLife Inc. and other insurers followed suit. Money-losing firms were forced to reduce their fees. Client withdrawals ($53 billion in the last four quarters) drove some managers out of business, including veteran Richard Perry, who until recently had managed one of the longest-standing and better-performing firms.
It's not surprising that investors - especially institutional investors, are abandoning such strategies.  As they say in trading, 'you're only as good as your last trade.'  According to Barclay Hedge Fund Data, 2016 is a little better than 2015, but not much:
4.89% is a good return, but it's not much better than you can acheive with traditional mutual funds or tax free munis.  Certainly it's not a compelling reason to drain your IRA from the markets and invest with hedge funds.  But, this is just an average, there are strategies out there that overperform this index, such as this one.
The California Public Employee Retirement System (CalPERS) is about to report the world’s largest public employee pension suffered an actuarial investment loss of $30.8 billion last year.
CalPERS manages the defined pension plan investments and record keeping for 3,007 California state and local government entities. The pension plan is also responsible for paying the pension benefits to 611,078 retirees and will eventually be responsible for paying retirement benefits to another 868,713 active and 335,908 inactive government workers.
Despite Governor Jerry Brown last summer demanding CalPERS immediately “lower its investment risk and volatility of returns” by reducing its “assumed” annual investment return from 7.5 percent to 6.5 percent, the CalPERS board voted 7- 3 on November 15, 2015 only to slowly reduce the investment return expectation over the next decade.
Practically, the slow death of the hedge fund industry is merely a milestone in its evolution.  Just like robotic strategies are now replacing traditional managers with a suit and tie, the structure of investments is evolving, too.  Hedge Funds aren't going to go away anytime soon, but how they are structured, how the fees are charged, and the strategies that they use, will rapidly change in 2017.  For example, some strategies such as managed accounts have a fee structure that charges only a percentage of profit, called 'performance fee' - with no other fees.  See one example the Magic FX strategy, for QEP/ECP US investors only - which charges a 30% performance fee from the profit.  In this model, if the strategy doesn't perform for investors, there is no fee.  This type of pay for performance model has been around for years, but will become more useful in a climate of diminishing returns and investors angry at paying fees for getting no results or even losing money.  It really is crazy, why investors should pay managers millions of dollars for losing money - it just shows how programmed investors are by traditional media, as we explain in Splitting Pennies the book.
While clients have only pulled a net 2 percent of assets so far, Tony James, the president at Blackstone Group, the largest investor in hedge funds, predicted in May that the industry would shrink by roughly a quarter over the next year. Hedge fund closures (782 in the first nine months) are on track to be the most since 2008, and startups (576) the fewest.
Any manager still standing applauds a smaller industry. Less money under management means fewer crowded trades and more chances to find the elusive alpha. Interest rates on the rise in the U.S., while still near zero or negative in the rest of the world, should also help. The Trump presidency, which promises less regulation, more infrastructure spending and the potential return of prop trading by banks, could also be a boon.
Where will the assets go?  The alternative investment industry is large - institutional funds, pension funds, hedge funds, are but a small part.  According to Barclay Hedge, there are 342 Billion in Managed Futures:
And, although the change from Q2 to Q3 of 2016 is a small percentage of @ $9 Billion, it is a positive figure, and shows that managed futures is one place funds are flowing into.  CTAs, CPOs, and other types of managed investments that have a track record should all benefit from the poor performance of traditional managers, especially those which don't charge a management fee.  But in any scenario, investors only started to loathe the management fees when performance suffered.  When performance is good - who doesn't mind paying for it?
And finally - it may shed light on the still standing FX manager industry.  While these hedge funds have suffered volatile returns, losses, and fee congestion - some FX managers have continued to perform year in and year out with the use of complex algorithms, that work in FX but not in other markets.  Now may be the time for institutional investors to take another look at such algorithmic FX strategies.
Here's a list of books to add to your bookshelf to enlighten yourself.
Posted: January 2, 2017, 12:03 am
Fortress Capital is an IB, CTA, and RIA with a focus on Foreign Exchange.  Fortress offers Forex managed accounts that can be executed at your preferred MT4 broker, or at one of ours (See our flagship strategy Global Alpha FX).


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Posted: November 30, 2016, 3:52 am
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Posted: November 25, 2016, 8:33 pm