Debris Represents the Crumbling Leftovers of X-Files Rip-offs

debris_1161x652_1161x653

Debris. NBC. Monday, March 1, 10 p.m.

Tragically—well, maybe; you be the judge—that bastard COVID has claimed another victim. The X-Files is finally dead, a stake pounded through its throbbing space-alien heart by its dozenth or so television clone. The killer was Debris, a mumbly and mindless sci-fi drama that would never have made it on the air if NBC weren’t so desperately scrambling for new pilots as the COVID production lockdown virus slouched toward Hollywood last spring.

If you somehow missed The X-Files during its 11-season run on Fox, or the various movie spin-offs, comic books, and video games that followed, you’ve probably seen it under some other name—FringeWarehouse 13Dark Skies, and too many others to count—because it essentially engraved the template for nearly all the television science fiction that followed over the three decades that followed its 1993 debut.

Not every series followed every particular, but generally speaking, you had a team led by two temperamentally opposed but sexually attracted investigators looking into weird phenomena caused by—in descending order of sinisterness—conspiracies of the U.S. government and/or extraterrestrial civilizations manipulating human history. Some episodes were devoted to the series’ overarching conspiracy storyline; some to a “monster of the week” that didn’t necessarily tie in very closely with the big story. (I was gravely disappointed when a demon’s lecherous obsession with a Stanford coed in an early episode of Supernatural turned out not to be a central tenet of Satanist theology.)

This was kind of fun for a while on The X-Files, but even the show’s own producers seemed to have sensed it was getting a little thin when they entitled an episode in the ninth season “Jump The Shark.” Most of the clones died off much more quickly. And finally one of them has been stillborn. Debris will freeze your blood not with terror but tedium. Its monsters are puny and its dialogue mostly left over from 1955. (“In the wrong hands,” gravely warns one investigator of the outer-space junk they’re chasing, “it could be the end of humanity.”) I wouldn’t watch this stuff with your eyeballs.

Debris stars Jonathan Tucker (Westworld) as CIA operative Bryan Beneventi and Riann Steele (NCIS: New Orleans) as his partner Finola Jones, an agent of the British intelligence outfit MI6, who’ve been teamed on a task force searching for the shattered remains of an alien spaceship. (Anybody who remembers the results of the CIA’s partnership with MI-6 through its agent Kim Philby will not exactly be optimistic about the outcome of this project.)

Beneventi, who just completed several years in Afghanistan that entailed the removal of eyeballs with knives or some similar intelligence task, is not inclined to view the alien junk in a positive light. Steele, who blathers on like a Hallmark card in the terminal stages of diabetes, thinks it’s like penicillin of the cyberage. She holds fast to her belief even after seeing the debris transmogrify a waitress into something that plunges seven stories to her death on a dining table in a hotel restaurant, not to mention causing various random Americans to burst into hemorrhages from their eyes. Sherlock Holmes has left the building.

Supposedly the search for the debris is complicated by various factors, including counterplotting by the CIA and MI-6; the interference of Jones’ dad, a star physicist and—um—dead; and a group of unknown but thuggish-looking fellows who are trying to get their own hands on it. Their exact goal is unknown, but some of them have letters of the alphabet tattooed on their fingers, which in my experience is never a good sign.

But the interest in these various subplots is seriously undercut by the sparse dialogue and its frequent incomprehensibility due to Steele’s posh British accent, which will likely leave a lot of viewers feeling like Whoopi Goldberg to decipher Rolling Stones lyrics in Jumpin’ Jack Flash. Incomprehensibility, though it’s usually due to plot machinations rather than accents, is a regular feature of creator-writer J.H. Wyman’s work, particularly the old sci-fi series Fringe, another X Files clone that Debris closely resembles. By the end of its 2008-2013 run, Fringe had hopped through so many time-travel worlds and alternative universes that even the characters seemed uncertain where they were at any given moment. But I could always tell. In Hell, about the Ninth Circle. It’s a neighborhood viewers of Debris will get to know well.

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Debris Represents the Crumbling Leftovers of X-Files Rip-offs

debris_1161x652_1161x653

Debris. NBC. Monday, March 1, 10 p.m.

Tragically—well, maybe; you be the judge—that bastard COVID has claimed another victim. The X-Files is finally dead, a stake pounded through its throbbing space-alien heart by its dozenth or so television clone. The killer was Debris, a mumbly and mindless sci-fi drama that would never have made it on the air if NBC weren’t so desperately scrambling for new pilots as the COVID production lockdown virus slouched toward Hollywood last spring.

If you somehow missed The X-Files during its 11-season run on Fox, or the various movie spin-offs, comic books, and video games that followed, you’ve probably seen it under some other name—FringeWarehouse 13Dark Skies, and too many others to count—because it essentially engraved the template for nearly all the television science fiction that followed over the three decades that followed its 1993 debut.

Not every series followed every particular, but generally speaking, you had a team led by two temperamentally opposed but sexually attracted investigators looking into weird phenomena caused by—in descending order of sinisterness—conspiracies of the U.S. government and/or extraterrestrial civilizations manipulating human history. Some episodes were devoted to the series’ overarching conspiracy storyline; some to a “monster of the week” that didn’t necessarily tie in very closely with the big story. (I was gravely disappointed when a demon’s lecherous obsession with a Stanford coed in an early episode of Supernatural turned out not to be a central tenet of Satanist theology.)

This was kind of fun for a while on The X-Files, but even the show’s own producers seemed to have sensed it was getting a little thin when they entitled an episode in the ninth season “Jump The Shark.” Most of the clones died off much more quickly. And finally one of them has been stillborn. Debris will freeze your blood not with terror but tedium. Its monsters are puny and its dialogue mostly left over from 1955. (“In the wrong hands,” gravely warns one investigator of the outer-space junk they’re chasing, “it could be the end of humanity.”) I wouldn’t watch this stuff with your eyeballs.

Debris stars Jonathan Tucker (Westworld) as CIA operative Bryan Beneventi and Riann Steele (NCIS: New Orleans) as his partner Finola Jones, an agent of the British intelligence outfit MI6, who’ve been teamed on a task force searching for the shattered remains of an alien spaceship. (Anybody who remembers the results of the CIA’s partnership with MI-6 through its agent Kim Philby will not exactly be optimistic about the outcome of this project.)

Beneventi, who just completed several years in Afghanistan that entailed the removal of eyeballs with knives or some similar intelligence task, is not inclined to view the alien junk in a positive light. Steele, who blathers on like a Hallmark card in the terminal stages of diabetes, thinks it’s like penicillin of the cyberage. She holds fast to her belief even after seeing the debris transmogrify a waitress into something that plunges seven stories to her death on a dining table in a hotel restaurant, not to mention causing various random Americans to burst into hemorrhages from their eyes. Sherlock Holmes has left the building.

Supposedly the search for the debris is complicated by various factors, including counterplotting by the CIA and MI-6; the interference of Jones’ dad, a star physicist and—um—dead; and a group of unknown but thuggish-looking fellows who are trying to get their own hands on it. Their exact goal is unknown, but some of them have letters of the alphabet tattooed on their fingers, which in my experience is never a good sign.

But the interest in these various subplots is seriously undercut by the sparse dialogue and its frequent incomprehensibility due to Steele’s posh British accent, which will likely leave a lot of viewers feeling like Whoopi Goldberg to decipher Rolling Stones lyrics in Jumpin’ Jack Flash. Incomprehensibility, though it’s usually due to plot machinations rather than accents, is a regular feature of creator-writer J.H. Wyman’s work, particularly the old sci-fi series Fringe, another X Files clone that Debris closely resembles. By the end of its 2008-2013 run, Fringe had hopped through so many time-travel worlds and alternative universes that even the characters seemed uncertain where they were at any given moment. But I could always tell. In Hell, about the Ninth Circle. It’s a neighborhood viewers of Debris will get to know well.

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Inimicus Curiae Briefs

Lawyers know about amicus curiae (friend of the court) briefs, which give interested or expert third parties an opportunity to provide courts with a perspective that the parties might have omitted. But we more rarely hear about inimicus curiae briefs, even though it turns out that many supposed amicus briefs are, in fact, inimicus briefs that have been, er, accidentally mislabeled.

A few tips for writing inimicus briefs from someone who’s read a few; I posted this in 2003, but was recently reminded about it.

[1.] Focus primarily on repeating the arguments of your favored party. After all, anything worth saying once is worth being said by everyone who wants to say it. The official term for this (originally from Law French) is the “moi aussi principle.”

[2.] If you do have a genuinely original twist to add to the analysis, don’t just stick with it—that’s bad form. Be sure to surround it with lots of other points that echo what your favored party says (see item 1 above). A ratio of 10 page of repetition to 1 page of new material is the norm, though experts believe that even this is too low.

[3.] Always include lots of general rhetoric, such as “The importance of the timeless guarantees of the First Amendment cannot be overstated in our marketplace of ideas, and the republic on which it rests.” Judges and law clerks just love that sort of stuff.

NB: This is especially true when filing briefs before the Supreme Court. The sorts of close and difficult cases that the Court hears are almost always decided primarily by applying general slogans. In fact, it’s considered disrespectful of the Court to focus on mere factual or doctrinal details, or to use more mundane language.

[4.] Always keep in mind that (according to Rule 3.7),

The primary purpose of an inimicus curiae brief is to allow the inimicus to tell donors and other supporters that the inimicus Has Filed A Brief Before The Court expressing the timeless verities for which the inimicus and its supporters stand.

Any departure from this purpose is frowned on.

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27% Of All Household Income In The US Now Comes From The Government

27% Of All Household Income In The US Now Comes From The Government

Following today’s release of the latest Personal Income and Spending data, Wall Street was predictably focused on the changes in these two key series, which showed a surge in personal income (to be expected in the month when the $900BN December 2020 stimulus hit), coupled with a far more modest increase in personal spending.

But while the change in the headline data was notable, what was far more remarkable was data showing just how reliant on the US government the population has become.

We are referring, of course, to Personal Current Transfer payments which are essentially government sourced income such as unemployment benefits, welfare checks, and so on. In January, this number was $5.781 trillion annualized, which was not only up by nearly $2 trillion from the $3.8 trillion in December it was also $2 trillion above the pre-Covid trend where transfer receipts were approximately $3.2 trillion.

This means that excluding the $2 trillion annualized surge in govt transfers, personal income excluding government handouts actually declined by $22.3BN from $15.696TN to $15.673TN, hardly a sign of a healthy, reflating economy.

Shown in longer-term context, one can see the creeping impact of government payments, shown in red below.

This, as noted earlier, was due to the latest round of government stimulus checks hitting personal accounts which in turn helped push the savings rate to a whopping 20.5% from 13.4% at the end of 2020.

Stated simply, what all this means is that the government remains responsible for over a quarter of all income, or 26.9 to be precise!

Imagine what that income chart will look like after Biden’s $1400 checks go out?

Putting that number in perspective, in the 1950s and 1960s, transfer payment were around 7%. This number rose in the low teens starting in the mid-1970s (right after the Nixon Shock ended Bretton-Woods and closed the gold window). The number then jumped again after the financial crisis, spiking to the high teens.

And now, the coronavirus has officially sent this number into the mid-20% range, after hitting a record high 31% in April.

And that’s how creeping banana republic socialism comes at you: first slowly, then fast.

So for all those who claim that the Fed is now (and has been for the past decade) subsidizing the 1%, that’s true, but with every passing month, the government is also funding the daily life of an ever greater portion of America’s poorest social segments.

Who ends up paying for both?

Why the middle class of course, where the dollar debasement on one side, and the insane debt accumulation on the other, mean that millions of Americans content to work 9-5, pay their taxes, and generally keep their mouth shut as others are burning everything down and tearing down statues, are now doomed.

The “good” news? As we reported last November, the US middle class won’t have to suffer this pain for much longer, because while the US has one one of the highest median incomes in the entire world, with only three countries boasting a higher income, it is who gets to collect this money that is the major problem, because as the chart also shows, with just a 50% share of the population in middle-income households, the US is now in the same category as such “banana republics” as Turkey, China and, drumroll, Russia.

What is just as stunning: according to the OECD, more than half of the countries in question have a more vibrant middle class than the US.

So the next time someone abuses the popular phrase  “they hate us for our [fill in the blank]”, perhaps it’s time to counter that “they” may not “hate” us at all, but rather are making fun of what has slowly but surely become the world’s biggest banana republic?

And as we concluded last year, “it has not Russia, nor China, nor any other enemy, foreign or domestic, to blame… except for one: the Federal Reserve Bank of the United States.”

Tyler Durden
Fri, 02/26/2021 – 11:45

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“America Is Back!?” Biden Is 3rd Successive President To Bomb Syria – Estimated 22 Killed

“America Is Back!?” Biden Is 3rd Successive President To Bomb Syria – Estimated 22 Killed

“America is back!”…Joe Biden’s mantra has been particularly on the foreign policy front since taking office. Giving the public and the world a small taste of what this will mean in terms of practical action, he’s ordered the first military strike of his presidency a mere little over one month after being inaugurated, becoming the third successive US president to bomb Syria as we covered last night.

Noting that the US has now been bombing Syria since 2014 (with a full occupation of a large northeast section of the country to boot), journalist Michael Tracy points out, “These days you don’t truly Become President until you bomb Syria based on questionable intelligence.”

D.C. Hawks and interventionists immediately cheered on Biden’s actions, which as usual didn’t even so much as come with Congressional notification, much less a vote to bomb a sovereign country, as the casualty count rolled in: “The Pentagon spokesman did not mention any casualties, but U.K.-based monitoring group the Syrian Observatory for Human Rights said on Friday that 22 people were killed in the strikes, which it said had hit three trucks carrying munitions from Iraq into Syria.”

As expected it’s being spun as “defensive” in nature, specifically in ‘retaliation’ for the Feb.15 ‘Iran-backed militia’ attack on a US base in Erbil which injured American soldiers and left one international contractor dead. A week ago the White House warned that “a response is coming” yet without saying where or when, and crucially without providing proof of culpability for that prior rock attack on Erbil Air Base in Iraq’s Kurdistan region. It helps to keep in perspective that this “defensive” strike took place thousands of miles away from US soil.

But there’s clearly immense signaling and symbolism behind Biden’s choosing to bomb inside Syria – and not where the Erbil base assault took place – Iraq. It means Biden and the hawks in the national security state aren’t finished with Assad and Syria after their failed years-long covert war of regime change. 

This is still about Syria as ground-zero in the US-Saudi-Israeli alliance’s war to smash the Iran-Syria-Hezbollah axis of resistance across the Levant.

After all, does anyone actually think the particular Iraqi paramilitary units which allegedly carried out the Erbil operation are now ‘on the run’ or quaking with fear when they watch targets hundreds of miles away across the border hit? Also, whatever happened to ISIS? It was never actually about ISIS or ‘counterterrorism’ at all, but the bullseye was always on Damascus. The Democrats and leftover neocons now running the show in D.C. are not finished in Syria.


Trump’s April 2017 strikes on Syria, via AP

Even Reuters acknowledged in its initial reporting that this appears likely only the beginning:

“The United States on Thursday carried out an airstrike in Syria against a structure belonging to what it said were Iran-backed militia, two officials told Reuters, an apparent response to rocket attacks against U.S. targets in Iraq.

While the strike could be the first retaliatory moves by the United States following last week’s attacks, the move appeared to be limited in scope, potentially lowering the risk of escalation.”

This will perhaps serve to ‘wake-up’ the long dormant antiwar movement in the US, which was last most active in the streets when Obama was poised to unleash a major ‘shock and awe’ style attack on the Syrian government in August-September of 2013.


Despite Syria having long been out of the international headlines, it remains that the population is now being choked and starved by far-reaching US sanctions, and is subject to near weekly illegal Israeli airstrikes, has witnessed its oil and gas fields occupied by US forces bent on stealing the valuable energy resources, and on top of all of this both al-Qaeda and Turkey still occupy large portions of northern and northwest territory.

Tyler Durden
Fri, 02/26/2021 – 11:36

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Texas Desperate For Out-Of-State Plumbers Amid Broken Water Pipe Chaos 

Texas Desperate For Out-Of-State Plumbers Amid Broken Water Pipe Chaos 

Since the deep freeze and two winter storms rolled through Texas earlier this month, disrupting power grids and knocking out power and heat to millions, homeowners and businesses have been swamped with broken pipes with the urgent need for plumbers. 

The Arctic blast swept through the state cut power to millions of customers, with estimates of 15 million people had no electricity for days as temperatures were well below freezing. Across much of the state, some homes and businesses were not properly winterized for cold weather, experienced broken water pipes and values that caused immense damage. 

Accuweather estimated last week that total damage and economic loss for the Lone Star state could be billions of dollars. 

At the tail end of the crisis when power was being restored, around last Thursday, we showed readers how internet search trends for “pipe burst” erupted across the state. 

It’s like when roofers are in high demand after a major hurricane; plumbers are being called up at once, and due to the high number of residential and commercial structures that sustained broken pipes, the state is lacking these handymen or women. 

In response, Gov. Greg Abbott has waived regulations for some plumber apprentices to work without direct supervision to help those in need. Out-of-state plumbers are being welcomed to assist in the storm-ravaged region.

Plumber Andrew Mitchell drove his family 22 hours from Morristown, New Jersey, to Houston with a truckload of pipes, according to WaPo

Mitchell and his brother-in-law recently turned-apprentice, Isiah Pinnock, worked around the clock to fix broke pipes and other damage. 

Mitchell told WaPo it was a “no-brainer” to make the quick transition to Texas. They saw an unprecedented need for plumbers on Facebook groups, along with horror stories of how broken pipes devastated many homes. Readers may recall, we documented some of the damage in a note titled “Is Texas Facing A Humanitarian Crisis?”

Mitchell is one of many plumbers who have made the journey to Texas. Out-of-state plumbers can submit an application that requires them to provide their licensing information and insurance coverage that satisfies Texas state standards. 

Frank Denton, chairman of the Texas State Board of Plumbing Examiners, said because demand is so high, his agency worked hard to approve out-of-state plumbers to meet soaring demand.

“We are certainly inviting them to come to Texas. That’s for sure,” Denton said. “As a result, we’re trying to expedite and make it as seamless as possible.”

With more than ten million people without a job nationwide- perhaps the silver lining here is that plumbers and handymen are in high demand in Texas. 

Tyler Durden
Fri, 02/26/2021 – 11:20

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Recipe For A ‘Gong Show’

Recipe For A ‘Gong Show’

Authored by Charlie McElligott via Nomura,

Bonds calm overnight, stabilizing from yday afternoon’s stunning VaR-event in Rates / USTs (particularly the belly, yikes), peaking following the 7Y auction bloodbath stress point (tailing by almost 5bps!) as Butterflys then exploded higher in unprecented 1d move fashion (indicative of RV / leveraged stop-outs), then evidencing itself further in accelerated deleveraging across “reflation” faves (longs in steepeners and TIPS BEs getting slammed / monetized with violence)…all while the MBS bleed continued its ugly recent one-way trade wider, and adding to further convexity hedging “negative feedback loop” flows in the process (TY 1m 25delta P/C skew exploded to highs since 2013)

We had spoken in the note for a long while now about tail hedgers who for months have been moving away from their 2020 play of “bear-steepeners,” which were the obvious eventual beneficiaries of the “renormalization reflation / blue wave-lite enhanced fiscal stimulus and govt spending largesse” convergence, likely then “shocking-out” legacy lazy-longs in the “Everything Duration” trade—i.e. the long-end sells off the most on enhanced “growth- and inflation- expectations”

But since late last year / start 2021, what instead were tail funds moving into?  We explained that they had more recently been loading into “bear-flatteners, with instead the FRONT-END / INTERMEDIATE SPACE then the most likely repricing points and coming un-pinned from policy adjustment, playing for a scenario where the market anticipated the Fed needing to tighten FAR ahead of schedule (moving from ’24 to ’23 and beyond), and they would do that via tapering of QE—which would disproportionately impact the belly of the UST curve

And there were other “canaries in the coal mine” too, besides the aforementioned tail-hedger flows pivoting from “bear-steepeners” into “bear-flatteners”…

  • The massive jump in Green ED$ (2023) open interest to a level that incredibly surpassed the OI of Reds (2022)—and all into a down move, meaning highly indicative of new short positions being established—was also a signal for the “pain-point” shifting

  • Even more incredibly, it is now the March ’23 (EDH3) contract which sits as the highest open interest contract across the entire Eurodollar futures board—which is STUNNING, as one would almost always assume that highest OI would be in Whites or at worst, Reds

  • The most recent 5Y auction should have been indicative of the “buyers strike” in USTs we had recently opined on in the note, with low indirects vs high dealer stuffing allocations…was a ragingly obvious “tell” ahead of further sloppy-trading into yday’s 7Y auction

  • Looking at the Nomura QIS CTA model, we had mentioned in recent weeks the acceleration into aggregate “short” signals across Global Bond futures as the near- and medium- term windows went “short” as price signals strengthened, against really just UST 10Y (TY) still having a lone 1Y window signaling “long” keeping it from going “all-in” -100% short (due to the magnitude of the pandemic / global growth shock UST rally last year)—but the violence of those moves is now LOADING MORE WEIGHTING into the 6m window which is “short” and away from the lone remaining “long” in the 1Y window…which in-turn is pulling the next level in TY to sell (and go short-er to -67%) in aggregate HIGHER and inching-closer to spot as a potential “accelerant flow” from here

  • And just this week with the help of Jack Hammond, we highlighted how we were no longer seeing dedicated Rates players interested in 30Y tails / high strike payers—but that over the month of February, then had instead begun “lining-up” to buy 10Y payers and in-, which was evidencing itself in the stratospheric rise in the left side of the vol surface over the past few weeks, and  yet another signal that the short-forwards were going to be the pain-point and play “catch-down” to rest of the longer-dated stuff

Taking a step back and to the point of the past notes then, I then tied this potential for Rates dis-ease back to the implications it could have on a cross-asset market that had been taking its cues over the past year from the direction of real- and nominal- yields and the shape of the UST yield curve…particularly with implications in Equities risk-premia / factors and thematic trades, when we have still see so much legacy-positioning crowded into Equities with heavy interest-rate sensitivity

This would only get hairier then when I noted last week that “duration- / UST- proxy” legacy longs in “Secular Growth” Tech would be at massive risk of an enormous “Gamma Unclenching” following last week’s Op-Ex, due to reduced Dealer hedging needs around expiring QQQ (Nasdaq) options positions…and into a VERY precarious paired of almost all-time high in QQQ $Delta vs a very historically signficant negative $Gamma position…and in peak-perversion, alongside a Rates / USTs VaR-event

And this is the why & how the (Bond proxy) Nasdaq dragged down the entire Equities complex yday in painful-fashion, now with QQQ $Gamma now ranking at 0.5%ile and QQQ $Delta at 0.2%ile

Source: Nomura

From here, Gamma and Delta levels that matter US Eq (and also noting it is important that we’ve now held both the Monday post Op-Ex low and ES1 50DMA on test yday):

  • SPX Gamma vs Spot is SHORT below 3877 (‘max’ short Gamma at 3750-75); Delta vs Spot would FLIP SHORT below 3814; 3800, 3850 and 3900 strikes still matter

  • QQQ Gamma vs Spot is SHORT below 328.06 (‘max’ short Gamma ~312); Delta vs Spot is SHORT below 330.57; 310, 315 and 320 are strikes which matter

Source: Nomura

And finally, regarding that whole “broken VIX” market thing I’ve been hammering for the past month +?  LOL yeah that’s still a thing, where what had been recently suppressed realized vol due to a stuffed “long gamma” and held in a chokehold at the 3900 strike is now seeing realized vol “crashing-UP” to the elevated forward implied vol we’ve spoken about ad nauseum (due to liquidity, regulatory / structural and macro regime-change reasons)

Source: Bloomberg, Nomura

The realized vol “crash-UP” of the past week (5d from 3 to 25!!!) is now crunching a ton of systematic and vol abitrageurs who’d crowded into VIX rolldown trades due to the enticingly extreme (99th %ile) steepness in VIX futs curvewhich then accordingly drove such exaggerated stop-outs in UX1 shorts yesterday as realized exploded higher (big vol outperf vs spot index move yday)….and as previously stated, this matters particularly for a risk-management market-structure (VaR, Target Vol / Vol Control) which uses volalility as the exposure toggle (and leading to mechanical “de-grossing” in a + vol impulse)

This then sees “shadow leverage” impacts in second-order deleveraging / redemption flows at ETF’s like ARK, with the past three days seeing outflows of -$848mm, -$293mm and -$433mm further leaning like de facto “short gamma”

Good news is that “IF” we can see Vol again stabilize and anybody is able to sell skew / fwd vol ever again (perhaps with help of the Fed, or more realistically if VIX ETNs take profits in longs), we could just as quickly re-leverage—i.e. we estimate that with a daily SPX change of 0% over the next month, Vol Control would mechanically see +$46B of US Eq to buy over 1m; with avg daily chg 0.5% = $37.2B to buy over 1m; and an avg 1% daily change = $16.5B to buy

To this highlighted point, we have now strung together a small number of consecutive days of Short-Term VIX ETN “Net Vega” DECREASING, which can ultimately help to alleviate some of that impossible stickiness in forward iVol which we’ve been noting, and help “tip” vol market into a “less broken” place (albeit the overall VIX ETN Net Vega remains 96th %ile since ’11)

Tyler Durden
Fri, 02/26/2021 – 11:05

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Coinbase Wants To Help Companies Follow In Tesla’s Footsteps

Coinbase Wants To Help Companies Follow In Tesla’s Footsteps

Submitted by Market Crumbs

As has been widely expected, Coinbase announced yesterday it has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission to go public.

Choosing to go public through a direct listing as opposed to a traditional IPO, Coinbase revealed in the filing that total revenue surged to $1.2 billion in 2020 from $533 million in 2019. Coinbase also shared that as of the end of last year the platform had 43 million verified users, $456 billion in lifetime trading volume and $90 billion in assets.

“The current financial system is rife with high fees, unequal access, and barriers to innovation,” Coinbase co-founder and CEO Brian Armstrong wrote in the filing.

“If the world economy ran on a common set of standards that could not be manipulated by any company or country, the world would be a more fair and free place, and human progress would accelerate.”

Coinbase listed countless risk factors such as declining cryptocurrency prices and waning confidence in the space, while also including “the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed Bitcoin, or the transfer of Satoshi’s Bitcoins” as a risk factor.

While the news of Coinbase’s upcoming listing stole headlines, it was a blog post from the day before that was of interest. With companies such as Tesla and MicroStrategy making news for adding bitcoin to their balance sheets, Coinbase’s blog post discussed the company’s capabilities for corporations looking to follow suit.

Coinbase’s Head of Institutional Sales, Trading, Custody and Prime Services Brett Tejpaul wrote that the company has held bitcoin and other crypto assets on its balance sheet since 2012, before adding the company intends to hold them because they “believe strongly in the long-term potential of the cryptoeconomy.”

This experience has helped Coinbase develop a solution for corporate companies that are interested in adding and managing digital assets as part of their corporate treasury strategy. Coinbase even put together an FAQ for corporate treasuries looking to explore their “more than white glove service.”

“Coinbase has efficiently executed nine and ten figure trades for some of the largest institutions in the world,” Tejpaul wrote. “Clients have selected us for our track record in security, sophisticated execution platform, 24/7/365 white glove service, and focus on regulatory compliance.”

By sharing its expertise with corporate clients, Coinbase is committed to helping cryptocurrencies grow by creating a digital currency exchange linked to the traditional financial system. Coinbase is looking to share its expertise in areas such as trading and custody, tax and accounting, and even talking points companies can use when adding digital assets to their balance sheets.

“Institutions across the board are building for a future that is protected from new risks; this includes building a diverse balance sheet that is adequately hedged from the traditional capital markets and monetary debasement,” Tejpaul wrote. “On the corporate side, use cases for digital assets are expanding rapidly from traditional portfolio management as an investment asset within a diversified portfolio — to accounts receivable/accounts payable, employee payroll, and commerce integration, for example.”

As Coinbase nears its debut on the public market, the company’s offerings for corporations looking to follow Tesla into adding bitcoin to their balance sheet may prove to be a large part of their business as adoption grows.

Tyler Durden
Fri, 02/26/2021 – 10:19

via ZeroHedge News https://ift.tt/2O7zbMU Tyler Durden

UMich Sentiment Slumps To 6-Month Lows As Partisan Divide Grows

UMich Sentiment Slumps To 6-Month Lows As Partisan Divide Grows

After January’s disappointing drop in confidence, analysts expected final UMich sentiment for February to rise modestly from the flash print and it did (from 76.2 flash to 76.8 final) modestly better than the 76.5 expectation, but sill below January’s 79.0 print.

  • The gauge of current conditions fell to 86.2 in February from 86.7 a month earlier.

  • A measure of expectations dropped to 70.7 from 74 in January, according to the Jan. 27-Feb. 22 survey.

Source: Bloomberg

That is the lowest headline UMich print since August.

“The worst of the pandemic may be nearing its end, but few consumers anticipate persistent and robust economic growth in the years ahead or that employment conditions will be soon restored,’’ Richard Curtin, director of the survey, said in the report.

Buying Conditions tumbled across the board…

Source: Bloomberg

The partisan divide continues to widen with Dems more positive and Reps’ confidence crashing…

Source: Bloomberg

And as investors and policy makers are watching carefully for signs of inflation, according to the Michigan Index, consumers expect prices to rise 3.3% in the next year, which was the highest since 2014 and matched the preliminary reading.

 

 

 

 

 

 

 

 

 

Tyler Durden
Fri, 02/26/2021 – 10:08

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Quant Who Called This Week’s Rout Turns Bullish, Says CTAs Are Now Covering TSY Shorts

Quant Who Called This Week’s Rout Turns Bullish, Says CTAs Are Now Covering TSY Shorts

Over the past two months, when unleashed animal spirits forced Citigroup to literally get a bigger chart measuring market euphoria, one analyst was warning that pain was coming. We are talking about Nomura’s Masanari Takada, who long ago replaced a certain “gandalf” with his market predictive skills, who first warned that a burst in 10Ys above 1.20% would spark CTA liquidations and shorting, and that 1.50% on the 10Y would emerge as a critical stop out catalyst leading to an even bigger selloff in rates coupled with a puke in broader equity markets.

Well, this morning the Nomura quant takes a well-deserved victory lap, writing that while the “rise in yields was beyond what we expected, but a risk-off turn much as we expected,” and elaborates:

The upsurge in the 10yr UST yield has proved difficult to stop, with the yield even testing 1.6% yesterday (25 February). US equity markets in general and tech & growth stocks in particular fell off steeply, throwing a tantrum in response to the rise in yields. We acknowledge that the recent rise in yields has gone beyond what we expected. However, the accompanying risk-off turn in equity markets has actually been much as we had expected, as has the behavior of speculative investors.

So far so good; what is notable is that after having been quite skeptical of recent market gains, Takada views the recent flush as a positive development – a purge of excess so to speak – and says that for three reasons, his take is that “the present risk-off phase seems unlikely to amount to more than a temporary release of pressure.”

  • First, the 10yr UST yield itself may be ready to fall back into the 1.20%–1.30% range in a reversion to the mean.
  • Second, his measure of investor sentiment is showing no sign that investors are trying to get the jump on any anticipated downturn in economic fundamentals.
  • Third and finally, there appears to be little risk of systematic funds (CTAs, risk-parity funds) deleveraging on a massive scale.

What this means practically is that if next week brings confirmation that speculators are covering short positions in USTs and that the seasonal profit-taking on long positions in Asian equities has started to abate, “we would expect the reflation trade to get another lease on life in the run-up to Easter.” For this to happen, he says that the Nikkei 225 would need to hold above 28,600, while the DJIA would need to hold above 30,500.

* * *

His bullish views aside, Takada then dips into the weeds of this week’s furious rates selloff, and writes that the sudden evaporation of liquidity in the 10Y “suggests that longer-term investors have capitulated”:

The idea of the 10yr UST yield quickly establishing itself in the 1.5%–1.6% range seems to have impressed the market as being self-contradictory, as the scenario itself is a risk-off factor. The US equity yield gap (calculated here as the difference between the S&P 500 earnings yield and the 10yr UST yield) has now moved in the 1.50%–1.75% range where the critical dividing line lies, making stocks look relatively expensive. Equity markets seem to have immediately adjusted downward so as to restore some kind of balance with bond yields. In terms of their consistency with equity markets, bond yields have gone about as high as they can reasonably go.

This is good news for all those rates bulls who got steamrolled in recent weeks when the 10Y yield exploded…

… because in terms of supply and demand, “UST short-covering signals are starting to flash, particularly among fleet-footed investors. Speculative swing traders that had been simultaneously accumulating short positions in US equities and US bonds in the lead-up to the end of February may be determining that they have accomplished their mission. A prime example of such swing traders are the investors tracked by the SG Short Term Traders Index (NEIXSTTI), which have an average investment horizon of less than 10 trading days.”

But what may be the most important observation made by Takada is that trend-following CTAs also appear to have swung to covering short positions in 10yr UST futures (TY). As we have discussed extensively, CTAs had been unobtrusively selling Treasury futures but they reversed course late in the day yesterday (25 February). “They now seem to have begun closing out short positions”, Takeda concludes.

According to Nomura, rhe swift upsurge in UST futures market volatility was the proximate trigger for CTAs’ swing to covering short TY positions and they suspect “that CTAs have organically opted to avoid taking their selling any further out of a recognition that the market for TY is behaving irregularly.”

We have our own rule of thumb which says that when CTAs suddenly call off that attack—that is, when they start taking profits not long after entering into a trade—it is usually because longer-term investors throwing their weight around have shaken up the normally orderly quantitative rules of price formation. And indeed, the TY market has recently sunk into a downward spiral of rising volatility in tandem with the evaporation of trading liquidity (which tends to amplify the price impact of a given volume of trading). Among other factors, we suspect that hedge selling on a large scale by longer-term investors has sucked liquidity out of the market in a way that has caused yields to momentarily rise by more than they would have otherwise.

In any case, Nomura thinks the panic selling of USTs by longer-term investors “has probably passed its peak” and expects the UST futures market (among others) to regain some semblance of order next week as trading liquidity returns. This means a sharp drop in yields as the bank estimates “that the 10yr UST yield is currently about 30bp above the fair-value yield implied by trend-following strategies. Short-covering by CTAs and other speculators for the sake of locking in profits may serve the purpose of reeling the 10yr UST yield back in.”

Finally, what does all this mean for stocks?

Here, Nomura is surprisingly complacent, noting that “nothing seriously irregular appears to be happening in global equity markets, either. Our measure of equity market sentiment has fallen to around the neutral line at zero, but investors do not seem to be pricing in any unexpected downturn in fundamentals. As discussed in several previous editions of this memo, there is a seasonal tendency for investors to take profits on long positions in Asian equities right about now (through early March). The steep rise in UST yields is undeniably exerting a drag on Asian equity markets, but we would advise against reading too much into what is happening.”

Perhaps responding to our observations on possible risk parity deleveraging published yesterday, Takada writes that in terms of supply and demand for equities, “some observers appear concerned about the threat of de-leveraging by systematic funds (CTAs, risk-parity funds).” However, Nomura thinks that systematic investors have thus far done no more than the minimum required trimming of their long positions: “We think we are still some distance from having to worry about a systematic, unbroken run of selling serious enough deepen and prolong this risk-off phase.”

As such, the bank sees little risk of significant de-leveraging by risk-parity funds. The parallel declines in bond markets and equity markets (representing a rise in cross-asset volatility) do tend to work against risk-parity funds and other such volatility control funds, and we are seeing some cases of funds choosing the “sell everything” option (simultaneous selling of both equities and bonds). However, Nomura estimates that the leverage ratio at risk-parity funds is still low. “In this respect, the current situation looks quite a bit different from the 2018 VIX shock and the 2020 COVID-19 shock. We see little evidence that risk-parity funds are having to hastily ratchet down their leverage.”

One final reason to be bullish on stocks is also the most obvious one: it’s only a matter of days before Biden’s $1.5 or so trillion stimulus is released with the bulk of the proceeds entering stocks, just as we have seen on previous occasions.

Tyler Durden
Fri, 02/26/2021 – 10:04

via ZeroHedge News https://ift.tt/3dVkCat Tyler Durden