Month: September 2024

Next week, our friends at SpotGamma are launching an extremely useful trading dashboard called Trace, which will bring Wall Street-level analytics to ordinary traders: analyzing dealer gamma exposure on a minute by minute basis, the application will provide real-time insight on key market levels, including zones of support, resistance, and volatility, hinting at potential breakout or breakdown levels, and warning of potential major moves in the immediate future.

Here is an example of what to expect.

As SpotGamma‘s Brent Kochuba notes, post-FOMC we find the S&P in a very unique position: negative gamma to the upside.   This implies that the big positions are traders long SPX calls, which places dealers in a chasey, negative gamma stance (hence today’s meltup). 

As regular readers are aware, negative gamma implies dealers are buying futures as the SPX moves higher (and alternatively selling or shorting when the SPX drops). Clearly yesterday’s FOMC & its 50 bps cut has equity momentum focused on the upside, with a big target at 5,750.

Negative gamma (red) is depicted in the SpotGamma Trace map below, which uses a proprietary dealer positioning estimate to forecast SPX dealer hedging flows. Currently we model dealers having large short call positions at 5,675 & 5,800, which can be seen as red strikes on SpotGamma’s Trace map (left side).

For today, 5,750 is a short term area of “local” positive gamma, which is depicted in blue. Note that the blue is concentrated into 4PM, but disappears post-4PM. This is because the material positive gamma for today is driven by 0DTE positions, which expire at the close.

Looking ahead, this upside equity momentum plays into a massive 9/20 triple witching expiration. Into Friday & Monday, this expiration could force the closing and rolling of long call positions, which could temporarily stall upside equity momentum.

Fast-forwarding from this morning, a mid-day update shoes that a band of positive gamma emerges above 5,700, which implies market support at that level. As SpotGamma notes, much of this positive gamma was driven by 0DTE positions – including a 4k lot 0DTE call seller at 5,735.

These supportive dealer positions are showing the SPX tracing a path up into 5,735  for the close (which is the white zone on the chart at 4pm ET).

What is unique about Trace is that unlike SpotGamma’s previous offering, which showed intraday Delta flow, we can now add a layer of dealer gamma as it also changes in real-time, which to many advanced traders is the holy grail of flow analytics.

We will be watching Trace closely to see how positions shift into and out of OPEX, as we continuously update positions throughout the trading day(s).

Readers who want to get an advance look at the features of Trace, which will be officially launched next Tuesday, can do so at SpotGamma’s website here.

Authored by Connor O’Keeffe via The Mises Institute,

On Sunday, for the second time this election cycle, a man was able to get close to Donald Trump with a rifle. The former president was golfing when Secret Service agents spotted a rifle barrel poking out of some bushes just off the course, near a hole Trump would soon play. Agents fired on the suspect, causing him to flee as Trump was rushed off the course. Shortly after, the man was apprehended by police.

A scoped rifle, two backpacks, and a video camera were recovered from the woods where the suspect was hiding. The FBI said it was investigating the incident as an attempted assassination. The suspect, Ryan Routh, has so far been charged with two gun-related crimes. 

While there are clearly some major differences between this incident and the first assassination attempt in July—when Trump was shot in the ear during a rally in Butler, Pennsylvania—the fact that an armed man was able to get so close to the former president and remain undetected until the last moment for the second time in two months is a big deal.

Yet the reaction from the political establishment and the establishment media has been notably different. Back in July, there was broad agreement within the establishment that they needed to “lower the temperature.” This week, the rhetoric has changed. While most go through the motion of denouncing political violence, establishment figures and outlets have downplayed the assassination attempt, obscured the attempted shooter’s political ideology, and even blamed Trump himself for provoking people into trying to kill him.

It’s not surprising that the political establishment and their friends in the media want to dismiss or play down what happened on Sunday. Because Ryan Routh, the suspect, appears to have been motivated by the exact narrative of the war in Ukraine and the prospect of a second Trump term that the establishment is trying so hard to get the American public to accept. 

In early 2022, after Russia invaded Ukraine, the American establishment went into overdrive to whitewash all the developments that had led to the invasion. They instead defined Vladamir Putin as an expansionist tyrant bent on conquering all of Europe simply because he hates freedom and democracy.

Because of unearthed social media posts, numerous interviews with major outlets like The New York Times, and a self-published book, we can clearly see that Routh was completely convinced by the establishment’s characterization of the war. So much so that in the months after the war broke out, Routh traveled to Ukraine to try and join the fight. He was turned away, apparently due to his age, but stuck around to try and recruit other foreigners to join Ukraine’s ranks.

In one interview with Newsweek, Routh laid out how he views the war:

To me, a lot of the other conflicts are gray, but this conflict is definitely black-and-white. This is about good versus evil. This is a storybook— you know, any movie we’ve ever watched, this is definitely evil against good. … It seems asinine that we have a leader and a country that does not understand the concept of being unselfish, and being generous, and being kind, and just the basic moral values that are required by human beings these days. It blows my mind.

That is exactly how the pundits and politicians who make up the American political establishment want us thinking about this war. Not as an unnecessary geopolitical conflict that escalated for decades before erupting into the conventional war we see today, but simply as a black-and-white showdown with an evil country.

Importantly, as can be seen in the opening to Biden’s State of the Union address from earlier this year, the establishment has explicitly conflated this threat abroad with what they call the threat at home—meaning Trump and the MAGA movement. So if a disturbed person like Ryan Routh was convinced that he would be a hero if he went and fought the evil Russians in Ukraine only to be turned away because of his age, it’s not much of a jump to expect that he concluded he could still be a hero if he set his sights on, what he was told, is the same threat at home.

That’s not to say that the establishment voices pushing the simplistic narratives that captured Routh directly incited his assassination attempt – although it would under the standard they apply to Trump and January 6. Only that the establishment is using misleading and sometimes wholly fictional narratives about the war in Ukraine and the populist anger directed toward them to try to scare us into voting in ways that support their interests. It shouldn’t surprise anyone when these contrived, simplistic, overly dramatic narratives lead some people to decide voting isn’t enough.

By Michael Every of Rabobank

As a central banker, you’ve failed to communicate when you prompt our Fed watcher, Philip Marey, to quote Orwell back at you. After the FOMC cut 50bps to 5.00%, as only in past crises, yet Fed Chair Powell said he wasn’t behind the curve, just “recalibrating”, and the US economy is “good”, Philip’s retort was:

“Really? A 50bps cut as a message that the economy is strong? So, if they cut by 75bps the economy is booming? This sounds like something out of George Orwell’s 1984: WAR IS PEACE; FREEDOM IS SLAVERY; IGNORANCE IS STRENGTH.”

The most benign interpretation is Philip’s view of “stag” not “flation” as the guide. Even so, going 50bps when the economy is strong — housing starts and building permits both leaped pre-Fed– may be wasting valuable ammunition: would a sudden deterioration mean a 75bps cut?

Alongside that “grifty, shifty, not nifty” 50 were revised forecasts. Unemployment at 4.2% is expected to rise to 4.4% in Q4 and 2025 before going back to 4.2% again: optimistic? Inflation for 2024 and 2025 was revised down, and in 2026 will be at 2.0%, as also seen in June: optimistic? GDP growth for 2024 was revised downward very slightly to 2%, but out to 2027 was unchanged: optimistic?

Yet we got big changes in the dot plot. End-2024 Fed Funds dropped from 5.1% to 4.4%, meaning 25bps cuts in November and December, so sing ‘The First Cut is the Steepest’; 100bps of cuts are seen in 2025; and 50bps in 2026. That means the long-run floor for Fed Funds is 3%. Indeed, Powell’s Q&A stressed the neutral Fed Funds rate was probably higher now than in the past, and he wasn’t expecting to return to New Normal lows.

If cutting 50bps and saying all is well was problematic for Fed credibility, so are its happy projections for markets that have already priced a lot of ‘BAD IS GOOD’ news in. 10-year yields dropped on the Fed decision then rebounded as Powell spoke, and at time of writing were 11bps off their initial post-cut low at 3.73%. The dollar slumped, then retraced losses.

A less benign interpretation for 50bps is politics. “In central banking? What next: politics in economics?!” However, Philip adds Powell had incentive to deliver a big pre-election cut because Trump won’t reappoint him as Fed Chair and may remove him prematurely; his only chance of another term is to please Harris. Yet a 50bps cut “is taunting former and possibly next President Trump. This could have serious repercussions next year. The sole dissenter, Michelle Bowman, may just have improved her chance of becoming the next Fed Chair.” Underlining that dynamic, there was post-cut praise from one Democrat for “following the data” (like we “followed the science”); and criticism from Republicans and Trump, who stated, “The economy would be very bad, or they’re playing politics, one or the other, but it was a big cut.” Things could change bigly for the economy, inflation, and the Fed come November, then 2025.

As warm-up, and following the acerbic tweet that “The Fed is expected to cut credit card interest rates today from 20.78% to 20.28%”, Trump, after what initially looked like a bomb threat, and declaring his policies at campaign events, is now promising to temporarily cap credit card interest rates at 10%. How would this work? No details. Could it happen? No idea. Would it raise US demand far more than the Fed rate cut? No denying it – and bigly. But, hey, let’s talk more about the Fed and that 50bps and what it means for asset prices.

“WALL STREET IS MAIN STREET”

Getting far fewer headlines, Brazil raised its Selic rate 25bps after the Fed cut, moving from 10.50% to 10.75% as expected, and signalling more hikes to come due to upside inflation risks. Does that make Brazil a global outlier or a thought leader? Only time will tell, but for the Fed getting to a first cut was always the easy part, even if they have messed it up. The harder part was always going to be ensuring they don’t get a 1970’s style rebound in inflation once “RATE CUTS!” start to flow into asset prices, commodities, and still-hot services. Our US election base case already assumes this happens via tariffs; other things threaten similarly.

As I concluded yesterday: “back to waiting for the Fed. Or the next geopolitical bang.” Within hours, walkie-talkies, radios, phones, and solar heating systems started exploding across Lebanon and Syria in what is almost certainly a follow-up attack by Israel after yesterday’s “Paging Mr. Terrorist” episode. Reportedly, it was use-it-or-lose-it for Israel as the plot was close to being discovered. The tactical imperative would be a major military follow-up vs. Hezbollah, which the Israeli war cabinet has approved even at the risk of triggering full-blown war. Hezbollah leader Nasrallah is expected to speak today; his recent speeches have tried to deescalate, but will this one?

Of course, the Fed isn’t considering the Middle East at all; nor what I wrote yesterday about the economic implications of the exploding pager incident: national-security bifurcation of supply chains, implying potential moves with dot plot impact within the dot plot’s forecast timeframe.

However, the White House is considering the region too much given the State Department just refused to redesignate the Houthis attacking Red Sea shipping as terrorists, as this would be unfair on ordinary Yemenis (whom the Houthis shoot, starve, and enslave). Perhaps “terrorist” is not the correct definition – it should technically be “pirate”; but even there the US has past form for swashbuckling, not buckling. Today, critics point out a US inverse Vegetius –“If you want war, prepare for peace”– won’t re-open Suez or present a united front against Iran. Others point out that Tehran attempted to pass hacked Trump campaign info to the then Biden campaign: so that’s where they got “no tax on tips” from?

Ukraine attacked a huge Russian ammo depot in Toropets, which didn’t get the same media headlines, but underlines how rapidly output from military-industrial supply chains disappears.

As mentioned here, the CEO of Flexport notes: “The biggest wild card in the presidential election that nobody’s talking about? The looming port strike that could shut down all East and Gulf Coast ports just 36 days before the election.” That wild card also applies to the Fed.

If the International Longshoremen’s Association representing 45,000 dockworkers strikes for the first time since 1977, US businesses could miss the key Black Friday/Cyber Monday peak sales period. Port trade is around $2.12trn, and 72% would grind to a halt, a one-day strike reportedly taking six days to recover from, a one-week strike in October creating bottlenecks until mid-November, not factoring in Red Sea disruptions caused by the not-terrorist Houthis. If goods then shift to the US West Coast ports ‘In Deep Ship’ during Covid, the claim is Asia-US freight rates could leap to $20,000, far above the peak seen in the last supply-chain crisis. That would mean firms with low margins might opt not to import at all, creating empty shelves.

While the Taft-Hartley Act gives the president the power to impose an 80-day cooling off period to delay a strike, Biden has said he doesn’t intend to use it here given the impact doing so could have on union votes; that as the Teamsters refused to endorse a presidential candidate despite its traditional Democrat support, as the majority of its members polled back Trump. On the other hand, the kind of strike described above would hardly help Harris come 5 November. So, what’s it to be?

“VOLATILITY IS STABILITY”

“Orwell, at least we got a 50bps cut.”

The last two days saw so many pagers, two-way radios, and electronic devices explode – literally thousands – that there are fears an electronic with a bomb in it could inadvertently make its way onto a passenger flight. The country’s state news broadcaster NNA is reporting that Lebanon’s director general of civil aviation has banned all passengers from carrying pagers and walkie-talkies on board any aircraft.

Airport security at Beirut Rafic Hariri International Airport will search for and prevent any pagers or two-way radios from being in cargo, checked, and carry-on luggage. The rule has taken effect immediately.

Following the Tuesday and Wednesday blasts, believed the work of Israeli intelligence, at least 37 have been killed and over 3,250 others injured. Reports say that even laptops and cell phones exploded in some instances. Lebanon’s Health Ministry on Thursday said there were 608 injured in the Wednesday blasts alone.

Some analysts are currently expressing that a ban on pagers and walkie-talkies could be something that spreads beyond airports in the Middle East. There were so many blasts all across Beirut and Lebanon, with some reported in Syria too, that the concern is a rigged pager could easily make it on a flight, possibly with someone sitting next to a window. 

The EU’s Josep Borrell yesterday highlighted the “indiscriminate” tactic of the Israeli operation, while the Kremlin condemned it as “international terrorism”.

While the majority of dead and injured appear to be Hezbollah operatives, several were civilians including children and medical workers. Many devices blew up inside homes and apartment buildings. A regional report summarizes:

On Tuesday, some 4,000 pagers exploded over the course of an hour. A day later, more explosions of handheld devices, including walkie-talkie radios, mobile phones, laptops and even solar power cells, took place.

Abiad said that more than 300 patients are in intensive care, and 400 require surgeries and other treatments.

The explosions on Wednesday involved “larger and bigger devices that caused more damage”, he added, resulting in wounds that involve “internal bleeding, injuries to the abdomen and other parts of the body, including brain haemorrhages”.

A local medical professional, Dr Ghassan Abu-Sittah, described to Sky News there has been a huge number of amputations as a result of the attack. “Almost exclusively the pager explodes in the hand while people are trying to read the message, so we’re getting mangled hands and penetrating injuries and blast injuries to the face and the eyes,” he said. He said many of the victims “will end up with some permanent disability.”

“We are all afraid,” Beirut resident Rana Bahlawani told Al Jazeera. “Everyone is living day by day as no one knows what to expect.” The capital’s popular seaside promenade, the Corniche, has reported to be empty throughout Thursday.

Russia has accused the West of a double standard after the US has refused to condemn the pager attacks, calling it “international terrorism”..

Russian Foreign Ministry spokeswoman Maria Zakharova commented on the pager blasts in Lebanon for RT, labeling the attack as international terrorism. She added that the world should closely monitor the West’s reaction. pic.twitter.com/bQXkt7hI0s

— RT (@RT_com) September 19, 2024

One prominent X account of a Lebanese user living in the West wrote: “My cousin in Beirut messaged me saying she disconnected her baby monitor and other household appliances and devices. Our people are unaware of which devices are safe and which are not.” A feeling of paranoia, chaos, and fear has gripped much of Lebanon.

Another commenter, Marc Lynch, said of the pager operation, “Israel’s attack on Hezbollah phones was technically brilliant, sure. It was also absolutely guaranteed that phones would explode in densely packed civilian areas. Markets, malls, taxis, buses. Just look at footage from hospitals. In any other context we’d call that terrorism and it is here too.”

Meanwhile, the NY Times strikes again:

“Noncombatants were also drawn into the fray.”

NYT is trying really hard to avoid saying Israel killed civilians in Lebanon attack. pic.twitter.com/wY2719aZfT

— Assal Rad (@AssalRad) September 19, 2024

Israel’s military has just announced that IDF chief Lt. Gen. Herzi Halevi has “approved operational plans as part of the continuation of the war” in Israel’s north against Lebanon’s Hezbollah. Exchanges of fire grew overnight and as of Thursday afternoon heavier airstrikes on southern Lebanon have been reported, as well as more than 40 rockets fired from Lebanon into Israel.

Local Hebrew media says several Israelis have been wounded after a missile fired by Hezbollah hit a vehicle in northern Israel. Israel says the goal of the new escalated anti-Hezbollah operation is to allow the return of the 80,000 residents of the north who have been forced out of their homes for almost a year.

The Chief of the General Staff, LTG Herzi Halevi, recently completed approval of plans for the northern arena. pic.twitter.com/B8VEZMZC9T

— Israel Defense Forces (@IDF) September 19, 2024

“We are very determined to create the security conditions that will return the residents to their homes, to the communities, with a high level of security, and we are ready to do all that is required to bring about these things,” the IDF stated.

The IDF has indicated that a new major operation has begun. Indeed it appears the feared bigger Lebanese war has come:

“The IDF is currently striking Hezbollah targets in Lebanon to degrade Hezbollah’s terrorist capabilities and infrastructure.”

“For decades, Hezbollah has weaponized civilian homes, dug tunnels beneath them and used weapons as human shields—having turned southern Lebanon into a war zone,” it said.

It is likely that the rate of airstrikes and mortar fire will rise throughout the day into the night. The major Israeli strikes on southern Lebanon have been confirmed through several circulating social media videos.

⚡️Zionist strike on south Lebanon pic.twitter.com/xyKugbr37m

— War Monitor (@WarMonitors) September 19, 2024

Hezbollah chief Hassan Nasrallah is currently addressing the pager attack crisis of the last two days which has left at least 37 dead and hundreds wounded. The televised speech is being closely followed by Lebanese and Israelis and the West alike.

He described that Israel “targeted thousands of pagers in one go” on Tuesday and Wednesday. “This is an act of war and a declaration of war by Israel on the Lebanese people,” Nasrallah said, further describing the attack as “an effort to kill 5,000 Lebanese people within minutes.” He acknowledged that Hezbollah suffered a ‘major and unprecedented’ blow but also emphasized that over much of the past year Israel has “lost the north” of its own country and the settlers are “screaming” in pain and danger.

Nasrallah says many of the pagers were out of service, turned off or stored away. He repeats that Israel’s wilfull intent was to kill thousands of Lebanese people within minutes.

He emphasized that Hezbollah will not stop its operations against Israel “no matter what” so long as the Gaza operation continues.

Watch Live:

developing…

With Housing Starts and Building Permits jumping exuberantly on the heels of declining mortgage rates (and mortgage applications spiking), today’s existing home sales data for August should be an interesting barometer for just how crazy The Fed’s decision to slash rates by 50bps was (with home prices at record highs and rising fast).

Perhaps shocking to some, existing home sales disappointed in August, dropping 2.5% MoM (vs -1.3% MoM exp) leaving sales down 4.22% YoY.

Source: Bloomberg

There hasn’t been a positive YoY sales comp since July 2021 as the existing home sales SAAR dropped to its lowest since Oct 2023 (just a smidge above the weakest since 2010)…

Source: Bloomberg

“Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months,” NAR chief economist Lawrence Yun said in a statement.

Interestingly , mortgage applications are soaring higher on the back of tumbling mortgage rates (at their lowest since Sept 2022)…

Source: Bloomberg

Which were enabled by The Fed jawboning the new rate-cutting cycle (and now actuating its crisis-level 50bps cut).

The trouble is, home prices are already at record highs as the rate-cutting cycle begins. The median sales price, meantime, increased 3.1% in the year through August, to $416,700. That was the highest for any August in NAR data.

Source: Bloomberg

A lack of inventory had been a notable headwind, with many would-be sellers unwilling to put their homes on the market and give up their sub-3% mortgage rates. This so-called lock-in effect has reduced sales by about a million homes a year, Yun has said.

“The rise in inventory – and, more technically, the accompanying months’ supply – implies home buyers are in a much-improved  position to find the right home and at more favorable prices,” Yun added.

“However, in areas where supply remains limited, like many markets in the Northeast, sellers still appear to hold the upper hand.”

In August, NAR’s figures showed 60% of homes sold were on the market for less than a month, compared with 62% in July.

And 20% sold above the list price, compared with 24% a month earlier.

First-time buyers made up 26% of purchases, matching an all-time low.

Individual investors or second-home buyers purchased 19% of homes, compared with 16% a year ago.

Who will get the blame for lack of affordability now?

Source: Bloomberg

If Trump wins, the answer to that is easy. If Kamala wins, it is corporate greed, durr (and on a side note, prices are soaring alongside inventories… not exactly helping the case for Kamala’s ‘Make Housing Affordable Again’ plan!)

The iPhone 16 is set to hit Apple stores this Friday. Ahead of the launch, the flight tracking website FlightAware is tracking a fleet of UPS air freighters loaded to the brim with new iPhones. This mode of rapid delivery from China to US distribution centers is aimed at meeting the preorder surge, given the time-sensitive nature of these shipments. However, Apple’s decision to rely on fuel-guzzling jumbo jets instead of more eco-friendly container ships raises serious questions about its commitment to sustainability. 

“Once you’ve received your UPS tracking number from Apple, use this page to figure out what flight is carrying your iPhone or Apple Watch. The “departure scan” in your UPS tracking should match the departure time for a flight listed below,” FlightAware wrote on its website. 

FlightAware’s live tracking map shows a fleet of UPS jets loaded with iPhones taking off from Shenzhen Bao’an International Airport—formerly Shenzhen Huangtian Airport—located in the city of Shenzhen in South Central China’s Guangdong province and Hong Kong International Airport. The final destinations are Anchorage International Airport in Alaska and Louisville International Airport in Kentucky. 

In light of this week’s incidents involving exploding pagers, it’s time to ask the question:

Did Mossad inspect them first https://t.co/NmNN8l8KRw

— zerohedge (@zerohedge) September 19, 2024

FlightAware’s activity log of the UPS jets.

Two reports this week…

• Apple Slips On Preorder Analysis Showing Weak iPhone 16 Pro Demand 
• No AI-Fueled Upgrade Supercycle? Apple iPhone 16 Discounts Offered At Major Chinese Online Retailers

… suggest soft demand for more expensive iPhone models. 

Authored by John Haughey via The Epoch Times,

A legal battle over the future of a website’s election prediction market is set to continue on Sept. 19, when an appeals court hears the case of Kalshi v. CFTC, a decision that could reshape how Americans engage in political discourse.

The three-judge U.S. Court of Appeals for the District of Columbia Circuit will be considering whether individuals should be permitted to purchase contracts to participate in predictive markets that trade on the outcome of elections. If so, should these markets be regulated like other financial exchanges and commodity markets or as a form of gambling?

New York-based KalshiEx LLC argues that the elections market section of its website is a derivatives trading platform where participants buy and sell contracts based on projected outcomes of events, such as elections, and should be regulated no differently than grain futures that investors purchase as hedges against price fluctuations.

These markets provide a “public benefit” by gauging public sentiment in real-time, Kalshi maintains, a valuable guide for policymakers, politicians, and pundits in charting the public pulse.

The Commodity Futures Trading Commission (CFTC), which regulates the U.S. derivatives markets, argues that Kalshi’s platform blurs the line between commodity trading and gambling, and should not be viewed the same as futures contracts.

The commission maintains that Kalshi’s market puts it in a position to be a de facto elections regulator, which it is not designed to be. Such contracts provide no “public interest” and, in fact, pose a risk to electoral integrity and could potentially incentivize manipulation and fraud, the CFTC argues.

Those conflicting contentions are the core of what the appellate panel will deliberate on before it decides to lift or sustain its stay on U.S. District Judge Jia Cobb’s Sept. 6 ruling in favor of the platform. Judge Cobbs found that the defendant, CFTC, exceeded its statutory authority as a Wall Street regulator when it issued a September 2023 order stopping Kalshi from going online with its market because it is a “prohibited gambling activity.”

Judge Cobbs on Sept. 12 also denied CFTC’s motion for a stay while it mounts an appeal.

After the initial stay request was rejected, Kalshi wasted little time getting its market online. Attorneys for the CFTC were also busy, and within hours secured a stay from the appeals court, setting the stage for the 2 p.m. Sept. 19 hearing.

In the brief time before trading was paused “pending court process” late Sept. 12, more than 65,000 contracts had been sold on the questions, “Which party will control the House?” and “Which party will control the Senate?”

The appellate panel will essentially be engaged in a technical legal debate over the definition of “gaming” and “gambling,” and how they would apply, in this case, to any potential regulation.

In its Sept. 13 filing calling for the stay to be lifted, Kalshi rejected CFTC’s definition that trading on election prediction markets is “gaming.”

“An election is not a game. It is not staged for entertainment or for sport. And, unlike the outcome of a game, the outcome of an election carries vast extrinsic and economic consequences,” it maintains.

The CFTC said in its Sept. 14 filing that because “Kalshi’s contracts involve staking something of value on the outcome of elections, they fall within the ordinary definition of ‘gaming.’”

‘Horse Has Left the Barn’

Regardless of how the panel rules, “The horse has left the barn,” said data consultant Mick Bransfield, of Pittsburgh, Pennsylvania, who trades on Kalshi’s website and purchased a “Senate control” contract.

There are ample opportunities to place election wagers on offshore websites such as New Zealand-based PredictIt, which imposes strict spending limits; on websites such as Polymarket, a New York-based platform that cannot legally accept wagers from within the United States; or the American Civics Exchange, where businesses and high net worth individuals can purchase “binary derivative contracts” through proxies tied to policy and electoral outcomes as hedges against “unpredictable electoral, legislative, and regulatory events.”

Predictit.org/Screenshot via The Epoch Times

“Elections predictive markets have been around since 1988 in the United States,” Bransfield told The Epoch Times, adding that the issue is “more nuanced than people realize.”

That nuance, said Carl Allen, author of The Polls Weren’t Wrong, is that Kalshi’s platform would be the first federally regulated U.S.-based predictive elections market open to all individuals without spending limits.

“To me, the question is not should it be regulated, the question is how? I think that is where we are,” Allen, who writes about predictive markets on substack, told The Epoch Times.

“It’s challenging to get your arms around this because there are so many organizations involved with it,” he said. “We’re reaching a really interesting point with sports betting going from totally disallowed, except for in Vegas and a few brick-and-mortar [stores], to being everywhere; crypto currency drastically growing; ETFs [Exchange-Traded Funds] getting big;” and Kashi attempting to open a predictive market on election outcomes.

Prediction market trader and Kalshi community manager Jonathan Zubkoff, who also writes about predictive markets and wagering, said the CFTC’s claim that elections markets are betting websites is mistaken.

“It’s not the same as sports betting” where there is “a line posted and billions of dollars are traded against it across different time zones,” prompting the odds to fluctuate, he told The Epoch Times.

“If you are looking at a line [to bet] on a Friday night for a Sunday game, there’s no hedge whatsoever.”

In elections markets, “there actually is a hedge” that gives people an opportunity to put money where “their bias is,” Zubkoff said.

Coalition For Political Forecasting Executive Director Pratik Chougule said another difference between sports betting and other types of gambling and predictive elections markets is that “unlike many other forms of speculation, the wagering here has a real public interest benefit. These markets inform in a way that is very beneficial.”

In October 2023, Chougule told The Epoch Times that elections markets reflect predictive science, citing numerous studies documenting that political betting websites are better indicators of public sentiment than any other measure except the election results themselves, including a study by Professor David Rothschild of the University of Pennsylvania’s Wharton School of Business.

“Polling is very unreliable,” he said. “And so we basically believe that, in order to promote good forecasting for the public interest, we believe that political betting is one solution to that because, at the end of the day when you have people wagering their own money on the line, that creates incentives that are very hard to replicate through other ways.”

Chougule, who hosts the podcast Star Spangled Gamblers, believes that, while not always accurate, election predictive markets are the best gauge of public sentiment in real-time.

“When they make a prediction, they are putting their money on the line,” he said. “It’s a pretty clear barometer of how an election is going.”

‘Gray Area’ Needs Rules

Chougule said he was “pessimistic” that Kalshi’s elections market would be online by Nov. 5.

“I think when you look at the landscape at the federal and state level, at Congress, at federal agencies, [there is] fear and skepticism and concern about what widespread elections betting could mean for our democratic institutions,” he said. “I don’t agree but it’s a fact.”

Bransfield said he was surprised by Cobb’s ruling against the regulators. “It did not seem the district court would side with Kalshi after the oral arguments in May,” he said. “The judge referred to elections contracts as ‘icky.’ That gave me the assumption that it would be unpalatable to her.”

But there is reason to be deliberative, Bransfield said.

“We should always be concerned about the integrity of our elections but these elections contracts have been around for so long,” he said, noting that more than $1 billion in 2024 U.S. elections contracts have already been purchased in the United Kingdom alone. “All those concerns already exist and have for a long time.”

Certainly, Allen said, “there are a lot of downstream effects that we are going to see from this,” but some fears are unfounded.

Unlike a sports contest where one player can affect the outcome, it would take a widespread concerted effort to “fix” an election, he said. Nevertheless, there is “potential for unscrupulous actors to release a hot tip” that could affect predictive markets.

Allen cited speculation about when former South Carolina Gov. Nikki Haley would end her presidential campaign during the Republican primaries, whether Robert F. Kennedy would pull the plug on his independent presidential campaign, and who both parties would pick as their vice presidential candidates as examples.

“A handful of people knew about [vice president picks] before it was public. It would be financially beneficial for someone to throw a couple [of] thousand dollars into that market,” he said.

Prime Minister Rishi Sunak (C) and his wife Akshata Murty (in yellow) at the launch of the Conservative Party general election manifesto at Silverstone race track in Northamptonshire, England, on June 11, 2024. James Manning/PA

The CFTC, in its challenge, noted that bets had been placed on the July 4 British general election date before Prime Minister Rishi Sunak officially announced it in May.

“It is very hard to see this gray area without some rules,” Allen said.

“Claiming that betting in elections is going to lead to issues with democracy and election integrity is one of the most ridiculous things I ever heard,” Zubkoff said, calling them “elections integrity dog whistles.”

Critics “are sort of lashing out,” he continued.

“It is a total misunderstanding. As someone who has traded in these markets, I haven’t seen anything that remotely constitutes a threat” to election integrity.

Zubkoff said Kalshi “very clearly has the better arguments” and cited the Supreme Court’s Chevron repeal as momentum that “bodes well for the future” of predictive elections markets.

He believes the appellate court will deny CFTC’s motion to extend the stay, and placed the odds of Kalshi getting a “yes” to go online before November’s elections at 60 percent.

Zubkoff noted that just like predictive elections markets, those odds could change in real-time during the hearing. “I could give you much better odds while listening to the hearing just based on the questions the judges ask,” he said.

Allen said the odds are “better than 60-40” that Kalshi will win its case, before qualifying that prediction with the ultimate hedge: “I don’t know how much money I would put on that.”

Rumors from Bloomberg reporters earlier this month about Intel considering a divestment in Israeli autonomous driving firm Mobileye Global has been debunked by the chipmaker this morning. 

“As the majority shareholder in Mobileye (MBLY), Intel has an unwavering focus on value creation and are excited about the future of its business,” Intel wrote in a statement. 

Intel said, “We currently do not have any plans to divest a majority interest in the company,” adding, “By providing Mobileye with separation and autonomy, we have enhanced its ability to capitalize on growth opportunities and accelerate its path to creating even greater value. We believe in the future of autonomous driving technology and in Mobileye’s unique role as a leader in the development and deployment of advanced driver assistance systems (ADAS).” 

In 2017, Intel bought the Israeli firm for a little more than $15 billion. By 2022, Mobileye debuted on the public markets via an initial public offering in New York. Shares are down 73% on the year, and down 45% from the IPO price.  

Mobileye shares are up 7.5% in premarket trading following the news from Intel. 

Mobileye’s float is 12.7% short, equivalent to about 11.7 million shares. Traders have been unwinding bearish positions since late April.

About a week ago, Goldman’s Mark Delaney told clients, “We are buy-rated on MBLY shares. Our 12-month price target is $24, which is based on 30X applied to our Q5-Q8 EBITDA estimate (ex. SBC).” 

Earlier this week, Intel CEO Pat Gelsinger informed employees about the chipmaker’s next steps in an ambitious turnaround plan, including a deal with Amazon, a pause in European plant expansion, and thousands of more layoffs. 

Authored by James Rickards via DailyReckoning.com,

We’re still trying to process the latest assassination attempt on Donald Trump, which took place on Sunday in West Palm Beach. But while that’s important to dissect as the election gets closer, it’s important to consider a development I’ve been warning about for over two years.

President Trump has long been an opponent of central bank digital currencies (CBDCs) or as I call them Biden Bucks. (Now that Biden is essentially out of the picture, maybe I should rename them Kamala Bucks.)

I called them “Biden Bucks” because I wanted Biden (and his partner Kamala) to take full credit for what I consider to be crimes against American citizens. More on that shortly. For now, let’s focus on Trump.

At a New Hampshire campaign rally earlier this year, Donald Trump reiterated what he’s been saying for months: CBDCs are dangerous and he would never allow one if elected.

For too long, the average American has been squeezed by the big banks and financial elites. It’s time we take a stand — together. This would be a dangerous threat to freedom, and I will stop it from coming to America. Such a currency would give a federal government absolute control over your money. They could take your money, and you wouldn’t even know it was gone.

In fact, Trump recently pledged to ban CBDCs, promote the creation of a national crypto reserve and guarantee that the government will not sell crypto obtained through law enforcement seizures.

I’ve said it before, but I’ll say it again: “Welcome aboard, Mr. President.” Again, I’ve been sounding the alarm about Biden Bucks for over two years. I’ve been warning about Joe Biden’s plan to control your money and take away your privacy rights completely.

A Threat to Your Freedom

President Trump is right. Biden Bucks are a dangerous threat to freedom. They’re a threat to our constitutional liberties and give the government total control of our private financial information.

A change in leadership is probably our last hope in stopping this madness from continuing.

Maybe you’re a new reader who’s not familiar with Biden Bucks, or maybe you’re an existing reader who hasn’t thought of them for a while. To catch you up, here are the basics: They would replace physical cash with new electronic currencies.

These Biden Bucks would have the full backing of the U.S. Federal Reserve. To be clear, they won’t just be a complement to cash. They will entirely, or very nearly entirely, REPLACE the cash (“fiat”) dollar we have now.

In other words, the dollar will be strictly digital. This digital dollar would be the sole, mandatory currency of the United States. What does this mean for you?

It would put your money under direct government control as President Trump has said. You could use it only at the government’s discretion.

We are already seeing how many retailers are no longer accepting cash across America. What happens when physical cash is eliminated from any payment transactions?

Declined!!!

Imagine this. To further advance the Biden/Harris Green New Scam, what if the Dems and their deep state enablers decide that gasoline needs to be rationed?

Your Biden/Kamala Bucks could be rendered useless at the gas pump once you’ve purchased a certain amount of gasoline in a week. You want gas, but all you get is a one-word message: Declined.

How’s that for control? That’s just one example. Biden Bucks would create new ways for the government to control how much you can buy of an item or even restrict purchases. They would keep score of every financial decision you make.

In a world of Biden Bucks, the government will even know your physical whereabouts at the point of purchase. It’s a short step from there to putting you under FBI investigation if you vote for the wrong candidate or give donations to the wrong political party.

If any of this sounds extreme, fantastical or otherwise far-fetched, I promise you it’s not. It’s happening right now. And given all the abuses of power the government’s engaged in over the past few years, why should you be surprised that Biden/Kamala Bucks wouldn’t invite even more abuse?

Kamala Would Be Even Worse

I don’t want to exaggerate, but the U.S. is moving closer and closer to an authoritarian-style government. We’re not there yet, but things are trending in that direction. And if you thought it was bad under Biden, it’ll be worse under a possible Kamala Harris presidency.

Biden was basically a puppet of top Democratic insiders, mostly holdovers from the Obama administration.

He never had any real core beliefs, he just did what he was told to do. He just wanted to be president.

Harris is different. She’s a true believer in the progressive causes the Biden administration put forward. You’d never know that if you listened to her running for president (she’s trying to position herself as a centrist), but you just have to look at her record.

As a senator, Harris had the most liberal record, even further left than Bernie Sanders or Elizabeth Warren. Pertaining to Biden Bucks specifically, she pushed unsuccessfully in 2020 for a 400% funding increase for the U.S. Digital Service, an agency that did early work on payment technology, setting the stage for a central bank digital currency.

So Kamala is all in on Biden Bucks and the threat to your money and freedoms. With Biden Bucks, a Harris administration and the Federal Reserve would become both money printer and central bank, destroying any checks and balances to their power over Americans’ financial holdings.

You CAN Fight Back

But we can fight back against Biden/Kamala Bucks by adopting a variety of alternative currencies including cash (while it lasts), gold coins, silver coins and commodity barter.

That’s one reason the government is trying to eliminate cash and kill crypto. It may come down to gold and silver. I urge you to get yours while you still can.

The bottom line is the federal government is coming after our money and rights. Again, that’s not hyperbole or some conspiracy theory. We can already see it happening.

It’s up to us to preserve our freedoms as Americans and fight back. No one will save us but ourselves.