Chicago Set To Offer $350 Million ObamaLand Center 99-Year Lease For Just $10

The Obama foundation is set to receive a 99-year lease to build its Presidential Center in Chicago’s Jackson Park, according to Chicago Business

The ordinance will go before the City Council on Thursday, along with an ordinance that covers use of the roadways surrounding the center. 

Under terms of the agreement, the Obama Foundation will be responsible for maintaining and keeping in good repair the grounds and buildings, while the City of Chicago will own the buildings and grounds. By contrast, the 11 official Museums in the Parks all have agreements in perpetuity. The foundation will pay the city $10 for the 99-year agreement. –Chicago Business

The foundation will need to satisfy several requirements – including meeting funding requirements for the estimated $350 million project, as well as assurances that the center passes the National Environmental Policy Act, for which a review being conducted by the National Parks Service is currently underway. 

Opponents of the center’s location – a 19.3 acre spread on the National Register of Historic Places – have taken issue with plans to cut down 40 mature trees – a process which has been halted “in an abundance of caution and to allay any doubts about the intentions of the city in respect to the ongoing federal reviews,” according to Shannon Breymaier, deputy director of communications for the mayor’s office.

According to the land-use agreement, the Obama Presidential Center must offer free admission 52 days of the year and offer parking rates on par with rates at the Field Museum, Shedd Aquarium and the Museum of Science & Industry. The grounds surrounding the center must be accessible to the public during Chicago Park District hours; the center can use the center’s green space and plaza for private events for no more than 15 days a year, and may not hold political fundraisers on the grounds.

The agreement also stipulates that the city reimburse the Obama Foundation, up to $75,000, for an environmental investigation of the property and “incremental remediation costs.” –Chicago Business

As Mark Glennon of WirePoints has noted several times, at least $139 million of the center will almost certainly be reimbursed by the federal government despite the fact that it was initially pitched as a privately funded presidential library. 

Here are the details and background:

Contrary to its clear, initial description as a presidential library, it won’t be one. The center will be owned and run by the Obama Foundation, not the National Archives and Records Administration, as are presidential libraries. Obama’s records, artifacts and papers will not be there.

Initial claims that it would be funded entirely with private money also evaporated.“Construction and maintenance will be funded by private donations, and no taxpayer money will go to the foundation,” the foundation’s spokeswoman said. The interpretation was that assured 100 percent private funding.

Meanwhile, the center has been receiving massive donations, as the founders of Twitter and LinkedIn are among those giving or pledging to give north of $1 million to the project, according to the Chicago Sun Times

The stepped up fundraising comes as former President Barack Obama is spending more to program and construct his Obama Presidential Center in Jackson Park with the tab to build the complex between $300 million and $350 million.

The new list of $1 million-plus donors has 46 individuals or foundations giving between Sept. 30 and Dec. 31. That compares with 13 individuals or foundations on the donor list released reflecting contributions through the third quarter last year.

Donors already in the Obama Foundation pipeline giving more include Chicago’s Crown family, which had given between $250,000 and $500,000 and is now in the million-dollar plus donor range. Chicago media executive Fred Eychaner, one of the nation’s biggest Democratic donors, who previously had given between $750,001 to $1 million, now is listed as giving more than $1 million. Ariel Investment’s John Rogers, on the Obama Foundation board went from the $500,001 to $750,000 range to more than one million dollars. –Chicago Sun Times

Groundbreaking for the center has been pushed to next year, as the center still has several additional hurdles to clear before construction can begin – including an EPA review. 

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Emerging Market Euphoria Is Back With A Bang

Traditionally, every time 10Y US Treasury Yields have jumped solidly above the 3% level – as they have in recent days – Emerging Markets were among the first casualties. But not this time, in fact quite the opposite as developing-nation stocks climbed for the fifth time in six days and the lira and rand led a rally in currencies.

Average spreads on emerging-market dollar and local currency bonds narrowed too. As the chart below shows, the largest ETF tracking emerging-market local currency bonds – the $6.1 billion JP Morgan JEML ETF – saw $169 million in inflows, the most since June 2017, after losing about a quarter of total assets since early April according to Bloomberg.

The inflows suggest that developing markets may finally be turning the corner after the worst slide in EMs since the financial crisis, as a result of a stronger dollar and global trade war.

Bizarrely, the rebound in sentiment has taken place against a backdrop of deteriorating China-U.S. trade tensions, and may encourage those seeing an end to a sell-off that’s hammered asset prices from Indonesia to Turkey and Argentina during a tumultuous past five months. The EM price gains have also given strength to the bout of optimism triggered last week by interest-rate decisions in Turkey and Russia that were more hawkish than many anticipated.

EM optimism appears to be contagious among analysts: quoted by Bloomberg, Bernd Berg, a strategist at Woodman Asset Management in Zug, Switzerland said that “currencies have found a bottom for now and the tactical rally might have some room to extend further as emerging-market central banks have come to the rescue with rate hikes,” said “Overall fundamentals are still solid and valuations are cheap in some emerging-market foreign exchange after the aggressive repricing this summer.”

Franklin Templeton’s Chris Siniakov and Goldman Sachs Asset Management’s Philip Moffitt are among those who also say the declines in emerging markets are starting to ease.

The world’s largest asset manager, BlackRock also said this week that emerging-market debt offers a “very good entry point” for investors, citing a tentative peak in the greenback and easing idiosyncratic risks.

The shift in mood has certainly spooked the EM shorts, who have materially covered their positions, a clear sign that the pessimism in emerging markets is starting to wane.

Furthermore, the correlation between emerging-market bonds and Treasuries is at the lowest in two years, which explains why U.S. yields above 3% aren’t an obstacle – for now – to developing-nation foreign debt as long as the dollar stays in check.

According to Bloomberg, the declining influence of Treasury yields may suggest that emerging markets are adjusting to the end of easy money and are focusing on threats to global trade as the main risk. Investors, however, who have been badly burned on the asset class, will be looking for more signs that the dollar has peaked before diving deep into valuations they maintain are too cheap to ignore.

Indeed, one reason why higher yields are being ignored may be that the strong dollar – which traditionally rises alongside yields, and is seen as an even greater nemesis to emerging markets – has slumped to the lowest level since the end of August.

Not everyone is bullish though: State Street is among those betting that the bearish trend has room to run. The firm is “pretty cautious” on emerging markets in the short term because of trade tensions, said Lori Heinel, deputy global chief investment officer.

But SocGen’s FX veteran Kit Juckes best summarized the renewed general apathy to all market risks: “Where we are today, is in a period of relative calm as U.S. bond yields probe their highs, and we become accustomed to trade rhetoric and perhaps, blasé about the economic damage it will cause.”

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DOJ Vows To Investigate After Second Veritas Video Exposes “Deep Throat” Types Within HHS

The Department of Justice on Wednesday said it would look into allegations of “misuse of government resources to advance personal interests” after James O’Keefe’s Project Veritas released a second video this week exposing “deep state” federal employees pursuing socialist agendas while on the clock at their government jobs. 

In the latest undercover video, DOJ paralegal and Democratic Socialists of America member, Allison Hrabar, reveals that there is “a lot of talk about how we can, like, resist from the inside.” She discusses a fellow DSA member working from within the Department of Agriculture who is “slowing down” the process by which people are eliminated from the food stamp program. 

PV Journalist: “…she mailed it to you in like physical snail mail like post office and then you like got it. That’s like awesome.”

Schubel: “Yeah. It’s kind of like the Nixon, “deep throat” type of thing.

“We have a member who works for the people who distribute food stamps, and they can, like, take that away, and they’re slowing what they do… What they’re doing means that people are going to be able to stay on food stamps for another month or two, which is, like, really important,” Hrabar said.

Hrabar also appears to use her DOJ work computer to research DSA political targets – including looking up the license plate of a lobbyist in order to organize a protest outside his home

In another portion of the video, Jessica Schubel – former Chief of Staff for the Centers for Medicare and Medicaid Services under teh Obama administration says that there is “like, a little resistance movement” within the government. Schubel also states that she received confidential information from a friend at the Department of Heath and Human Services.

In response to the Veritas videos, a DOJ spokesperson said: “These allegations are deeply concerning. Department policy prohibits misuse of government resources to advance personal interests. We are looking into this immediately and have referred this matter to the Inspector General as well.”

Watch the full video here: 

 

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Ron Paul Rants That Republicans Share The Blame For Socialism’s Comeback

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

According to a recent Reuters/Ipsos survey, 70 percent of Americans, including about 50 percent of Republicans, support Medicare for all, the latest incarnation of single-payer health care. Republican support for a health plan labeled “Medicare for all” is not surprising considering that Republican politicians support Medicare and that one of their attacks on Obamacare was that it would harm the program. Furthermore, the biggest expansion of Medicare since its creation – the Part D prescription drug program – occurred under a conservative president working with a conservative Congress.

Conservative Republicans do propose reforming Medicare to reduce its costs, but their proposals are always framed as “saving Medicare,” and most reform plans increase spending. Few conservative Republicans would dare advocate allowing young people to opt out of paying Medicare taxes in exchange for agreeing to forgo Medicare benefits.

Many conservative Republicans favor other government interventions into health care, including many features of Obamacare. In fact, Obamacare’s individual mandate originated as a conservative proposal and was once championed by many leading Republicans. Many other Republicans simply lack the courage to repeal Obamacare, so they say they only want to repeal the “unpopular” parts of the law. It would not be surprising if we soon heard conservatives and Republican politicians talk about defending Obamacare from supporters of socialized medicine.

The same dynamic at work in health care is at work in other areas. For example, the same conservative administration and Congress that created Medicare Part D also dramatically expanded federal control of education with “No Child Left Behind.” Conservative Republicans who (rightly) fight against deficit spending when a Democrat sits in the White House decide that “deficits don’t matter” when the president has an “R” next to his name.

Many Republican politicians – and even conservative intellectuals – will say they are being pragmatic by not fighting progressives on first principles, but instead limiting the damage done by the welfare state. The problem with this line is that, by accepting the premise that government can and should solve all of life’s problems, conservatives and Republicans will inevitably get into a “bidding war” with progressives and Democrats. The only way Republicans can then win is to join Democrats in continually increasing spending and creating new programs. This is why the so-called “conservative welfare state” ends up as bloated and expansive as the progressive welfare state. Refusing to question the premises of the welfarists and socialists is not a pragmatic way to advance liberty.

While progressives blame social crises on the free market, Republicans and conservatives are unwilling to admit the problems were caused by prior government interventions. Thus the passage of Dodd-Frank was aided by claims that the housing bubble was created by deregulation, while Obamacare’s passage benefited from widespread misconception that America had a free-market health care system prior to 2010.

Until a popular intellectual movement arises that is able and willing to challenge the premises of Keynesianism, welfarism, and democratic socialism, while putting forth a positive vision of a free society, government will continue to expand.

Fortunately, such a movement exists and is growing as more Americans – particularly young Americans – are studying the ideas of Liberty and working to spread those ideas. If the new liberty movement grows and stays true to its principles, it will be able to defeat the socialists of all parties, including those who call themselves conservative.

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Amazon To Open 3,000 Cashierless Convenience Stores By 2021

Retail workers who are pushing for higher wages better take notice: Amazon preparing to put their bosses out of business.

Roughly nine months after opening its first Amazon Go store in Seattle, Amazon announced on Wednesday that it is planning a massive expansion of the franchise. The company has been notoriously tight-lipped about Amazon Go since it first started offering tours of its prototype Seattle location to select journalists back in 2017. After opening its third cashierless Amazon Go location in Chicago earlier this year, and is planning to open six more locations by the end of this year, before eventually scaling up to 3,000 locations by the end of 2021. If Amazon succeeds, Go will become the largest convenience store chain in the US, per Bloomberg.

So far, most of the extant Amazon Go locations offer only a small selection comprising mostly salads, sandwiches and snacks.

An Amazon spokeswoman declined to comment. The company unveiled its first cashierless store near its headquarters in Seattle in 2016 and has since announced two additional sites in Seattle and one in Chicago. Two of the new stores offer only a limited selection of salads, sandwiches and snacks, showing that Amazon is experimenting with the concept simply as a meal-on-the-run option. Two other stores, including the original AmazonGo, also have a small selection of groceries, making it more akin to a convenience store.

But as the company ramps up the logistical back-bone necessary to support the chain, it ultimately hopes to conquer the fast-casual market in dense urban areas where wealthy professionals who might be willing to spend a little more on a salad or a sandwich typically proliferate. Ultimately, the company hopes to compete by eliminate meal-time congestion with its grab-and-go automation. The initial market reaction to the news was muted, though shareholders probably aren’t thrilled about the massive capital investment that will eat away at operating profits.

Chief Executive Officer Jeff Bezos sees eliminating meal-time logjams in busy cities as the best way for Amazon to reinvent the brick-and-mortar shopping experience, where most spending still occurs. But he’s still experimenting with the best format: a convenience store that sells fresh prepared foods as well as a limited grocery selection similar to 7-Eleven franchises, or a place to simply pick up a quick bite to eat for people in a rush, similar to the U.K.-based chain Pret a Manger, one of the people said.

Shoppers use a smartphone app to enter the store. Once they scan their phones at a turnstile, they can grab what they want from a range of salads, sandwiches, drinks and snacks — and then walk out without stopping at a cash register. Sensors and computer-vision technology detect what shoppers take and bills them automatically, eliminating checkout lines.

One potential obstacle to expanding the chain is the high cost of opening each location due to the sensors and AI technology necessary to support its automatic-checkout system. The company’s other physical stores include about 20 bookstores and Whole Foods, which it bought last year.

The challenge to Amazon’s plan is the high cost of opening each location. The original AmazonGo in downtown Seattle required more than $1 million in hardware alone, according to a person familiar with the matter. Narrowing the focus to prepared food-to-go would reduce the upfront cost of opening each store, because it would require fewer cameras and sensors. Prepared foods also have wider profit margins than groceries, which would help decrease the time it takes for the stores to become profitable.

Amazon no doubt sees an opportunity to profit by grabbing a slice of the $233 billion convenience store market. After eating the initial capital expenditure, Amazon will easily be able to compete on operating costs. But to thrive in such a competitive market, location will be key, according to several analysts.

AmazonGo will be more of a threat to fast-casual restaurants if it is targeting cities, said Jeff, vice president of NACS. Shoppers rate location and a lack of lines as the most important factors when shopping for convenience, he said.

“AmazonGo already has no lines,” Lenard said. “The key to success will be convenient locations. If it’s a quarter mile from where people are walking and biking, the novelty of the technology won’t matter. It’s too far away.”

One unintended consequence of Amazon’s expansion could be a worsening row with President Trump, as Amazon Go could eliminate some of the food-service and retail jobs that have been among the fastest-growing sub-sectors of the US labor market. This could threaten the robust employment gains that President Trump has cited as evidence of his presidency’s success. And Trump has lashed out at Amazon in the past for being a job-killer. And the FTC has been quietly hiring staffers who are looking into how the agency can bring an anti-trust case against tech giants like Amazon. 

Going forward, we imagine investors will be on the lookout for signs that this expansion could be the final antagonism that finally provokes the government to take action against Bezos before Amazon truly does become “the Everything Store”.

Though there is one potential upside for all those displaced low-wage workers: The format will make looting during natural disasters that much easier.

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High School Journalists Fight for Their 1st Amendment Right to Report on Their School’s Administration

|||Screenshot via https://bhsregister.comA Vermont high school guidance director was recently charged with six counts of unprofessional conduct. On September 10, student journalists with the Burlington High School Register reported that the charges against Mario Macias, their guidance director, included falsifying information on a student transcript, intimidating employees, and revealing sensitive information of a student’s traumatic past in the presence of a third party. They also included a copy of the charges filed against Macias via the Vermont Agency of Education. Though Macias was the apparent wrongdoer in the situation, the school sought to limit the student journalists who broke the story about their administrator.

According to a report in the Burlington Free Press, the co-authors of the story, Halle Newman, Nataleigh Noble, Jenna Peterson, and Julia Shannon-Grillo, reportedly tracked the information based on a tip from another student. Just one day after publishing it to their website, Burlington High School administrators had the story unpublished. Interim Principal Noel Green censored their voices because the students were told, according to Newman, that it “created a hostile working environment for Macias.” However, the students maintained that they were merely reporting facts contained in a public document.

The students contacted the Student Press Law Center, which confirmed that the students’ actions were legally protected. The Vermont Press Association and the New England First Amendment Coalition also released a joint statement demanding that Green and the administration release and publish the story.

The story appeared on the website following the joint statement and mass reporting about the unpublishing. However, both the students and their adviser were informed that the school would revert to a 2016-2017 school policy that required each story be reviewed by an administrator “48 hours before publication.”

However, the Burlington School Board acted quickly to overrule Green in order to remain in compliance with Vermont’s New Voices Act. The law was passed in 2017 to protect student journalists’ First Amendment right to publish material in public school and college-affiliated media without fear of censorship or retaliation.

“All previously practiced or adopted guidelines regarding publications in the BHS Register are no longer in effect,” the board said in a statement. “The Burlington School Board, together with its administration, will exercise its jurisdiction under Vermont’s New Voices law, codified at Vermont Statutes, Title 16, Section 1623(i), to adopt a written policy consistent with the provisions of the New Voices law. The New Voices law is intended to ensure free speech and free press protections for public school students in order to encourage students to become educated, informed, and responsible members of society.”

Additionall, the board promised that future policies would include the input of student publications and “local First Amendment experts and organizations.”

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Cody Wilson, Home Weapon-Making Pioneer, Charged with Sexual Assault for Paying for Sex with a Minor

Cody Wilson, the maker of the first 3D-printed plastic gun who is currently embroiled in legal trouble as he fights to assert his and his company’s (Defense Distributed) First Amendment rights to distribute computer files that can help in the homemade printing or machining of weapons, has a warrant out for his arrest for a second degree felony charge of sexual assault. The potential punishment on conviction would be two to 20 years and a $10,000 fine.

The affidavit from a police officer reporting the testimony of the person with whom Wilson allegedly had sex describes her meeting Wilson via a website called sugardaddymeet.com. The site requires those using it to assert they are over 18, but the person in question is actually 16. The two are said to have met last month and traveled to an Austin, Texas, hotel, where they had sex, for which Wilson paid the girl $500.

The nature of the charge under Texas penal code 22.011(A)(2)(a) makes consent or payment irrelevant; her being legally a child is all that matters.

According to police in a press conference today, the event became known to them via the girl in question discussing it with an unnamed and unspecified “counselor.”

Wilson has not been taken into custody. The Austin police said they believe him to currently be in Taiwan and claim to be working with “United States marshals to locate Mr. Wilson.” They believe Wilson knew that the victim was speaking to police about the incident. Wilson did not respond to a request for comment today.

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The Market Is “Sandbagging Us” – Mark Spitznagel Sees “Deeper & Deeper” Crashes Ahead

Universa Investments LP founder, Mark Spitznagel, discusses the lessons learned from the 2008 financial crisis, warning Bloomberg’s Erik Schatzker that the current stock market exuberance is “sandbagging” investors again, just like it did in previous crises, but reminds that while “monetary intervention is a Faustian bargain,” everyone knows you can’t fight the Fed,

“…you mustn’t fight the Fed. What you must try to do is sort of jiu-jitsu the Fed. You need to sort of use the Fed’s force against it.”

Interview below:

Full Transcript:

Erik Schatzker: What do you think of as the most important lessons of the 2008 financial crisis?

Mark Spitznagel: Well, I think what it taught us ultimately is that interventionism, monetary interventionism, is a Faustian bargain. It gives us short term gains, and with that comes longer term pains. I think we saw that previous to the last crisis, and I think we’re going through the same process now. What we end up having is a market that is just very good at sandbagging us. It makes us feel for a long time like we’re smart, like we all have an edge – which of course is impossible, we can’t all have an edge – and then, once we’ve up our bets, it shows us its real properties.

Erik: Universa, your firm, and you by extension, wouldn’t have a business if there were no financial crises. But as a matter of principle, are corrections, crashes, market meltdowns an inevitable, necessary feature of the modern financial system?

Mark: Certainly the modern financial system, because of the way it is structured, particularly the way it is structured in terms of, again, monetary interventionism. Interest rates are not free-floating. It doesn’t have to be that way. It’s more of a philosophical disagreement between natural free markets. Are they inherently fragile, and need us to protect ourselves from them? It doesn’t need to be that way but unfortunately it is that way.

Erik: Some people say crashes – maybe not necessarily as big as the one that we had in 2008, perhaps more along the lines of what we had in 2000 or what we’ve had since, some of the stuff that was brought on by sovereign debt bubbles and such in Europe – are going to become more frequent. Do you think we’ll see crashes more frequently?

Mark: You know, I don’t have a good feel for the frequency or the timing. It’s something that I’ve always made very sure to stay away from, and the nature of my investing affords me that. I think we are going to continue to see deeper and deeper ones, simply by virtue of the fact that the degree of interventionism is larger and large. It gets incrementally higher every cycle. In some ways we’re still recovering from that great bubble in 2000, and so the economy needs more and more in order to keep us afloat from that.

Erik: Tell me about the next crisis. What do you think it looks like?

Mark: The way I structure risk mitigation, which is what I do certainly, means that I don’t have the luxury of knowing what the next one is going to look like, thinking that I know what the next one is going to look like. I don’t claim to have known what 2008 would look like, even though we traded it the way we did. For me, insurance-type of investing the way I do is really about covering all of your contingencies. You can’t just isolate one contingency. You need to be able to cover many of them.

Erik: What I had in mind was more along the lines of this. People look back at 2008 and say it was a once in seven decades event, we haven’t seen anything like that since 1929 and the great depression. And it’ll be another seventy years before we have another crisis like that. And I’m just trying to find out whether you think there’s any validity to that kind of thinking. If you can’t predict crashes, can anybody else?

Mark: Yeah, there’s validity to that. In many ways I agree with it. But at the same time, everyone knows you can’t fight the Fed. And you mustn’t fight the Fed. What you must try to do is sort of jiu-jitsu the Fed. You need to sort of use the Fed’s force against it.

Erik: I like that. The Fed is going to do what the Fed is going to do, in other words, and you as an investor have to respond?

Mark: Well you need to be able to go with it in all directions. That’s really the point here. There’s a great cliché that says offense wins games and defense wins championships. I hold that very close. It’s one cliché that happens to be very true in the realm of investing. And that’s because of course compound returns – the rate of compounding – is all we care about in investing and it’s the severe losses that crush the rate if compounding. It’s not the small losses. So this is the reason why I focus on the severe losses, the crashes. So what does that mean? I call this a volatitliy tax, where large losses crush your rate of compounding. We need to think about that. Von Clausewitz’s first principle is secure your base. And this is what we all try to do in portfolio management is secure our base. It’s not what we get through Modern Portfolio Theory.

Erik: Now, when you describe yourself as a portfolio manager many people might be confused. They think of a portfolio manager as somebody who is trying to make money by taking positions that are going to increase in value or generate return over time. You’re doing something different.

Mark: Yes, certainly. To think about it simply, Universa is a safe haven, but it’s a particularly explosive, insurance-like safe haven. And it’s there specifically so that the more explosive it is the more systematic risk my clients are able to take.

Erik: Many investors who hedged or who diversified gave up much of the upside in equities since the financial crisis and we need only look at hedge fund returns for example to see that. Now, hedge funds don’t necessarily need to beat the S&P 500, but they do have to deliver value to their customers, and many of their customers or clients don’t think that they have been doing that. What did these investors who hedged or diversified do wrong?

Mark: Modern Portfolio Theory sold us a bill of goods. And that bill of goods is that if you lower your volatility through diversification – it’s this dogma of diversification – if you lower your volatility yes you’re also going to lower your arithmetic return, but if you get that ratio going up all is well. And then you can take some leverage – which is kind of crazy in itself that good risk mitigation requires leverage – and all is well. You’ll raise your long-run return. But it just hasn’t worked out that way. As we diversify, de-worsification is really what we’re doing when we diversify. Diversification, of course, in this environment too where all correlations spike to one when you least can afford them to, it’s a fundamental problem, and its’ so contrary to the way I think about it, it’s a completely different way of constructing portfolios, which for me is about focusing on the downside and mitigating the volatility tax.

Erik: So, if people want to understand a bit better what you do, and more and more, with some $10 billion under management now people are beginning to see the value in what you do, help us appreciate the nature of a tail risk hedge. What kinds of things are in the Universa portfolio?

Mark: Well without getting into specifics, as I said it’s an explosive, insurance-like payoff, but specifically explosive insurance-like convex payoff to what you have in your portfolio. So that’s the important thing. We can’t get too fancy, in my view, about knowing exactly what that next crash is going to look like. We need to get all of the contingencies right. What that means is whatever your exposures are you need to have very specific downside crash-convexity to those exposures.

Erik: But you find that where, in out-of-the-money options?

Mark: Well yeah there’s a range of places where we can find this in derivatives markets.

Erik: Principally derivatives we’re talking about.

Mark: In order to get the type of asymmetry that I’m talking about it really requires the use of derivatives, yes. So that’s a good simple way to think about it.

Erik: We learned in 2008 that derivatives contracts themselves can blow up. Are the derivatives that you’re trafficking in now safer instruments than they were in 2008?

Mark: I’m not sure. Again, this is a contingency I don’t want to have to think about. I don’t feel like I have an edge in that. I don’t feel like anybody has an edge in that. We all suffer from this hindsight bias where we think we had that last crash, for instance, figured out, we think we understood the cause and effect. I don’t have the luxury of cause and effect. I don’t have the luxury of thinking everything though exactly the way it’s going to pan out, because I will absolutely be wrong. So my simple solution to that is I don’t take single-entity counterparty risk. I face the exchanges. The saying goes it’s kind of like buying Titanic insurance from someone who’s on the Titanic. It’s just not a great idea.

Erik: The cost of protection, at least as measured by the VIX, and I know that’s an imperfect measure, has mostly been low, mostly, over the past ten years. What if insurance gets more expensive?

Mark: What if it does? It’s likely to be associated with an event. That tends to be how it works. We saw it happen very briefly last February. The interesting thing in this age is when we see these flare-ups how quickly it all comes back to cheapness again. I expect we’ll continue to see that and the reason is selling insurance is just sort of the most obvious and most straightforward way to earn this extra yield. We are in this yield-starved, yield-chasing environment, and again it goes back to central banks.

Erik: But how is it that those guys who were, if you will, selling insurance, got destroyed in February, and you didn’t?

Mark: Because I’m on the other side of that trade. I’m not selling insurance, I’m fundamentally on the other side of that trade. I’m purchasing insurance from the market, insurance-like payoffs, so there’s really a pretty steady drumb-beat of supply on the other side because it feels so good. It feels good structurally as a professional trader, it feels good cognitively to make this little premium most of the time.

h/t Jack

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2 Female Mental Health Patients Die in Back of Police Van Fleeing Florence Floods

Several questions remain unanswered after two South Carolina mental health patients died yesterday. The victims, both female, were being transported in a police van when floodwaters overtook their vehicle.

A Horry County Sheriff’s Office van was taking Windy Wenton, 45, and Nicolette Green, 43, to McLeod Behavorial Health in Darlington, South Carolina, Chief Deputy Tom Fox told WLTX. Two deputies were in the van with them, though Wenton and Green were in the back.

Disaster struck when the van was overcome by flood waters in the aftermath of Hurricane Florence, which has devastated the region in recent days. Both deputies escaped the van, then attempted to save Wenton and Green. But “despite persistent and ongoing efforts, floodwater rose rapidly and the deputies were unable to open the doors to reach the individuals inside the van,” the sheriff’s office said in a statement.

The deputies made it to the top of the van, where they were rescued by a high-water team. But nothing could be done to save the two women they were transporting. Both women were declared dead last night, Marion County Coroner Jerry Richardson told WPDE, though first responders were not immediately able to retrieve the van with their bodies in it. “They’re still under the water,” Richardson told the Associated Press this morning. “It’s come up two feet since just last night.”

In a statement, Horry County Sheriff Phillip Thompson called the deaths a “tragedy,” while noting that the two deputies have been placed on administrative leave. “Just like you, we have questions we want answered,” he said.

One of the biggest questions: Were Wenton and Green shackled in the back of the van?

Multiple outlets, including ABC News, the New York Post, and the New York Daily News, say the patients were either “shackled” or “chained.” When reached for comment by Reason, a spokesperson for the South Carolina State Law Enforcement Division, which is investigating the incident, said he couldn’t confirm that they were shackled. He explained the van was still underwater, though officials were working on a “plan” to recover it later today.

Determining whether Wenton and Green were in chains is important. If they were, then that could have kept them from escaping the van with their lives. It would also raise another question: Why were two mental health patients chained up in the back of a police van in the first place? And why were they moved yesterday, and not before Florence made landfall, especially when state and local officials knew for days that severe flooding was likely?

The deaths of Wenton and Green bring the storm’s deathtoll to 37. Though in this case, it’s possible Florence isn’t to blame so much as the officers transporting the two women and the department that waited so long to relocate them.

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The Texas GOP is Trying to Beat Beto O’Rourke by Accusing Him of Being Too Cool

|||Bill Clark/CQ Roll Call/NewscomFrom a “free markets and free minds” perspective, Rep. Beto O’Rourke (D–Texas) would likely be more of the same if elected to the United States Senate. Like many members of Congress, O’Rourke supports government intervention over free market solutions.

It would be one thing if Sen. Ted Cruz (R–Texas), whose seat O’Rourke is after, challenged his opponent on those grounds. While Cruz recently voted for an $854 billion spending bill to increase federal defense, health, and labor funding, he does claim to be a small-government conservative. But his preferred method of campaigning is much, much lamer.

The Texas GOP has already made fun of O’Rourke for being in a band when he was younger, and for knowing how to skateboard. Cruz also released an ad criticizing his opponent for saying “fuck” in public. But the latest tactics are even more out of touch, and include accusing liberals of wanting to infuse Texas with “tofu and silicon and dyed hair.” He’s even suggested (jokingly, of course) that O’Rourke would make BBQ illegal in the state. Just a week prior, Cruz knocked O’Rourke’s support for national anthem protests.

Democratic Socialist Alexandria Ocasio-Cortez tweeted an interesting question following some of the ‘too cool’ attacks on O’Rourke: “Why is the GOP so corny?” she asked, just before observing that superficial things such as piercings and ripped jeans are not enough to disqualify someone from running for office.

Ocasio-Cortez is not the first person to observe that the Republican Party is in the habit of pandering to a dying voter base. Sen. Rand Paul (R–Ky.) warned his fellow Republicans in 2014 that they needed to adapt. This included embracing people “[with] tattoos, without tattoos, with earrings, without earrings, black, white, brown.” Paul repeated himself in 2016, adding, “When we become the old white man’s party—which we’ve been kind of headed towards for a while—we’re never going to win another election.”

Though Cruz led O’Rourke in the polls by double digits just a few months ago, a new poll has O’Rourke in the lead. A Wednesday Reuters poll put O’Rourke ahead of Cruz by two points. Larry Sabato, director of the University of Virginia’s Center for Politics, observed that Cruz’s contentious relationship with President Trump has hurt his reputation with some Republican voters in the state. RealClearPolitics showed Cruz leading O’Rourke by an average of 4.5 points on Tuesday.

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