iftttwall

As the liquidation across asset-classes accelerates, equity protection costs are exploding.

VIX topped 40 for the first time since June…

And, as Nomura’s Charlie McElligott notes, vol-of-vol (VVIX) is going absolutely BONKERS, as folks are grabbing at “tails” again into atrocious market illiquidity, election scenario freakouts (folks getting arms around tax implications of “Blue Sweep” yet again?! – or the massive downsizing of prior fiscal stimulus expectations with Republican Senate) and COVID shutting Europe back down as the “European Renaissance” trade again false-starts…

And in “flight to liquidity” fashion with a “short squeeze” positioning kicker, US Dollar is ripping higher, while SPX term structure btwn now and election is exploding higher as well in major cringe-fashion:

Additionally, as McElligott warns, making matters worse for the 60/40 and Risk Parity set is that USTs aren’t hedging on the risk-off move and actually SELLING-OFF…

…as the missing overseas “real money” buyers wait for event-risk to clear before backing up the truck into duration buying (esp with fx-adjusted yields at or near 5 year bests, and a Fed who won’t be able to risk tighter financial conditions into the super fragile pandemic recovery—just as Europe is re-entering “lockdown”—thus likely to “up” QE purchases amounts and / or extend the weighted avg maturity of the asset portfolio through duration purchases).

Perhaps most notably, the “Large Lot” sellers are back…

And professionals are starting to position for an imminent systemic risk event as implied correlation signals macro overlay buying is dominating any single-name protection buying…

Not pretty.

We have often (here and here) written about the notion that brokerage houses – especially Robinhood – are seeing a boom during the pandemic as a result of the Fed sending out “free money” to unemployed U.S. citizens who then, instead of going out and looking for a job, sit at home and try to become professional daytraders by downloading the Robinhood app and pouring all of their cash into Tesla call options.

On Tuesday of this week, Robinhood Co-Founder and Co-CEO Vlad Tenev sat down with Aaron Ross-Sorkin for an exclusive interview to talk all things “state of the union” with both the markets, and the Robinhood app. During the interview, he seemed to confirm that the Fed has been a major tailwind for the company. 

When Aaron Ross-Sorkin asked him about the idea of “gamifying investing” and Lee Cooperman’s assessment that the Fed stimulus checks would “end in tears”, Tenev responded by recognizing the effect of the Fed’s measures as “an opportunity for investors”. 

“It appears to be the case that the Fed has determined that it’s important to maintain the stability of the markets and support the markets and the economy by lowering rates and delivering stimulus checks to people on an individual basis,” Tenev said.

He continued: “Which has, you know, in history been an unprecedented act. So the government is stepping in and doing aggressive actions to maintain the sanctity of the economy and the markets. And I do think, from a macro level that’s an opportunity for investors.”

Tenev then admitted that Robinhood was literally watching users deposit their stimulus checks: “We saw an impact of people depositing their stimulus checks into Robinhood. We saw, you know, deposits that were equal to or multiples of the stimulus amount.”

When Sorkin asked about whether or not that concerned Robinhood, especially given that many of these people are unemployed, Tenev responded by tacitly encouraging it: “I think there’s been a little bit of a shift in mindset. Investing and the ability to invest I think now that the barriers are lower, allowing so many more young people to participate it’s clear to people that it’s not just for the wealthy. And I think what you’re seeing now is sort of a cultural relevance ascribed to investing that hasn’t been there before.”

He continued: “…our belief is, the more we lower the barriers to entry, the more we level the playing field and allow people to invest their money at a younger age. The better off our economy will be and the better off society will be because we kind of live in the intersection of capitalism, democracy and innovation. And I think that it’s a very interesting place to be in.”

Tenev also said that many Robinhood users see the election volatility (along with literally any other dip in the market for any reason, including the end of the world as we know it) as a reason to “buy the dip”. He told Ross-Sorkin: “What we’ve seen is they typically see volatility and market downturns as buying opportunities just because they’re at the beginning of their investing journey and think they recognize that there’s many, many decades for things to smoothen out in front of them.”

What he means, of course, is that they have been conditioned by Central Banks to believe the market only goes up. 

Tenev continued, making excuses for investors poor decisions: “In terms of volatility, we have to be prepared for anything. It certainly would not be a surprise to see greater volatility heading up to the election and the weeks and months afterward. So we’ve been investing more in terms of making sure our processes are really solid. And we’re taking a look at things like margin and margin requirements for different securities. We’re also continuing to invest in the scalability and reliability and redundancy of our systems.” 

Tenev also ducked a question of how Robinhood gets such great terms for its payment for order flow. 

“But it looks like, from my math, you’re doing better. I mean, Robinhood makes more money on a pay for order flow than your rivals. Can you explain what that deal is and how that is the case?” Ross-Sorkin asks, as one point.

Tenev responded: “It’s a standard, regulated practice across the industry. And it is a revenue stream that Robinhood has – one of several revenue streams. And as we continue to roll out more products, including our debit card, we’ll get access to more revenue streams for the business as time goes on.”

You can read the full transcript of the interview here.

Authored by John Vibes via TheMindUnleashed.com,

Keith Raniere, the leader of the Hollywood sex cult NXIVM, was sentenced to 120 years in prison on Tuesday. Initially, the 60-year-old cult leader was facing just 15 years for charges of sex-trafficking, racketeering, child pornography, and forced labor.

However,  Brooklyn federal court Judge Nicholas Garaufis used his discretion to increase the sentence to 120 years. Raniere was also ordered to pay a $1.72 million fine.

“To him, the brave victims … are liars. Mr. Raniere remains unmoved. … [He] has therefore failed to demonstrate remorse,” instead maintaining “to this day that he’s done nothing wrong,” Garaufis said

When Raniere spoke to the court he accused the victims of being liars.

“I do believe strongly that I’m innocent of the charges. But it’s also true I see all of this pain. They’re lying for a reason, and that reason stems from me. I do feel deep remorse, but I do not feel remorseful for the crimes I did not commit,” Raniere said.

Smallville actress Allison Mack was a member of the cult and worked in a management position. As second-in-command, it was her job to lure women into the programs under the pretense of female empowerment and self-help workshops, to then convince them to sign up for a more “advanced program” called Dominus Obsequious Sororium, which required these women to basically turn the lives over to cult leader Keith Raniere. Dominus Obsequious Sororium is a quasi-Latin phrase that roughly translates to “Master Over the Slave Women.”

When women joined Raniere’s inner circle, they were forced to sign over their finances to him, starve themselves to maintain a certain weight, and he even had them surgically branded with his initials. Raniere would use blackmail to keep the women from speaking out, by collecting nude photos and damaging evidence on family members.

The cult was finally exposed when the daughter of former Dynasty actress Catherine Oxenberg became a member. Oxenberg told the New York Times that she became concerned after she saw that her 26-year-old daughter India was extremely emaciated from dieting, and was suffering from serious health problems.

“Some people have said this is a voluntary sorority. The women I have spoken to tell a far different story,” Oxenberg said. “Coercion is not voluntary. Extortion is not voluntary. Blackmail is not voluntary.”

When these accusations hit the news, other women, including actress Sarah Edmondson, came forward to all to tell the same story, of the blackmail, the branding, as well as the forced labor and forced sexual activity.

Raniere is also accused of having a history of pedophilia, with accusations that stretch back over 20 years, involving girls as young as 12.

In 2012, several women were interviewed by the Albany Times Union about the coercive sexual experiences that they had with Raniere when they were young girls. One of the women in the case was found dead of a gunshot wound before she was able to give the interview. Her death was ruled a suicide.

The U.S. attorney’s office requested to have Raniere held without bail in a letter to the court stating that he was a known child predator.

The mainstream media is silent following an explosive Tuesday night interview with Tony Bobulinski, a former Naval veteran of 20 years who provided text, email, and anecdotal evidence that he was brought in by the Biden family to manage a venture with a CCP-linked Chinese entity, and that they concealed Joe Biden’s involvement.

“Why on 10:38 on the night of May 2 [2017] would Joe Biden take time out of his schedule to take time with me, behind a column so people could not see us, to have a discussion with his family and my family and business at a very high level?” Bobulinski asked host Tucker Carlson.

And just 11 days after that clandestine 2017 meeting with Joe, an email was sent regarding ‘remuneration packages’ for six individuals – which included a proposed equity split of “20” for “H” and “10 held by H for the big guy.”

When Bobulinski asked Joe Biden’s brother why they weren’t concerned about the political or headline risk involved in case Joe Biden decided to run for office in the future, Jim Biden replied “plausible deniability.“

And when Bobulinski was threatening to go public with this information after Rep. Adam Schiff smeared him as a Russian asset, Biden family representative Rob Walker told Bobulinski “You’re just gonna bury all of us.“

And the MSM won’t cover any of this. Nevermind that Joe Biden lied in 2019 when he said that he ‘never talked to Hunter about his business.’ This is the same constellation of news organizations which was happy to peddle unfounded rumors about then-candidate Donald Trump’s nonexistent relationship with Russia, before the 2016 election.

As Fox News notes, “While the mainstream media has scrutinized President Trump and his family members at every turn, there has been a near blackout of coverage of Bobulinski’s shocking claims.”

“It is pretty much a 100 percent blackout of the Bobulinski story in the traditional media. Of course, there are lots of stories that need to be covered in the busy 2020 news agenda, but the total omission of Bobulinski’s accusations is curious, to say the least,” DePauw University professor and media critic Jeffrey McCall told Fox News.

“Even if this story is not front and center on the news agenda, it does need to be approached somewhere along the way. Odds are that most mainstream media outlets are devoting very few reporting resources, if any, to the Bobulinski story,” he added. “It would seem those outlets could at least be investigating the accusations to try to prove them invalid.”

McCall noted that the typical default has been to “assume that the Hunter Biden story, and what Joe’s role might or might not have been, is totally off limits and not newsworthy,” which isn’t how the press should operate. 

“What little coverage has surfaced has basically just been running without challenge the boilerplate denials and indignation from the Biden camp. The manner in which this story has been covered can only be described as the ‘lapdog press,’ as contrasted with the ‘watchdog press,’” McCall said. –Fox News

And according to political satirist Tim Young, “When you realize that major media organizations such as CNN, MSNBC, Washington Post and the NY Times ran completely unsubstantiated stories like the pee tape from the dossier, Julie Swetnick and Michael Avenatti’s claims against now Justice Kavanaugh, and numerous anonymous senior administration officials statements that ‘would definitely prove the Trump campaign colluded with Russia’ yet haven’t touched direct testimony with direct evidence and easily provable points from Tony Bobulinski after his Tucker Carlson interview, it goes beyond hypocrisy,” adding “it’s election interference to try to install a potentially seriously corrupt candidate in Joe Biden.”

As Curtis Houck writes via NewsBusters – here are the top 10 moments from the Bobulinski interview that the MSM will ignore:

1. Biden Associate Pleads With Bobulinski; You’ll ‘Bury All of Us’

2. Bobulinski: Joe’s Brother Credits ‘Plausible Deniability’

3. ‘I Think Joe Biden and His Family Are Compromised’ by the Chinese

4. This Was Never Just About Hunter Biden

5. ‘They Carved Out a Piece of His Schedule for You’

6. Bobulinski’s First Meeting with Joe Biden

7. Joe Tells Bobulinski to ‘Keep an Eye on’ His Brother and Son

8. ‘10 Percent for the Big Guy, Held by H’

9. ‘There’s Two Chairman in This Story’

10. ‘The Only Qualification They Had Was the Biden Name’

What will be even more fun is watching the MSM dodge this for four years if Joe Biden is elected, while Congress does nothing and a special counsel is the furthest thing from anyone’s mind – despite the bar being ‘pee pee dossier and drunken rumor’ the last time.

If we didn’t know better we would suggest that today’s stock market puke was reflexively driving a desperate rush for liquidity as the dollar spikes higher as bonds (barely moving despite the massive puke), bullion (gold and silver slammed), Bitcoin (a recent favorite hiding place) are all exhibiting signs of liquidation…

Since the open, stocks are being dumped…

Bitcoin is back below $13000…

Bullion is puking (gold <$1900)...

…and silver < $24...

And bonds are also being sold along with stocks…

And all of that is driving the dollar higher…

By Michael Every of Rabobank

Waves and Walls

Six days to go now. Or rather seven days if you expect that we could see a US election result the day after voting, as per usual. That had looked a long shot a month ago, when the meme was of a flood of vote-by-mail (VBM) ballots arriving days and days after Election Day and taking weeks to contentiously count. The larger narrative was also of a Republican in-person vote on 3 November making it look like a Trump win, and then a Blue Wave subsequently washing it away.

That 4 November result may not be possible given Illinois is still allowing up to 14 days after election day for VBM ballots to arrive; Iowa six days; Kansas three days; Mississippi five days; Nevada seven days; New Jersey two days; New York seven days; North Carolina three days; Ohio ten days; Texas one day; Virginia three days; and West Virginia five days, with all ballots needing to be posted on Election Day. The case regarding the key swing state of Pennsylvania is soon to be heard by the US Supreme Court. However, with the exception of Pennsylvania, and possibly Nevada and North Carolina, few of those other states are likely to be close, or a tipping point in the race to the electoral college – although of course one can always find an opinion poll that tells you what you want one way or the other.

Moreover, the election narrative above is already changing in that much of the VBM wave appears to have already arrived, unless there is going to be a sudden flood of fresh ballots sent out. Indeed, we have also just heard pleas from former Democratic AG Holder and at least one governor not to vote by mail due to the overloaded system and to vote in person instead, a reversal of the previous tactical advice.

Target Smart shows that at least 59m people have already voted in 2020 which is 43% of all those who bothered to do so in 2016. (The press suggests 70m this morning, which would suggest over half the election is already over by the usual standards.) By registered party, the split is 26.7% of Democrats vs. 16.1% of Republicans and 55.8% of independents. That implies a lead for Democrats that Republicans will have to better on the ground on 3 November with in-person ballots, as Democrats now also try to add to their total in person ahead of and on Election Day – so the Blue Wave may have swept in first, and the Red Wall will have to see if it can rise above that rising water level or not on Tuesday, which changes the potential election result timing.

One can also dive into the voting and demographic data available at both the local and meta-level to see how high that Blue wave really is so far. With perhaps half the vote in, why not do so rather than just looking at the Real Clear Politics average to try to guess the other half?

However, it remains true that there are still many ways to interpret these data, and there are six days left to vote. Anything could happen with the VBM trend, and on the Big Day itself. Has VBM cannibalised in-person voting, or supplemented it? Perhaps turnout in 2020 will be off the charts. Or perhaps not. Perhaps people will have voted opposite to their actual registration. Or perhaps not. Perhaps independents have split sharply for one candidate or the other. Or perhaps not.

Yet perhaps there is a lower risk of the Florida-2000 tsuris many fear, and we can get back to talking about something else within a week – which will be a blessed relief to most of us.

Then it will just be the subsequent US domestic reaction to a race where only one man can win; and the international dominoes that will start to fall one way or the other once we know who has.

On which, and speaking of dominoes, France is set to announce another four-week (“more flexible” lock down) as Covid-19 cases and deaths surge. The country is also wrapped up in a spat with Turkey on several fronts, a boycott of its products by some Muslim states, and the Brexit negotiations. And it has more than one eye on the US election, of course. (See here for more.)

Prior to that, we saw the PBOC remove the Counter-Cyclical Factor (CCF) applied to the daily fixing of CNY. Again. The CCF is usually put in place at times when the Chinese currency is weakening and needs support, and it does what it says. The “market” close should be X….but the PBOC applies the CCF and says it is Y, which is always stronger. (When the actual market would be Z, but we never get there because of capital controls.) Removing the CCF is a clear signal, on the back of others, that the PBOC does not want the currency appreciating too far too fast; and the pattern suggests it might now start to move back the other way again.

As noted several times recently, let’s also see what emerges from the US election in terms of the EM FX response, and CNY as the biggest domino in particular. How will it price in confrontation vs. possible co-operation from a week today?

On which, as a US court stalls the White House move to ban China’s WeChat, someone on social media is complaining that his attempts to share news of the Hunter Biden laptop were blocked by both WeChat AND Twitter. So East-West co-operation is possible!

Which is a message Australia always longs to hear. Q3 CPI there was a tick stronger than expected at 1.6% q/q and yet just 0.7% y/y (yes, those are the right way round). As usual, there are a host of other measures. As is now usual, the underlying message is lowflation not inflation. And indeed the only question is just how much QE the RBA will ultimately do and for how long. Again, the market seems to think this is a signal to buy AUD. One wonders why, when in every other case abroad it has taken the opposite stance on QE and FX. Let’s see if that particular Aussie narrative-clinging lasts a lot longer than six days.

Oil prices were hammered overnight, accelerating after API reported an unexpectedly large crude build

API

• Crude +4.557mm (+1.2mm) – biggest build since May

• Cushing +136k

• Gasoline +2.252mm

• Distillates -5.333mm

DOE

• Crude +4.32mm (+1.2mm) – biggest build since May

• Cushing -422k

• Gasoline -892k (-400k exp)

• Distillates -4.491mm (-2mm exp)

Official DoE data confirmed API’s reported larger than expected crude build but Gasoline saw a draw…

Source: Bloomberg

A busy storm season has left production-monitoring a thankless task and Zeta may make next week’s data even worse…

Source: Bloomberg

Another hurricane in the Gulf of Mexico helped produce a rise in prices yesterday, but the reaction appeared to be muted as forecasts began to show the storm would miss major production facilities.

“A resurgence in COVID-19 cases in Europe and North America has stopped the recovery in demand in its tracks,” ANZ Research said in a note.

“If market conditions worsen, (OPEC+) will have no choice but to delay the increase of quotas by a month or two at its meeting on December 1,” ANZ said.

WTI was trading just above $37 ahead of the official EIA data and extended losses on the weak data…

Finally, Bloomberg Intelligence Senior Energy Analyst Vince Piazza notes that “weak demand is still weighing on fundamentals across the energy complex, with no fiscal stimulus to support a shaky economic backdrop as Covid-19 infections rise faster than expected.”

The latest chapter in the ridesharing soap opera that continues to play out across the U.S. (and notably California, where a court just ruled that drivers must be made employees, and not contractors) has arrived in the form of a U.S. Civil Rights Act lawsuit filed against Uber for – wait for it – firing drivers based on how they are rated by customers for doing their job.

Yes, in today’s “woke” environment, not performing your job well is no longer an acceptable means for being terminated. That’s why former driver Thomas Liu is suing the ride-hailing giant, claiming that there’s bias in the way the company fires minority drivers – which is the same way it fires all drivers: based on customer ratings of their service.

Also known as: exactly how anyone manages any customer service-oriented business.

“Uber is aware that passengers are prone to discriminate in their evaluation of drivers, but Uber has continued to use this system, thus making it liable for intentional race discrimination,” Liu said in a lawsuit, according to Bloomberg.

It’s a claim he brought four years ago to the U.S. Equal Employment Opportunity Commission, who did nothing about it other than to tell Liu to try his hand pursuing the claims in court. So, that’s exactly what he is doing.

Uber is on the record as calling the lawsuit “flimsy” and the company said that it “has greatly reduced bias for both drivers and riders, who now have fairer, more equitable access to work and transportation than ever before.”

We have to side with Uber on this one. The company also argues that since its drivers are independent contractors (but for California) that they aren’t even covered by workplace protections of the Civil Rights Act. 

Liu’s lawsuit points out that Uber’s policy is (gasp) to deactivate drivers who have a rating the company deems to be unsatisfactory. Liu claims he faced bias while driving in San Diego, including customers canceling when they saw his photo (How do you prove this? And also, that doesn’t affect a driver’s rating…) or “asking in an unfriendly manner” where he was from. 

He claims he was terminated because his rating fell under the company’s 4.6 minimum. Liu argued the minimum “automatically deactivated anyone who looked different, dressed different, talked different, or acted different.” We can’t help but wonder if Liu spent most of his rides disgruntled and, if so, if that could explain why his rating was so low.

“Customer discrimination is not an excuse for employers to discriminate,” Liu’s lawyer said, seemingly unaware that customers “discriminate” by where they get the best service in all industries across the country. It’s called capitalism. 

We look forward to the court tossing this one out.