Tag: finance

Longtime commodity investors are growing increasingly perplexed by movements in contemporary commodity markets, which just don’t seem to follow the same trading patterns they once did. This attitude was perhaps best expressed recently by Hugh Hendry, who decried “wrong” markets when he shuttered his Eclectica hedge fund in September after 15 years…

And just last month, when the latest victim of this disturbing trend, Jamison Capital founder Stephen Jamison, decided to throw in the towel and shutter his nearly $1.5 billion macro commodity fund and convert his assets to a family office…joining a group that includes Texas tycoon T. Boone Pickens, one of the most famous commodity traders to ever do it.

It won’t be the first commodity/macro fund to admit defeat in a market in which nothing makes sense. The closure of Jamison, one of the largest commodity-focused hedge funds, comes after several other big names have closed shop in recent months. They include hedge fund manager Andy Hall, who closed his Astenbeck Capital Management last summer, and Texas tycoon T. Boone Pickens, who said this month that he was closing his fund, in part due to declining health.

The irony is, many of these closures happened before the recent spurt higher in global commodities, which recently clocked their longest win streak in history, might do something to help results this quarter.
 

As we’ve explained before, traders operating in the Information Age of commodity trading insist that the old strategies don’t work anymore because – as one trader put it – “everything is transparent, everybody knows everything and has access to information.”

That is, there’s so much data available from various services – and so many sophisticated algorithmic traders who can parse these massive data sets – that many of the arbitrage opportunities that commodity trading shops relied on simply no longer exist, leaving middlemen like Nobel Group in a difficult position because the tiny margins upon which they rely for profits has essentially vanished, having been front-run out of existence.

Today, Reuters returned to the theme of commodity hedge funds throwing in the towel – and coincidentally – managers who have operated in the space for decades blame these same factors for forcing them to reluctantly throw in the towel: Namely, algorithmic trading.

Just ask veteran commodity fund manager Anthony Ward. Ward was once so highly regarded for his cocoa trading prowess that he earned the nickname “chocfinger”. But after four decades, Ward has found that computer-driven trading is distorting prices to such a degree that the fundamental analysis he once relied on to predict how prices would react to massive harvests, or droughts, or declining demand aren’t as reliable as they once were.

Ward said he first realized that “the days of traditional commodity investors doing well from taking positions based on fundamentals such as supply and demand may be numbered” in January 2016, when his firm ended up badly wrongfooted when cocoa prices slid based off weak factory data out of China triggered algos that were programmed to respond to signs of weakening demand…

…The problem with this, from a fundamental standpoint, is that China’s cocoa consumption is relatively inconsequential for the global market. Algorithms just sold cocoa along with a basket of commodities. As we repeatedly noted around that time, cross-asset correlations had climbed to unprecedented levels as algorithms left their imprimatur on the broader market…

Meanwhile, the algorithms ignored obscure weather patterns that indicated there would be a “hot, harmattan wind from the Sahara desert” bolstering the crop yields in Ghana and the Ivory Coast,” Reuters said.

After all, reading a headline about Chinese factory production is easy for an algorithm. But try explaining to an algorithm what a “harmattan wind” is and…well…we imagine you get the idea…

Commodity markets fell across the board that month after weak factory data in China raised fears of lower demand from the world’s top consumer of raw materials.

Ward blamed the slide in cocoa on what he regarded as misplaced selling by computer-driven funds reacting to the Chinese data, given China has scant impact on the cocoa market.

“The actual fundamentals in cocoa were extraordinarily bullish in January 2016. We were forecasting the largest harmattan in history, which is exactly what happened,” he said.

His prediction that a hot, harmattan wind from the Sahara desert would hit harvests in Ivory Coast and Ghana and drive cocoa prices higher did come to pass – but not before the fund had been forced to cut its losses when the market slumped.

At the end of 2017, Ward closed the CC+ hedge fund that had invested in cocoa and coffee markets for years.

Also in 2016, Michael Farmer, founding partner of the Red Kite fund, which specializes in copper, also blamed HFT and algorithms for creating an “unfair advantage” for themselves and their ilk. CME Group found during a recent study that algorithmic trading is responsible for about half of trading volume in agricultural products, and some 58% in energy contracts.

At the same time, data from industry tracker Hedge Fund Research shows the average hedge fund returned 8.64% in 2017 but commodity funds barely broke even with an average return of a paltry 0.43%.

In the past, Ward estimated that automated trading would distort the market by 10% to 15% from prices justified by fundamentals – which he said was irritating but often manageable – it can now reach 25% to 30%.

Traders like Farmer have also blamed exchanges’ decision to offer HFT shops special co-location services for giving super-computers a distinct advantage, essentially allowing them to see a picture of the market that is milliseconds removed from what even less-powerful, or less advantageously placed, computers might see.

Unsurprisingly, the fund managers at some of these systematic funds are unapologetic about the impact on the market that their funds are having.

“I don’t feel too sorry (for traditional fund managers),” said Anthony Lawler, co-head of GAM Systematic, the quantitative part of Swiss money manager GAM Holding, which had assets under management (AUM) of 148.4 billion Swiss francs ($158 billion) at the end of September.

“Information, which used to be expensive, difficult to get, not easily shared, is now ubiquitous. It’s truly mind-boggling the depth of data available,” Lawler said.

“That means it’s much more difficult to have an information edge and advantage to the player who can digest and analyze the data the quickest.”

GAM Systematic, which had $4.3 billion of assets at the end of September, regards commodities as one of many markets it monitors for opportunities by crunching data such as weather forecasts and shipping data that shows how full a vessel is.

They added that great human traders can still win by capitalizing on machines’ shortsightedness…

“If you’re a great discretionary trader, then sit on the sidelines and wait for those missteps … I would be super happy if that trader is successfully picking off some of these missteps,” said Lawler.

But in today’s world of super-fast computers, these traders dismiss fundamental analysis as essentially “the work of a historian”.

“The truth is fundamental analysis is effectively the work of a historian, seeking to provide explanation for what has already occurred,” he said.

Meanwhile, traders also blamed banks like once-legendary commodity broker Goldman Sachs for withdrawing from the market, allowing machines to play a larger role.

Total global commodity assets under management more than halved from 2012 to 2015 to under $200 billion, though the total has since recovered to just over $300 billion, according to Barclays.

Some claim this has created a feedback loop of sorts, making markets less liquid and more prone to choppy moves that algorithms can more easily capitalize on. Other traders have learned to survive by essentially pivoting from trading commodities for speculative purposes to running their own mines.

“Seven years ago we started diversifying our business operations,” said Eibl. He now operates a merchant business in metals with a turnover of more than $1 billion a year, runs tungsten and tin mines in Africa and Asia and is soon to launch a metals-backed crypto-currency.

But as last week’s “volocaust” demonstrated, that long-awaited opportunity to capitalize on the failures of their machine rivals might just be upon us, as traders largely blamed machines for exacerbating the selloff.

As one trader who called the selloff put it, this is just an appetizer…

 

 

 

 

 

 

via Zero Hedge http://ift.tt/2o1Z1lD Tyler Durden

The Dollar Index is kneejerking higher in the last few minutes following headlines from Nikkei that The Bank of Japan is considering nominating uber-dove Masazumi Wakatabe to a key leadership position.

JPY immediately jerked lower as Wakatabe is seen as advocating bolder monetary easing. As Nikkei reports,

The potential choice of Wakatabe, a longtime proponent of aggressive easing, as deputy governor comes amid speculation that the central bank is looking to start normalizing policy.

Wakatabe has argued for raising the BOJ’s annual pace of Japanese government bond purchases from the current 80 trillion yen ($750 billion) to 90 trillion yen and broadening the range of assets the bank buys.

“There needs to be easing strong enough to absorb the negative impact of the consumption tax hike [planned for October 2019] and lift inflation to 2%,” he told The Nikkei in December.

via Zero Hedge http://ift.tt/2obqsbU Tyler Durden

For the first time since January, Bitcoin is trading above $10,000…

 

 

There has been notable price action and volume around the Asian close every day this week…

 

But it seems Bitcoin is more interested in following Nasdaq higher and VIX lower..

via Zero Hedge http://ift.tt/2F5a9Wr Tyler Durden

Authored by Lance Roberts via RealInvestmentAdvice.com,

Last week, Congress passed a 2-year “continuing resolution, or C.R.,”  to keep the Government funded through the 2018 elections. While “fiscal conservatism” was just placed on the sacrificial alter to satisfy the “Re-election” Gods,” the bigger issue is the impact to the economy and, ultimately, the financial markets.

The passage of the $400 billion C.R. has an impact that few people understand. When a C.R. is passed it keeps Government spending at the same previous baseline PLUS an 8% increase. The recent C.R. just added $200 billion per year to that baseline. This means over the next decade, the C.R. will add $2 Trillion in spending to the Federal budget. Then add to that any other spending approved such as the proposed $200 billion for an infrastructure spending bill, money for DACA/Immigration reform, or a whole host of other social welfare programs that will require additional funding.

But that is only half the problem. The recent passage of tax reform will trim roughly $2 Trillion from revenues over the next decade as well.

This is easy math.

Cut $2 trillion in revenue, add $2 trillion in spending, and you create a $4 trillion dollar gap in the budget. Of course, that is $4 Trillion in addition to the current run rate in spending which continues the current acceleration of the “debt problem.”

But it gets worse.

As Oxford Economics reported via Zerohedge:

“The tax cuts passed late last year, combined with the spending bill Congress passed last week, will push deficits sharply higher. Furthermore, Trump’s own budget anticipates that US debt will hit $30 trillion by 2028: an increase of $10 trillion.”

Oxford is right. In order to “pay for” all of the proposed spending, at a time when the government will receive less revenue in the form of tax collections, the difference will be funded through debt issuance.

Simon Black recently penned an interesting note on this:

“Less than two weeks ago, the United States Department of Treasury very quietly released its own internal projections for the federal government’s budget deficits over the next several years. And the numbers are pretty gruesome.

In order to plug the gaps from its soaring deficits, the Treasury Department expects to borrow nearly $1 trillion this fiscal year. Then nearly $1.1 trillion next fiscal year. And up to $1.3 trillion the year after that.

This means that the national debt will exceed $25 trillion by September 30, 2020.”

You can project the run rate quite easily, and it isn’t pretty.

Of course, “fiscal responsibility” left Washington a long time ago, so, what’s another $10 Trillion at this point? 

While this issue is not lost on a vast majority of Americans that “choose” to pay attention, it has been quickly dismissed by much of the mainstream media, and Congressman running for re-election, by suggesting tax reform will significantly boost economic growth over the next decade. The general statement has been:

“By passing much-needed tax reform, we will finally unleash the economic growth engine which will more than pay for these tax cuts in the future.”

Don’t dismiss the importance of $25-30 Trillion in U.S. debt. It is larger than the debts of every other nation in the world – combined.

Congress Killed The Economic Boom

While it truly is a great “talking point,” the reality is it just isn’t true.

As I have shown previously, there is absolutely NO historical evidence that cutting taxes, without offsetting cuts to spending, leads to stronger economic growth.

Even Congressman Kevin Brady, Chairman of the House Ways and Means Committee, confirmed the same.

Deficits, and deficit spending, are HIGHLY destructive to economic growth as it directly impacts gross receipts and saved capital equally. Like cancer – running deficits, along with continued deficit spending, continues to destroy saved capital and damages capital formation. 

Debt is, by its very nature, a cancer on economic growth. As debt levels rise it consumes more capital by diverting it from productive investments into debt service. As debt levels spread through the system it consumes greater amounts of capital until it eventually kills the host. The chart below shows the rise of federal debt and its impact on economic growth.

The reality is that the majority of the aggregate growth in the economy since 1980 has been financed by deficit spending, credit creation and a reduction in savings. This reduced productive investment in the economy and the output of the economy slowed. As the economy slowed, and wages fell, the consumer was forced to take on more leverage to maintain their standard of living which in turn decreased savings. As a result of the increased leverage more of their income was needed to service the debt – and with that, the “debt cancer” engulfed the system.

The Austrian business cycle theory attempts to explain business cycles through a set of ideas. The theory views business cycles:

“As the inevitable consequence of excessive growth in bank credit, exacerbated by inherently damaging and ineffective central bank policies, which cause interest rates to remain too low for too long, resulting in excessive credit creation, speculative economic bubbles and lowered savings.”

The problem that is yet not recognized by the current Administration and mainstream economists is that the excessive deficits and exponential credit creation can no longer be sustained. The process of a “credit contraction” will eventually occur over a long period of time as consumers and governments are ultimately forced to deal with the deficits.

The good news is the process of “clearing” the market will eventually allow resources to be reallocated back towards more efficient uses and the economy will begin to grow again at more sustainable and organic rates.

Today, however, expectations of a return to economic growth rates of the past are most likely just a fairy tale. The past 9-years of stock market returns have been fueled by trillions of dollars of support and direct injections into the financial system – that support is not sustainable in the long run. While the injections have kept the economy from falling into a depression in the short term – the unwinding of that support will suppress economic growth for many years to come.

There is no way to achieve the necessary goals “pain-free.”  The time to implement austerity measures is when the economy is running a budget surplus and is close to full employment. That time was two Administrations ago when the economy would have slowed but could have absorbed and adjusted to the restrictive measures. However, when things are good, no one wants to “fix what isn’t broken”. The problem today is that with a high dependency on government support, high levels of underemployment and rising budget deficits, the implementation of austerity measures will only deter future economic growth, which is dependent on the very things that need to be “fixed”.

The processes that fueled the economic growth over the last 30 years are now beginning to run in reverse, and when combined with the demographic shifts in the U.S., the impact could be far more immediate and prolonged than the media, economists, and analysts are currently expecting. Sacrifices will have to be made, the economy will drag on at subpar rates of growth, individuals will be working far longer into their retirement years and the next generation of Americans will lead a far different life than what the currently retiring generation enjoyed.

It is simply a function of the math.

via Zero Hedge http://ift.tt/2Ggl7ru Tyler Durden

By Charlie McElligott, MD at Nomura Cross-Asset Strategy

Hints Of Transition To “Late Cycle”/”Pre-Recession” As Key Levels Hold

SUMMARY:

• Rates flows showing no urgency to cover from shorts / no urgency to ‘dip toes’ from real money/little-to-no gamma- or convexity-hedging = still room for USTs to go lower
• Yet 3.2% in 30Y UST yields holds early—a reversal LOWER in rates would skewer much cross-asset thematic positioning
• Equities rallied on “still easier” financial conditions with flattish “real rates” and MUCH weaker USD
• However, an early test of 2720 “congestion” / resistance in ES1 has failed
• SPX and Volatility analogs tell similar story: re-test of equities lows is likely coming, followed by a rally looking-out on 3m / 6m basis
• “Late-cycle” indications from the CPI ‘particulars’—alongside rising yields—are the “playbook” for weaker US Dollar from here
• Typical “late-cycle” / “pre-recession” behavior would tell investors to avoid expensive stocks as “Value” outperforms—potentially meaningful confirmation of where the economy stands

COMMENTARY:

First—a few levels of note worth reiterating: 2720 in SPX and 3.20 in UST 30Y yield, both of which have ‘held’ so far this morning.

Regarding yesterday’s selloff in USTs, comments from our Rates team were extremely telling from the positioning perspective, in that there was very little “stress.”  My outstanding colleague Darren Shames noted that the shorts were in no rush to cover, communicating high conviction that yields still have more room to move higher.  Real Money simply wasn’t there, feeling like there is still more move to shake out / better entry-points, potentially eying that ~3.20% level in the 30Y that has held since 2014.  Darren too mentions that convexity hedgers were present to a certain extent, but by no means forcing the flows—even at the worst levels of the day.  When viewing that alongside his observation that dealer gamma hedging flows too were negligible, it indicates that the “sellers are lower” supply still has yet to be seen (although notable that ~7k futs traded overnight as yesterday’s 120-08 low in TYH8 was breached—looks like a “stop loss”). 

Source: Bloomberg

As previously stated, it’s the move in “real rates” that risk traders need to keep an eye on.  My yesterday afternoon piece focused on this, because despite the move in nominal yields, the “gap” move in inflation expectations (thus the widening in breakevens) actually kept “real rates” stable on the day.  This in turn provided relief from the recent equities-theme of the negative impact of “tighter financial conditions.”

Source: Bloomberg

However, I REALLY think that it was the USD breakdown which provided the most relief for US equities.  The Bloomberg Dollar Spot index sits on the cusp of breaking-down to a new 3.5 year lows with a frightening amount of room to fall (no support til 1065—the 76.4% retracement of the 5 year BBDXY rally—which is another -4.5% move).  

What drove this next leg lower in the “short USD trade,” especially after the better inflation print?  Well…outside of the Retail Sales clunker, it’s a larger view of what the particulars of the inflation report said about the status of where the US economic cycle is (hint: late-stages). 

Essentially, the pace of the inflation running at a 2.9% annualized rate over the past three months (strongest since ’11) is a “tell,” while too seeing previously-lagging sectors like “medicare costs” finally pivot-higher speaks to this turn in “late-stage-cyclicality.”  So as we move a “new world” of higher-rates in conjunction with “end of cycle,” this is a potent cocktail for a major beatdown in the prospects for the US Dollar from here.

Source: Bloomberg

So as it pertains to stocks then, a few points:

Big picture and as previously referenced, SPX is now in that “congestion zone,” and earlier this morning touched—and failed—at that 2720 resistance I noted.  Today’s flows / opening print might indeed chase it back up, but I’ll be watching to see how much institutional “follow-through” there is here, as I continue to see potential for a fade. 

Anthony Antonucci has run a number of evolving “market shock” analogs (TWO -3.5 SD ‘down’ moves followed by a +2 SD move ‘up’) and, on average, the market re-tests lows within a month.  From there however, we form a “tradeable-bottom” and travel higher on a 3 month basis. The sample-set isn’t terrible either—7 examples—1946, 1966, 1970, 1973, 1987, 2011 and 2015.  Anthony also notes that “…the highest correlation to this current period on SPX returns is Aug11 2015 and yes we rallied for next day or 2 (2739) and chop and a few weeks later we test the lows and rip again.” 

Source: Nomura

Volatility also tells a similar “sequencing” story in that “volatility spike and reset” analog looks similar to the “chop then higher” story.  Looking at the VXO (the OEX VIX which has a longer history), we looked at scenarios when the index trades above 30 then sells off more than 50% as the market rallies and vol comes in.

Similar gig:

Source: Nomura

The message here from these analogs? 

That I think you’re gonna have another chance to buy stuff lower, before another rally off the back of a “tradeable bottom”…and more importantly, that higher volatility / “chop” is “here to stay.”

* * *

Thematically as it relates to the “late-cycle” commentary above, it was notable to see “high beta” / “cyclical beta” to perform the way they did (e.g. a basket of ‘beta energy’ closed +4.2% on day; ‘high beta’ basket was +2.8%; leveraged balance-sheet +2.4% / high default risk +2.3%).  Generally-speaking, you’d expect to see “Value” again start working in a “late-cycle” / “pre-recession” backdrop (acknowledging of course that this “pre-recession backdrop” classification will be viewed as controversial–but by the NBER economic cycle “definition,” it’s the phase which follows “pure expansion”).    The trick or “issue” however is that this stuff has been a lot of the underweight or short in the market. 

A study by O’Shaughnessy Asset Management on factor performance over the business cycle notes the underperformance of ‘expensive’ stocks versus ‘cheap’ ones in the late-cycle phase, aka “Value” factor market-neutral performance:

“Striking in the Pre-Recession periods is the strong high-low spread for Value of 17.8 percent, which suggests that investors shun expensive stocks when economic growth is in question. In fact, across the various regimes in our study, the low Value (expensive) decile excess return of -12.4 percent is the lowest. The trend of expensive stocks underperforming starts well in advance of an official recession and extends through the early recovery Post-Recession regime.Not only do these stocks deliver poor excess and absolute return, they tend to exhibit extreme volatility. While high Value (cheap) stocks had a standard deviation of just 14.8 percent annualized, low Value (expensive) stocks had a standard deviation of 30.3 percent.”

 

Thus, I’m watching “Value” performance as closely as ever—either as another “false dawn” or as an indication that investors are beginning to transition into “late-cycle” / “pre-recession” positioning.

via Zero Hedge http://ift.tt/2By4U1O Tyler Durden

Did the dead-cat-bounce just die?

 

 

This drop has erased all the post-CPI gains…

via Zero Hedge http://ift.tt/2o9gk3v Tyler Durden

Following the 8th largest mass shooting in American history, and 18th school shooting in 2018 (and one-per-week since 2013), President Trump is set to address a mourning nation faced with an epidemic that is perhaps more of a problem than opioids.

President Trump tweeted his condolences this morning and called for flags to fly at half-mast…

My prayers and condolences to the families of the victims of the terrible Florida shooting. No child, teacher or anyone else should ever feel unsafe in an American school.

— Donald J. Trump (@realDonaldTrump) February 14, 2018

And then addressed the actual shooter’s situation…

So many signs that the Florida shooter was mentally disturbed, even expelled from school for bad and erratic behavior. Neighbors and classmates knew he was a big problem. Must always report such instances to authorities, again and again!

— Donald J. Trump (@realDonaldTrump) February 15, 2018

President Trump is due to speak at 11ET…

*  *  *

America’s deadliest modern mass shootings

1. Las Vegas shooting. (October 2, 2017) 58 killed, 527 injured

2. Pulse nightclub shooting. Orlando, Florida (June, 2016): 49 killed and more than 50 injured at a gay nightclub.

3. Virginia Tech shooting. Blacksburg, Virginia (April, 2007): 32 killed and 17 injured on campus.

4. Sandy Hook shooting. Newtown, Connecticut (December, 2012): 26 killed at an elementary school.

5. Texas church shooting: Sutherland Springs, Texas (November, 2017): 26 killed during a church service

6. Luby’s Cafeteria shooting. Killeen, Texas (October, 1991): 23 killed at a restaurant.

7. McDonald’s shooting. San Ysdiro, California (July, 1984): 21 killed at a McDonalds.

8. Stoneman school shooting. Parkland, Florida (February, 2018). 17 killed at a high school.

9. University of Texas Tower shooting. Austin, Texas (August, 1966): 16 killed in and around campus by a sharpshooter.

10. San Bernardino shooting. San Bernardino, California (December, 2015): 14 killed at holiday party at conference center.

11. Oklahoma post office shooting. Edmond, Oklahoma (August, 1986): 14 killed at a post office.

12. Fort Hood shooting. Fort Hood, Texas (November, 2009): 13 killed at a military base.

13. Columbine shooting. Littleton, Colorado (April, 1999): 13 killed at a high school.

14. Binghamton Civic Association shooting. Binghamton, New York (April, 2009): 13 killed at a community center for immigrants.

15. Walk of Death shootings. Camden, New Jersey. (September, 1949): 13 killed in businesses and on the street.

16. Wilkes-Barre shootings. Wilkes-Barre, Pennsylvania (September, 1982): 13, many of them related, killed at two homes.

17. Wah Mee shooting. Seattle, Washington (February, 1983): 13 killed at a gambling club in Chinatown.

18. Aurora movie theater shooting. Aurora, Colorado (July, 2012): 12 killed and 58 wounded at a cinema.

19. Navy Yard shooting. Washington, D.C. (September, 2013): 12 killed and 8 wounded at a military base.

Source: Axios

There have been 18 school shootings in 2018 alone…

And 290 since 2013… or on average around one per week…

Source: EveryTownResearch.org

via Zero Hedge http://ift.tt/2F5cSyR Tyler Durden

Authored by Bryce Coward via Knowledge Leaders Capital blog,

As we navigate a period of market turmoil, its important to remember that non-bear corrective phases typically last six weeks to two months and almost always include several several substantial large rallies followed by selloffs back to the range of the initial low.

Indeed, this classic give and take is how important bottoms are usually formed. From a psychological standpoint, we can think of it as the weak hands exiting on strength (perhaps at or about the level at which they bought in) and strong hands stepping in on weakness.

In this post we examine the past four major S&P 500 drawdowns (2010, 2011, 2012 and 2015-2016) to demonstrate the bottoming process that is typical of market corrections. We apologize ahead of time for the larger than normal charts.

Starting with the 2010 correction, we see that an initial 12% selloff over two weeks was followed by a 10% rally over five days to old highs, another 11% decline, two more rally attempts, and then a final 11% plunge. The whole episode lasted about two months.

During the 2011 correction, an initial two weeks of weakness that took the market down 18% was followed by four substantial attempts to rally to the previous highs and then a final 10% dump into the ultimate low. The whole episode lasted about two months.

In the 2012 correction, a 9% initial selloff over two weeks was followed by a 3% rally lasting five days and a final 5% dip over four days into the low. That ultimate low was then retested two weeks later with a 4% dip. The whole episode lasted two months.

During the 2015-2016 correction, the market dropped 11% over three days, made two vigorous attempts at the old highs, and then fell another 7% to test the initial low. But the correction wasn’t over. The market rallied a full 13% to the range of the previous highs, stayed there for six weeks and then fell 14% to a new, lower low. This new low was followed by a 7% rally and an 8% final plunge into the ultimate low. The whole episode lasted six months with the initial phase lasting six weeks.

Finally, we show the current correction in real time. We see that the market plunged 10% over seven days, rallied 5% over two days, and then made a new low two days hence. We’ve since rallied back nearly 7% over four days to exactly the 65-day moving average. The whole episode has lasted thirteen days, with the low achieved after ten days.

Given the above episodes, and many others like them throughout market history, it would be completely normal and indeed expected for this market to test the low put in place on Friday, February 9th one or several more times, and possibly break that level. It would be normal for this back and forth process to take place over the next four to six weeks.

via Zero Hedge http://ift.tt/2EvnC8Y Tyler Durden

Cryptocurrency prices are surging again this morning with Bitcoin testing $10,000 for the first time in over two weeks.

On the week, Bitcoin is up around 15% but Litecoin is leading the run…

While Bitcoin remain down 30% year-date, it appears that amid the recent cataclysmic collapse of Bitcoin, the cryptocurrency hammered out a low earlier this month, as dip buyers scooped up coins below $6,000.

Nearly eight days from the low, the auction has soared by more than 50 percent probing a 20 simple moving average at 9,162.

We now have an idea who one of those dip buyers were and the amount they purchased…

According to BitInfoCharts, a mysterious buyer with a Bitcoin address of 3Cbq7aT1tY8kMxWLbitaG7yT6bPbKChq64 purchased an astronomical amount of bitcoins worth $344,000,000 at a blended cost basis around $8,400 from 02-09-18 through 02-12-18. In total, this Bitcoin whale doubled down adding nearly 41,000 coins for a new total of 96,000 coins worth somewhere around $900,000,000 at today’s price ($9,400).

 

Bitcoin address 3Cbq7aT1tY8kMxWLbitaG7yT6bPbKChq64 is number three on the top 100 richest Bitcoin address in the world.

The table from BitInfoCharts reveals the centralization of Bitcoin wealth. 

Last night, we reported how South Korea officials downplayed the threats of a ban, which has sent Bitcoin well over +11 percent since to 9,400-handle.

The catalyst for the leg higher appears to be South Korea once again as regulators downplayed any threats of a ban.

As Bloomberg reports, South Korea’s government gave the strongest signal yet that it will allow cryptocurrency exchanges to keep operating in the country, a welcome development for traders who had feared an outright ban in one of the world’s biggest markets for digital assets.

Policy makers will focus on making cryptocurrency trading transparent rather than outlawing it altogether, Hong Nam-ki, minister of the Office for Government Policy Coordination, said in a video a posted on the presidential website. It was the government’s first coordinated response to the public uproar over a justice ministry proposal in December to shut digital-asset exchanges.

But as we have noted previously, this rebound is very much the norm, seasonally as China’s lunar new year approaches…

via Zero Hedge http://ift.tt/2C0lHeD Tyler Durden

Authored by Luke Rosiak via The Daily Caller,

Bruce Ohr, the Department of Justice official who brought opposition research on President Donald Trump to the FBI, did not disclose that Fusion GPS, which performed that research at the Democratic National Committee’s behest, was paying his wife, and did not obtain a conflict of interest waiver from his superiors at the Justice Department, documents obtained by The Daily Caller News Foundation show.

The omission may explain why Ohr was demoted from his post as associate deputy attorney general after the relationship between Fusion GPS and his wife emerged and Fusion founder Glenn Simpson acknowledged meeting with Ohr. Willfully falsifying government ethics forms can carry a penalty of jail time, if convicted.

The Democratic National Committee (DNC) hired Fusion GPS to gather and disseminate damning info about Trump, and they in turn paid Nellie Ohr, a former CIA employee with expertise in Russia, for an unknown role related to the “dossier.” Bruce Ohr then brought the information to the FBI, kicking off a probe and a media firestorm.

The DOJ used it to obtain a warrant to wiretap a Trump adviser, but didn’t disclose to the judge that the DNC and former Secretary of State Hillary Clinton’s campaign had funded the research and that Ohr had a financial relationship with the firm that performed it — which could be, it turns out, because Ohr doesn’t appear to have told his supervisors. Some have suggested that the financial payments motivated Bruce Ohr to actively push the case.

For 2014 and 2015, Bruce Ohr disclosed on ethics forms that his wife was an “independent contractor” earning consulting fees. In 2016, she added a new employer who paid her a “salary,” but listed it vaguely as “cyberthreat analyst,” and did not say the name of the company.

The instructions require officials to “Provide the name of your spouse’s employer. In addition, if your spouse’s employer is a privately held business, provide the employer’s line of business.” As examples, it gives “Xylophone Technologies Corporation” and “DSLK Financial Techniques, Inc. (financial services).” The dollar amount does not need to be disclosed. “Report each source, whether a natural person or an organization or entity, that provided your spouse more than $1,000 of earned income during the reporting period,” they say.

The DOJ says, “Financial disclosure reports are used to identify potential or actual conflicts of interest. If the person charged with reviewing an employee’s report finds a conflict, he should impose a remedy immediately.” Its guidance says, “employees should always seek the advice of an ethics official when contemplating any action that may be covered by the rules.”

Paul Kamenar, a Washington, D.C., public policy lawyer experienced in executive branch ethics and disclosure laws, said, “Based on my reading of the regulations and disclosure guide accompanying the form, he failed to disclose the source of his wife’s income on line 4 by not including the ‘name of the employer.’”

“The law provides that whoever ‘knowingly and willfully’ fails to file information required to be filed on this report faces civil penalties up to $50,000 and possible criminal penalties up to one year in prison under the disclosure law and possibly up to five years in prison under 18 USC 1001,” he said. “Since he lists her income type as ‘salary’ as opposed to line 1 where he describes her other income as ‘consulting fees’ as an ‘independent contractor’ it’s clear that she was employed by a company that should have been identified by name,” he said.

“And even with respect to her ‘independent contractor’ listing, it appears incomplete by not describing what kind of services were provided. Both these omissions do not give the reviewing official sufficient information to determine whether there is a conflict,” Kamenar added.

Bruce Ohr spouse financial disclosure (DOJ)

Ohr also did not get a conflict of interest waiver from his supervisors, suggesting that he may not have explained to anyone the true source of the income and how it intersected with his official involvement in the case, nor did he have approval.

If a potential conflict is disclosed and explained to supervisors, a government agency can grant a conflict of interest waiver, known as a 208(b) waiver. In response to a records request, officials told TheDCNF, “There are no … waivers for this filer.”

Scott Amey, general counsel of the Project on Government Oversight, said “he couldn’t get a waiver for that, that would have required outright recusal.” Making it potentially even worse than failing to recuse, Ohr’s pressing the Trump case appears to be something he decided to do on his own, rather than something assigned to him.

Bruce Ohr was demoted from his DOJ position shortly after the company’s founder acknowledged in a Nov. 14, 2017, interview with the House Intelligence Committee that he had met with him. Fox News reported in December that Ohr had concealed his meetings with the firm from his supervisors.

The form says, “[F]alsification of information required to be filed by section 102 of the [Ethics in Government Act of 1978] may also subject you to criminal prosecution” as well as “civil monetary penalty and to disciplinary action by your employing agency.”

The lack of disclosure is the latest of several examples of people apparently trying to conceal the financial relationship that Fusion GPS, which was funded by the DNC, had with the family of the DOJ official.

In Fusion GPS founder Simpson’s November House interview, he conspicuously omitted his relationship with Nellie Ohr, painting Bruce Ohr as someone who he was connected to independently. Investigators said, “You’ve never heard from anyone in the U.S. Government in relation to those matters, either the FBI or the Department of Justice?”

“I was asked to provide some information … by a prosecutor named Bruce Ohr,” he said.

Investigators said, “Did Mr. Ohr reach out to you?”

“It was someone that Chris Steele knows … and I met Bruce too through organized crime conferences or something like that … Chris told me that he had been talking to Bruce … and that Bruce wanted more information, and suggested that I speak with Bruce,” Simpson said.

Simpson also said his firm was not affiliated with any Russian speakers, even though Nellie Ohr appears to speak the language.

In addition to meeting with Simpson, Ohr also met with Steele before the election.

In an earlier Aug. 22, 2017, interview with the Senate Judiciary Committee, Simpson didn’t mention either of the Ohrs by name. He said he had not met with any FBI officials about the matter, without noting his contact with the DOJ official.

Simpson suggested in court records on Dec. 12, 2017, that the only way government investigators could have found out about Nellie Ohr’s relationship with the company was through its bank records. “Bank records reflect that Fusion contracted with Nellie Ohr, a former government official expert in Russian matters, to help our company with its research and analysis of Mr. Trump. I am not aware of any other sources from which the committee or the media could have learned of this information,” he said.

Tom Fitton, president of Judicial Watch, a conservative legal group that has been critical of the department’s handling of the Trump investigation, said, “This document ought to trigger an immediate criminal investigation if one isn’t already ongoing.”

Kathleen Clark, an ethics expert and law professor at Washington University in St. Louis, said beyond the disclosure issue, as far as the legal definition of conflict of interest requiring a recusal, it could depend on whether Ohr’s actions would have had a “direct and predictable” effect on his wife’s income from Fusion GPS.

Kamenar said what is known as the frequently used “catch-all” provision clearly applies, saying “Circumstances… would cause a reasonable person with knowledge of the facts to question an employee’s impartiality” require recusal.

Amey said, “As a lawyer and a top Justice official, Ohr should know that he can’t participate in anything related to his wife’s work … Ohr should have been upfront about his wife’s employment and not touched anything related to Steele, the dossier, and Fusion GPS.” The DOJ’s judgment is only as good as the information volunteered to them by Ohr, he said, and because he didn’t list the name of his wife’s employer, they likely had no reason to suspect it might have impacted his work.

Walter Schaub, a former government ethics czar who is an expert on the forms and resigned after offering sharp criticisms of Trump, declined repeated requests to weigh in on Ohr.

Bruce Ohr did not return a request for comment, nor did the DOJ.

via Zero Hedge http://ift.tt/2o22VLz Tyler Durden