Tag: news

The Reckoning Is Here

Authored by Sven Henrich via NorthmanTrader.com,

The big macro wheels are turning and everybody better pay very close attention. The Reckoning is coming. Best hope for a substantive China trade deal and a last minute save on Brexit to perhaps delay the inevitable: The Coming Recession.

This week’s full frontal capitulation by the Fed has not only removed a key buying carrot, but also has brought about the inversion of the yield curve, a classic confirming warning sign that a recession is coming. The key question of course: The when and the how. Bulls will want to hope the recession is at least another year or two away to engage participants in a final game of musical chairs before the rug gets pulled. Bears will point to structural forces and factors that suggest that a recession may come a lot sooner than anyone expects.

In this edition of the Weekly Market Brief I’ll outline some key macro risk factors and dissect some key technical developments I think everyone should be aware of.

Before I do that a quick announcement: After considering all the feedback I’ve received (thanks by the way) I’ve decided to continue to provide a video component as part of the Weekly Market Briefs whenever possible. They truly help provide context and color to the charts. If you want get notifications of the videos you can subscribe via my channel here: NT YouTube Channel.

Now onto markets:

Let’s me get something straight here: Bulls continue to be wrong on the macro and bears continue to be right.

Fact: All the glorious projections made by bulls about growth and earnings continue to get overrun by the deteriorating macro reality. The same folks that didn’t forecast the 2015/2016 earnings recession also didn’t predict the 2019 earnings recession (or the 2018 20% market drubbing for that matter) and are once again clinging to dovish central banks to bail them out.

And, up until Friday, this game has worked yet again:

Let’s call a spade a spade: Without a complete policy flip flop by the Fed $SPX wouldn’t be trading anywhere near 2800 so soon in 2019. Can we all just acknowledge this?

Reminder: Guy Adami made this very point on CNBC Fast Money on February 15th:

Note that, over a month later, the $DJIA, small caps, banks, transports are all lower now compared to the date of that clip.

A rally off of the December lows made technical sense. Up to a point, but then it became jawboning after jawboning and culminated in the complete capitulation by the Fed this week. And at what price? Perhaps the total loss of credibility by the Fed. Not only on substance, as they have been entirely wrong about their ability to autopilot the balance sheet roll-off and to continue to raise rates in 2019, but also, at minimum, in appearance.

Consider:

You can see the sheer bafflement at what the Fed has done:

So why the complete the change? Look at the timeline: This from December 18:

Then just a few weeks later on January 4th Powell suddenly came out and signaled flexibility on the balance sheet.

On February 4th Powell, Mnuchin and Trump had dinner.

On March 20th Powell announces the end of QT for September with an immediate reduction for this summer.

The Fed gave Trump everything he demanded. The appearance is awful.

The point is not lost on others:

QT is now in effect over and QE will recommence in some form at least by 2021 at the latest:

The Fed will never “normalize”, the ghosts of the financial crisis will remain in the system and 3 months of “non accommodative” in 2018 have now been reverted to back to “accommodative” with no end in sight.

The implication is obvious: The Fed gave up its independence, reacted to political and market pressure and shot its credibility (whatever they had left). And now the Fed may be at risk of becoming subject to political partisanship with the nomination of Stephen Moore to the Fed Board. “A respected economist” President Trump called him on twitter. I’m sorry, but Moore is neither an economist nor is he respected. He’s a political hack and his track record on economic policy is dismal and appears mostly politically driven. I am concerned that a Fed without credibility is on the path to lose the confidence of markets. It’s a key risk factor to watch if Moore actually manages to get confirmed (an open question).

But credit where credit it due: The Fed has managed once again to jam up markets despite the continued deterioration in everything macro. Examples:

US:

Germany:

Profit downgrades:

Earnings:

-3.7% earnings growth for Q1 2019.

And now an inversion of the yield curve (see video below for further discussion):

..and a record monthly deficit pre-recession:

Well done. Remember all the nonsense that was peddled to the public about flowing milk and honey when the tax cut was pushed through?

Larry Kudlow in 2017:

“Kudlow expects to defy expectations again with predictions that the bill will not add to the deficit but rather “pay for itself.”

“I think this thing is going to pan out better than almost anybody thinks. The deficit is going to be much lower,” Kudlow said. “This thing is going to pay for itself.”

He also predicted an economic growth rate of about “3 to 4 percent,” saying it could spur economic growth in other countries“.

The macro data above renders these declarations a poor joke. Completely wrong. About everything. But none of this is a surprise. I had outlined all this critically in the run up to the tax cut (Tax Cut Scam) as well as the impending pain to come from these tax cuts (Tax Cut Recession).

So let’s be clear: The macro is developing precisely how voices like myself have been outlining it to unfold and yields and the bond market have been advertising this since the trend line on $TNX got tagged last year:

And now we have an inverted yield curve with a US government forced to finance trillion dollar deficits before a recession. And these funding requirements will only balloon higher, as will interest on debt payments, while they are now chasing slower growth right at the end of the longest expansionary cycle in history.

Who won? Corporations ($AMZN pays zero taxes this year, $SPX 500 CEOs (Now clocking in a median MONTHLY salary of $1M, congrats), and taxpayers get to foot the bill as benefits are on the chopping block in this year’s budget proposals. Wealth inequality was bad, now it’s on rocket fuel. Any wonder why people are pissed off and political movements are start to gravitate toward redistribution?

The Fed’s chasing reality, central banks are hopelessly stuck with their bloated balance sheets with less ammunition to react, a tax cut that has expanded wealth inequality and government deficits, slowing growth everywhere and an inverted yield curve. Buy stocks say the folks who predicted none of this.

So I have to again ask: What has changed since 2007?

The answer is nothing. Except more debt, slower growth, more wealth inequality and now permanent dovish central banks. So yes, best hope for a substantive China deal and a miraculous Brexit resolution or the reckoning of all the artificial liquidity excess of the past 10 years may unleash upon this globe much sooner than anyone cares to imagine.

Now let’s review the charts and technicals:

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Mueller’s Conclusion: No Coordination Between Trump Campaign and Russia

President Donald TrumpThe investigators working for Special Counsel Robert Mueller did not find evidence that President Donald Trump or anybody connected with him directly conspired or coordinated with Russian nationals or entities attempting to influence the outcome of the U.S. presidential election in 2016.

That’s according to a long-awaited summary of the outcome of Mueller’s investigation, which was delivered today to the heads of Congress’ judiciary committees and then almost immediately released to the public.

The four-page memo written by Attorney General William Barr states clearly, “The Special Counsel’s investigation did not find that the Trump campaign or anyone associated with it conspired or coordinated with Russia in its efforts to influence the 2016 U.S. presidential election.”

Barr’s letter explains that Mueller’s team looked at the two big efforts by Russian entities to meddle with the election outcome—both the secret, concealed campaign to spread discord and misinformation on the internet, and the hacking operations that gathered secret Democratic Party emails and communications within Hillary Clinton’s campaign—and found no involvement from Trump or people on his campaign.

Furthermore, the report explored accusations that Trump obstructed justice by his actions during the investigation, like firing FBI Director James Comey. Here, Mueller essentially punted. Mueller did not draw a conclusion one way or the other as to whether Trump’s behavior counted as obstruction, and will leave it to Barr to make a decision to prosecute. Mueller’s report does not conclude that Trump committed a crime, but also does not exonerate him, according to Barr.

Barr adds in response that he does not see enough evidence under the principles of the Department of Justice to establish obstruction charges that would satisfy a “beyond a reasonable doubt” threshold for conviction.

Barr concludes he wants to release as much information from the report as possible, but there are some disclosure concerns involving evidence in grand jury investigations that need to be dealt with. There are likely to be some redactions in what gets out from the report, but it does suggest we’re going to see a lot of it.

So this is hardly going be the last word, not that anybody thought it would be. Mueller is essentially handing the obstruction issue over to Congress, and I imagine there will be a lot of opinions there, though House Majority Leader Nancy Pelosi (D-Calif.) has already said she doesn’t predict impeachment happening without bipartisan support. If Barr’s summary of the Mueller report is accurate, I don’t see any current Republican defenders of Trump switching sides.

Read Barr’s letter to Congress for yourself here.

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Impeachment Odds Implode As Mueller Report Clears Trump Of Collusion

Shortly after a summary of the Mueller Report was submitted to Congress by Attorney General William Barr clearing President Trump of collusion with Russia, the odds of impeachment plummeted (tab over to 24 hr chart). 

Odds of Trump impeachment (source: PredictIt)

After nearly two years, Mueller’s team of approximately 40 FBI agents issued over 2,800 subpoenas, executed “nearly 500 search warrants,” and “obtained over 230 orders for communication records. They also issued 13 requests to foreign governments for evidence and interviewed approximately 500 witnesses.

Specifically, “The Special Counsel’s investigation did not find that the Trump campaign or anyone associated with it conspired or coordinated with Russia in its efforts to influence the 2016 Presidential election.”

And while the Mueller summary leaves the door open for AG Barr to determine whether Trump obstructed justice, Barr sees no obstruction – writing in conjunction with Deputy Attorney General Rod Rosenstein that they “concluded that the evidence developed during the Special Counsel’s investigation is not sufficient to establish that the President committed an obstruction-of-justice offense.”

Trump’s odds of becoming the 2020 Republican nominee spiked as well, and his chances of winning the next election jumped.

Odds of Trump becoming GOP nominee in 2020

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Cord Cutting Apocalypse: More Households Now Subscribe To Streaming TV Than Cable

American consumers are plagued with First World problems. There appear to be too many online streaming platforms for consumption. The average consumer now subscribes to three streaming video services, and for the first time, more households are subscribing to streaming TV than to traditional cable, according to a new report from Deloitte.

Deloitte’s 13th annual Digital media trends survey, conducted by Deloitte’s Technology department, discovered that 69% of households have at least one streaming video subscription, compared with 65% who have a cable subscription. The findings confirm that cord-cutting continues to accelerate, as households seek Netflix, Hulu and Amazon Prime as a cheaper alternative to cable and satellite packages.

The survey found that many of the respondents subscribed to three streaming services and that binge-watching occurred on the regular, with 91% of millennials saying they have “Netflix and chilled.”

Deloitte said millions of consumers are gravitating toward streaming video services because of their high-quality, original content. About 57% of consumers have subscribed to streaming video services for the original content. The figure is much higher for millennials – coming in at 71%.

However, consumers experienced frustration with the abundance of content, 47% said they need more than two subscriptions to watch all of their shows, and 57% said shows that they have watched mysterious disappeared from streaming services.

“With more than 300 over the top video options in the U.S., coupled with multiple subscriptions and payments to track and justify, consumers may be entering a time of ‘subscription fatigue,'” said Kevin Westcott, vice chairman and U.S. telecom and media and entertainment leader, Deloitte LLP. “As media companies and content owners wrestle with how to retain and grow their subscriber base, they should not only continue to strengthen their content libraries, quality, distribution and value, but also keep a close eye on consumer frustrations, including advertising overload and data privacy concerns.”

Despite the acceleration of cord-cutting, the survey also revealed that some consumers continue to pay for streaming and cable TV, with 43% of consumers having subscriptions to both.

Deloitte’s 2018 survey found that streaming video adoption breached the halfway mark in 2017 with 55% of consumers subscribing to streaming services.

The trend is evident, cord-cutting is expected to explode this year through 2021. Traditional TV is doomed. 

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Trump To Sign Order Recognizing Israel’s Sovereignty Over Golan Heights

Via AlMasdarNews.com,

President Trump will be signing an order in the coming days to recognize Israel’s sovereignty over the occupied Golan Heights region, Israel’s Minister of Foreign Affairs Yisrael Katz told Reuters on Sunday.

According to Katz, Trump will be signing this order on Monday, March 25th, but he did not go into specifics.

An Israeli soldiers stands guard at an outpost in the Golan Heights, via AFP

Earlier in the week, US President Donald Trump said via Twitter that it was time for the United States to “fully recognize Israel’s Sovereignty over the Golan Heights, which is of critical strategic and security importance to the State of Israel and regional stability.”

Prior to Trump’s tweet, U.S. Senator Lindsey Graham made a trip to Israel, where he would later visit the occupied Golan Heights with Israeli Prime Minister Benjamin Netanyahu.

Responding to the US move, Secretary-General of the Arab League Ahmed Aboul Gheit announced that the league fully supported Syrian sovereignty over the territory.

Israel seized the Golan Heights region from Syria during the Six-Day War of 1967; since then, they have maintained control over the area, despite repeated calls by the international community to withdraw.

Following the Six-Day War, the United Nations passed Resolution 242, which called on Israel to return the land to Syria; this was later followed by Resolution 497, which recognizes Syria’s sovereignty over the Golan Heights.

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Russiagate Ends: Mueller Finds No Russia Collusion, Leaves Door Open On “Obstruction”

Lawmakers on Capitol Hill have received a letter from Attorney General William Barr which concludes that the special counsel investigation did not find that any US person or Trump campaign official knowingly conspired with Russia.

Rep. Jerry Nadler (D-NY) notes that “while this report does not conclude that the President committed a crime, it also does not exonerate him.“

As far as Obstruction – Mueller has left it to the Attorney General to “determine whether the conduct described in the report constitutes a crime.”

While the full report could include damaging elements which don’t rise to the level of criminal charges, Trump is certainly projecting the “all clear,” tweeting on Sunday “Good Morning, Have A Great Day” – after hitting the links with musician Kid Rock on Saturday at Trump International Golf Club. 

Both Democrats and Republicans have called for the full public release of the long-awaited report, which notably did not include any new indictments – which sent Democrats into fits over the weekend as Republicans celebrated what appears to be a big win. 

On Saturday, 18 state attorneys general joined together to urge the Justice Department to publicly release the final report. 

“As the top law officers in states across the country, we strongly urge United States Attorney General Barr to immediately make public the findings of the Mueller investigation,” reads the statement. “The American people deserve to know the truth.”

It’s likely that Democrats want to see the entire report in order to pick up on any wrongdoing that may have occurred, yet did not rise to the level of a chargeable offense. 

While Mueller apparently did not find anything else that rose to the level of a prosecutable crime (or has handed off aspects of the investigation to federal prosecutors), journalist Paul Sperry notes that the Special Counsel investigation also failed to yield any indictments on the left. 

Democrats, meanwhile, are still holding out for the “fat lady” to sing based on the notion that aspects of the investigation were handed over to New York prosecutors. 

The only question – where will the left move the goal posts when this is all said and done?

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Cancer-Causing Chemical Over Houston Channel Sends Hundreds To Hospital

Bloomberg’s update in the wake of the week-long Deer Park oil processing plant fire (now extinguished) and chemical spill holds nothing back, but underscores the seriousness of the situation after both city and Intercontinental Terminals Co. (ITC) previously sought to reassure residents days ago that “everything’s fine”.

Instead, as Bloomberg’s aptly titled headline reads, “Cloud of Cancer-Causing Chemical Hangs Over the Houston Channel” — this as hundreds of area residents have sought medical help for illnesses ranging from nausea to headaches to irritation and burning in the skin, eyes, nose and throat.

Prior photo showing a black plume that had stretched for 20 miles from the petrochemical fire at the Intercontinental Terminals Company, Monday, March 18, 2019, in Deer Park, Texas. via AP

For many days running the nation was captivated by dramatic images of flames and smoke plumes hovering above the Houston area from the Deer Park petrochemical fire, which had initially triggered an emergency shelter-in-place order from city authorities when it began last Sunday March 17; and while firefighters had extinguished the raging inferno on Thursday, multiple chemical tanks reignited again late Friday, complicating efforts to clean up a massive chemical spill into the nearby Houston Ship Channel.

With the fire now extinguished, Houston and Harris County area residents, especially those closest to Deer Park, are now concerned over dangerous levels of exposure to the chemical tanks which had burned for days: benzene, xylene, naphtha, toluene, and pyrolysis gasoline, known as Pygas, along with other oil processing related chemicals.

According to prior local reports: 

Officials said the components are in gas blend stocks used in the production of finished gasoline and base oil used for machine lubrication.

NAPHTHA can cause irritation to eyes and the respiratory system. It affects the central nervous system and is harmful and even fatal if it is swallowed.

XYLENE may also be fatal if it is swallowed and enters the airway. It can cause skin irritation.

City and environmental officials have throughout the ordeal assured residents that Harris County Pollution Control was conducing air quality monitoring tests of the area, but still cautioned residents to stay indoors throughout the ordeal if at all possible.

Days into the fire city officials had released a statement alerting the public to elevated levels of benzene, described as “a colorless, sweet-smelling chemical that can be derived from natural gas, crude oil or coal, can cause cancer, infertility and birth defects in the developing fetus of pregnant women among other things” according to the Centers for Disease Control and Prevention.

Runoff from the now-extinguished petrochemical tank fire at Intercontinental Terminals Company, via Houston Chronicle

Benzene is a known carcinogen which can cause devastating health effects based on various levels of exposure. Residents have become increasingly anxious and angry with both Deer Park and ITC’s over what the Houston Chronicle describes as “volatile compounds sitting in damaged tanks at the petroleum storage facility or streaming into nearby waterways.”

And though the ship channel is not a source for drinking water, the stretch of waterway near the ITC facility has been shut down to boat traffic, per Bloomberg:

The U.S. Coast Guard is forbidding vessel traffic on a stretch of the key industrial shipping route after a wall collapse and fire at Intercontinental Terminals Co.’s already-damaged chemical storage complex on Friday. A mix of toxic gasoline ingredients, firefighting foam and dirty water flowed from the site into the channel, and a benzene plume above the water poses a threat to ship crews, said Coast Guard Capt. Kevin Oditt.

Area schools and some roadways had remained shut down throughout much of last week due to the emergency, which had continued into the early part of the weekend due to “the collapse of a containment wall and Friday’s new fires in three wrecked storage tanks and a drainage ditch.”

The days long fires have been extinguished, via The Houston Chronicle

Alarmingly, Bloomberg described a continued developing emergency situation with “Nausea, headaches and other symptoms drove about 1.000 people to seek treatment at a pop-up clinic, with 15 of the most-severe cases loaded onto ambulances and hauled to hospital emergency rooms.”

Confirming frustrations at lack of ITC officials’ slow communication as to the exact nature of the chemical threat, Deer Park Mayor Jerry Mouton said press conference on Saturday: “It’s been a never-ending, re-occurring case of things not working out as planned.”

Class action lawsuits against facility owner and operator Intercontinental Terminals Co., including by Texas Attorney General Ken Paxton over the company’s violation of clean-air laws, are reportedly in process of being filed. 

Bloomberg described some of the specific ailments of Deer Park residents according to the following example: 

Reyna and her 18-year-old daughter Rebecca had been waiting for 2 1/2 hours at the pop-up medical center when the new fire erupted. They left without being seen because they didn’t want to get marooned there if the city ordered everyone to stay indoors.

“I was filling out the paper work inside, and my eyes were running and running with tears,” Mercy Reyna said. “It was just that desperation of wanting to get your eyes out and just rub them and rinse them and put them back. It’s just that burning sensation.”

ITC officials had confirmed that about about “60,000 barrels (2.52 million gallons) of hazardous chemicals” still remained within the damaged part of the complex, which means it’s not fully contained and should any further fire or event occur, could continue spilling into the waterway. 

The company is further reportedly offering a means for area residents impacted by the fire and smoke to receive compensation for medical issues or if they were forced to miss work or who had smoke soot damage to vehicles or homes. However, in going directly through the company claimants have to sign away their right to sue ITC now or in the future. 

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Hedge Fund CIO: This Is Where The Next “Equity Panic” Will Arise

Submitted by Eric Peters, CIO of One River Asset Management

“When we can’t come up with a clear catalyst, that’s when we know whatever arises will (1) be unexpected, and (2) cause a greater reaction,” said the endowment. They were discussing what worried them, why they continued de-risking, exiting short volatility strategies, and adding long volatility.

“The inability to point to a catalyst means that the asset class (vol) is cheaper and becoming a better risk/reward opportunity than at other times. Since we have other strategies that win to the upside (equity, biotech, activism, etc) we’re happy to pick up vol when it’s cheapest (i.e. right now). It’s not that complicated.”

Interest rate and foreign-exchange implied volatility has plunged to levels that preceded the 1970s turbulence. Global stock market volatility is near historic lows as well. “I think the equity decline may be precipitated by an interest rate or foreign-exchange event causing a loss of confidence in equity markets.

Perhaps interest rates shifting higher/lower does it, or an EU crisis or something with the Japanese yen or Chinese renminbi.” Aggressive volatility selling persists, driven by investors who need to earn incremental returns, emboldened by the view that with all global central banks in a dovish mood there’s little risk of disruption.

“Vols are at all-time lows precisely because the risks are no longer top of mind. Wouldn’t surprise us if an issue in rates/FX happened first, causing equity weakness, followed by equity panic that crescendos to levels where the put options that people have sold really kick in. You would want to buy into that capitulation of course, because we’d get a quick 20% bounce (from down 40%),” they said.

“Don’t know about the direction of the second 20% after that rebound…would depend on what caused the rate/FX issue initially. The point is, everyone is focused on equity risk, but paying no attention to rates/FX, which means that’s probably where the next issue will arise.”

Overall

“The 737 Max 8 can be flown safely without these two gauges,” said the pilot union spokesman, “But there’s a broader margin of safety if you’ve got them.” Boeing charges a little extra for a safety feature that alerts pilots to faulty information from key sensors. Boeing’s CEO weighed the risk/reward, then chose to charge customers for something that should obviously come as standard on every $120mm passenger plane.

The CEOs of Ethiopia and Lion Air also weighed the risk/reward, then chose to not buy that optional safety feature. And as we all marvel at those catastrophic miscalculations, the cost of protecting our investment portfolios using volatility is at or near the lowest levels since the 1960s.

* * *

  • “The extremely accommodative low interest rates we needed when the economy was quite weak, we don’t need anymore. We may go past neutral, but we’re a long way from neutral at this point, probably,” said Fed Chairman Powell (Oct 3rd), weighing the risk/reward of policy action/reaction. With interest rates ‘a long way from neutral’, investors hammered stocks. The S&P 500 fell 8% in Oct.
  • “Interest rates remain just below the broad range of estimates of the level that would be neutral for the economy,” said Powell (Nov 28th). Hearing the dovish shift to ‘just below’ neutral, investors raced to buy the S&P 500. Four days later it puked, for no real reason.
  • “We thought carefully about how to normalize policy and came to the view that we would effectively have the balance sheet run-off on automatic pilot,” said Powell (Dec 19th), with stocks already in free-fall. The S&P ended Dec -9%.
  • “We will be prepared to adjust policy quickly and to use all our tools to support the economy should that be appropriate to keep the expansion on track,” said Powell (Jan 4th), and stocks embarked on an explosive rally.
  • “This is a good time to be patient and watch and wait and see how the economy evolves,” said Powell (Feb 26th), after a 19% rise from the Dec 26th panic low. Investors loved what they heard, but stocks barely rallied.
  • “I don’t feel we have kind of convincingly achieved our 2% inflation mandate in a symmetric way,” said Powell (this Wednesday), indicating the Fed is willing to risk economic overheating, rising inflation. Bulls lifted stocks to new 5mth highs.

But by Friday, the S&P 500 reversed sharply to close the week lower, for no particularly good reason, but for the fact that after a 22% bear market rally, buying stocks because the Fed has completed a 5mth policy U-turn is seriously bad risk/reward.

* * *

Dawg

“The Fed just told us they’re not screwing this market,” said Bulldog, drool dripping. “Stocks are supposed to grind up now, there’s no doubt about that, everyone knows it,” said Dawg. “So that’s what’s probably going to happen.” And he sat down with a thud, for a quick lick. “But you gotta watch markets like this, where everyone pretty much knows what’s going to happen, because when they don’t go the way they’re supposed to, it gets real ugly real fast. So whatever direction markets head from here, go with it,” he said, and went back for another lick.

“The long bond yield has gotten me agitated,” continued Bulldog, returning to all fours, clean, refreshed, ready. “30yr yields don’t lie, and when they break down like they just did, it means something’s not right.” US 30yr bond yields fell to a 14mth 2.88% low on Friday, well below their 3.45% Nov 2nd high. “Maybe the Europeans and Japanese figure they’d rather buy US bonds and take the FX risk instead of earning nothing for owning their own 10yr bonds.” 10yr German bonds yield -0.02%, Japan -0.08%. “But something smells wrong.”

Wag the Dog

“Retail sales collapsed in Dec by the most since 2009,” said the investor. “No one has offered a compelling explanation.” Consensus estimates ranged from a +1.1% monthly rise to a -0.2% decline – in fact, retail sales plunged -1.1%. “One hypothesis is the US now has an insane wealth function. If that’s the case…Jesus.” At the Dec lows, the S&P 500 was -15% on the month. People usually think the economy drives the market, but what if that relationship has reversed? “It wasn’t a Lehman moment, but in terms of the retail sales reaction, it was close.”

Until

“There’s an extraordinary amount of vol selling,” said the PM. “When you sell vol, you win 80%-90% of the time, so people try to increase the number of observations.” Traders now sell intra-day volatility on stocks. “When you increase your observations like this, you’re implicitly spiking your gamma — I wouldn’t want that kind of exposure in October 1987,” he said. “But banks that provide this exposure take the other side of the short gamma trade, and as they hedge that exposure, they crush market volatility. And this will continue until it doesn’t.”

“Markets always produce liquidation events,” continued the same PM. “Markets need to flush positions periodically,” he said. “Investors have observed that for years, selling volatility has been superior to being outright long stocks.” So they now exchange their stock portfolios for volatility-selling programs. “Despite the fact that implied volatility has moved lower, realized vol has declined too – that spread is the source of steady profits. So vol selling has continued to look attractive even as vol has declined. And this too will continue until it doesn’t.”

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Horrifying Passenger Video Shows Furniture Crashing Into Walls Aboard Stranded Viking Cruise Ship

What was supposed to be a relaxing Nordic cruise turned into a seafaring nightmare for 1,373 Viking Sky passengers on Saturday when  their ship became stranded off Norway’s western coast during a spell of particularly bad weather.

Shocking footage from the ship, which swiftly went viral on social media, showed unmoored furnishings crashing into walls and nearly colliding with terrified passengers. Eventually, 17 passengers were hospitalized with related injuries.

After the crew radioed for help, deciding to drop anchor to prevent the ship from being pushed onto nearby rocks, more than 400 passengers were eventually rescued by the Norwegian coast guard in a painstaking rescue operation that involved five helicopters working throughout the night into Sunday.

Fortunately, the quick-thinking crew managed to save the vessel from a possible shipwreck. Coast guard official Emil Heggelund estimated that the ship was only 325 feet from striking rocks under the water, and 2,950 feet from shore when three of its four engines failed in an area off the Norwegian coast known for rough conditions, according to the AP.

Cruise

Though tensions on the boat reportedly ran high into the night, once the first hundred or so passengers had been airlifted off the boat, the mood began to relax, one passenger told the AP.

Passenger Alexus Sheppard told The Associated Press in a message sent from the Viking Sky that people with injuries or disabilities were winched off the cruise ship first. The atmosphere onboard grew calmer after the rescue operation’s first dramatic hours, Sheppard said.

“It was frightening at first. And when the general alarm sounded it became VERY real,” she wrote.

“We saw two people taken off by stretcher,” another passenger, Dereck Brown, told Norwegian newspaper Romsdal Budstikke. “People were alarmed. Many were frightened but they were calm.”

Eighteen hours after stalling out, the ship’s crew managed to restart the failing motors. Two tugboats eventually led it back to port. The cruise, which included mostly Americans, Brits, Aussies and Kiwis, was scheduled to dock at a handful of Norwegian towns before sailing to its destination in the UK.

In video that circulated on social media, falling beams and sliding furniture nearly collide with terrified passengers.

We wouldn’t be surprised to see a dip in global cruise bookings after this.

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Top Democrat: Mueller Report Doesn’t Matter, “We Know There Was Collusion”

The dissonance is strong with this one…

Top-ranking Democrat, and House Judiciary Committee Chairman, Jerry Nadler did the rounds of Sunday’s political shows this morning but it wasn’t until he reached the safety of CNN that he decided to unleash his ‘facts’ in response to the narrative-crushing conclusions reached by special counsel Robert Mueller.

“We know there was collusion,” Nadler insisted several times during an appearance on CNN’s “State of the Union” while shrugging off Mueller’s apparent facts – “Why there’s been no indictments, we don’t know.“

While the CNN host did attempt to push back, noting that none of Nadler’s ‘facts’ had warranted an indictment, the Democrat would have none of it, reeling off a list of various events, from The Trump Tower meetings (which have been dismissed by fact patterns numerous times) and the way Trump “pressured the FBI to go easy, to stop investigating Flynn,” and Trump firing Comey as evidence of the alleged “collusion.”

“Well, there have been obstructions of justice, whether they are – clearly, whether they are criminal obstruction is another question,” Nadler implored…

“But we have – the special prosecutor is limited in scope. His job was limited in scope and limited to crimes. What Congress has to do is look at a broader picture. We are in charge — we have the responsibility of protecting the rule of law, of looking at obstructions of justice, abuses of power, at corruption, in order to protect the rule of law so that our democratic institutions are not greatly damaged by this president.”

Of course, Nadler is not alone. House Intelligence chair Adam Schiff said on ABC’s “This Week” Sunday that even if the Mueller report does not recommend any new indictments — as has been reported — that does not necessarily rule out impeachment for President Trump.

STEPHANOPOULOS: “You told the San Francisco chronicle on Friday, if there’s no bombshell, there’s no impeachment. Does no new indictments qualify as no bombshell?

SCHIFF: “Not necessarily because again, George, as you pointed out, they can’t indict the president. That’s their policy. And therefore there could be overwhelming evidence on the obstruction issue. And I don’t know if that’s the case, but if there were overwhelming evidence of criminality on the president’s part, then the Congress would need to consider that remedy if indictment is foreclosed.”

Quite obviously, this is far from over in the minds of the Russia-gate-ist of Russia-gaters as their entire world construct dissolves around them.

#NeverForget

via ZeroHedge News https://ift.tt/2TUz4qg Tyler Durden