Tag: news

Every country is Number One when it comes to something, and this map from webcomic Doghouse Diaries just what all those somethings are.

 

As , of course, it's not all maple syrup and raspberries; some countries have some rather tragic distinctions.

(click map for massive version)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/sUn5z5_68Wc/story01.htm Tyler Durden

As we sit in our comfortable living rooms, loafing back into our sofas, munching on a bar of chocolate and slurping down the coffee whilst checking the smartphone for message most of us have little idea that the chocolate, the coffee and the smartphone were made by resorting to indirect slavery quite probably. Whether we like it or not, we are contributing to the indirect slave trade of the companies that provide those things and many more to us. Whether we like it or not we are directly contributing to slavery because there are slaves employed in our own back yard still today.

Global Slavery Figures

• There are 29.8 million slaves in the world.
• They mostly work in developing and emerging countries producing goods that are destined for the Western world and our own markets.
• Those 29.8 million people account for 1.82% of world population today.
• India is the worst country in the world for the total number of slaves.
• There are 14 million of them.
• China comes in way behind and in second place with 2.9 million of them.
• Pakistan has 2.1 million slaves.
• Mauritania has the highest ratio of slaves to the population.
• The total population stands at 3.4 million and 4.3% are enslaved people.

The top ten countries that make up 76% of all of the enslaved people in the world are:

• India
• China
• Pakistan
• Nigeria
• Ethiopia
• Russia
• Thailand
• Democratic Republic of Congo
• Myanmar
• Bangladesh

The USA is 139th on the list out of a total of 162. The UK is 160th.

India is the worst country in the world for slavery today. Perhaps if they were to ratify the Worst Forms of Child Labour Convention, then they might be able to deal with that problem. Bonded labor might have been outlawed as from 1976by the Bonded Labour System (Abolition) Act 1976, but it has rarely been enforced.

But there are slaves working in the Western world too such as the forced laborers that are made to work on the cannabis farms in the UK. For the first time, the Global Slavery Index has been published this year and it is a telling story of the misery not only of the developing world, but of our own countries. It’s a quantitative index of 162 countries which means that it accounts for almost the entire world population. . Until this report was published estimates stood only at roughly 10 million under the 29.8-million estimate of the Global Slavery Index. Previously, the method of calculation did not include forced labor and did not consider that human trafficking was part of slavery. The Index also uses forced servile marriage and debt bondage in the calculation.

The Global Slavery Index estimates that there is a margin of error of between 5% and 10% and they hope that it will be a “wake-up call” to governments around the world. It is however highly unlikely that this will become reality.Governments in the West remain complacently asleep when it comes to slavery in their own back yards and certainly even more so with other countries that are toiling away for us.

Endemic cultural problems have maintained people entrapped in slavery in countries like India due to caste issues (despite that officially having been abolished (at least Article 17 of the Indian Constitution made untouchability and discrimination on that basis illegal).

Maybe some leaves should be taken out of Brazil’s book and we should be doing more of what they do there. There is a list of ‘dirty’ companies that have used slaves in the production of products. Their national plan is to do away with slavery.

Slavery is not just a figment of our imagination, it means jobs that we can’t walk away from, it’s working for nothing and it’s control through violence and pressure as well as being nothing more than the boss’s property.

We’re All Slaves

To some extent we are all slaves in daily life in the societies that have been elaborated for the benefit of those either at the top or even for those at the bottom. There’s rarely something for those that are stuck in the middle. We go to work, we earn a living and we pay that money to someone else in taxation so that it can go to the common good of all in society under the supreme principle of providing for the needy, whoever they are and whatever being needy really does mean.

But, we work like drudges even though the 19th century sweatshops went long ago from our societies; at least, for most of us, although they still exist in some back room of a dingy apartment building somewhere in the rough part of towns of most cities we live in. We created democracy (or we thought we did) and the upper class was reduced (or the wealth just got spread around with fewer people allowed to rake it in). The poorer got richer and the majority got thrown into the middle band of the class that got little or nothing. Democracy created what we have right now. The few rich people get most of the earnings and the poorest get doled out and propped up. The guys in the middle pay for the rest and get their shoulders thrown into the grindstone, regardless of whether they want their money to be handed around to the needy or to fill the cash-fat obese accounts of the super wealthy in Geneva or somewhere else.

We have all a role to play in the slave trade. But, there are some that are worse off than others in countries around the world.

Which is better: being a slave in India or being a middle-class slave that finances the government through taxation? A no-brainer? Or, does it depend on where we’re sitting?

 

Originally posted: (In)Direct Slavery: We’re All Guilty

 

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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5pQ7QVl8ep4/story01.htm Pivotfarm

Mayor Bloomberg’s crusade to micromanage what New Yorkers put in their mouth has so far failed, but that just means the attempt to impose the first “New Normal” nanny state, in which individual calorie consumption is regulated for the greater good by the even greater government, has simply shifted its geographic location. In this case to Mexico, which according to the OECD has surpassed the US as the world’s fattest country and is “notorious for its love of sweets, fried foods and pastries” and where as the WSJ reports, the lower House of Congress passed on Thursday a special tax on junk food that is seen as potentially the broadest of its kind, part of an ambitious Mexican government effort to contain runaway rates of obesity and diabetes.

Mexico’s weight problem in context:

The WSJ reports on what can only be described as Mike Bloomberg’s wet dream:

The House passed the proposed measure to charge a 5% tax on packaged food that contains 275 calories or more per 100 grams, on grounds that such high-calorie items typically contain large amounts of salt and sugar and few essential nutrients.

 

The tax, which was proposed just this week, is sure to stir controversy among big Mexican and foreign food companies that operate here. It comes on top of another planned levy on sugary soft drinks of 1 peso (8 U.S. cents) per liter that was passed by the same committee, an effort that New York Mayor Michael Bloomberg supported.

…

 

The taxes—both aimed at curbing consumption—have broad political support and were expected to later be approved by the Senate as part of a sweeping tax overhaul. The snack food levy is part of a bigger tax proposal from President Enrique Peña Nieto which aims to raise the government’s non-oil tax collections.

 

“This appears to be the most aggressive strategy anywhere in the world in recent years to improve diets via tax disincentives,” said Michael Jacobson, executive director of the Center for Science in the Public Interest in Washington.

Some have already cast the blame: TV zombies and undereducated “fatsos.”

“We’re a country of malnourished fatsos,” José Antonio Álvarez Lima, a former state governor turned newspaper columnist told Mexican political news website Animal Politico. He pegged part of the blame for Mexico’s high consumption of soda and snacks on incessant TV advertisements and poor education.

Mexico’s attempt to centrally-plan what’s for dinner naturally was met with the adoration of not just Mayor Mike, but every government apparatchik desperate to justify their non-value adding exietsnce. Such as this one:

Harold Goldstein, executive director of the California Center for Public Health Advocacy, called Mexico a role model, saying that the measures could protect the health of consumers while also shielding the economy from productivity losses and runaway public health costs.

Of course, if the “measures” fail at doing all those magical things, the government can just swoop in and start regulating the economy and productivity next, just as the Fed has been doing in the US for the past 5 years, with absolutely disastrous results.

Which is not to say Mexicans aren’t fat. As noted above, according to the OECD, the average Mexican is now fatter than the average American. Which means very, very fat.

Seven of 10 adults in Mexico, and a third of children, are either overweight or obese. Mexicans have now surpassed Americans for the title of the fattest country in the OECD, according to the organization.

 

All that fat has contributed to an alarming rise in chronic illnesses like adult-onset Type 2 diabetes, which afflicts an estimated 15% of Mexicans over the age of 20, the highest rate for any country with more than 100 million inhabitants. Illnesses related to excess weight cost the Mexican public health system more than $3 billion a year, according to the legislation.

 

On virtually every street corner in Mexico, makeshift stands sell the types of packaged items that will be taxed for the first time: potato chips, cookies, ice cream, fried corn chips, chocolates, candy, puddings and local sweets.

However, while those who revel in the government’s intellectual superiority, despite the vivid example of every centrally-planned economy crashing and burning in due course, some are quick to point out that this latest plan to micromanage consumption is idiocy. First, the big food companies:

Mexican industrial chamber Concamin estimates that processed food companies targeted by the new tax employ thousands of Mexicans and account for 4.1% of GDP. “We can’t allow last-minute taxes,” said Concamin president Francisco Funtanet, suggesting that companies might cut back on personnel and investment to absorb the tax hit.

 

Raul Picard, a top official at Concamin and owner of a chocolate company, argued that vice taxes could lead to a proliferation in contraband goods of questionable origin, possibly posing a threat to public health.

 

“There’s no such thing as junk food, just junk diets,” said Felipe Gómez, head of a regional food makers’ group in Jalisco state. Even so-called junk food has carbohydrates and calories that the body needs, Mr. Gómez argued.

But it’s not just the big corporations that are skeptical. So are normal people with some common sense.

Some ordinary Mexicans said a tax was unlikely to change their eating habits much.

 

Héctor Ortega, a 45-year-old operator of a street stand in downtown Mexico City, predicted that consumers may pull back briefly when prices rise, but then return to their old habits.

 

“Just like the cigarettes, people will go back to their old habits,” said Mr. Ortega. He said junk food was obviously unhealthy, but it was often the only thing that poorly paid office workers and students can afford. “This is a restaurant zone and the food here is expensive. For some people, these products are the only food available.”

 

Fernando González, 24, an office worker who frequents Mr. Ortega’s stand, is a big fan of sodas and gum, in particular. When the new prices kick in, he said, he won’t give up on his favorites, but will probably buy less chips and candy.

 

“It’s a craving, it’s an addiction, it’s something people enjoy,” he said of Mexicans and their treats.

The biggest irony, of course, is that the government “of the people”, in its very finite wisdom, will hurt those it supposedly cares about the most: the poor. Because the rich can afford to eat healthy. It is the poor who will merely have to pay more to satisfy their “food addictions.”

Academics say the move could hurt the poor because they spend a greater percentage of their income on cheap, packaged foods, but added that doing nothing was worse.

Sure. Which is why America no longer has a drug (or gun) problem. Oh wait.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/wKEwrWwJ0a4/story01.htm Tyler Durden

Mayor Bloomberg’s crusade to micromanage what New Yorkers put in their mouth has so far failed, but that just means the attempt to impose the first “New Normal” nanny state, in which individual calorie consumption is regulated for the greater good by the even greater government, has simply shifted its geographic location. In this case to Mexico, which according to the OECD has surpassed the US as the world’s fattest country and is “notorious for its love of sweets, fried foods and pastries” and where as the WSJ reports, the lower House of Congress passed on Thursday a special tax on junk food that is seen as potentially the broadest of its kind, part of an ambitious Mexican government effort to contain runaway rates of obesity and diabetes.

Mexico’s weight problem in context:

The WSJ reports on what can only be described as Mike Bloomberg’s wet dream:

The House passed the proposed measure to charge a 5% tax on packaged food that contains 275 calories or more per 100 grams, on grounds that such high-calorie items typically contain large amounts of salt and sugar and few essential nutrients.

 

The tax, which was proposed just this week, is sure to stir controversy among big Mexican and foreign food companies that operate here. It comes on top of another planned levy on sugary soft drinks of 1 peso (8 U.S. cents) per liter that was passed by the same committee, an effort that New York Mayor Michael Bloomberg supported.

…

 

The taxes—both aimed at curbing consumption—have broad political support and were expected to later be approved by the Senate as part of a sweeping tax overhaul. The snack food levy is part of a bigger tax proposal from President Enrique Peña Nieto which aims to raise the government’s non-oil tax collections.

 

“This appears to be the most aggressive strategy anywhere in the world in recent years to improve diets via tax disincentives,” said Michael Jacobson, executive director of the Center for Science in the Public Interest in Washington.

Some have already cast the blame: TV zombies and undereducated “fatsos.”

“We’re a country of malnourished fatsos,” José Antonio Álvarez Lima, a former state governor turned newspaper columnist told Mexican political news website Animal Politico. He pegged part of the blame for Mexico’s high consumption of soda and snacks on incessant TV advertisements and poor education.

Mexico’s attempt to centrally-plan what’s for dinner naturally was met with the adoration of not just Mayor Mike, but every government apparatchik desperate to justify their non-value adding exietsnce. Such as this one:

Harold Goldstein, executive director of the California Center for Public Health Advocacy, called Mexico a role model, saying that the measures could protect the health of consumers while also shielding the economy from productivity losses and runaway public health costs.

Of course, if the “measures” fail at doing all those magical things, the government can just swoop in and start regulating the economy and productivity next, just as the Fed has been doing in the US for the past 5 years, with absolutely disastrous results.

Which is not to say Mexicans aren’t fat. As noted above, according to the OECD, the average Mexican is now fatter than the average American. Which means very, very fat.

Seven of 10 adults in Mexico, and a third of children, are either overweight or obese. Mexicans have now surpassed Americans for the title of the fattest country in the OECD, according to the organization.

 

All that fat has contributed to an alarming rise in chronic illnesses like adult-onset Type 2 diabetes, which afflicts an estimated 15% of Mexicans over the age of 20, the highest rate for any country with more than 100 million inhabitants. Illnesses related to excess weight cost the Mexican public health system more than $3 billion a year, according to the legislation.

 

On virtually every street corner in Mexico, makeshift stands sell the types of packaged items that will be taxed for the first time: potato chips, cookies, ice cream, fried corn chips, chocolates, candy, puddings and local sweets.

However, while those who revel in the government’s intellectual superiority, despite the vivid example of every centrally-planned economy crashing and burning in due course, some are quick to point out that this latest plan to micromanage consumption is idiocy. First, the big food companies:

Mexican industrial chamber Concamin estimates that processed food companies targeted by the new tax employ thousands of Mexicans and account for 4.1% of GDP. “We can’t allow last-minute taxes,” said Concamin president Francisco Funtanet, suggesting that companies might cut back on personnel and investment to absorb the tax hit.

 

Raul Picard, a top official at Concamin and owner of a chocolate company, argued that vice taxes could lead to a proliferation in contraband goods of questionable origin, possibly posing a threat to public health.

 

“There’s no such thing as junk food, just junk diets,” said Felipe Gómez, head of a regional food makers’ group in Jalisco state. Even so-called junk food has carbohydrates and calories that the body needs, Mr. Gómez argued.

But it’s not just the big corporations that are skeptical. So are normal people with some common sense.

Some ordinary Mexicans said a tax was unlikely to change their eating habits much.

 

Héctor Ortega, a 45-year-old operator of a street stand in downtown Mexico City, predicted that consumers may pull back briefly when prices rise, but then return to their old habits.

 

“Just like the cigarettes, people will go back to their old habits,” said Mr. Ortega. He said junk food was obviously unhealthy, but it was often the only thing that poorly paid office workers and students can afford. “This is a restaurant zone and the food here is expensive. For some people, these products are the only food available.”

 

Fernando González, 24, an office worker who frequents Mr. Ortega’s stand, is a big fan of sodas and gum, in particular. When the new prices kick in, he said, he won’t give up on his favorites, but will probably buy less chips and candy.

 

“It’s a craving, it’s an addiction, it’s something people enjoy,” he said of Mexicans and their treats.

The biggest irony, of course, is that the government “of the people”, in its very finite wisdom, will hurt those it supposedly cares about the most: the poor. Because the rich can afford to eat healthy. It is the poor who will merely have to pay more to satisfy their “food addictions.”

Academics say the move could hurt the poor because they spend a greater percentage of their income on cheap, packaged foods, but added that doing nothing was worse.

Sure. Which is why America no longer has a drug (or gun) problem. Oh wait.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/wKEwrWwJ0a4/story01.htm Tyler Durden

Submitted by Pater Tenebrarum of Acting Man blog,

Selling Both the Rumor and the News Turns Out Not to Work …

In our interim update on gold a few days ago we wrote:

 

“It seems possible that news of a budget and/or debt ceiling deal could send gold prices even lower, but the likelihood of that happening is actually not as pronounced as it would have been if prices had risen during the current period of uncertainty.

Usually either the rumor is bought and the news are sold, or vice versa. Cases of 'sell the rumor and then sell the news as well' are generally fairly rare.”

 

It should be remembered in this context that gold was supposed to follow a certain script in the context of the debt ceiling debate, written by Goldman Sachs analyst Jeffrey Currie and given the placet of analysts at virtually every mainstream bank:

 

“Once we get past this stalemate in Washington, precious metals are a slam dunk sell at that point,” Currie said. “You have to argue that with significant recovery in the U.S., tapering of QE should put downward pressure on gold prices.”

 

The markets rarely make things that easy, although one must of course keep in mind that the action over a few trading days cannot yet be called conclusive with regard to the medium term trend. In this particular case, shorts thought they had received an invitation to shoot fish in a barrel, but the market evidently decided otherwise.

 

 

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Gold, December contract daily – following a false breakdown, the contract shot higher upon the budget deal resolution – click to enlarge.

 

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As the above chart shows, while the especially smart bears who thought they could break gold below short term support by selling over $600 million notional  on GLOBEX prior to regular COMEX trading hours had their clock cleaned, the bulls cannot yet claim a decisive victory either. Still, they have won an important battle. Here is a close-up of the action:

 

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December gold, 30 minute chart – click to enlarge.

 

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The biggest positive is in our view the 'false break' highlighted above. Selling thousands of contracts in the 'off hours' has this time not been enough to actually break support. When a market isn't going down when it 'should', it often goes up instead. This is an excellent example for this rule.  However, bullish traders require some follow-through buying at this juncture to produce a decisive trend change. There is strong lateral resistance in the 1340-1350 area, and it needs to be overcome to pronounce the trend truly changed.

Interestingly, as can be seen in the chart of 1 month GOFO (gold forward rate) by Societe Generale below, the gold forward rate has once again turned into negative territory in the London market. While this is not quite as significant as some people have asserted in light of extremely low LIBOR rates, it is still remarkable – moreover, negative GOFO rates always tend to provoke rallies in the gold price in the short term. There simply are no exceptions to this rule we know of. 

Normally, gold is lent out in order to obtain collateralized dollar loans at a very low interest rate, as the lease rate paid on gold is deducted from LIBOR in these transactions. The situation actually reverses when GOFO is negative, as then whoever is on the other side of the trade actually pays for obtaining the temporary use of gold. Why would anyone want to do that?

We believe the answer has to do with the fractionally reserved gold system involving unallocated gold accounts (i.e., irregular gold deposits). According to what must be considered quite credible estimates, the leverage employed can be as high as 100:1 – which is to say that unallocated gold accounts are backed by only a single ounce of gold per 100 ounces deposited. 

The remainder of the deposits has been employed by bullion banks for their own business purposes – it is essentially fractional reserve banking, only it is using gold as the underlying currency. So what happens when delivery demands or demands to move gold from unallocated to allocated accounts exceed the amount of physical gold actually at hand? One way to satisfy such delivery demands in the short term is to borrow gold. So we suspect &ndas
h; although we cannot prove it – that this is why GOFO has turned negative.

 

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1 month GOFO turns into negative territory again – click to enlarge.

 

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We also like that Thursday's rally was greeted with incredulity all around. A friend sent us the following smattering of quotes from the mainstream financial press. We especially like the guys who just know that the 'gold bull market is definitely over':

 

“The markets had anticipated a last-minute compromise of this kind," says a note from German investment bank and bullion dealers Commerzbank. "What is more, this also means that the scaling back of Fed bond purchases will be further postponed. A renewed sell-off of precious metals thus failed to materialize."

 

Issued before the debt-limit fix, "Resistance lies between 1301 and 1307," said Scotiabank's technical analysis Wednesday night, pointing to gold's 50% retracement of both its 2008-2011 uptrend and this year's June-August rally.

 

Longer-term, however, "Desire to buy gold as a hedge against the consequences of monetary policy has diminished," reckons Credit Suisse analyst Tom Kendall, who in February announced the "beginning of the end of the era of gold".

 

"When you've got other asset classes, equities in particular, doing so well, then it's hard to divert investments out of them and into something like gold, which is falling."

 

A lot of gold," agrees Robin Bhar at Societe Generale, also speaking to Bloomberg today, "has been held for speculative purposes, investment and a store of value, and that's less of a reason going forward.

 

"If you sell your gold and put your money into equities, other fixed-income assets or real estate, you're going to show a return. The gold bull market is definitely over."

 

But "although the US has managed to avert a default," counters Nic Brown's commodity team at French investment and bullion bank Natixis, "[it] has clearly lost some credibility" with foreign creditors led by China. Not only did Washington's behavior annoy T-bond holders, says Natixis, "a concrete long term solution has once again failed to emerge."

 

(emphasis added)

And so it goes – we are going to keep these quotes for reminiscence purposes.

 

Gold Stocks

Yesterday the HUI gapped up above its 20-day moving average. We have become a bit wary of such gaps, but want to point out that the action so far looks quite similar to what happened in early July. Even today's pullback is reminiscent of the action following the gap up in July.

Whether the similarities will continue we cannot say, but we do like the fact that the index has done what it was expected to do in view of the wedge-like decline that preceded the recent rally.

 

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HUI daily – now we have an MACD buy signal as well, tentative though it may be – click to enlarge.

 

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Also worth noting is that in spite of gold's very strong rally, the HUI-gold ratio continued to improve somewhat:

 

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HUI-gold ratio still improving – and the recent move to new lows is beginning to look like a false breakdown as well – click to enlarge.

 

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So here we have another 'false breakdown' in terms of the ratio of gold stocks to gold and obviously it would be quite encouraging if it manages to hold up.

 

Conclusion:

As before, we cannot yet say whether a trend change is definitely in the bag. However, considering how absolutely dismal sentiment on gold is, considering the many similarities to the 2008 'retest' that could be observed recently (back then, gold was also declared 'dead' by the mainstream) and given the fact that for a change, the gold market has not acted in the way that was widely expected, it continues to make sense to look for more signs of a trend change to emerge.

Ideally declines should continue to be kept in check by support at $1275, while any rally that manages to exceed the $1350 level on a closing basis and confirmed by the gold stock indexes can probably be interpreted as a sign that the short to medium term trend has finally reversed for good.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1ovjvUaC6_4/story01.htm Tyler Durden

While last week’s relentless panic buying has been extensively commented on, it was last week’s nearly 50% plunge in near-term stock vol that the major news as the world went from risk off mode to risk on. It wasn’t just stocks whose volatility imploded: as the following charts from Bank of America and associated commentary show, it was the implied near-term volatility of all assets classes that was hammered in the last three days.

First equities:

 

 

Chart of the week: VXV/VIX ratio says risk rally to continue

 

While the VIX index has just reached fresh 2m lows, it still has plenty of room to fall; particularly against its curve. Indeed, the VXV/VIX ratio (VXV is the Bloomberg ticker for 3m S&P500 Volatility) continues to trend higher. Until this ratio reaches 1.2 or greater (indicating investor complacency) the US equity rally remains on firm footing.

But also Treasurys:

 

US Fixed Income volatility breakdown

 

The MOVE index has broken its yearlong pivot at 73.00 and completed a 3m top in the process. Expect Treasury volatility to decline further in the weeks ahead towards the May lows at 48.87 before greater signs of basing emerge.

FX…

 

 

FX volatility descent accelerates

 

G7 FX volatility remains under pressure. The mid-September completion of a 7m Head and Shoulders Top says that the fall in volatility can extend to the Dec’12 lows at 7.06% before all is said and done.

And Crude:

 

 

Oil volatility spills lower

 

After 6m of a very choppy consolidation, WTI Crude Oil volatility has broken sharply lower to resume its year and a half downtrend. The completed Triangle formation points to further downside in the weeks ahead. The initial target is the Mar-28 low at 17.60, with risk for a move to its long term channel base near 13.53.

Finally, while everyone is fascinated by the rapid VIX down move, it is what someone did on Friday by betting that VIX will double by February in a 24/29 VIX Call Spread, that was of note. The amount wagered: $6.7 million. Whether or not this was an outright trade, or a hedge (and if one listens to Jamie Dimon perjuring himself to Congress, any trade is a hedges, adding further to the confusion) is unknown, but it is not pocket change betting that the plunge in vol will be merely transitory. From Bloomberg:

An investor paid $6.7 million for a trade that will pay off if the Chicago Board Options Exchange Volatility Index more than doubles by February.

 

The trader today bought 160,000 bullish contracts on the VIX expiring in February with a strike price of 24, while selling the same number of February 29 calls in a strategy known as a call spread, according to New York-based Trade Alert LLC. The trade profits if the volatility gauge rises above 24.42 from the current level around 13, data compiled by Bloomberg show. It has a maximum payoff if the VIX jumps 115 percent to 29.

 

“This is probably an investor with a portfolio of stocks who is using the VIX to hedge against an increase in market volatility,” Frederic Ruffy, a Chicago-based senior options strategist at Trade Alert, said in a phone interview. “The focus is on the February options, so it expresses concern over what will happen during the next three months, which coincides with the next deadlines on the government budget.”

 

Congress resolved a deadlock on funding the U.S. government and avoiding a default this week, driving the VIX down from a three-month high of 20.34 on Oct. 8. The agreement funds the federal government through mid-January and lifts the nation’s debt ceiling until Feb. 7.

 

The VIX, which hasn’t closed above 29 since the end of 2011, slumped 3.3 percent to 13.04 today, a one-month low.

 

The purchased February 24 calls cost 90 cents per contract, while the February 29 calls were sold at 48 cents. The total cost of the trade was 42 cents per contract, or $6.7 million, according to data compiled by Bloomberg. 

So with the latest can-kicking set to expire in less than three months, and at least one investor already putting in millions in a wager that Vol, currently plunging, will once again double as the Congressional dysfunction returns, one wonders: Will Mr. Chairman, who runs the world’s biggest hedge fund, get to work as usual, and make sure any and all risk hedges expire worthless?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4kCvqsHSv_A/story01.htm Tyler Durden