Month: February 2018

Some weekend observations on volatility and risk, excerpted from the latest batch of Weekend Notes by One River CIO Eric Peters.

* * *

“Things had been too easy for too long,” said Roadrunner, the equity market’s biggest volatility trader.

“Yet vol has found a bid on each dip for weeks,” he said. “The market saw this coming.” The S&P 500 rallied +7.5% in the first 18 trading days of 2018. Yet implied volatility levels rose. Then stocks fell -3.9% in 5 days.

“When stocks dump on a Friday, closing at the lows, and you haven’t hedged, it makes for a long weekend,” said Roadrunner. “People are worried that higher interest rates kill this bull market. I’m more worried about lower interest rates,” he whispered, darting looks left, right, up.

“Stocks should trade down hard Monday morning.” As hedgers sell. “Then we get to see where this thing really wants to go.”

Our Reality

“If we believe something, does that make it true?” he thought, unsure. When asked if the US government is concealing what they know about the 9/11 attacks, 49.6% of Americans agree or strongly agree. Is the government concealing what they know of JFK’s assassination? 49.6% agree or strongly agree. Alien encounters? 42.6%. Global warming? 42.1%. Plans for a One-World government? 32.9%. Obama’s birth certificate? 30.2%. Origin of the AIDS virus? 30.1%. Supreme court justice Scalia’s death? 27.8%. Apollo moon landing? 24.2%. Hmmm.

Anecdote

It raced across the night sky at 150,000 mph. No larger than a marble. The meteorite vanished in a trail of brilliant light, a faint green copper glow, come and gone. And his heart raced, recalling that first shooting star, decades ago, a child in a backseat, face pressed to the window, searching the heavens. His excitement late that night, replaced by profound sadness. The tragic fate of that distant star, its surrounding planets, its children too, all gone in a magnificent flash. The enormity of that tragedy consumed the little boy. But the more he thought about it, the less it made sense. So he found an encyclopedia.

And having set the record straight he returned to a world filled with Easter bunnies, Tooth Fairies and Santa Claus — all such wonderful things, as real as the sky is blue, just so long as he never stopped to consider their impossibility.

In time, as he explored the history of humanity, he marveled at our ability to believe anything, everything. Religious and political leaders have us believe in things we fear. Business leaders have us believe in things we covet. Scientific pioneers challenge our beliefs. But left to our own devices, we simply believe in those things we most want to believe. Miracles and magic. Holy Grails. Buried treasure and Bitcoin. The lottery. Alchemy. We want to believe so badly that these things become real, for a time.

The history of markets is a tale of such things, our myths, manias. Illusions, delusions. As they unfold, they’re as real as Santa.

Today we’ve come to believe that volatility is the same thing as risk. When volatility declines, large risks become small. Which allows us to take more. And because volatility is mean-reverting, there are no risks provided we never exit a position. But the more he thought about it, the less sense it made.

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A crash between an Amtrak passenger train and a CSX freight train in South Carolina killing at least two people and injuring at least 70 on Sunday, the South Carolina Emergency Management Division (SCEMD) reported.

The Amtrak train was heading from New York to Miami with 139 passengers and 8 crew members on board when the train collided with a freight train and derailed around 2:45 a.m. near Cayce, authorities said.

The location of the crash in Cayce, South Carolina

The passenger train is part of Amtrak’s ‘Silver Service,’ an overnight line that connects New York and Miami with numerous stops along the way. The National Transportation Safety Board is investigating the crash.

“Amtrak Train 91, operating between New York and Miami, came in contact with a CSX freight train at around 2:35 a.m. in Cayce, South Carolina,” Amtrak said in a statement on its website. “The lead engine was derailed, as well as some passenger cars.”

“The injuries range from cuts and bruises to severe broken bones. All the injured have been transported to local hospitals,” said SCEMD public information officer Derrec Becker.

Addressing the media shortly before 7am local time, a spokesperson for South Carolina Emergency Management Division confirmed that two people had died and 70 people had been taken to various local hospitals with injuries.  He added that a hazardous materials team had been called in, to deal with a significant fuel spill from the crash but said that it doesn’t represent a threat to the public.

The crash happened near a stretch of tracks by a rail yard about 10 miles (16 kilometers) south of Columbia, where several track spurs split off for freight cars to be unloaded. Authorities said they haven’t determined if both trains were moving or if the Amtrak train was diverted on to a side track. The National Transportation Safety Board will investigate.

TV footage from the crash scene showed the aftermath of the collision, with the Amtrak engine on its side and its front crumpled.

The people who weren’t hurt were taken in patrol cars to a shelter, Lexington County Sheriff’s spokesman Adam Myrick said. “We know they are shaken up quite a bit. We know this is like nothing else they have ever been through. So we wanted to get them out of the cold, get them out of the weather – get them to a warm place,” Myrick said.

Amtrak set up a passenger information line at 1-800-523-9101.

This is the second Amtrak incident within a week, after a train carrying Republican members of the House of Representatives to a policy retreat crashed in Virginia on Wednesday. One person died in that crash, while in December three people were killed and dozens more injured when another train derailed near DuPont, Washington.

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Authored by Paul Craig Roberts,

The World Will Not Survive the American Neoconservatives’ Doctrine of US World Hegemony

The government of the United States is clearly in demonic hands. We are overflowing with proof. Take Friday (2-2-18) for example.

A report from the House Intelligence Committee was released that is proof that the Federal Bureau of Investigation, the Department of Justice (sic), and the Democratic National Committee are engaged in a conspiracy against American democracy and the President of the United States with the full support of the presstitute media.

As if that is not enough, also released today is the Pentagon’s new Nuclear Posture Review. A nuclear posture review specifies a country’s attitude toward nuclear weapons and their use. In past posture reviews, nuclear weapons were regarded as unusable except in retaliation for a nuclear attack. The assumption was that no one would use them. There was always the possibility that false warnings of incoming ICBMs would result in the nuclear button being pushed, thus setting off Armageddon. There were many false warnings during the Cold War. President Ronald Reagan was very concerned about a false warning resulting in mass death and destruction. This is why his principal goal was to end the Cold War, which he succeeded in doing. It did not take successor governments long to resurrect the Cold War.

The new US nuclear posture is a reckless, irresponsible, and destabilizing departure from the previous attitude toward nuclear weapons. The use of even a small part of the existing arsenal of the United States would be sufficient to destroy life on earth. Yet, the posture review calls for more weapons, speaks of nuclear weapons as “usable,” and justifies their use in First Strikes even against countries that do not have nuclear weapons.

This is an insane escalation. It tells every country that the US government believes in the first use of nuclear weapons against any and every country. Nuclear powers such as Russia and China must see this to be a massive increase in the threat level from the United States. Those responsible for this document should be committed to insane aslyums, not left in policy positions where they can put it into action.

President Trump is being blamed for the aggressive US nuclear posture announced today. However, the document is a neoconservative product. Trump, perhaps, could have prevented the document’s release, but under pressure as he is by the accusation that he conspired with Putin to steal the US presidential election from Hillary, Trump cannot afford to antagonize the neoconized Pentagon.

The neoconservatives are a small group of conspirators. Most are Zionists allied with Israel. Some are dual-citizens. They created an ideology of American world hegemony, specifying that the chief goal of US foreign policy is to prevent the rise of any other power that could serve as a constraint on US unilateralism. As neoconservatives control US foreign policy, this explains US hostility toward Russia and China and also the neoconservatives’ use of the US military to remove governments in the Middle East regarded by Israel as obstacles to Israeli expansion. For two decades the US has been fighting wars for Israel in the Middle East.

This fact proves the power and influence of the insane neoconservatives. It is certain that people as insane as the neoconservatives would launch a nuclear attack on Russia and China. The Russian and Chinese governments seem to be completely unaware of the threat that the neoconservatives pose to them. I have never experienced in my interviews with Russians and Chinese any awareness of the neoconservative ideology. Possibly, it is too insane for them to grasp.

Ideologues such as the neoconservatives are not fact-based. They are chasing their dream of world hegemony. Russia and China are in the way of this hegemony. Having learned the limits of US conventional military power—after 16 years the US “superpower” has been unable to defeat a few thousand lightly armed Taliban in Afghanistan—the neoconservatives know that conventional invasions of Russia or China would lead to the total defeat of US forces. Therefore, the neoconservatives have elevated nuclear weapons to a First Strike, usable, arsenal that in the neoconservative dream of world hegemony can be used to destroy Russia and China.

Ideologues who divorce themselves from the facts create a virtual world for themselves. Their belief in their ideology blinds them to the risks for themselves and others that they impose on the world.

It is clear enough that without the utterly corrupt Obama Department of Justice (sic) and FBI, the utterly corrupt Clinton-controlled Democratic National Committee, and the utterly corrupt American and European presstitute media working to destroy Trump’s presidency by framing him up as “a Russian agent,” President Trump, understanding that the Pentagon’s posture review would worsen, not normalize, relations with Russia, would have deep-sixed the demonic document that threatens all life on earth.

Thanks to the American liberal/progressive/left, the entirely of the world is faced with a far more likely nuclear demise than ever threatened us during the Cold War with the Soviet Union.

 

By its collaboration with the military/security complex and the corrupt Hillary DNC, the liberal/progressive/left has forever discredited itself. It is now seen by every thinking person worldwide as an insane propaganda ministry for the neoconservatives’ plan to use nuclear weapons to eliminate constraints on US unilateralism. The liberal/progressive/left has endorsed “hegemony or death.”

They will get death. For all of us.

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The Eagles and the Patriots will be going head to head tomorrow to compete for Super Bowl LII.

Historically, the Patriots have pedigree, with five wins in total.

The Eagles, very much playing up to their underdog tag, are looking to win their first, having been beaten in 1981 and 2005 – the latter a narrow loss at the hands of the Patriots.

The American public seems to be rooting for them, too.

You will find more infographics at Statista

As Statista’s Martin Armstrong points out, in total, 45 percent of Morning Consult survey respondents said that they’d like to see the Eagles triumph, to the 26 percent backing the Patriots.

When Super Bowl LII is kicked off on Sunday, February 4, more than a hundred million Americans will be watching.

Can Tom Brady carry his Patriots to yet another victory or will the Philadelphia Eagles finally get their hands on the Vince Lombardi Trophy?

As the following infographic nicely illustrates, it is not only the biggest game of the year, but also a, albeit unofficial, national holiday.

You will find more infographics at Statista

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Yesterday, we highlighted a story that pulled back the curtain on the shady world of media sites paying for traffic – a practice that countless social-media influencers and AdSense scammers have employed for years to help monetize their respective platforms.

As it turns out, IBT Media, the publisher of Newsweek and the International Business Times, reportedly schemed to buy fraudulent traffic in order to help secure a major ad contract from a US government agency. A group that investigates fraudulent web traffic initially published the findings, which comport with a story from Buzzfeed news about IBT India.

 

 

Now, Thinknum, a FinTech company that analyzes web traffic, has published a report on its blog alleging that SpeedDate.com, one of the 45 web properties owned by Match.com, misleads users by publishing fake engagement data on its homepage.

 

 

When the company’s analysts tried to verify the high level of activity (after all, the site regular advertises more than 2,500 singles “online now” – a huge number in many parts of the US) they discovered something disturbing in the website’s header files: A random number generator (highlighted in purple in the image above).

So we looked deeper – why wasn’t SpeedDate.com registering on our active users counts? Perhaps it’s because they don’t use Facebook login like their other properties, making it difficult for us to track activity? Perhaps it’s because they’re under the radar?

Or perhaps it’s because they lie?

When our engineers took a deeper look at SpeedDate.com to figure out how we could track activity – after all, 3,297 Singles Online Now is a lot, and we should be tracking this rising star of digital dating – we found something curious in their header files.

A random-number generator.

What’s perhaps even more galling is how the site is “monetized” – instead of relying solely on advertising traffic, real human users must pay for the service.

You may think this isn’t a big deal, but in an environment in which dating sites are exceedingly difficult to navigate, difficult to use, and sketchy on details, a company as big at Match shouldn’t be commiting a sin as fundamental as making up its usage numbers.

Perhaps SpeedDate.com is just a placeholder for something bigger. Maybe it’s a relic that Match is no longer feeding. That said, it still entices hapless singles to sign up, give out personal data, and get matched up with users that either don’t exist, or haven’t been using the site in years.

Oh – and to “verify your profile” you need to enter credit card information and get billed $0.99. After all, there are thousands of singles waiting to meet you, right?

Right?

To be sure, the author of the Thinknum post said the company isn’t sure what’s up with Speeddate.com these days, or if they’re even still active as a business. In 2008, they came under fire for some Facebook login shenanigans that got them banned from the social network. Regardless, their site is active – and they’re accepting signups.

 

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Authored by Tom Luongo,

“Round up the usual suspects,” will be as far as the Democrats will be willing to go in the wake of the FISA memo’s release. There is nothing in that memo that anyone following the Special Counsel Robert Mueller’s investigation doesn’t already know.

All the memo does is corroborate the bread crumbs left behind by a drip feed of leaks, counter-leaks and good ol’ fashioned investigative journalism.  Since the memo is based on actual evidence that the FBI admits is real but will not allow us to see, the memo itself can be taken as fact.

The FBI has the evidence.  They’ve showed it to the House Intelligence Committee.  Both agree on the facts.  So, by extension, the memo is all the evidence we need.

Put that in your DNC-scripted talking point pipe and blow it out your ass.

 

Conclusions Matter

Now that the timeline and paper trail have been determined the real implications of the memo and its facts can be discussed.  I’m no longer interested in the game of cut and thrust to stop the truth from coming out.

I’m only interested now in the conclusions we can draw from the memo itself.

And those conclusions are chilling.

The out-going Obama administration, at the highest levels in coordination with the media, conspired to create news stories that supported a FISA warrant based on politically-motivated opposition research to undermine the newly-elected President of the United States.

Moreover, it knowingly omitted material facts to the court not once, but four times, to keep that surveillance warrant open in service of this operation.  A warrant the FBI deputy director, Andrew McCabe, testified under oath to Congress that was key to its issuance.

They knew the dossier on Trump, compiled by Michael Steele, was unverifiable. They hid its origin and motivation from the court.  The information from this warrant and the details of the dossier were used to move public opinion and Congress into supporting Robert Mueller’s investigation.

But, to what end?

To disgrace and force from office the President of the United States.  Thus, these people, and the leadership of the Democratic Party, President Obama himself and Hillary Clinton’s staff all conspired to criminally disenfranchise more than 60 million Americans who voted for Donald Trump.

To say that this is bigger than Watergate is like calling World War II a minor kerfuffle.

What About the Voters!?

Think about this for one second and you know what I’m saying.

All of these people are guilty, at a minimum of corruption, conspiracy and fraud.  I’m no legal scholar, so I’m sure the list of offenses is longer than one of Hillary Clinton’s tirades after someone criticized her latest pantsuit atrocity.

This ultimately opens all of these organizations up to the biggest civil rights class action lawsuit in the history of this country.  The Obama administration and the Democratic Party used opposition research to paint a false narrative of corruption in the Oval Office to discredit the election.

How many riots and street demonstrations did we see in 2017 as outraged and triggered liberals ran around smashing in windows and beating people up because of their delusion based on a lie?

How many hours of lost productivity did the country suffer because of FBI complicity in an operation to overturn a legal election?

How many millions in property damage?  Destroyed careers?

What about the direct victims of this disgusting display of government corruption taken to its logical conclusion?

Why is Michael Flynn nearly bankrupt after being hounded by Mueller for months only to get a nothing guilty plea on the thinnest of procedural offenses?

When the corruption is this venal isn’t it our right under the Constitution to petition our government for a redress of grievances?  Who do we sue?

Because there’s material harm here and someone should be held responsible.  This began under Obama’s watch.  He set this whole process in motion.  High ranking members of his cabinet are directly implicated by the facts in the memo.

And the memo is just the beginning of the discovery phase of this very public trial.

Government on Trial

But, I want more than that.  I want it all out in the open. And I want those responsible, those for whom the titles, salaries, benefits and power we bestow on them to do our work, to stand up and be accountable.

And if they are too venal, feckless and narcissistic to admit these things, then we’ll drag them through the most embarrassing of show trials.

And that means stripping them of their wealth, power and privilege.

It means turning off their house organs in the media; outing the enablers, leakers, trolls and spooks.

It means releasing everything, unredacted, in the name of national security.

It means reminding them of just how much all of that depends on our consent, not theirs.

Because if we don’t demand these things, then next time there won’t even be the pretense of an election.

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