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Authored by Daisy Luther via The Organic Prepper blog,

The Northern California wildfires are fast-moving, unpredictable, and for some, unsurvivable.

The videos below will show you what it’s really like, trying to survive an ever-changing inferno…and why you shouldn’t wait for the official evacuation order.

A lot of folks have been critical, saying blithely, “They knew there was a fire. They should have evacuated.” It’s important to understand that it doesn’t always work like that with wildfires. Armchair quarterbacking is easy. Fleeing when the car your driving literally catches on fire and the smoke is blinding you is not.

First of all, fires move rapidly. You can be in no danger whatsoever and just see a fire on the distant horizon, and then minutes later, it’s at your back door. Secondly, they change courses. Many times, the fire gets ahold of some new fuel – like a home, tall grass, or trees, and the course veers in that direction. Finally, high winds have propelled these fires rapidly and fanned them to new heights. Every fall, California has something called the “Diablo Winds.” These are seasonal gusts that can reach as high as 80 mph and cause extremely high fire danger. When coupled with existing fires, it’s nothing less than the perfect storm.

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October is often the worst month of the year for wildfires in California. Not only is it the time when the Diablo winds (or Santa Ana winds in Southern California) kick up, but it’s also the driest month. California has a long dry season. It isn’t unusual to go without a single drop of rain from May through the end of October. Because of this, all the lush grass that grows during the spring rainy season is dried, crisp, and tragically perfect fuel.

In situations like this, there is often little to no warning before the fire is roaring through your property. The fire may be miles away and heading in the opposite direction one minute, then turn on a dime. Then suddenly, you find yourself directly in the path of an inferno. If you’re lucky, you escape unscathed with your life but lose all your worldly possessions. Many people have not been lucky.

15 large wildfires are blazing through Northern California’s wine country. 40 people are confirmed dead, hundreds are missing, more than a 100,000 have evacuated, and nearly 6000 homes and businesses have been completely burned to the ground. Thus far, the damage estimate is more than 3 billion dollars.

The following videos and stories show you what the Northern California wildfires are really like.

This video is shot from a fire engine from Berkeley, California on the day Santa Rosa burned. It gives you the firefighters’ firsthand view of the destruction and the speed with which it was wrought.

This video shows the utter devastation from the wildfires and includes clips of people escaping with only their lives.

These two roommates left with their dogs as the fire jumped the hill behind their home, narrowly escaping death. (Strong language)

This police officer’s body camera shows the terrifying scene when he was helping people evacuate.

This couple described their escape as being like “driving through hell.”

This video shows multiple clips of people fleeing the blaze as embers rain down and the billowing smoke gets closer. They are trappd on the freeway in slow-moving traffic.

In one tragic story, a family tried to evacuate by car. Their car caught on fire and they had to take off on foot to try and outrun the blaze. They got separated in the smoke. A 14-year-old boy burned to death and the other members of the family are burned over more than half their bodies. The mother and daughter were found by a neighbor and the father was found by paramedics. (source)

In a story with a happier ending, a farmer tried to evacuate his dogs but one refused to go. Odin, a Great Pyrenees, stayed with his herd of goats. The owners were positive they’d never see their beloved dog again, but when they returned to the farm, they discovered a slightly singed Odin with every member of his herd unharmed. This very good boy had even picked up a few baby deer. (source)

Haunting drone footage shows what Santa Rosa looks like after the fire.

While I strongly recommend evacuating in a situation like this, one man stayed behind and managed to save his home and his neighbor’s home from the wildfire.

Along the Napa/Sonoma border, these residents scrambled for safety and barely escaped with their lives. There were fires in all directions, blocking escape routes. People had to choose whether to drive through blinding smoke or flames.

This couple survived a wildfire they couldn’t escape by taking refuge in a neighbor’s swimming pool for SIX hours as the fire blazed all around them.

Another couple who tried to take refuge in a pool was not so fortunate. The woman died in her husband’s arms after 60 years of marriage.

This family’s dog ran away in a panic and they had no option but to leave. They returned home, certain their beloved pup had perished, but then they found this:

These interviews tell the stories of more narrow escapes.

This aerial footage gives you a better idea of what firefighters are dealing with during these widespread blazes.

More than eleven thousand firefighters are pushing themselves to the limits of their endurance to contain these fires, but they aren’t able to directly respond and save people. As the mayor of Calistoga said in a press conference to the few who opted to ignore evacuation orders, “You will NOT be given life safety support at this point. You are on your own.” Exhausted firefighters are grabbing moments of rest when they can.

In some areas, civilians, farmers, and construction crews have taken a stand to protect their homes from the infernos.

The story of the Capell Valley community is one that was repeated in neighborhoods and valleys across Northern California’s wine country this week, as dry conditions and high winds fueled multiple fires in Sonoma, Napa, Yuba and Mendocino counties.

 

It was not only firefighters who stood in the path of the blazes, but civilians too. Contractors, skilled construction workers and even former wildland firefighters came out of the woodwork to run bulldozers and drive multi-thousand gallon water tenders on twisty and damaged back roads.

They picked up what tools and equipment they could and tried to save their neighborhoods….

 

This wasn’t the first time Gil Pridmore had fought a fire in those hills. He spent years as the boss of a California Department of Forestry and Fire Protection bulldozer crew and fought the 1981 Atlas Peak Fire.

 

He used this experience to help lead a team of 30 people to cut multiple layers of firelines on the rim of the valley.

 

When flames would breach their lines and encroach on houses, the goal was to get the house “in the black,” or completely surrounded by burned areas so there was no fuel left to catch fire. (source)

They managed to save all but one home in the valley.

A few things to learn from the California wildfires

There are lessons to be learned from these videos (and 5 years of living in fire-prone California.) Wildfires happen in other parts of the United States as well, and it’s important to be prepared before the first spark.

You need a fire kit in your vehicle at all times. Things to include:

• Swimming goggles: This will protect your eyes and help keep you from being blinded by smoke
• Respirator masks: This doesn’t mean you will be able to breathe if the fire sucks all the oxygen from your environment, but it will help to filter out some of the smoke so you aren’t disabled by a coughing fit.
• Fire extinguisher: In a worst case scenario if your vehicle catches on fire, you may be able to put it out if you attack while the blaze is small.
• Welding gloves: Remember the guy who burned his hands opening a gate? Welding gloves will offer some protection from hot surfaces.

And here are some tips.

• Do not wait for the official order: In some parts of Sonoma County, people are questioning why an evacuation alert never came. While officials do their best, YOU are the person who is responsible for your family’s safety. (source)
• Have more than one escape route: In situations like this, you will often find your escape route blocked. Have more than one way out. Figure these out ahead of time and now when you are fleeing for your life and blinded by smoke.
• Evacuate large animals ahead of time. If possible, evacuate your livestock before the emergency becomes a crisis. In a situation like this, animals can be fearful and uncooperative. Get your livestock to safety first, because if you have to rush out like many of these families did, you’ll have to leave them behind, helpless. I shared good news stories above, but a friend of mine in California went to help out with veterinary rescue. There are far more bad news stories.
• Leash or crate pets early on: They will be affected by the same kind of panic. A normally well-behaved pet could rush off into danger, leaving you to make the choice to leave them behind or risk your family’s lives trying to save them.
• Grab your dirty clothes hampers: If you have time to grab a few things unless you have just done laundry, grab dirty clothes hampers. They’re likely to have several days of clothing from the skin out, PJs, and socks, saving you time from searching for all those things individually.
• Keep precious items and documents in one area: Make sure irreplaceable things are kept together. We have a decorative trunk near the door into which we can sweep precious mementos. Important documents are backed up in the Cloud, which means we don’t have to spend time packing those.

The fires are beginning to be contained, and firefighters say they are gaining an edge. Two out of three of the most destructive fires are more than 50% contained. Some people in Sonoma will be allowed to return to their homes today – or what’s left of them. Winds have lightened, but the weather will still be hot and dry until Thursday when there is a small chance of blessed rain. (source)

I wish those in the affected areas the very best.

via http://ift.tt/2zf3kxi Tyler Durden

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Less than a day after South Korean and US naval forces kicked off their latest round of joint military drills, which are slated to run until the end of the week, North Korea’s deputy UN ambassador claimed during a fiery speech at the UN General Assembly that the Korean peninsula “has reached the touch-and-go point and a nuclear war may break out any moment,” the Associated Press reported.

Complaining to the UN General Assembly’s disarmament committee, Kim In Ryong argued that North Korea is the only country in the world that has been subjected to “such an extreme and direct nuclear threat” from the United States since the 1970s, adding that the isolated North has the right to posses nuclear weapons in self-defense.

This latest warning arrives as the US and South Korea are bracing for another North Korean missile test. For weeks now, South Korean intelligence has suspected that its isolated neighbor could use the beginning of China’s National Party Congress, which begins on Thursday, as an opportunity for what would be a bold act of defiance, angering both the US and the North’s primary benefactor and only major ally, China. The North has also been threatening to unveil a new ICBM that intelligence services believe might be capable of striking the west coast.  

During his speech, Kim accused the US and South Korea of conducting military exercises involving “nuclear assets” and also mentioned a top-secret plan to stage a “secret operation aimed at the removal of our supreme leadership” developed by US and South Korean intelligence. The plan was exposed after North Korean hackers stole a large cache of military documents from the South.

Boasting about the country’s nuclear capabilities, Kim bragged that the North Korea had completed its “state nuclear force and thus became the full-fledged nuclear power which possesses the delivery means of various ranges, including the atomic bomb, H-bomb and intercontinental ballistic rockets.”

“The entire U.S. mainland is within our firing range and if the U.S. dares to invade our sacred territory even an inch it will not escape our severe punishment in any part of the globe,” he warned.

The dangerous rhetoric comes as Russia – which was recently rumored to be ramping up economic support for the North – reversed course and said it would curtail economic, scientific and other ties with North Korea in line with UN sanctions

Meanwhile, the European Union announced new sanctions on Pyongyang for developing nuclear weapons and ballistic missiles.

US Secretary of State Rex Tillerson said Sunday that diplomatic efforts aimed at resolving the North Korean crisis “will continue until the first bomb drops.” His commitment to diplomacy came despite

President Donald Trump’s tweets several weeks ago that his chief envoy was “wasting his time” trying to negotiate with North Korean leader Kim Jong Un, whom he derisively referred to as “Little Rocket Man.”

A report published by Russian media earlier today claiming that US and North Korean diplomats might be meeting at a conference in Moscow next week was quickly denied by the isolated country’s government, which said it’s not yet ready to begin negotiating with its greatest geopolitical foe.

Kim also reiterated that North Korea considers its missile arsenal “a precious strategic asset that cannot be reversed or bartered for anything.”

“Unless the hostile policy and the nuclear threat of the U.S. is thoroughly eradicated, we will never put our nuclear weapons and ballistic rockets on the negotiating table under any circumstances,” Kim said.

But in an interesting twist, Kim told the disarmament committee that while the Democratic People’s Republic of Korea — North Korea’s official name — would like to see nuclear weapons vanish from the face of the earth, aggressive expansion of nuclear arsenals has left the country no choice but to arm itself.

By accelerating the modernization of its weapons, the US is “reviving a nuclear arms race reminiscent of [the] Cold War era,” Kim said. He also noted that the nuclear weapon states, including the United States, boycotted negotiations for the Treaty on the Prohibition of Nuclear Weapons that was approved in July by 122 countries at the United Nations.

“The DPRK consistently supports the total elimination of nuclear weapons and the efforts for denuclearization of the entire world,” he said.

 

But as long as the United States rejects the treaty and “constantly threatens and blackmails the DPRK with nuclear weapons … the DPRK is not in position to accede to the treaty.”

via http://ift.tt/2youNzC Tyler Durden

Last week we reported that in the latest instance of criminal Japanese corporate malfeasance, Japan’s third-biggest steel producer admitted falsifying data about the quality of steel, aluminum, copper, iron powder and other products it sold to customers across virtually every single industry. The news sent the company’s stock tumbling 43% from levels before the scandal broke, to the lowest price since 2012.

The downstream impact was quickly felt, with selling hitting names across the global supply chain…

 

… while the NYT reported that the fallout has the potential to spread to hundreds of companies. As of a week ago, the extent of the problems at Kobe Steel was still unfolding, and prompte the Nikkei newspaper to conclude that “the falsification problem has become an issue that could destroy international faith in Japanese manufacturing.”

Well, as of moments ago that tipping point was this much closer, when the same Nikkei reported that some Kobe Steel plants in Japan had been falsifying product quality data for decades, well beyond the roughly 10-year time frame given by the lying steelmaker. According to the Japanese newspaper, “employees involved in the data manipulation used the industry term tokusai to refer to shipping of products that did not meet the standards requested by customers”, the Nikkei source said. Though tokusai usually refers to voluntary acceptance of such products, plants sometimes sent substandard goods without customers’ consent. The word was apparently in use at some plants for 40 to 50 years.

But wait, it gets better.

Not only did the company, having already been caught, lie to shareholders and rule-abiding employees how long this illegal behavior had been going on, but – in a glaring example of corporate idiocy – had effectively enshrined and codified its fraudulent ways, as the cheating procedures eventually became institutionalized in what was essentially a tacit fraud manual, allowing the practice to continue as managers came and went.

Meanwhile, the Nikkei also reports that everyone could have been in on it, as data manipulation may have occurred with the knowledge of plant foremen and quality control managers. Some shipments even came with forged inspection certificates.

Kobe Steel has tapped senior officials in the aluminum and copper business – where most of the misconduct took place – to serve on its board. How far up the chain of command knowledge of the fraud may have extended in the past remains an open question.

According to the latest update, systemic data falsification took place at no less than four Japanese production sites and appears to have affected virtually every product made by the company: the scandal has spread to the manufacturer’s mainstay steel business, with revelations Friday that steel wire was also shipped without inspection or with faked certificates. Meanwhile, the number of affected customers has swelled from around 200 to roughly 500.

One can only imagine the “honesty”, measured in alpha, beta and gamma radiation, if Kobe was also behind the Tepco nuclear disaster, where of course as we leaned over the past 6 years, the amount of data fabrication was just as unprecedented. It is almost as if there is something rather rotten with Japan’s entrenched, corporate ways…

But not to worry: in an amusing twist, Kobe Steel has promised it will complete safety inspections for already shipped products in two weeks or so. A report on the causes of the fraud and measures to prevent a recurrence will come out in a month or so; we can’t wait to read the lies in that one. The steelmaker is conducting a groupwide probe that includes interviews with former senior officials. Because if there is anything Kobe will be successful at, it is diligent, honest self-reporting.

Where the company is certainly lying however, is when it told analysts earlier on Monday that “liquidity is not an issue” according to Bloomberg. Judging by the explosion in Kobe Steel CDS in recent days…

… one more gaffe by the scandal-plagued company, and Kobe Steel will be insolvent. As for all those who are considering providing liquidity to this fraud of a company, good luck with lying to yourselves that you will ever see any of that money back.

via http://ift.tt/2gndKaw Tyler Durden

Authord by Ben Levisohn via Barrons,

In the rise of computer-driven trading, some hear echoes of the stock market’s 1987 crash. Beware the feedback loop…

Black Monday. Although the event to which those two words refer occurred 30 years ago, they still carry the weight of that day—Oct. 19, 1987—when the Dow Jones Industrial Average shed nearly a quarter of its value in wave after wave of selling.

No one in living memory had seen anything like it, at least not in the U.S., and in the postmortems conducted to understand just how the Dow managed to drop 508 points in one day, experts found a culprit: so-called portfolio insurance, a quantitative tool designed to use futures contracts to protect against market losses. Instead, it created a poisonous feedback loop, as automated selling begat more of the same.

Since that day, markets have rallied and markets have tumbled, and still we marvel at the unintended consequences of what, in hindsight, was an obviously misguided strategy.

Yet in the ensuing years, market participants have come to rely increasingly on computers to run quantitative, rules-based systems known as algorithms to pick stocks, mitigate risk, place trades, bet on volatility, and much more – and they bear a resemblance to those blamed for Black Monday.

The proliferation of computer-driven investing has created an illusion that risk can be measured and managed. But several anomalous episodes in recent years involving sudden, severe, and seemingly inexplicable price swings suggest that the next market selloff could be exacerbated by the fact that machines are at the controls.

“The system is more fragile than people suspect,” says Michael Shaoul, CEO of Marketfield Asset Management.

THE RISE OF COMPUTER-DRIVEN, rules-based trading mirrors what has happened across nearly every facet of society. As computers have grown more powerful, they have been able to do what humans were already doing, only better and faster. That’s why Google has replaced encyclopedias in the search for information, why mobile banking is slowly replacing bank branches, and why—someday—our cars will be able to drive us to work. And it is also why Wall Street has embraced computers to help with everything from structuring portfolios and trading securities to making long-term investment decisions.

In the years since 1987, huge strides have been made in understanding what drives stock performance and how to apply it to portfolio construction. At first, researchers focused on “factors,” such as a stock’s volatility relative to the market—known as beta; whether a stock is large-cap or small—the size factor; and whether it is cheap or expensive—the value factor. More recently, the use of factors has proliferated to include many others, such as quality and momentum. (The latter involves buying the best-performing stocks and shunning the worst performers.)

Quantitative investors understood early on that betting on stocks based on their characteristics – and not the underlying business fundamentals of a particular company – was a good way to outperform the market. So good, in fact, that many fundamental, or “active,” money managers now use quantitative tools to help construct their portfolios and ensure that they don’t place unintended bets. Nomura Instinet quantitative strategist Joseph Mezrich says that 70% of an active manager’s performance can be explained by quantitative factors. “Factors drive a lot of the returns,” Mezrich says. “Over time, this has dawned on people.”

Has it ever. One result has been the rise of indexing and exchange-traded funds. The ability to buy an index fund based on the Standard & Poor’s 500 – effectively a bet that large companies will outperform small ones – made the need for traditional fundamental research and stock-picking unnecessary. Since then, indexes and ETFs have been created to reflect just about any factor imaginable – low volatility and momentum among them. Some funds even combine multiple factors in a quest for better performance.

As a result, an increasing amount of money is being devoted to rules-based investing. Quantitative strategies now account for $933 billion in hedge funds, according to HFR, up from $499 billion in 2007. And there’s some $3 trillion in index ETFs, which are, by definition, rules-based. The upshot: Trillions of dollars are now being invested by computers. “We’ve never seen so many investment decisions driven by quantitative systems,” says Morningstar analyst Tayfun Icten.

That’s quite a change from the 1980s. If you wanted to place a trade 30 years ago, you picked up the phone and called your broker; your broker called the firm’s trader; the trader would ring up a specialist, the person in charge of running trading in a given stock; and the trade would be executed. The process was slow, cumbersome, and inefficient. As computer technology advanced, machines gradually took most of these steps out of the hands of humans. Today, nearly every trade is handled by an algorithm of some sort; it is placed by a computer and executed by computers interacting with one another.

The entity handling trades isn’t the only thing that has changed in the past 30 years. Trading now occurs in penny intervals, not fractions such as eighths and 16ths. While that has made it cheaper for investors to buy and sell a stock, pennies made trading far less lucrative for market makers, who historically profited by playing the “spread” between the highest bid to buy and the lowest offer to sell. Consequently, market makers have been replaced by algorithms programmed to instantaneously recognize changes in liquidity, news flow, and other developments, and respond accordingly. At the same time, the proliferation of exchanges helped to lower trading costs but also created a fragmented market that can make shares hard to find during dislocations.

Most of the time, none of this matters. If you want to buy a stock, you boot up your computer, log in to your brokerage account, and place an order that gets filled almost immediately. The fee you pay is so low that it would have been unimaginable 30 years ago. The system has worked well for individual investors, and will continue to do so—as long as nothing goes wrong.

BUT MISTAKES HAPPEN.

In 1998, the “quants” at Long-Term Capital Management, led by Nobel Prize winners Myron Scholes and Robert Merton, nearly caused a massive market selloff when the hedge fund’s highly leveraged trades, based on quantitative models of expected market behavior, suddenly lost money after Russia unexpectedly defaulted on its debt. The damage was magnified by the borrowing that LTCM had used to supersize its bets. Only a bailout organized by the Federal Reserve prevented the broad market from plummeting.

In August 2007, a selloff occurred in quantitative funds that would become known as the “quant quake.” To this day, no one knows what sparked the selling, but once it began, computer models kicked in, causing further selling. Humans added to the mess as risk managers looking at losses dumped shares. Funds specializing in quantitative investment strategies reportedly suffered massive losses: The Renaissance Institutional Equities fund was thought to have lost nearly 9% early in that month, while Goldman Sachs ’ Global Alpha suffered a double-digit decline.

The impact on the market wasn’t huge – the S&P 500 dropped just 3.3% during the first two weeks of August – but the event demonstrated what happens when a trade sours and too many funds are forced by their models to sell at the same time. It was a wake-up call for quants, who have since created more-sophisticated systems to reduce the kind of crowding that led to the selloff.

More recently, problems have been caused by algorithms that are supposed to provide stock for investors to buy, or buy when investors sell, creating liquidity. On May 6, 2010, the S&P 500 dropped 7% in just 30 minutes, as bids and offers for stocks moved far away from where stocks had been trading, in some cases leaving bids down as low as a penny and offers as high as $100,000.

Again, no one knows what caused the sudden decline. Investors had been on edge because of an unfolding European debt crisis, but that alone seemed unlikely to have triggered the flight of automated market makers. The U.S. Commodity Futures Trading Commission blamed the swoon on fake orders placed by a futures trader, while the Securities and Exchange Commission fingered a massive sell order in the futures market allegedly placed by a mutual fund company seeking to protect itself from a potential downturn. That order, it argued, had been handled by a poorly designed algorithm—yet another reminder that an algorithm is only as good as the inputs used by the people designing it.

While the rout was over quickly, and the S&P 500 finished the session down a more modest 3.2%, the episode raised concerns about the potential for computerized trading to exacerbate selloffs.

REGULATORS AND EXCHANGES have made changes since then, but so-called flash crashes continue to happen, even if they are no longer quite as disruptive as the 1987 selloff. On Aug. 24, 2015, for instance, the Dow dropped almost 1,100 points during the first five minutes of trading. The selloff was spurred by a plunge in China’s stock market, which led to a drop in Europe. All of this happened when U.S. markets were closed, which meant that investors turned to the futures and options markets to place their trades.

Chaos prevailed when the stock market opened: Only about half of the stocks in the S&P 500 had started trading by 9:35 a.m.; a quarter of the Russell 3000 index was down 10% or more intraday, and many large ETFs traded far below the value of their underlying assets. Algorithms, sensing something amiss, simply stepped back from the market. Once again, the S&P 500 recovered much of its sudden loss, but savvy market observers detected eerie echoes of an earlier era. In a much-read note at the time, JPMorgan strategist Marko Kolanovic cited the feedback loop of selling and compared it to the Black Monday selloff of 1987.

Flash crashes have not been limited to stocks – or even crashes. On Oct. 15, 2014, the price of the 10-year Treasury note soared, causing yields to tumble 0.35 of a percentage point in mere minutes before quickly reversing. The SEC blamed the increasing role of automated high-frequency algorithms for the sudden move.

The most recent scare occurred on May 18, when the iShares MSCI Brazil Capped ETF (ticker: EWZ) dropped as much as 19% in a single trading session before closing the day down 16%. To put that move in perspective, the Brazil ETF’s worst single-day decline at the height of the financial crisis in 2008 had been 19%. While there was bad news in May—reports that Brazilian President Michel Temer had been ensnared in a corruption scandal—that seemed insufficient cause for such a precipitous decline.

Shaoul, of Marketfield, attributes the Brazil ETF’s plunge to a combination of factors, including the growth of passive investing, which has made it easy to buy and sell an entire country’s market with the press of a button, combined with computer-driven trading.

“There was no way of knowing what was a human being pressing a button, or a computer pressing a button,” he says. “But it generates the potential for sudden spikes in volatility that come out of nowhere.”

The Brazil ETF recovered its losses fairly quickly. By the end of August, it was trading above its May 17 close.

U.S. markets haven’t suffered declines like that, but have experienced numerous “fragility events”—sudden one-day declines—during the current rally, says Chintan Kotecha, an equity derivatives strategist at Bank of America Merrill Lynch. But because stocks have been in a bull market, there has been little follow-through after the initial selloff. As a result, some quantitative strategies reposition for more volatility, but none arrives. Kotecha attributes the lack of follow-through, in part, to central bankers’ continued bond-buying, which has provided much-needed support for the markets.

Follow-through was all the market had in 1987, as selling automatically triggered more selling. To some observers, the risks of a similar scenario are growing. One particular area of concern: volatility-targeting strategies, which try to hold a portfolio’s volatility constant, and risk-parity strategies, which attempt to equalize the risk in a portfolio among bonds, stocks, and other assets—and sometimes use leverage to do it. When volatility is low, these portfolios can hold more-risky assets than when volatility is high. But as soon as volatility rises—and stays high—these types of funds will need to start selling stocks and other assets to keep the risk of their portfolios at the same level. If they sell enough, volatility could spike higher, leading to even more selling.

In a market selloff, commodity-trading advisors similarly could exit their long positions quickly and look to short stocks, creating further selling pressure as they head for the exits. “Action leads to more action,” says Richard Bookstaber, chief risk officer at the University of California and author of The End of Theory, a book about financial crises caused by positive feedback loops.

PERHAPS THE BIG QUESTION is who might be left to buy. Warren Buffett once quipped that investors should be fearful when others are greedy and greedy when others are fearful, but the current market structure has turned that maxim on its head. Algorithms provide less liquidity in a downturn than a human market maker, who might be thinking about how to profit from a dislocation.

The rise of momentum and passive strategies has caused some $2 trillion to shift away from active money managers, who could be counted on to look for bargains as stocks sold off, says Kolanovic, the JPMorgan strategist.

“We think the main attribute of the next crisis will be severe liquidity disruptions resulting from market developments since the last crisis,” he says.

But most strategists acknowledge that such an occurrence isn’t a high-probability event. Much will depend on the cause of any disruption, as well as seasonal factors—stocks are more thinly traded in summer, for example. Also, computers aren’t the only cause of selling cycles; bear markets, after all, long predate machine-driven trading.

Quantitative investors argue that they have learned from past mistakes and are less likely to be leveraged or crowded into the same trades.

Moreover, regulators and exchanges have instituted rules that could help arrest a bout of unchecked selling, with trading halts imposed when the S&P 500 falls 7%, 13%, and 20%.

Maybe these precautions will work to stem a tidal wave of selling. One of these days—possibly soon, given stocks’ lofty valuation and the Fed’s plan to shrink its balance sheet—we’ll find out.

via http://ift.tt/2ztYGfF Tyler Durden

Content originally published at iBankCoin.com

 

 

One of the more bizarre allegations levied against accused rapist and disgraced Hollywood mogul Harvey Weinstein is that he masturbated into a potted plant in front of TV news anchor Lauren Sivan in 2007.

Sivan said Harvey lured her to the basement of Socialista, a Cuban restaurant in Greenwich Village, NY. in which Weinstein was an investor, and tried to kiss her. When she rebuffed his advances, the serial sexual predator “simply began to pleasure himself” – asking the TV anchor to “just stand there and shut up” before reportedly ejaculating into a potted plant.

From potted plant to cookware

When former owner of Socialista, Armin Amiri was reached for comment by The Hollywood Reporter, he says Weinstein’s lawyers asked him to deny the incident. Instead, Amiri confirmed that it happened – though he says Weinstein actually ejaculated into a cooking pot, not a potted plant, which was later found on the stove.

What I remember about this incident is that my sous chef came into my office, furious, telling me that ‘some fat fuck’ saying he’s an owner — he didn’t know the name — had come into the kitchen with a woman and shoved a $100 bill at him and told him to get out. It was like 1:30 in the morning and he’d been the only one still there. The chef told me he was going to quit.

I went to check things out and saw Harvey soon after, fixing his belt, behind the bar. I never saw the woman. My chef and I go to the kitchen. He picks up a pot that had been placed back on the stove. It had been defiled. It was so bizarre. We couldn’t believe it happened.

 (full statement below)

So, accused rapist and all around sexual predator Harvey Weinstein allegedly lured local TV reporter Lauren Sivan into the basement of a restaurant he was an investor in, paid the chef $100 to go away – telling him he was ‘an owner,’ and jerked off into a pot when she rebuffed his advances – which he then placed back onto the stove before zipping up and walking out.

Not even close to OK Harvey…

Let’s not go so far as to say Weinstein was engaging in a festive night of #SpiritCooking, which he’s at least one or two degrees of separation from given his close friendship with the Clintons – who are in turn friends with noted occultist Marina Abramovic (who Tony Podesta has given money to, who was invited to Hillary Clinton’s Campaign launch, whose art Hillary Clinton placed in US embassies around the world, who Hillary wanted to invite to a lunch event, who donated the maximum $2700 to Hillary’s campaign, and who said in a Reddit AMA (“Ask Me Anything”) that her spirit cooking dinners in private homes are not art.). While Harvey’s sperm receptacle was probably chosen out of practicality – the guy did leave semen, in a cooking pot, on a stove.

Not to mention, Harvey sure seems to love his highbrow bodily excretion art… or at least this is what he thinks of at the sight of a naked woman: 

George has a dog

His NAME is Rocky

And he pees

And poops

WHEN I walk in th room

Sounds like Rocky doesn’t like Harvey very much.

(Amiri’s full statement to THR)

“Last week, after Lauren Sivan came forward with her awful story about Harvey Weinstein and the ‘potted plant’ at Socialista, he contacted me. We hadn’t spoken in years. He told me he needed a statement about his involvement in Socialista, which I said I’d be happy to provide, and I did, and then his lawyers said he needed one saying I hadn’t seen anything that night. I told them I knew something happened that night, I just hadn’t known what specifically. I couldn’t make a statement absolving him because when she came forward, my memory clicked.

Harvey had been an investor in Socialista and I had appeared in one of the films he distributed, ‘Factory Girl.’ What I remember about this incident is that my sous chef came into my office, furious, telling me that ‘some fat fuck’ saying he’s an owner — he didn’t know the name — had come into the kitchen with a woman and shoved a $100 bill at him and told him to get out. It was like 1:30 in the morning and he’d been the only one still there. The chef told me he was going to quit.

I went to check things out and saw Harvey soon after, fixing his belt, behind the bar. I never saw the woman. My chef and I go to the kitchen. He picks up a pot that had been placed back on the stove. It had been defiled. It was so bizarre. We couldn’t believe it happened.

I couldn’t prove any of it so I never confronted him. Harvey was an investor and it was around the time he married Georgina Chapman.

My heart goes out to all the brave women who have come forward. Once Ms. Sivan spoke out, and after being contacted by several media outlets, I’ve felt responsible to state what I remembered.”

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Following President Trump's United Nations' speech threats to "totally destroy" North Korea, lambasting the North's leader Kim Jong-un as "a rocket man on a suicide mission," it appears he is not the only one capable of public and aggressive hyperbole.

As The Independent reports, propaganda fliers presumed to be from North Korea and calling US President Donald Trump a “mad dog” have turned up across central Seoul, including near the presidential Blue House, according to posts on social media and people who found them.

“Death to old lunatic Trump!” reads one poster, with a North Korean soldier with rifle in hand, crushing what looks to be Trump’s head with his tongue dangling out of his mouth.

Near the soldier’s head is the line: “Complete obliteration.”

Another poster shows Trump with the body of a dog being decapitated by an axe…

Blood is shown splattered on the axe in the poster, which states:

“Let’s behead mad dog Trump for the future of a peaceful and warless world and mankind!”

And In an apparent jab at Trump’s UN speech, one of the propaganda posters featured Trump standing behind a podium with a rocket in his mouth painted with the words “totally destroy North Korea”.

Again, Trump is depicted as a dog with a human face and labelled as “mad dog Trump”.

Men in suits (on the right) with surprised looks on their faces are shown in the poster saying:

“He’s gone completely insane” and “If we let him be, there will be war”.

Of course none of this is new to Trump as liberal so-called comedians have gone there…

And so has German magazine Der Spiegel…

But, it is reportedly not difficult to find North Korean propaganda posters in South Korea, usually flown by balloon over the highly fortified demilitarised zone.

Military images and anti-US threats are common in North Korea propaganda as Pyongyang demands the United States cease what it says is its preparations for invasion.

“I am pretty sure it came from North Korea by balloon, since the prevailing winds during October have been from north to south and we’ve been getting reports of others finding them throughout Seoul,” said Chad O‘Carroll, managing director of NK News, a Seoul-based news subscription service, who found the leaflets while jogging in central Seoul.

But, as The Indepdent reports, the new series of fliers posted recently on Twitter and other social media target Trump specifically.

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After the Clinton Foundation’s chief spokesman suggested as much in a tweet on Saturday, the Clinton Foundation has confirmed that it will not be returning a $250,000 donation from disgraced Hollywood studio chief Harvey Weinstein, Fox news reported.

The foundation said Sunday that donations, ranging from $100,000 to $250,000, have already been spent on projects.

On Friday, Hillary Clinton said during an interview Friday with the UK’s Channel Four that her campaign has yet to rreturn Weinstein's campaign contributions. After issuing a statement denouncing her one-time friend issued five days after the scandal broke, Clinton promised during an interview with CNN that she personally would donate to charity an amount equal to Weinstein's contributions over the course of her political career.

She blamed the delay on the complexities of withdrawing money from a campaign account, and reiterated that the money would be turned over soon. Weinstein was also a prominent Democratic fundraiser who hosted fundraising events for Clinton and former President Barack Obama.

The move to keep the money was expected following tweets from the foundation’s spokesman Craig Minassian.

“Suggesting @ClintonFdn return funds from our 330,000+ donors ignores the fact that donations have been used to help people across the world,” Minassian wrote on Twitter.

Suggesting @ClintonFdn return funds from our 330,000+ donors ignores the fact that donations have been used to help people across the world. https://t.co/dBXNZwAkWS

— Craig Minassian (@MinassianMedia) October 14, 2017

A Clinton Foundation spokesman told the Daily Mail that Weinstein's money was used to fund programs to help lower the cost of HIV medication and supporting women and girls in developing countries. Weinstein's most recent donation was made in 2014.

In an interview with CNN's Fareed Zakaria on Thursday Clinton said she was "sick" and "shocked" when she found out about the sexual assault allegations against Weinstein, which were first revealed in a bombshell report by The New York Times and then further reported in a detailed report by The New Yorker and subsequent reports in the Times. Since then, more than 30 women have publicly accused Weinstein of harassment, assault or groping.

"I was appalled. It was something that was just intolerable in every way," she said. "And, you know, like so many people who've come forward and spoken out, this was a different side of a person who I and many others had known in the past."

When asked about Weinstein’s campaign donations, she told CNN that it wasn't possible to give the money back but that she would donate an equivalent amount to charity.

"What other people are saying, what my former colleagues are saying, is they're going to donate it to charity, and of course I will do that," she said on CNN. "I give 10% of my income to charity every year, this will be part of that.

 

There's no – there's no doubt about it."

A Clinton aide later told CNN that Clinton would donate $13,000 to a women's organization, but refused to provide a name. The donation will cover Weinstein's contributions to her 2000 Senate primary race, the 2006 Senate primary and general election, the 2007 presidential primary and the 2015 and 2016 presidential primary and general election, the aide said.

Dozens Democratic Party politicians – including Senate Minority Leader Chuck Schumer, Sen. Sen. Al Franken, Sen. Elizabeth Warren, Sen. Cory Booker – have pledged to donate their Weinstein’s contributions to charities focused on women’s rights.

But will Clinton – who has repeatedly insisted that she was unaware of Weinstein's predatory behavior despite considering him a friend – cough up an additional $250,000 to cover Weinstein’s donations to the Clinton Foundation? That remains to be seen.

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In his latest weekend note, One River CIO Eric Peters discussed, among other topics, what he thought would be the nightmare scenario if not for the current, then certainly next Fed chairman: a world in which despite the Fed’s best intentions (and we use the term loosely), the Fed continued to hike rates without any perceptible increase in wages and thus, long-term inflation expectations. The result would be a failure to raise bond yields, which would provide further ammo for stocks to keep rising ever higher into what even the Fed tacitly admits is increasingly an asset bubble. This is how Peters described the ominous dynamic that would lead to major headaches for the next (and perhaps current, if Yellen remains in her spot) dynamic:

“Global profits are rising, unemployment is falling, growth is up” said the strategist. “Yet bond yields seem unable to jump.” US 10yr bond yields are 2.27%, Germany 0.40%, Japan 0.05%. “The cyclical surprise is that the Phillips curve finally kicks in, just as everyone gives in.” US unemployment is 4.2%, a 17yr low. Germany 3.6%, a 37yr low. Japan 2.8%, a 23yr low. “And the biggest structural surprise is that technology has rendered wage inflation a phenomenon for the history books.” “But if we don’t see a sustained cyclical jump in wages, then yields won’t go up. And if yields don’t go up, then the asset price ascent will accelerate,” continued the strategist. “Which will lead us into a 2018 that looks like what we had expected out of 2017; a war against inequality, a battle for Main Street at the expense of Wall Street, an Occupy Silicon Valley movement.” He paused, flipping through his calendar.  “Then you’ll have this nightmare for the next Federal Reserve chief, because they’ll have to pop a bubble.”

Today, picking up on this divergence between rising short-term rates, and an inability – and unwillingness – of the long-end to reprice higher which continues to manifest itself in a flattening of the yield curve, where today the 2s10s pancaked to the lowest since the financial crisis…

… a move which continues to be ignored by markets…

… was Deutsche Bank’s derivatives strategist Aleksandar Kocic who confirms what Peters said, and argues that “for anything to happen, long rate has to move higher.” Taking a slightly different angle than Peters however, who focused on the structural deflationary forces which prevent the curve from steepening, Kocic frames a move higher in longer yields as one which underscores the trap the current (or future) Fed chairman is in: any notable steepening would be an indication of the Fed potentially losing control, or as Kocic puts it “possible missteps in monetary policy unwind” and a “disorderly unwind of the bond trade”, with the end result being an explosion in pent up volatility: “this is the risk that would be probably impossible to control, its trigger being either excessive deficit spending or inflation. “

As a result, Kocic writes that the Fed “has an uncomfortable (and complicated) task in this context: Fed needs to raise rates in order to prevent rates rise. What must not be, cannot be: Inflation cannot be allowed to develop because it would be no way of avoiding dramatic rise in rates. If the Fed embarks on aggressive hikes in order to fight inflation, rates would rise. If the Fed stays behind the curve, the market would bear steepen the curve. Either way, the long rates go up.”

Which, ironically, as Peters explained, is precisely what needs to happen to avoid the continued blowing of a massive equity bubble,or to summarize: the market finds itself in an increasingly unstable dysequilibrium in which on one hand the stock bubble grows ever bigger, while on the other, a normalization in equities is intimately linked to the Fed losing control of the yield curve. And, as Kocic has claimed on prior occasions, the ultimate catalyst that can trigger an end to this “metastable” market state is inflation. The outcome, in either case, would be explosive.

Here is Kocic:

With abundant liquidity, Fed transparency, and “predictable” political shocks, we have entered a regime of noisy status quo whereby the only temporary source of transient bid for gamma could be triggered by possible missteps in monetary policy unwind. However, even that seems to be relatively unlikely and, even if it happens, episodic at best. The largest, and possibly, the only risk capable of resetting the vol higher is the tail risk associated with bear steepening of the curve and disorderly unwind of the bond trade. This is the risk that would be probably impossible to control, its trigger being either excessive deficit spending or inflation.

 

It is precisely the severity of this problem that prevents return of volatility. Current monetary policy is focused on the management of the underlying tail risk and the Fed transparency and gradual hikes are all about the reduced maneuvering space that has remained after almost a decade of stimulus. Fed has an uncomfortable (and complicated) task in this context: Fed needs to raise rates in order to prevent rates rise. What must not be, cannot be: Inflation cannot be allowed to develop because it would be no way of avoiding dramatic rise in rates. If the Fed embarks on aggressive hikes in order to fight inflation, rates would rise. If the Fed stays behind the curve, the market would bear steepen the curve. Either way, the long rates go up.

Going back to the increasingly flatter curve, this is what Kocic defines as the “maneuvering space” left for the Fed. One look at the chart above confirms that said space is getting increasingly smaller. A flat, or worse – inverted – yield curve would imply game over. Here is Kocic again, who points out that the steepness of the curve is the “market’s playground”, in which “everything that can happen, has to happen inside this space”… a space which is curently a paltry 60 bps and shrinking every day:

The gap between the Short term rate expectations and the Long rate represents the remaining maneuvering space that the Fed has left. This gap defines the playground for the markets — everything that can happen, has to happen inside that space. This gap is narrow, currently at 60bp .

Mechanistically, this is logical, as the longer the current business cycle continues without a recession – and some immaculate increase in productivity and r-star – the flatter the curve become:

If the Fed has a long way to go into the cycle, the back end remains steep. However, as the hikes approach the final destination (the Long rate), the curve will continue to flatten reflecting the declining inflation expectations. These are pure mechanics of the Fed cycle. These stylized facts are illustrated in the Figure 14.

 

This is also a problem, because all else equal, the Fed has at most two more rate hikes before it loses control. In the interim, it somehow has to reprice both risk premia and vol higher… but without crashing equities, forcing a new easing cycle, which may include not only more QE but also NIRP:

“Given where long rates are, Fed appears as overly hawkish – it has only two more hikes to go and, for volatility and risk premia to reprice higher, the gap has to widen. As is appears unlikely that the Fed will be cutting rates any time soon, the gap could widen only if the Long rates sell off.”

And, as noted above, “for anything to happen, 5Y5Y sector has to move higher”, however the $6.4 trillion question is whether this sell off in long rates will be violent or controlled. As Kocic concludes, “This is the catalyst for everything.”

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Political prisoners in Europe used to be a thing of the past; as of Monday afternoon, Spain has two.

Spanish judge Carmen Lamela has ruled that the leaders of the two biggest grassroots pro-independence associations in Catalonia should remain in prison without bail on possible charges of sedition for which, if convicted, they could face prison sentences of up to 10 years. The legal investigation claims Jordi Sanchez, the leader of Catalan National Assembly (ANC) movement, and Jordi Cuixart, who heads the Omnium Cultural association, were heavily involved in organising the massive protest aimed at hindering a Guardia Civil investigation in Barcelona into the build-up for the 1 October illegal referendum. Specifically, members of the Guardia Civil were trapped in Catalan government offices on 20 September as a result of thousands of protestors encircling the building, in what has been described as a “siege” and during which three police vehicles were destroyed.

Now, in a decision that could further enflame separatist passions, both Cuixart and Sanchez, are set to spend the night in a prison near Madrid; the two earlier refused to answer questions from the judge overseeing the investigation. Summoned to court twice on Monday, on entering they gave clenched fists victory salutes to a small group of supporters.

Cuixart, left, and Sanchez arrive to the Audiencia Nacional Court to testify

The ANC and Omnium are the two most powerful non-institutional Catalan separatist organisations, responsible for organising the annual marches in which several hundred thousand people are estimated to take part.

As reported earlier, the chief of the Catalan police, Josep Lluis Trapero, was also questioned in the same courtroom on Monday for a second time in ten days, on possible charges of sedition over the regional police force’s allegedly overly passive role during the build-up to the 1 October referendum. Trapero, who prosecutors had also asked to be detained, was finally released without bail, although his passport was confiscated.

Predictably the imprisonment of two of their best-known local leaders has provoked outrage amongst the separatist movement according to The Independent, further raising tension on an already exceptionally fraught day in Spain’s prolonged political crisis in Catalonia.

According To The Spain Report, Catalan leader Carles Puigdemont tweeted the judge’s decision was “very bad news”.

“Imprisoning Jordi Cuixart and Jordi Sánchez is very bad news. They mean to imprison ideas but they make the need for freedom stronger in us.”

Deputy First Minister Oriol Junqueras also responded on Twitter within minutes, in English: “We ask to sit and talk and the PP, through the Public Prosecutor, responds with unconditional imprisonment for @jordisanchezp and @jcuixart”.

We ask to sit and talk and the PP, through the Public Prosecutor, responds with unconditional imprisonment for @jordisanchezp and @jcuixart

— Oriol Junqueras (@junqueras) October 16, 2017

The independence movements were clearly outraged: Omnium Cultural tweeted: “The loss of liberty for the chairmen of Omnium and the ANC is unacceptable in a democratic society. The mobilisation continues, they cannot imprison a whole people!”. The ANC released a pre-recorded message from Mr. Sánchez, in which he said his imprisonment did not respond “to any principle of justice”, and that the court sought to “frighten us, punish us for having defended liberty”.

The Catalan government’s Director of Foreign Communications, Joan Maria Pique, tweeted: “Shame. Spain, the Turkey of the west”.

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