iftttwall

Three weeks ago we introduced the real "50 Cent" – the mystery trader whose pattern of huge, near-daily trades on the VIX is turning heads in the options market.

Not him..

 

As we detailed previously, Pravit Chintawongvanich, head of risk strategy at Macro Risk Advisors,  the huge options buyer known as "50 Cent" shows no signs of slowing down.

"I would categorize them as someone who doesn't flinch at losing money," commented Chintawongvanich who flagged the activity in a series of research notes.

 

The money-losing trades in question have been purchases of call options on the CBOE volatility index. These represent bets that market volatility is set to rise, and to a lesser extent, that stocks are set to fall.

 

Sussing out the actions of an institutional trader based on public information about options trades can be difficult, if not impossible. But this trader made it easier by leaving a clue out in the open. "They have a very particular pattern of buying options," Chintawongvanich explained Wednesday on CNBC's "Trading Nation."

 

"Basically they come in every day and they buy 50,000 VIX calls worth 50 cents. So in other words, they don't care too much what the strike is; they just pick the option that's worth 50 cents."

Having reportedly suffered $89 million in losses so far in 2017 however, the trader is not giving up on his strategy and just doubled-down…

On Wednesday morning, the trader, nicknamed "50 Cent" by Macro Risk Advisors because of their predilection for contracts that cost roughly that much, bought an additional 100,000 VIX calls betting that the index will climb about 40% by May.

Sending VIX Call volumes to near-record highs…

And MRA doesn't think the trader will stop there. The firm expects purchases of bullish VIX contracts to continue in the coming days.

"The amounts of money 50 Cent is spending are large, but this could be just the tip of the iceberg when you consider all the hedging that takes place over the counter as well," Pravit Chintawongvanich, the head of derivatives strategy at MRA, wrote in a client note on Thursday.

 

"Even in the listed space, there is plenty of hedging that takes place that may not be as obvious and predictable as 50 Cent, and thus harder to attribute to one person."

Still, positioning from hedge funds suggests the trader might be on to something. They haven't been this bullish on the VIX since March 2016, according to data from the US Commodity Futures Association.

Notably, 50 Cent's options would become profitable only if the VIX climbed to between 19 and 26, according to data compiled by MRA.

 

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

Via TheAntiMedia.org,

“I’ve worked with murderers and rapists. I can recognize
dangerousness from a mile away. You don’t have to be an expert on
dangerousness or spend fifty years studying it like I have in order to
know how dangerous this man is.”

Those words came from the mouth of James Gilligan, psychiatrist and
professor at New York University. The man he is speaking of is the
president of the United States.

Gilligan’s comments were one of many from a group of psychiatrists who gathered
at Yale’s School of Medicine on Thursday. The message presented was
that Donald Trump is mentally unfit to be in the White House.

Dr. John Gartner, practicing psychiatrist and founding member of Duty
to Warn, a group of several dozen mental health professionals who feel
it’s their obligation to inform the public about the president’s mental
state, says the warning signs have been there from the beginning.

“Worse than just being a liar or a narcissist, in addition he is
paranoid, delusional and grandiose thinking, and he proved that to the
country the first day he was president,” Dr. Gartner said.

Earlier in the year, claiming Trump is “psychologically incapable of competently discharging the duties of President,” Dr. Gartner started a petition calling for Trump to be removed from office. So far, that petition has received nearly 47,000 signatures.

Dr. Bandy Lee, who chaired the conference and is an assistant
clinical professor in Yale’s department of psychology, thinks Trump’s
mental state is an issue people are beginning to become concerned about:

“As some prominent psychiatrists have noted, [Trump’s mental
health] is the elephant in the room. I think the public is really
starting to catch on and widely talk about this now.”

via http://ift.tt/2pRgn7d Tyler Durden

 

 

The French Connection Election:

Yesterday afternoon, My gal and I strolled together to the French Consulate on Fifth Ave & 75th Street so that I could exercise my French voting rights. We were intent on taking a few pictures to mark the occasion.  I had decided to have my better half snap the images, as I surmised that it might be a dicey proposition to take photos inside the consulate during the voting procedures…..

As I feared, once she started clicking away, the Consule General (4th photo on the left) instantly made a beeline toward us and then proceeded to tell us, in no uncertain terms, to immediately cease and desist. Moreover, he sternly asked us to promptly delete the images off the cell phone.  Of course, I took the phone from my true love and pretended to diligently delete them.  Little did they know, I was an astute undercover reporter for a highly recognized online publication.  (For your viewing pleasure, the adjacent images are what we got away with.)

 

Curious Crazed Consulate Caper: 

This get’s even more interesting.  To put us all in the appropriate frame of mind, the consulate staff had posted large color posters of all the candidates on the walls of a circular stairwell leading to the large ballroom (turned voting hall) on the floor above.  Out of the 11 candidates presenting themselves for the French Presidency, take a wild guess who was missing?  Yep, that’s right, you guessed it, Marine Le Pen was nowhere to be found!

As soon as I noticed the astounding gaffe, I forthwith asked those around me WTF is this?  No one seemed to know or have noticed, but they too were rather miffed.  Further to my astonishment, upon alerting a few volunteers officiating in the proceedings, these dim wits claimed they hadn’t noticed it and didn’t seem to care in the slightest, much less bother addressing the considerable clandestine cockup.

To attempt to rectify the totally FUBAR situation,  I went looking for my new pal The Consule Generale de France so as to directly question him about the grave omission, but conveniently he had disappeared from sight.  I tried to track him down, but at that point, some other person of authority suggested to me that I best move along so as not to disrupt the steady flow of voter traffic.  Shortly afterward, I was asked to quickly get moving and gently escorted out of the building under the watchful eye of the attending security guys.

 

 

 

 

Sure smelled like Globalism to me…

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

via http://ift.tt/2oxwF15 Bruno de Landevoisin

Having already 'dropped' over one trillion dollars in 2017 to keep reality at bay, it appears the world's central bankers are not about to let a French election mishap spoil the illusion.

Just as central bankers gathered at The BIS' Basel Tower just says before the Brexit vote, so judging by the statements today, the monetary manipulators stand ready to rescue markets once again should the first round of the French election 'surprise' the 'free' markets.

Brexit's BTFD took a few days…

 

Trump's election BTFD took a few hours…

 

And given the following comments, we expect any French 'surprise' (as investors fear that a potential run-off between eurosceptic candidates Marine Le Pen and Jean-Luc Mélenchon would raise questions about France's future in the European Union, roiling financial markets and undermining depositor confidence), will be dismissed in minutes…

The European Central Bank could provide emergency cash to French banks if needed after the first round of France's presidential election on Sunday, but it doesn't expect such a move will be necessary, ECB policymaker Ewald Nowotny said on Saturday.

 

"If there should be problems for specific French banks liquidity-wise, then the ECB has the … ELA, Emergency Liquidity Assistance, but we don't expect of course any special movements," Nowotny, who is Austria's central bank governor, told reporters at the IMF and World Bank spring meetings.

 

…

 

“The central bank should be ready for any shocks that should materialize” after the French election, Bank of Italy Governor Ignazio Visco says in Washington.

 

Tools that should be used include liquidity provision and cheap refinancing when needed.

 

“Intervening very quickly is really very easy now given the instruments we have.”

 

“But as we have seen in similar cases, no need has really been observed. And the reason is that all market participants know that these instruments are there to be used.”

Or roughly translated – "All clear" to BTFD on Sunday night.

via http://ift.tt/2oxkHV4 Tyler Durden

Authored by Mike Krieger via Liberty Blitzkrieg blog,

My current working hypothesis is that the U.S. is a late-stage empire about to enter a more serious and dangerous period of collapse. In case you missed it, I outlined my broad brush view in the very popular recent post, Prepare for Impact – This is the Beginning of the End for U.S. Empire. Here’s a brief excerpt:

I believe last night’s strike represents the beginning of the end for U.S. empire. Although the U.S. has been declining domestically for this entire century, America has still been calling all the shots on the international front. This makes sense in late-stage empire, as the focus of the fat and happy “elite” becomes singularly obsessed with domination and power, while the situation back home festers and rots.

 

Trump won on an “America first” platform that promised to emphasize the well-being of American citizens over geopolitical adventurism. We now know for certain he’s been manipulated into the imperial mindset, and his recklessness will merely accelerate U.S. decline on the world stage, and in turn, back home.

When I came across reports yesterday that the U.S. Justice Department is trying to figure out a way to prosecute the world’s most courageous and effective news publisher, Wikileaks’ Julian Assange, I immediately saw it to be further evidence of the incredible insecurity and desperation of the American establishment.

The CIA is particularly enraged at Assange as a result of last month’s initial Vault 7 release. Rather than apologize for allowing zero day exploits in large tech companies to remain open and therefore vulnerable to hacking from anyone with the skills to do so (see: CIA Hacking Tools Allow for an Unaccountable Intelligence Agency Dictatorship), CIA director Mike Pompeo decided to respond with an unhinged nervous breakdown during a recent speech to the Saudi funded Center for Strategic and International Studies (CSIS). Here are a few excerpts from his deranged, incoherent, and unconstitutional remarks courtesy of the CIA:

WikiLeaks walks like a hostile intelligence service and talks like a hostile intelligence service. It has encouraged its followers to find jobs at CIA in order to obtain intelligence. It directed Chelsea Manning in her theft of specific secret information. And it overwhelmingly focuses on the United States, while seeking support from anti-democratic countries and organizations.

This is what’s called “projection.”

It is time to call out WikiLeaks for what it really is – a non-state hostile intelligence service often abetted by state actors like Russia. In January of this year, our Intelligence Community determined that Russian military intelligence—the GRU—had used WikiLeaks to release data of US victims that the GRU had obtained through cyber operations against the Democratic National Committee. And the report also found that Russia’s primary propaganda outlet, RT, has actively collaborated with WikiLeaks.

 

We know this because Assange and his ilk make common cause with dictators today. Yes, they try unsuccessfully to cloak themselves and their actions in the language of liberty and privacy; in reality, however, they champion nothing but their own celebrity. Their currency is clickbait; their moral compass, nonexistent. Their mission: personal self-aggrandizement through the destruction of Western values.

 

They do not care about the causes and people they claim to represent. If they did, they would focus instead on the autocratic regimes in this world that actually suppress free speech and dissent. Instead, they choose to exploit the legitimate secrets of democratic governments—which has, so far, proven to be a much safer approach than provoking a tyrant.

More projection.

No, Julian Assange and his kind are not the slightest bit interested in improving civil liberties or enhancing personal freedom. They have pretended that America’s First Amendment freedoms shield them from justice. They may have believed that, but they are wrong.

 

Assange is a narcissist who has created nothing of value. He relies on the dirty work of others to make himself famous. He is a fraud—a coward hiding behind a screen.

Really? Seems to me he’s created the most powerful and impactful media organization of the 21st century, which is precisely why you hate his guts.

And in Kansas, we know something about false Wizards.

 

So we face a crucial question: What can we do about this? What can and should CIA, the United States, and our allies do about the unprecedented challenge posed by these hostile non-state intelligence agencies?

 

While there is no quick fix—no foolproof cure—there are steps that we can take to undercut the danger. First, it is high time we called out those who grant a platform to these leakers and so-called transparency activists. We know the danger that Assange and his not-so-merry band of brothers pose to democracies around the world. Ignorance or misplaced idealism is no longer an acceptable excuse for lionizing these demons.

 

Third, we have to recognize that we can no longer allow Assange and his colleagues the latitude to use free speech values against us. To give them the space to crush us with misappropriated secrets is a perversion of what our great Constitution stands for. It ends now.

 

And finally—and perhaps most importantly—we need to deepen the trust between the Intelligence Community and the citizens we strive to protect.

Deepen the trust? There is no trust.

At CIA, I can assure you that we are committed to earning that trust every day. We know we can never take it for granted. We must continue to be as open as possible with the American people so that our society can reach informed judgments on striking the proper balance between individual privacy and national security.

The first thing to appreciate from the above excerpts is how uncollected and unhinged Mike Pompeo appears to be, and let’s also not forget that Donald Trump appointed Pompeo of his own volition. Much of his commentary centers around simple name calling, for instance referring to Assange as a “narcissist,” a “false wizard” and a “demon” in the span of just a few short paragraphs. His seemingly unstable emotional state certainly doesn’t give me a lot faith in the CIA, not that I had much to begin with.

Moving along, Pompeo’s entire rant is filled with projection. First let’s define Psychological Projection:

Psychological projection is a theory in psychology in which humans defend themselves against their own unconscious impulses or qualities (both positive and negative) by denying their existence in themselves while attributing them to others. For example, a person who is habitually rude may constantly accuse other people of being rude. It incorporates blame shifting.

Pompeo exhibits this behavior repeatedly in his remarks. For instance, he accuses Assange of “seeking support from anti-democratic countries and organizations.”

I mean, that’s basically the CIA’s mission statement, and its entire history is filled to the brim with “seeking support from anti-democratic countries and organizations.”

Moving along, he states “Assange and his ilk make common cause with dictators today,” and also says about Wikileaks, “they do not care about the causes and people they claim to represent.”  

Both of these statements summarize U.S. foreign policy to a tee. After all, one of America’s closest foreign allies, Saudi Arabia, is not only one of the world’s most repressive, undemocratic states, it is also one of the leading propagators of radical Islamic terrorism across the globe, including the attacks of 9/11 (for more see: Meet the Lawyer Who’s Suing Saudi Arabia for Financing the 9/11 Attacks).

Finally, Pompeo justifies his attack on the First Amendment by pushing a false “us versus them mentality.” He states:

Third, we have to recognize that we can no longer allow Assange and his colleagues the latitude to use free speech values against us.

This implies that Assange and Wikileaks represent “the enemy,” while the CIA is somehow some shining white night. Unfortunately for Pompeo, this isn’t how many Americans see the situation.

Let’s recall the following tweet, and understand that John Harwood’s following isn’t exactly filled with anti-establishment types.

Who do you believe America?

— John Harwood (@JohnJHarwood) January 6, 2017

You can say that’s not a scientific poll, and that’s fine, but I’d argue a large percentage of Americans think Wikileaks is more patriotic than the CIA, and that poses an enormous problem for the deep state.

In fact, Americans as a whole no longer trust most of the institutions charged with managing the U.S. empire, because those institutions have completely and utterly failed the people. The only way to regain trust is to actually start doing some decent things for the nation, but that’s not what happens in late-stage empire. In late-stage empire, the corrupt and foolish “ruling class” continues to double and triple down on their own stupidity and theft until the whole thing falls apart. This is precisely what I expect to happen, and the ongoing Assange witch-hunt simply further confirms my suspicions.

To further prove the point, take a look at the following excerpt from CNN’s article on the topic:

US authorities have prepared charges to seek the arrest of WikiLeaks founder Julian Assange, US officials familiar with the matter tell CNN.

 

The Justice Department investigation of Assange and WikiLeaks dates to at least 2010, when the site first gained wide attention for posting thousands of files stolen by the former US Army intelligence analyst now known as Chelsea Manning.

 

Prosecutors have struggled with whether the First Amendment precluded the prosecution of Assange, but now believe they have found a way to move forward.

Think about what you just read for a minute. The DOJ apparently spent 7 years trying to figure out how to void the First Amendment, yet it couldn’t jail a single bank executive during that entire time. What does this tell you about where the government’s priorities lie? Even more disturbingly, it doesn’t matter which Goldman Sachs/deep state puppet sits in the White House, the agenda moves forward. It is an imperial agenda to protect and secure the wealth and power of the few against the well being and liberty of the many.

The U.S. empire doesn’t work for the people, it works for a small handful of elitists and insiders who have completely gamed a corrupt system for their advantage. The America people are starting to figure this out, partly due to the journalism of Wikileaks, which is why the deep state hates Assange so passionately.

The American empire is becoming increasingly insecure and desperate, which also makes it increasingly dangerous. Empires don’t reform, and as we can see from Trump’s first 100 days, we certainly aren’t going to see a reversal of course from him.

We the people need to keep our eye on the prize and stop bickering with one another over relatively trivial issues. That is precisely what the status quo wants and actively encourages us to do. They can’t keep us oppressed if we stand together, so let’s not make their jobs easier by constantly fighting with one another. We need to stand tall and say enough is enough. That we are sick of your puppets, your wars and your Wall Street bailouts. America is tired of being controlled by a small group of unaccountable, incompetent, greedy, unethical crooks running around stealing everything in sight.

Enough is enough.

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

One month after a startling reversion by the G-20 finance ministers and central bankers, who during their latest meeting in Baden-Baden dropped a decade-long tradition of rejecting protectionism and endorsing free trade, pressured by Trump’s delegate Steven Mnuchin, the IMF has done the same, and according to a communique from the IMF’s steering committee released on Saturday in Washington echoed the G-20 reversal, and said that officials “are working to strengthen the contribution of trade to our economies” while omitting a call from its last statement in October to “resist all forms of protectionism.”

The International Monetary and Financial Committee – which is the IMF’s top advisory panel, composed of 24 ministers and central bankers from nations including the U.S., China, Germany, Japan and France – released the statement during the spring meetings of the IMF and World Bank.  Since joint statements at gatherings such as the G-20 and the IMF require assent from members, the change in the U.S. position on trade from the Obama administration is forcng modifications in language that was previously uncontroversial.

While the trade language was drastically changed, some positions remained the same: the IMFC statement reiterated pledges from October to “refrain from competitive devaluations” of currencies and to avoid targeting “our exchange rates for competitive purposes.”

There were other changes: in addition to the trade stance, the latest communique omits language from October that welcomed “the entry into force of the Paris Agreement on climate change.” Trump is contemplating whether to make good on his campaign promise to withdraw from the deal, as Bloomberg notes.

The shift in the trade “plege” was due to the Trump administration’s persistent threats to raise tariffs if US trading partners don’t agree to renegotiate trade agreements and create fairer conditions for U.S. goods; in the past week Trump fired the first shot in what may be upcoming trade wars when he signed an executive order looking into curbing steel imports under the guise of “national security” concerns.

While agreeing on paper, most IMF members continued to voice their support for globalization and free trade. As Bloomberg adds, Germany, holder of this year’s G-20 presidency, “commits to keep the global economy open, resist protectionism and keep global economic and financial cooperation on track,” Finance Minister Wolfgang Schaeuble said in his statement to the IMFC. “There is evidently a need to better communicate the benefits of trade and globalization.”

Germany’s position is understandable: with its 2016 trade surplus hitting a record high of €253 billion, with net trade accounting for over 8% of German GDP and with Germany’s current account at over 8.5% of GDP, nearly four times greater than China, many have wondered why Trump is so focused on China when it comes to trade, and has given Germany a free pass. To be sure, any changes in the global trade regime would have dire consequences on the German economy, which together with the cheap Euro, kept artificially lower by the poor peripheral European states, explains why Germany is such a vocal supporter of globalization and free trade: it is the world’s biggest beneficiary from it!

Unlike Schauble, comments from U.S. Treasury Secretary Steven Mnuchin, by comparison, did not refer to resisting protectionism. Instead, Mnuchin said that “.we will continue to promote an expansion of trade with those
partners committed to market-based competition, while more rigorously
defending ourselves against unfair trade practices.”

In retrospect, it is somewhat odd why having flipped on virtually every other pre-election promise, Trump remains so adamant on changing the global trade regime; and a more nuanced and direct question: what will Goldman get out of a protectionist shift?

In addition, in language that was seen as a jab at Germany Mnuchin said that “countries with large external surpluses and sound public finances have a particular responsibility for contributing to a more robust global economy.” That responsibility will only grow drastically if in just over 24 hours Le Pen and Melenchon are delcared winners of the first round of the French presidential election/

via http://ift.tt/2poIAm1 Tyler Durden

Authored by Uncola via TheTollOnline.com,

Definition of UTOPIA

1: an imaginary and indefinitely remote place

2: a place of ideal perfection especially in laws, government, and social conditions

3:   an impractical scheme for social improvement

 

Definition of DYSTOPIA

1: an imaginary place where people lead dehumanized and often fearful lives

2: literature: anti-utopia

– Merriam-Webster.com

Many Americans today would quite possibly consider Aldous Huxley’s “Brave New World” to be a utopia of sorts with its limitless drugs, guilt-free sex, perpetual entertainment and a genetically engineered society designed for maximum economic efficiency and social harmony. Conversely, most free people today would view Orwell’s “1984” as a dystopian nightmare, and shudder to contemplate the terrifying existence under the iron fist of “Big Brother”; the ubiquitous figurehead of a perfectly totalitarian government.

Although both men were of British descent, Huxley was nine years older than Orwell and published Brave New World in 1932, seventeen years before 1984 was released in 1949. Both books are widely considered classics and are included in the Modern Library’s top ten great novels of the twentieth century.

Brave New World

Aldous Huxley was born to academic parents and he was the grandson of Thomas Henry Huxley, a famous biologist and an enthusiastic proponent of Darwin’s Theory of Evolution who was known as “Darwin’s Bulldog”. Huxley’s own father had a well-equipped botanical laboratory where young Aldous began his education. Given the Huxley family’s appreciation for science, it makes perfect sense that Brave New World began in what is called the “Central London Hatchery and Conditioning Centre” where human beings are artificially grown and genetically predestined into five societal castes consisting of: Alpha, Beta, Gamma, Delta and Epsilon.

Initially, the story centers on Bernard Marx, who is a slightly genetically flawed Alpha Plus psychologist with an inferiority complex due to his short stature. By the end of the novel, however, the protagonist becomes a boy named “John the Savage” who is the bastard child of the “Director of the Central London Hatchery”, and a lady named Linda, who naturally birthed John on a remote American Indian Reservation. When Bernard discovers the true identities of John and Linda, he arranges to fly them back to London in order to leverage his position with John’s biological father, the Hatchery Director.

Bernard is in love with a beautiful fetus technician named Lenina Crowne, who, upon meeting John the Savage falls madly in lust. Lenina is a gal who enjoys multiple lovers because, in the Brave New World, “everyone belongs to everyone else”. In other words, sexual promiscuity is encouraged as sort of a societal “pressure relief valve” designed to discourage negative emotions such as jealousy and envy. John the Savage, however, suppresses his sexual attraction to Lenina because he considers her a slut.

Eventually, John’s sexual repression contributes to him violently attacking some children of the Delta caste who were waiting in line for their “Soma”, a mood-altering drug; and the outburst causes both Bernard and John to be brought before the powerful Mustapha Mond, who is one of ten world controllers. A debate ensues between John and Mr. Mond who explains to the Savage that a stable society requires the controlled suppression of science, religion, and art. John, who is an avid admirer of William Shakespeare, argues that human life is not worth living without these things.

In Brave New World, the State achieves a harmonic equilibrium via the economic parity of production and consumption while utilizing Eugenics as a means to counterbalance the life and death of the citizens. Technology is employed as a means of control in lieu of any search for scientific, or spiritual, truth; as these are considered a threat to the established order. People are cloned in hatcheries in accordance to the needs of the State and trained into obedience through “Hypnopedia”, or sleep-teaching. Happiness is valued over dignity and morality, and emotions are regulated through the use of the drug, Soma, amid constant entertainment including superficial games and virtual reality venues called the “feelies”. Although there is no God or religion, per se, in Brave New World, Henry Ford is canonized in the place of a deity as a testament to corporate efficiency, assembly line production and rampant consumerism.

1984

Like Huxley, George Orwell also envisioned a future where government monitored and controlled every aspect of human life; yet the world is much more terrifying in 1984. Orwell actually volunteered and fought in the Spanish Civil War in 1936 before being injured by a sniper’s bullet in May of 1937; it was there where he witnessed, first-hand, the ghastly barbarism of political fascism. Moreover, he previously observed the rise of Joseph Stalin in the Soviet Union and, later, Adolf Hitler in Germany. In turn, Orwell published Animal Farm in 1945 and four years later, his novel 1984, as literary warnings to mankind.

The setting of 1984 takes place in a futuristic, post-apocalyptic Great Britain which, at that time, was part of “Oceania”; one of three world super-states all engaged in never-ending warfare. The protagonist of the novel is Winston Smith, a middle-class member in the Outer Party of INGSOC, a totalitarian regime led by the figurehead known only as “Big Brother”.

Winston works in the Records Department of the “Ministry of Truth” where he revises history on behalf of the Party while under constant surveillance both at work and home. Everywhere he goes; there are posters with a photo of the party’s leader and the words: “BIG BROTHER IS WATCHING YOU”. In an act of rebellion, Winston acquires a diary and begins to record what Big Brother and the INGSOC party would label as “crimethink” and “thoughtcrime”.

Eventually, Winston meets and falls in love with a beautiful coworker named Julia, and they engage in what they believe to be a secret affair whereby they have illicit sex as a form of political rebellion. In 1984, the Party members living in Oceania are brainwashed to have sex only for procreation and this is how sexual repression is channeled into enthusiasm for the State.

Under the threat of detection by the “Thought Police”, torture and even “vaporization”, which would eliminate every last vestige of proof he ever existed, Winston persists in his rebellion against the Party with certain fatalism. In fact, just before he and Julia are captured by the militant, jackbooted INGSOC Party authoritarians, Winston told Julia “we are the dead”; to which she replied the same words back to him.

Throughout Orwell’s dark narrative, various themes are explored such as “Newspeak” which is a language of mind control; the terrifying tyranny of totalitarianism; historical revisionism; torture, and psychological manipulation. The INGSOC Party’s prisonlike control and complete invasion of individual privacy is such that a citizen’s own facial expression could betray their inner disloyalty to the Party through what Orwell labeled as “crimeface”:

Your worst enemy, he reflected, was your own nervous system. At any moment the tension inside you was liable to translate itself into some visible symptom.

– Winston Smith, 1984, part 1, chapter 6

Orwell was near prophetic in describing the proliferation of listening devices in both public and private settings as well as “telescreens”, which simultaneously broadcast propaganda while relaying live video feeds back to the Party watchers. In Orwell’s chilling story, free will and individuality are sacrificed to the extreme demands of Collectivism and in deference to complete societal control by an authoritarian government.

Compared and Contrasted

In both, Brave New World and 1984, common themes are addressed including government, orthodoxy, social hierarchy, economics, love, sex, and power. Both books portray propaganda as a necessary tool of government to shape the collective minds of the citizenry within each respective society and towards the specific goals of the state; to wit, stability and continuity.

In Brave New World, The “Bureaux of Propaganda” shared a building with the “College of Emotional Engineering” and all media outlets including radio, television, and newspaper. Much of the brainwashing of the citizens in Huxley’s world included messaging to stay within their genetically predetermined castes or to encourage the daily use of the drug, Soma, in order to anesthetize emotional agitation:

a gramme in time saves nine

A gramme is better than a damn

One cubic centimetre cures ten gloomy sentiments

When the individual feels, the community reels.

The “Ministry of Truth”, in 1984, also known as “minitrue” in Newspeak, served as the propaganda machine for Big Brother and the INGSOC regime. Although its main purpose was to rewrite history in order to realign it with Party doctrine and make the Party look infallible, the Ministry of Truth also promoted war hysteria in order to unite the citizens of Oceania while broadcasting simple messages designed to discourage any self-determination or autonomous thought.

Who controls the past controls the future. Who controls the present controls the past.

 

war is peace

freedom is slavery

ignorance is strength

Whereas the citizens of Brave New World used the drug Soma and cursory material distractions to vanquish any desire for real knowledge or truth; the “memory hole” in 1984 was a chute connected to an incinerator and served as the mechanism by which the Ministry of Truth would abolish historical archives as if they never existed.

In other words, truth was unimportant to the citizens of Brave New World and it was summarily rescinded from the realm of 1984.

Furthermore, in order to additionally fill the empty existence of those living in Brave New World, Huxley envisioned a character by the name of Helmholtz Watson as a creator of hypnopaedic phrases designed to fill the mental and emotional vacuum vacated by knowledge:

Alpha children wear grey. They work much harder than we do, because they’re so frightfully clever. I’m really awfuly glad I’m a Beta, because I don’t work so hard. And then we are much better than the Gammas and Deltas. Gammas are stupid. They all wear green, and Delta children wear khaki. Oh no, I don’t want to play with Delta children. And Epsilons are still worse. They’re too stupid to be able to read or write. Besides, they wear black, which is such a beastly colour. I’m so glad I’m a Beta.

– BNW, Chapter 2, pg. 27

In 1984, however, Orwell conceived of a character named Syme, who was an enthusiastic Newspeak redactor of language:

It’s a beautiful thing, the destruction of words.

 

Don’t you see that the whole aim of Newspeak is to narrow the range of thought? In the end we shall make thoughtcrime literally impossible, because there will be no words in which to express it. Every concept that can ever be needed will be expressed by exactly one word, with its meaning rigidly defined and all its subsidiary meanings rubbed out and forgotten.

– Syme, 1984, part 1, chapter 5

In Brave New World, Helmholtz Watson worked to fill the mind of people with hypnotic messages. In 1984, Syme strived to remove words from the English language in order to eliminate what the Party considered to be “thoughtcrime”.

Although the methodologies varied, mind control was prevalent throughout both the fictional worlds of Huxley and Orwell.

Social hierarchies were also present in both futuristic novels. The citizens of Brave New World consisted of the Alpha caste which held the highest jobs in the world state, and Betas, who were allowed to interact with the Alphas. The Gamma’s were considered to have average intelligence, they were eight inches shorter than Alpha’s in height, and they maintained the office jobs and held administrative positions. The Delta’s were trained from a very young age to despise books and were conditioned to work in manufacturing, while the Epsilon castes members were considered as morons who performed the menial labor within the lowest strata of society.

Although 1984 doesn’t have a caste system, per se, the citizenry were still separated into three groups: the Inner Party, the Outer Party, and the Proles, or the proletariat. The Proles constituted 85% of the population and were allowed privacy and anonymity, yet they lived in extreme privation in pursuit of bread and circuses.

As the Party slogan put it: ‘Proles and animals are free.’

– ”1984”: part 1, chapter 7

Although both Inner and Outer Party members of 1984’s Oceania lived under constant surveillance, the members of the Inner party led lives of relative luxury compared to the middle-class lifestyle of those within the Outer Party. Additionally, the members of the Outer Party were denied sex, other than within marriage and for the sole purposes of procreation. They were also denied motorized transportation and were allowed cigarettes and gin as their only vices.

Governments of both Brave New World and 1984 also filtered information and propaganda in accordance to the class ranking of their citizens.

In Brave New World, the separate castes, except for the Epsilons who couldn’t read, received their own newspapers delivering specific propaganda for each class of society; whereas the INGSOC party members of 1984 were allowed newspapers and to view broadcasted reports of world news via their telescreens.

Even though there is no actual organized religion described in either book, there were deities endorsed by the government, primarily for economic reasons, and complete with mandated rigorous orthodoxies.

Again, the aforementioned god of Brave New World was called “Ford”, after Henry Ford, in celebration of his efficient assembly-line production of goods that was worshiped by both the overseers and citizenry of the world state.

In 1984, Big Brother served as the almighty “beginning and end”, creator, judge, grand architect and savior for the INGSOC party disciples.

In Huxley’s vision of the future, the higher power of consumerism guided the people; complete with memorized short phrases designed to encourage the replacement of material items in lieu of repairing them; and, those wearing older clothes were shamed into purchasing new apparel:

Ending is better than mending.

The more stitches, the less riches.

BNW, Chapter 3, pg. 49

Orwell, on the other hand, considered war as the means by which a collectivist oligarchy could maintain a hierarchical society by purging the excess production of material goods from the economy; thus, keeping the masses impoverished and ignorant by denying them the surplus “spare time” that is afforded via the convenience of modern technology:

The essential act of war is destruction, not necessarily of human lives, but of the products of human labour. War is a way of shattering to pieces, or pouring into the stratosphere, or sinking in the depths of the sea, materials which might otherwise be used to make the masses too comfortable, and hence, in the long run, too intelligent.

— Emmanuel Goldstein, ”1984”: part 2, chapter 9

The futuristic societies envisioned by Huxley and Orwell, additionally, both discouraged romantic love, yet diverged on the subject of sex. As mentioned earlier, Brave New World treated sex as a “pressure relief valve” remaining constantly open in order to release any negative emotions like suspicion, distrust, jealousy, rage or envy. “Everyone belonged to everyone else”, so there was no need for secrets. Even children were encouraged to sexually experiment guilt free. Of course, sex was meant to be enjoyed only as a means of pleasure in Brave New World; as procreation was considered an anathema by the people and beneath the dignity of mankind.

In Orwell’s dark dystopia, however, promiscuous sex was encouraged among the proletariat and the Ministry of Truth even had a pornography division called “Pornosec”, which distributed obscene media for consumption by the Proles alone. Conversely, and also as mentioned prior, the members of the INGSOC party were required to abstain from sex; except for married couples attempting to procreate solely on behalf of the government.

In reading both books, it was also fascinating to see how both Huxley and Orwell painted their female protagonists, Lenina Crowne and Julia, respectively, as shallow nymphomaniacs.

Nevertheless, the procreative sterilized purity and casual sexual promiscuity of Brave New World along with 1984’s hierarchical rationing of sex, combined with the twisted morality of the INGSOC Party, represented the power of government invading into the most personal means of expression, and engenderment, between individuals of both worlds.

The concept of “everyone belongs to everyone else” in Brave New World allowed intimate acts to be considered merely as trivial recreation whereas the Party’s power over copulation in 1984, created a sense of fatalism within Winston and Julia as they made love knowing they were “the dead”.

In spite of any differences, both scenarios were the end result of extreme philosophical collectivism manifested into distorted and perverse destinies of speculative, future populations.

The Future is Now

For reasons described heretofore, many might consider Brave New World to be a utopian dream. In the context of individual autonomy, however, as well as the pursuit of truth, the opportunity for personal self-actualization, the dilemma of ethical considerations and the governmental dispensation of immoral law; Huxley’s vision of the future removes the lid of a veritable Pandora’s Box of questions. In reality, the societal structure as delineated in Brave New World would greatly resemble what could be called a “prison of pleasure” and, perhaps, even a “penitentiary of profligate practicality”.

Applying the same philosophical critique of 1984, and in similar fashion, Orwell’s nation-state of Oceana would be considered as a bona fide dystopian “prison of fear”.

As a matter of fact, both societies portray prisons of man’s own making, formed by governments following their own directions toward their respective future destinations. To say it another way: The road to hell is actually paved with bad intentions. As the Inner Party member (and administrator of torture), “Obrien”, admitted to Winston Smith in Room 101 of The Ministry of Love:

We know that no one ever seizes power with the intention of relinquishing it.Power is not a means; it is an end. One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship. The object of persecution is persecution. The object of torture is torture. The object of power is power.

– Obrien, ”1984”: part 3, chapter 3

Both power structures in Brave New World and 1984 chose to diminish individual rights in order to achieve societal stability. To the governments of both super-states, their citizens were considered as mere “means to an end”; namely, the continuation of power.

Now I will tell you the answer to my question. It is this. The Party seeks power entirely for its own sake. We are not interested in the good of others; we are interested solely in power. Not wealth or luxury or long life or happiness; only power, pure power. What pure power means you will understand presently. We are different from all the oligarchies of the past in that we know what we are doing. All the others, even those who resembled ourselves, were cowards and hypocrites. The German Nazis and the Russian Communists came very close to us in their methods, but they never had the courage to recognize their own motives. They pretended, perhaps they even believed, that they had seized power unwillingly and for a limited time, and that just round the corner there lay a paradise where human beings would be free and equal. We are not like that.

– Obrien, ”1984”: part 3, chapter 3

This is a perfect description of mankind striving to be as gods; an attempt to create metaphysical law from carnal desire. Foregone were the virtues of mercy, humility, temperance, autonomy, self-reliance, and restraint.

Mustapha Mond, one of ten world controllers in Brave New World and the evil Obrien of 1984’s nation of Oceana, both knew what they were doing. They were fully conscious in order to exert complete control and ensure the continuation of their respective, fictional nation-states.

But, could this type of power consolidation occur in the real (non-literary) world?

To answer that question one only needs to study history then, go turn on all of the various “telescreens” in their private homes: Televisions, smartphones, tablets, lap-taps and desktop computers. Tyrannical regimes have been centralizing and fortifying ramparts of power from the time man first crushed grapes. And, obviously, as the exiled enemy of the State, Edward Snowden, has revealed, modernity is no antiserum to the cancerous systematization of power.

When considering the prosperous technological paradise of Brave New World, where the societal elite had unrestricted access to intercontinental transportation and private helicopters; where even the lower classes enjoyed pampered lives of perennial comfort, ceaseless entertainment, and eternal recreation; as compared to the dingy, post-apocalyptically war-torn, third-world existence of 1984; it becomes difficult not to view both Huxley and Orwell as prophets.

Indeed, both futures have come to pass and are merely economically separated and dispersed into diverse geographic locations.

Today, it is the westernized cultures of the world, including Asian nations like Japan and South Korea, that more closely resemble Brave New World, whereas vestiges of 1984 can be seen in the eastern bloc communist countries, China, North Korea and the Islamic societies of the middle-east.

Although Adam Smith’s “invisible hand” of Capitalism had created a rising economic tide that lifted many boats; much of the world’s population still languishes in squalor and will never rise from the muck.

Moreover, even the modernized nations today have sacrificed individual freedom upon the altar of Collectivism as political correctness stifles free speech; families suffocate beneath mountains of debt and United Nations Agenda 21 policies release a deluge of regulations causing extra-governmental autonomous innovation to collapse before the inexorable, gravitational pull of the hive-mind.

Corporations like Amazon, Microsoft, Samsung and Apple have become the eyes and ears of Big Brother who is always watching, and ever listening.

To the sounds of mouse-clicks, once free people have “accepted” the “terms” of their surrender and have forfeited their liberty in the name of convenience. Like buzzing insects, the citizens of modern societies are caught in silicon honey traps mortgaged with plastic and electronically powered via USB cable nooses wrapped tightly around their collective throats.

The Technocratic Powers That Be wield weapons far more powerful than any time prior in history and soon, people will wake up to realize the electronic buzzing sound ringing in their ears was not emanating from their own wings, but rather, it was merely the sound of drones over their heads.

Like in Brave New World, science now rules supreme over ethics as medical professionals sell fetus organs to advance the cause of genetic research. The United States currently leads the world in illegal drug use and consumes near all of the global opioid supply; according to U.S. Surgeon General Vivek Murthy:

In most countries, the use of opioid prescriptions is limited to acute hospitalization and trauma, such as burns, surgery, childbirth and end-of-life care, including patients with cancer and terminal illnesses. But in the United States, every adult in America can have “a bottle of pills and then some.

Just as 1984’s Ministry of Truth purveyed pornography to the Proles, statistics show at least 35% of all internet downloads and at least 30% of all data transferred across the internet are porn-related. Also similar to Huxley’s Brave New World, sex runs rampant throughout the modernized nations as cases of sexually transmitted disease have reached a record high in the United States.

In correlation to the ever-expanding gulf between rich and poor, strict adherence to orthodoxy now determines how high one can rise in the societies of the westernized nations, as political correctness defines the faith of the pantheistic disciples of Mother Earth in the form of Gaia worship; and social hierarchy is increasingly determined via the identity politics of the collectivist left. The American body politic has now witnessed the rise of the warrior cop and the militarization of domestic law enforcement, as interminable wars are eternally fought on foreign shores and sovereign nations are bombed under false pretense.

Even 1984’s “Victory Gin” has manifested in the form Russian Vodka within the eastern nations, as Oceania’s type of man-made orthodoxy silently drowns the human spirit in devastating despair, while contorted moralities overtake both the Christian and Islamic societies of the modern age.

Orwell defined “doublethink” as:

the power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them

— Emmanuel Goldstein, ”1984”: part 2, chapter 9

Only in wealthy westernized nations do billionaires own multiple mansions, fly private jets and ride in eight-cylinder limousines to climate-change conferences where policies are decreed to lower the carbon footprint of the proletariat. Only in wealthy westernized nations, do ever-increasing numbers of women consider white men to be pigs while simultaneously striving to be their equals. And, only in the wealthy Christian nations of the northern hemisphere will citizens support a women’s right to third-trimester abortions, while rigorously and righteously battling for legislation to save endangered dung beetles.

Throughout Islamic societies, drinking alcohol and gambling is forbidden, but the governments and their citizens gladly tolerate canings, whippings, lashings, honor killings, suicide attacks, and the genital mutilation of young girls.

This does NOT prevent, however, the citizens of the wealthy Christian nations in the West to welcome with open arms, and in the name of “tolerance”, the pervading flood of Islamic immigrants.

The writings of Huxley and Orwell resonate by the echoes of history, over the canyons of time, and to the very cliff upon where mankind now stands. Propaganda daily spews via the machinations of five corporations which control 90% of all mainstream media channels. These companies toe the war-party line and wield their great powers of disinformation to contort facts or even censor the failures of the politicians whom they favor while, simultaneously, attacking their political enemies with lies and innuendo; even to the point of creating a phony election hacking narrative to satisfy their radioactive lust for war with nuclear powered enemies.

Even the characters of both Brave New World and 1984 are resonant of familiar archetypes from days gone by. Brave New World portrayed the character Bernard Marx as being short like Hitler, with a small man’s inferiority complex and complete with the surname of Karl Marx, the eponymous founder of Marxism.

The noble sounding Lenina Crowne’s name contains the surname of Vladimir Lenin, and Orwell’s portrayal of Julia does not seem overly diverse from former President’s Obama’s vision of “The Life of Julia”. Even the mustachioed, evil-eyed Big Brother from 1984’s dystopian nation of Oceana, looks eerily similar to just about every other tin-pot dictator who ever walked the earth.

Art imitating life? Indeed.

Yet the irony fails to impress America’s young social justice warriors of the Millennial generation who have been raised on a steady diet of socialism, political correctness, and participation trophies; a far cry from the rugged individualists of previous American generations. In the 2016 U.S. Democratic Party Primaries, and with the same sense of vague dissatisfaction as exhibited by Huxley’s Bernard Marx, millions upon millions of rainbow worshipping Snowflakes, old and young alike, turned out in force to show their support for another Bernard: Bernard Sanders, a redistributionist of the line of Robin Hood who, in the spirit of Santa Claus, offered free college educations to all of Uncle Sam’s children.

Sadly, Big Brother is here to stay and, with time, he will only grow more bigly; regardless of any transitory elected politicians in the governments of the world’s “sovereign” nations today.

Although Aldous Huxley and George Orwell valiantly spun fictional narratives in order to warn the real world’s future citizens, they were not alone in their efforts.

On January 17, 1961, former President Dwight D. Eisenhower warned of an ever-encroaching “Military Industrial Complex” in his farewell address to the nation:

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.

Exactly 100 days after Ike’s farewell, on April 27, 1961, John F. Kennedy spoke before the American Newspaper Publishers Association in an address that later became known as his “Secret Society” speech. In that address, he stated the following:

For we are opposed around the world by a monolithic and ruthless conspiracy that relies on covert means for expanding its sphere of influence: on infiltration instead of invasion, on subversion instead of elections, on intimidation instead of free choice, on guerrillas by night instead of armies by day. It is a system which has conscripted vast human and material resources into the building of a tightly knit, highly efficient machine that combines military, diplomatic, intelligence, economic, scientific and political operations. Its preparations are concealed, not published. Its mistakes are buried not headlined. Its dissenters are silenced, not praised. No expenditure is questioned, no rumor is printed, no secret is revealed. Without debate, without criticism, no Administration and no country can succeed– and no republic can survive. That is why the Athenian lawmaker Solon decreed it a crime for any citizen to shrink from controversy.

Thirty months after that speech, President Kennedy was assassinated in Dallas, Texas on November 22, 1963.

Many people consider Kennedy to have been the last American president not controlled by a financial global elite hell bent on world domination.

In one of the twentieth century’s minor ironies, Aldous Huxley died on the very same day that John F. Kennedy was killed. It was also the exact day C.S. Lewis, the British author, and Christian apologist, passed from this earth.

Coincidence? Only God knows.

Regardless, by 1984 all had been forgotten; and, in a Brave New World, none of it really matters anyway.

via http://ift.tt/2pQ6i7x Tyler Durden

Ahead of Sunday’s first round of the French election, we have previously provided several perspectives on the political and economic outcomes, including a permutation matrix of all six possible outcomes in terms of “high” vs “low market risk” (from BofA), why the market may be too complacent about a Le Pen – Melenchon result (candidate approval variance is within the polling error), and that European stocks have completely failed to price in any adverse outcome (as DB observed yesterday).

So with markets now closed, and all bets off, if only for the next two days until the results emerge, here is a complete guide to the first round of the first elections, compiled based on research reports by Deutsche Bank and Citigroup.

Guide to the French elections first round, from Deutsche Bank and Citi

Summary:

• The first round of the French Presidential elections will be held on Sunday 23rd April.
• Most polling stations will close at 7pm local time but some will remain open until 8pm local time. The first exit polls should be published at 8pm but may have to be taken cautiously. By midnight local time we could expect to have a clear picture of who would make it to the second round.
• Since publication of our initial comprehensive piece on the French elections, the polls for the four major candidates have narrowed considerably and Mélenchon has replaced Hamon on the left wing. The narrowing of the polls and the historical error in actual voting relative to polls makes any of the six outcomes involving the four major candidates possible.
• In order of decreasing likelihood the potential outcomes are (1) Macron vs. Le Pen (2) Le Pen vs. Fillon (3) Macron vs. Mélenchon (4) Le Pen vs. Mélenchon (5) Macron vs. Fillon and (6) Mélenchon vs. Fillon.
• Based on current polls, in our baseline scenario of Macron vs. Le Pen in the second, Macron is expected to win comfortably. Le Pen would have to win the first round with a gap of 5pp or more and/or the participation rate in the second round to fall below 60% for her chances to improve significantly.
• We assess the expect market impact on bond markets based on expected yield and spread levels for a presidential win for the four candidates and indicative probabilities of a win for the candidates in the second round conditional on the outcome of the first round.
• Macron is favoured to win against all candidates if he makes it to the second round. Based on current polls market concerns about French elections should recede considerably in any outcome with Macron in the second round.
• OAT-Bund spreads have the greatest room to widen in case of a Mélenchon vs. Le Pen outcome, while it has the most room to tighten in case of a Macron vs. Fillon outcome. However, in the latter scenario the tightening in OAT-Bund spreads should be more than offset by the rise in Bund yields leaving OAT yields broadly unchanged.

Timeline of Sunday 23rd April:

On Sunday 23 April, most polling stations will close at 7pm local time but some will remain open until 8pm local time. The first exit polls should be published at 8pm but may have to be taken cautiously. Press reports suggest that pollsters are worried about their ability to provide accurate exit polls at 8pm . Throughout the evening, polls are counted. By midnight local time we could expect to have a clear picture of who would make it to the second round.

• At 19:00 BST / 14:00 EDT preliminary results are released, which is perceived as a usually good indicator of the final results. This will give markets a good hour to digest before Asia markets open at 05:00 Sydney / 20:00 BST / 15:00 EDT. In 2012, 80% of the vote was counted by roughly 22:00 BST. Note that polling stations in rural areas close by 17:00 BST, urban polling stations by 18:00-19:00 BST.
• However, watch out for leaks. In 2012, journalists and pollsters circumvented the law by employing code names for each candidate, leaking the results of the exit polls to the public off. These reports were then quickly picked up and distributed by foreign new outlets which are not subject to French laws. On the night of April 23 look to the airwaves for news; perhaps #RadioLondres will be making another dramatic call to La Resistance.

The candidates – A four horse race:

Of the 11 total candidates, four leading the race. Citi Research’s latest probabilities of each candidate becoming President are: Macron (35%), Fillon (30%), Le Pen (25%), Melenchon (10%). What is clear is that the first round will be too close to definitively call – it’s a four horse race.

• Marine Le Pen: The right-wing  candidate is the main risk for EUR. She has repeated a campaign promise to propose a referendum on France’s membership in the Eurozone and EU within six months. She is expected to go through the first round with ease, but not likely to prevail in the second round, ultimately.
• Francois Fillon: Conservative candidate and former PM was formerly the frontrunner. However his popularity has been undermined by controversies, particularly allegations he paid his wife with taxpayer money for a job she did not perform.
• Emmanuel Macron: The independent centrist and former economy minister is Citi’s base case winner. His new party En Marche has continued to gain momentum.
• Jean-Luc Melenchon: The wildcard candidate has gained impressive momentum in the last month or so. The hard left wing candidate proposes a top income tax charge of 90% and to renegotiate the terms of France’s EU membership.

The first round: A close four way race

The first round polls have narrowed considerably The gap between the 4 major candidates has narrowed considerably over the past few weeks. Given the relatively narrow range between the various candidates and historical polling error, any of the six outcomes taking into consideration the four major candidates is possible.

Based on the final polls, Le Pen and Macron are still the favourites expected to make it past the first round and this remains the most likely outcome. As the current polls have Mélenchon and Fillon lagging, the scenarios which see them making it past the first round would probably be based on them doing better at the expense of the two front-runners.

• Mélenchon’s progress has been mainly at the expense of Hamon. To make it past the first round he would have to capture voters further away on the political spectrum. We would expect his gains to be marginally more at the expense of Le Pen rather than Macron This implies that in the second round Mélenchon vs. Macron is more likely than Mélenchon vs. Le Pen.
• In the case of Fillon, we would expect his gains to be more at the expense of Macron rather than Le Pen. Fillon’s experience and party structure could make centre-right voters tempted by a Macron vote switch back to Fillon at the last minute. This implies that in the second round Fillon vs. Le Pen is more likely than Fillon vs. Macron
• The probability of both Melenchon and Fillon making it past the first round remains low but cannot be ruled out entirely.

All six outcomes are possible

The six outcomes ordered by decreasing likelihood (i.e., most likely at the top of the list) are listed below. We also highlight the indicative probability of the first candidate wining the second round in each of these outcomes

• Macron vs. Le Pen: Based on the current stated intentions and certainty to vote expressed in polls and barring a significant upside surprise for Le Pen, we would expect reasonably high chances (~80%) of Macron wining the elections. The chance for Le Pen to win the second round would increase if she wins the first round with a gap clearly larger than 5pp. A low participation rate in the second round could also increase Le Pen’s chances (<60%).
• Fillon vs. Le Pen: Based on the current polls and historical polling errors, we would expect Fillon’s chances to win the second round to be around 70%. Le Pen’s chances to win are likely to increase if the participation rate in the second round is lower than 55%.
• Macron vs. Mélenchon: We would assign a relatively high probability (~80%) for Macron to win the second round. Mélenchon’s chances would increase if he is able to gather even more support from the supporters of the socialist party candidate Hamon in the second round.
• Mélenchon vs. Le Pen: Conditional on Mélenchon making it to the second round vs. Le Pen, we would assign a higher probability (~60%) of Mélenchon rather than Le Pen winning the second round. According to polls and vote transfers between rounds, Mélenchon is more likely to appeal to the traditional centre-left and centre voters compared to Le Pen who would appeal mostly to the most conservative Republican party supporters.
• Macron vs. Fillon: Based on polls, we would still assign a reasonable high probability to Macron winning the second round (~75%).
• Mélenchon vs. Fillon: In this scenario we expect the second round to be reasonably close as the two front runners in the first round would have lost. Given the more strong upward momentum for Mélenchon and recent polls, we would assign a slightly higher chance (~55%) to him wining the second round.

Three key factors you should watch

Momentum is a key ingredient in this contest: Looking at recent polling, Le Pen appears to be losing some, down 1.1% point on average compared to previous surveys. Macron’s first round voting intentions have eroded by 0.2% point. Fillon and Mélenchon, by contrast have gained 1.0% point and 1.2% point respectively.

Turnout is crucial. The five-poll average suggests that 69% of voters are sure to cast a ballot, with at least an extra 10% who think that they will but cannot say for certain. However there are conflicting interpretations on how this might impact the chances of each candidate. There’s two sides to the argument:

• Higher turnout arguably tends to benefit more status quo candidates, such as Macron, who the polled suggest their less certain to show up for.
• But in the case that the turnout were to be lower-than-expected, it would likely favor Macron and Fillon whose sympathisers tend to be from voting groups (demographic wise) that are more likely to cast a ballot. If turnout is higher, then anti-establishment extremes are likely to do a little better than suggested in polls.
• CitiFX Strategist Josh O’Byrne helpfully points out, “Turnout stats by department should also be released before initial results. Figure 1 shows the top and bottom Departments for Le Pen in 2012, based on the deviation from the national average. Exceptionally high turnouts in populous Departments such as Pas-de-Calais, Gard, Paris or Hauts-de-Seine, could give an early indication of how the evening may evolve.”

1. 

• The last issue we have touched upon briefly – voting intentions. The ‘certainty of choice’ as indicated in polls suggest that Le Pen supporters are especially strong.  Le Pen’s base is the strongest, with around 84% according to Ifop-Fiducial’s daily tracker, just ahead of Fillon around 82%, compared to the overall 72% average. Macron is slightly behind on 69%, with Mélenchon on 67% and Hamon on 63%. The amount of choice on the Left explains these lower ratings, but also increases tail risks for Sunday.

Impact on bond markets

In assessing the potential market impact of the result of the first round of the French election, we use the scenario analysis previously published for yield levels in case of victory in overall presidential election for the four major candidates.

Our indicative yield and spread levels in the various outcomes of the first round are conditional on the levels we see under the presidency of the four candidates and the conditional probability of the final outcome following the first round. Investors might have expectations of different levels and probabilities but our analysis provides a reasonable guide and framework.

In previous analysis we have estimated that the OAT-Bund spread could be ~200bp in a Le Pen win, 150bp in a Mélenchon win and 45bp in a Macron/Fillon win. Previously we had not distinguished between a Macron and Fillon presidency but we now decide to distinguish between the two even though the difference is fairly minor. In our view, Fillon’s pro-reform agenda and the backing of an established party in the parliament could see the OAT-Bund spread tighten back to the level seen in Q2-14 level of ~40bp. However, in case of a Macron win the risk of a failure to deliver could increase and the OAT-Bund spread might not tighten below the current level of Belgium-Bund spread (~50bp).

The table below summarizes the 10Y bund yield, OAT-Bund spread and BTP-Bund spread level in these scenarios for reference.

For the six outcomes discussed in the previous sections and using indicative probabilities based on polls on the second round outcome conditional on the outcome of the first round we show indicative levels for the OAT-Bund spread after the first round of elections.

Using the same framework and our previously published scenario for 10Y Bund yields and BTP-Bund spreads we arrive at the following levels for the indicative level of 10Y yields in Germany, Italy & France after the first round of the French election. It should be noted that in particular our framework was initially published in early March when the level of 10Y bunds were higher at around 0.35% compared to current levels of 0.25%.

Electoral dashboard

We have been publishing an election dashboard that tracks the polls’ evolution. For details of methodology see here.

Mélenchon’s surge also happened in 2012: In figure 6, we reproduce polls for Mélenchon in 2012 in the last month before the election. Mid-March  2012, he was polling around 11% and then surged above 15% at times. Ultimately he only gathered 11% of the votes. The similarity with the 2017 polls and momentum is striking. If Mélenchon wants to have a chance to make it to the second round, he cannot rely on taking votes from Socialist Hamon anymore. He will have to adopt a different strategy and either aim to capture Le Pen’s voters or Macron’s voters or convince abstentionists to support him. Figure 3 also shows that many of Mélenchon’s potential voters are not certain of their choice.

Second round – In the two graphs below (figures 7 and 8), we report the polls’ evolution of support for mainstream candidates Fillon’s and Macron’s leads over Le Pen in the second round of the Presidential elections, which have been relatively stable in recent weeks.

Second round vote transfer – Figures 9 and 10 show how votes could transfer between the first round and the second round of the Presidential elections. Here we adjust them to represent the share of the electorate of each candidate that would likely switch to Le Pen, abstain or choose Fillon/Macron.

We then show how these vote transfers among first-round voters could add up in the second round (Figure 11 and 12).

Brexit and US elections polling errors applied to French polls: In the case of the US elections and particularly Brexit, polls underestimated the risks of a surprise. Figure 13 and 14 trace the history of polls in the six months prior to the vote for Brexit, and from the day Trump and Clinton were the official nominees in the US. The solid lines represent actual polling data. The dotted lines adjust for the margin of error. We apply the Brexit and US election margins of error to the Le Pen-Fillon gap and the Le Pen-Macron gap in the French second-round polls.

Pollsters careful about not underestimating National Front support: In France, pollsters are careful in measuring National Front support. Figure 15 traces history of polling estimation error for National front since 2002. Also, the mobilization of the French electorate against the National Front should not be ignored. Recently in the 2015 regional elections – National Front candidates were defeated by wide margins against centreright candidates in two regions contrary to opinion poll expectations (Figure 16).

* * *

Possible scenarios & implications for EUR

• There are six possible paths for two of the main four candidates to advance to the second round. Consequently unlike previous political risk events (eg Brexit, Trump), the outcome is anything but binary. This makes it tricky to determine how EUR will react.
• There are two key negative scenarios that will be at the forefront of investors’ minds: 1) Le Pen vs. Mélenchon, and 2) Fillon vs. Mélenchon. We’re most worried about the former, which has been described by some as a ‘nightmare’ scenario and roughly 7% priced in in the options market. If these are the final candidates for May 7, this would a hard choice between two anti-globalization, anti-EU and pro-Russia candidates. EUR is likely to react accordingly, and understandably negatively.
• The most positive outcome for EUR on the other hand this Sunday would be Le Pen coming in third place, entirely discounting the chance of her advancing to the second round and the possibility of victory. A Macron vs Fillon scenario would be ideal in such a case, as both candidates are seen as moderates. Alternatively a Le Pen vs Macron scenario for the second round would also be a positive.
• Naturally, an ultimate Le Pen victory would be the most negative for markets given her anti-EU and “Frexit” stance. As such, one thing to watch in the first round election results is her margin of victory, if she scores the highest, relative to current polling. If she obtains say, 30% of the vote or more, then EUR is likely to sell off rather sharply (she currently polls 23-24% on average).

For those who missed, here is a scenario analysis from BofA laying out the potential market impact of the 6 possible outcomes from the first round:

What happens next? It’s not over yet

If no candidate gets 50% in the first round vote (as is expected), then the top two candidates go through to the next round a week later and the one who gets the most votes wins. Polling restarts on Monday and there is a TV debate for the final scheduled for Wednesday May 3. The second round vote will be held on May 7.

Also note that legislative elections are held in June. If the President fails to secure a majority in the Assemblée Nationale with their party, the country will fall into a period of “cohabitation” – which means the president will have diminished powers. Voters will elect into the lower chamber of parliament representatives from 577 constituencies. 

As Citi Research point out, even if Macron wins, it is unlikely that his party will have an outright majority. The most likely scenario here is a governing coalition. Le Pen’s FN, which currently has only two MPs, is extremely unlikely to get anywhere near the 289 Le Pen would need for a majority in the assembly. This is a problem Mélenchon would also face. More radical proposals, such as an EU/Eurozone referendum, will be harder to implement subsequently.

Timeline:

• April 21 – [from midnight] Poll blackout
• April 23 – First round of French presidential elections. At 19:00 BST / 14:00 EDT, media is authorized to report preliminary results (Not exit polls, but numbers based on processed ballots – historically an accurate indicator of the final result)
• April 26 – Official announcement of first-round results (latest date)
• May 1 – Local holiday in France
• May 3 – TV debate between the two remaining candidates
• May 5 – [from midnight] Poll blackout
• May 7 – Second round of French presidential elections. Last polls close at 19:00 BST / 14:00 EDT, with an exit poll result announced immediately.
• May 11 – Official proclamation of the new President.
• May 14 – [from midnight] End of Francois Hollande’s mandate
• June 11 – First round of legislative elections
• June 18 – Second round of legislative elections.

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