Tag: finance

According to a Bloomberg headline which instantly sent the Dow Jones 100 points higher from intraday lows, Deputy Attorney General Rod Rosenstein reportedly told President Donald Trump last week that he isn’t the target of any part of Special Counsel Robert Mueller’s investigation.

• ROSENSTEIN SAID TO TELL TRUMP HE’S NOT TARGET OF MUELLER PROBE

As Bloomberg adds, Rosenstein, who brought up the Mueller probe himself, “offered the assurance during a meeting with Trump at the White House last Thursday,” a development that helped tamp down the president’s president’s desire to remove Rosenstein or Mueller, and probably explains why Trump hasn’t gone postal yet following the raid last week of his personal attorney Michael Cohen.

After the Rosenstein meeting, Trump told some of his closest advisers that it’s not the right time to remove either man since he’s not a target of the probe. One person said Trump doesn’t want to take any action that would drag out the investigation.

The news also helped send risk assets sharply higher as it would suggest the risk of impeachment – if the Bloomberg report is accurate – is far lower.

If true, that begs the question: so who is the target of Mueller’s probe?

And parallel with that, many have also asked just what is the point of Mueller’s ongoing probe, which continues to cost taxpayers millions of dollars, a year and a half after Hillary Clinton’s humiliating loss in the presidential election.

 

via RSS https://ift.tt/2F0K8pH Tyler Durden

Less than a month after his former protege (now his arch-nemesis) Viktor Orban led his nationalist Fidesz party to an overwhelming victory in Hungary’s federal election in March, billionaire investor George Soros – who has become a persona non-grata in his native Hungary – has lost another round in its ongoing confrontation with the ruling government, and is closing the offices of his Open Society Foundation in Budapest.

Patrick Gaspard, the head of Open Society, announced the closure in an article by Austria’s Die Presse.

Soros, who recently donated the bulk of his eleven-figure fortune to Open Society – an international chain of liberal nonprofits dedicated to pushing Soros’ pro-immigration, pro-globalization political agenda under the guise of altruism – has been openly feuding with Orban for more than a year, ever since he criticized the Hungarian leader for purportedly running a “mafia state” during a speech in the UK.

And as we anticipated following Orban’s sweeping electoral triumph, life for Soros proxies in Hungary has now become “unbearable”. Fidesz has been pushing a bill, informally known as the “Stop Soros Act”, designed to weaken Soros’s influence in Hungary. Along with the Soros bill, the country’s Parliament is weighing a suite of proposed constitutional amendments that would weaken Hungary’s courts while allowing Orban to consolidate power.

Observers expect the amendments will soon become law now that Fidesz has been reelected with the two-thirds parliamentary majority required to remake the country’s constitution.

Orban has blamed Soros for a host of ills and pushed through legislation cracking down on non-governmental organizations called the “Stop Soros” laws which drew international criticism. More details:

According to Austria’s Die Presse, Patrick Gaspard, the head of the Open Society Foundation (OSF), that was founded by US billionaire George Soros, announced the closure of the office in the Hungarian capital on Thursday.

Budapest accused Soros of hiring some 2,000 people to meddle in the parliamentary elections. The ruling Fidesz party and its coalition partner are attempting to ban his groups, such as the pro-immigration Open Society Foundation, from the country.

The so-called “Stop Soros Act” is yet to be passed by parliament, but PM Orbán is hopeful the bill will limit Soros’ influence in the country’s internal affairs.

After the election, Hungary’s re-elected PM tightened the screws on Soros, and Brussles: speaking during a press conference in Budapest last week, Orban said “the Hungarian voters have designated the most important topics: immigration and the topic of national security. Hungarians have decided they want to be the only ones who will decide who can live in Hungary.”

Orbán also made it clear that far from stepping back from the ruthless campaign rhetoric, he would stay true to it, including by going ahead with controversial bills described by his government as the “Stop Soros” package.

In addition to his conflict with Soros, Orban has also been feuding with the European Union and German Chancellor Angela Merkel over his strict anti-immigration position. The EU has opened a case against Hungary for its refusal to participate in the migrant-redistribution scheme. Orban, who has openly bragged about building an “illiberal” Democracy, has effectively proven Merkel wrong.

Whereas much of Europe stressed under daily reports of altercations involving Muslim immigrants who arreived as a result of Angela Merkel’s “Open Door” policy, Hungary has benefited from lower crime rates and lower incidences of terrorism than other EU member states. The country has attributed its lower crime rate on its aggressive anti-immigration policices: In 2015, Hungary built barriers along the Hungary-Serbia and Hungary-Croatia borders to stop migrants from entering the country on their way to EU members states with more generous benefits.

So, for those keeping track at home, the score is now Orban – 2, Soros – 0, but don’t cry for the Open Society loss: after the closure, the foundation will still have more than 40 offices around the world.

via RSS https://ift.tt/2qJywTl Tyler Durden

Yesterday, for the umpteenth time in the last few years, we exposed the clear manipulation of VIX at the futures settlement auction – spiking VIX to favor the record long positioning of VIX futures speculators.

With stocks quietly drifting sideways ahead of the US cash open this morning, VIX suddenly spiked reprising a pattern of jerky moves on days when futures on the gauge are settled in monthly auctions…

As a reminder, VIX futures settle on Wednesdays at 9:20 a.m. New York time in an auction by Cboe Global Markets.

As Bloomberg notes,  VIX was heading for its longest streak of daily losses in almost a year in early New York trading, before it reversed direction and rose as much as 11 percent.

The gain occurred around the time of the settlement, which happened 13 percent above the VIX close on Tuesday and outside of today’s range.

Both the settlement price and the high-water mark for the VIX occurred more than 10 percent above Tuesday’s close — lucky, if you were betting on a gain.

And as VIX was manipulated around the auction, so the option-market ‘tail’ wagged the broad-stock-market ‘dog’ – slamming the S&P down almost 20 points.

And don’t forget, large speculators hold a record net-long VIX futures positions, according to the latest data from CFTC…

So this settlement spike was very much in favor of all those speculators – after a week of crushing them – how convenient.

So just how easy is it to do this?

How do ‘traders’ manipulate the options market, thus moving VIX in their favor, to rig stock momentum one way or another?

Bloomberg reports that Pravit Chintawongvanich, head of derivatives strategy at Macro Risk Advisors, says the VIX – a gauge of the implied volatility of the S&P 500 Index derived from out-of-the-money options – was ‘gunned‘.

That is, it was intentionally pushed higher.

A massive bid for protection against a tumble in equities caused the prices of put options to soar in early trading on Wednesday, effectively forcing up the official settlement level for VIX.

“Around 9:15, suddenly a bid emerged for the extremely far downside options, pushing the early indication [of the VIX] up 1 point,” Chintawongvanich said.

“By 9:30, the early indication was around 17.50, up over 2 points from the 9:00 a.m. level, despite S&P futures remaining unchanged.”

Bloomberg’s Dani Burger highlights some of the S&P 500 options that were at the center of yesterday’s VIX rigging speculation.

One trade of 13.9k May puts with a 1200 strike during the VIX settlement (at a total cost of $348,000).

Tied to options that gain on a 50% SPX decline… and before Wednesday, the five-session average volume for this option was just 22!

Roughly $2.1 million was spent bidding up put options with strike prices that had 50 percent downside from current levels, the strategist calculates.

To visualize this manipulation better… here is a chart of the premium traded in the April VIX settlement, by strike…

And compare that to March VIX settlement…

 

So, to summarize: with speculators the longest volatility they have ever been – and facing some very recent pain from 5 days of volatility declines – the settlement level for April was manipulated over 2 vol points higher – potentially saving the 92,913 long vol futures contracts’ traders millions of dollars (among others)… at a cost of just $2 million – buying deep, cheap OTM Puts to push up the skew (the outside volatility) and thus drive up VIX (which is calculated from a strip of OTM options).

Further still, as VIX was monkey-hammered higher, so the reflexive – albeit slightly delayed – reaction in the stock market was a 20 point drop in the S&P 500 (120 point drop in The Dow), which could have garnered dramatic profits for anyone who was algorithmically buying the deep OTM Puts and sell equity futures simultaneously.

Still think stocks are all about fundamentals?

*  *  *

Of course, as Bloomberg reports, Cboe Global Markets declined to comment.

Last month, Cboe CEO Ed Tilly said at a conference that “the integrity of our VIX products and markets is paramount. And, if our regulatory team were to uncover any manipulation, it would be rooted out, swiftly and decisively. Period.”

But, as Reuters reports, France’s market watchdog did make a statement this morning with regard manipulation of European equity volatility markets, claiming it was “very unlikely.”

Any manipulation of Europe’s main gauge of stocks volatility would be “very unlikely”, France’s financial markets regulator said in a research note on Thursday, following allegations that the equivalent U.S. “fear gauge” was being manipulated.

Europe’s VSTOXX, the region’s equivalent to the U.S. CBOE S&P 500 volatility index VIX, would probably be protected from any possible rigging due to the different method used to settle prices for the VSTOXX futures, the Autorité des Marchés Financiers (AMF) said.

“As the index is calculated every 15 seconds, 61 points are used in calculating the settlement price of the future (as opposed to a single point for the VIX). Given the liquidity of Eurostoxx 50 options at this time of the day, it would thus appear much more difficult and costly to manipulate VSTOXX futures,” the report said.

The AMF also ruled out the possibility of manipulation of France’s volatility index, VCAC.

“Since the VCAC is not an underlying of listed derivatives, a manipulation scheme on the VCAC index similar to the alleged VIX manipulation may thus be ruled out,” the watchdog said, adding that no products reference the VCAC index.  

Translated: It couldn’t happen here…

via RSS https://ift.tt/2qJ0bUq Tyler Durden

In addition to the surge in equity volume in the first quarter as a result of sharp repricing higher in equity vol which helped US banks post record equity trading revenues, there was another sharp pick up in trading last quarter: FX trading volumes rose to a record high in the first three months of the year according to CLS data, as the rise in volatility from multi-year lows encouraged more buying and selling of currencies. Or, as Bank of America put it, “the sleeping giant has awoken.“

In a note from BofA’s Vadim Iaralov, the FX strategist writes that after hibernating for most of last year, the FX market has awoken in 1Q18, and interbank FX volumes have picked up for the first time after hitting bottom in 4Q.

Additionally, major currencies such as EUR, CNH, RUB have increased volume by more than 17%, 54%, 20% respectively vs 1Q17, despite rising geopolitical risk and fickle risk sentiment. The biggest gainers in EM were THB, CNH, and RUB, while EUR, NZD and AUD have picked up in G10 space.

According to data from CLS, major settler of trades in the foreign exchange market, the average daily traded FX volumes submitted to it reached $1.87 trillion between January and March, surpassing a previous high of $1.67 trillion in the first quarter of 2013. Daily volumes in March reached $1.855 trillion, down 4.8% on February but up on a year earlier.  In addition to volatility, CLS attributed the rise in volumes to a trend of more buy-side firms like asset managers using its services.

As Reuters adds, average daily volumes of spot and derivatives currency trading touched $461 billion in March, slightly lower than the record month of February when volumes hit $463 billion. NEX Group, which owns another big FX trading platform, saw average daily foreign exchange spot trading volumes rise 7% to $92.7 billion in March from the previous year.

The rise in FX volumes will be welcomed by trading platforms and banks that have struggled with calm financial markets squeezing their profits in recent years. They have central banks to thank: “FX markets are in a wait-and-see mode,” Thu Lan, an FX analyst at Commerzbank in Frankfurt said. “Everyone is  waiting to see the first (monetary policy) normalization steps from central banks.”

Still, in an apparent paradox, the surge in FX volumes has not translated into either higher profit, easier trading or clearer currency trends.  In fact, as BofA notes, and as FX traders know too well, major currencies such as EUR have stayed in a tight range with falling volatility as volumes rose, while AUD broke out of its range on average volumes. In other words, “spot movement and trade volumes are increasingly diverging.“

To decipher this puzzle, the bank conducted an analysis of spot movement based on its internal measurements and interbank volume data; it showed that flows have become more important than ever in a market lacking a clear fundamental theme. More surprisingly – and a nightmare for all momentum traders – order flow reversed direction every few days for EUR pairs as it stayed range-bound. At the same time, AUD broke out of its range under pressure of directional selling flows when equities fell.

Some more details from BofA:

Flows are becoming more important than before. We measure flow direction by aggregating monthly net order flow as the difference between buyer-initiated trades and seller-initial trades by value using a Tick History database of all trades on Reuters interbank platform since April 2006. We aim to disentangle buy and sell orders to capture the nature of supply and demand over time and test the intuition that a strong directional order flow drives currency movements.

We regress monthly spot log-returns on net order flow and find out that order flow has becoming increasingly important as a driver of spot movement. The adjust R2 has increased to a historical high in recent months for major currencies (USD goes with the flow).This trend is especially evident for ZAR, CAD, TRY and AUD (Chart 3).

Spot movement and trade volumes are increasingly diverging. EUR stayed in a tight range with falling volatility despite rising volumes, while AUD broke out of its range on average volumes. In our view, the difference lies in the directionality and persistence of their flows.

To measure the directionality of the flow, we average the duration of the longest uptrend and downtrend. We define the main trend as the largest consecutive streak of flows in one direction in the last 90 days. Our analysis shows the AUD flows persisted for an average of 8.5 days above its long-term average of 5.5 (Chart 4), while EUR flows have persisted for only 4.7 days below its average of 6 days (Chart 5).

In more recent developments, according to BofA’s (partial) data there is broad evidence of USD selling vs EM that has yet to translate to corresponding currency movements. Using the historical regression for each currency and the partial order flow to date suggests the spot to play catch up for JPY and CNH. Meanwhile, USD was bought vs EUR, perhaps as evidence of repatriation and we expect EUR/USD to fall by up to 2%.

In the case of USD/RUB, there were actually more sellers than buyers especially on 10 April, which marked the high. While we do not expect RUB to unwind 7% as fundamentals have changed, it is a bearish signal to see net sellers come in at the new high (Chart 6).

The surge in volumes – with or without associated spot moves – may note last: so far April has been a quiet month in FX, with currencies generally shrugging off rising geopolitical tensions, concerns about a possible U.S.-China trade war and the prospect a global economic growth boom is nearing its peak; in fact, in a redux of 2017, most currency pairs are once again stuck in narrow price ranges, as if central banks had to put down their “no volatility” fist.

via RSS https://ift.tt/2HexYPW Tyler Durden

Faced with the threat of a subpoena, the Department of Justice (DOJ) is reportedly ready to hand over copies of former FBI Director James Comey’s memos detailing his interactions with President Trump, reports Bloomberg as well as CNN Justice Reporter Laura Jarrett.

The Justice Department is expected to make the @Comey memos available to Congress later today, a source with knowledge of the matter tells @LauraAJarrett

— Jake Tapper (@jaketapper) April 19, 2018

The memos – leaked to the New York Times through Comey pal and Columbia Law professor Daniel Richman, were a major catalyst in Deputy Attorney General Rod Rosenstein’s decision to appoint former FBI Director Robert Mueller as special counsel to investigate Russian interference in the 2016 US election.

As reported Wednesday by The Hill, House Judiciary Committee Chairman Bob Goodlatte (R-VA) was expected to subpoena the Department of Justice as early as this week in order to obtain copies of seven memos Comey created. 

The chairman on Wednesday notified the ranking Democrat, Rep. Jerrold Nadler (N.Y.), that a subpoena is forthcoming. Under Judiciary committee rules, the chairman must consult the ranking member two business days “before issuing any subpoena” — suggesting that the move is imminent.

The order comes after Deputy Attorney General Rod Rosenstein asked three powerful House lawmakers — Goodlatte, Oversight and Government Reform Committee Chairman Trey Gowdy (R-S.C.) and Intelligence Committee Chairman Devin Nunes (R-Calif.) — to give him extra time to consult with the “relevant parties” on whether he can make the memos available to them. –The Hill

Deputy Attorney General Rod Rosenstein seemingly began to stall on the requested document delivery – telling lawmakers on Monday that the Comey memos may be related to an “ongoing investigation,” and that they may “report confidential presidential communications,” meaning that Congressional investigators have a “legal duty to evaluate the consequences of providing access to them.” 

Ranking Democrat Rep. Jerrold Nadler (NY) backed Rosenstein’s pushback earlier in the week, calling the GOP’s imminent subpoena as political “theater” which may interfere with Mueller’s investigation. 

“The Comey memos are key to the Special Counsel’s work. Pursuant to long-standing Department policy and absent any satisfactory accommodation, the Department of Justice cannot simply hand over evidence that is part of an ongoing criminal investigation,” Nadler said.

“If House Republicans refuse any accommodation short of the Department of Justice handing over custody of these documents  —which it cannot do — I fear the Majority will have manufactured an excuse to hold the Deputy Attorney General in contempt of Congress. If they succeed in tarnishing the Deputy Attorney General, perhaps they will have given President Trump the pretext he has sought to replace Mr. Rosenstein with someone willing to do his bidding and end the Special Counsel’s investigation,” he added.

In a Monday response from Rosenstein, the Deputy AG referenced a 77-year-old opinion of Attorney General Robert Jackson who wrote “all investigative reports are confidential documents of the executive department and that congressional and public access thereto would not be in the public interest,” while pointing to a long list of his predecessors who agreed. 

“Investigative reports include leads and suspicions, and sometimes even the statements of malicious or misinformed people. Even though later and more complete reports exonerate the individuals, the use of particular or selected reports might constitute the grossest injustice, and we all know that a correction never catches up with an accusation,” Jackson argued at the time.

Hey @Comey. Just heard that DOJ is ready to send your memos to congress. Perfect timing with the book tour — you can’t hide from the press.

— Arthur Schwartz (@ArthurSchwartz) April 19, 2018

via RSS https://ift.tt/2Hhap4V Tyler Durden

Via The Deviant Investor,

This article was written for Miles Franklin by Gary Christenson who advocates treating causes, not symptoms.

Headache? Muscle ache? Back ache? Take a pill! An over-the-counter pill will diminish the symptoms and pain. The consequences will come later.

High cholesterol? Take a pill. There are other ways to reduce cholesterol but none that produce $ billions for Big Pharma. Consequences to your body and finances will manifest in other ways.

High Blood Pressure? Take a pill. There are other means to lower blood pressure, but none that produce $ billions for Big Pharma. Side effects may require other drugs, which will also have side effects.

Economic sluggishness? Take a pill – an extra-large dose of Quantitative Easing. There are other ways to stimulate the economy, but QE bailed out banks at taxpayer expense, increased banking profits, expanded debt, printed $16 trillion from “thin air” and levitated the stock market.

Economic Side effects: Pension funds are increasingly insolvent, savers don’t earn a decent return from savings, official debt exceeds $21 trillion, a potential derivative disaster looms ahead, and more dangers will manifest in coming years.

CONSEQUENCES OF “TAKE A PILL” THINKING

• If an individual has broken his leg, massive doses of OxyContin may remove the recognition of pain, but it does nothing to heal the broken leg. Treat causes, not symptoms!

• If an individual has high blood pressure caused by any of a dozen life-style or diet choices, a pill may reduce blood pressure, but it doesn’t correct the imbalances that created the high blood pressure.

• The government and Federal Reserve have created too much debt. It can’t be paid with current dollars. Adding more debt is NOT a solution to an excessive debt problem, but that is the preferred choice of governments and central banks.

• Treating symptoms does not solve problems. Temporary pain may disappear, but at what future cost?

• Legislation usually treats symptoms. An affected group could be farmers, cotton growers, ranchers, public employee unions, other organizations, or any ethnic or racial group. The result: more bureaucracy, more social programs, increased taxes, and less productivity.

From Ronald Reagan:

“Nothing lasts longer than a temporary government program.”

MORE EXAMPLES:

The decade of the 1960s introduced new problems to the American public. Many were direct consequences of the excessive spending on President Johnson’s “guns and butter” programs. He escalated the Vietnam War at a massive cost while increasing social programs. (Sound familiar?)

“Take a pill” thinking encouraged government to spend a fortune on war and social programs and face the consequences later. Foreign nations converted dollars to gold per the Bretton Woods treaty. Instead of correcting the imbalances and spending responsibly, President Nixon did his version of “take a pill” and decreed the U.S. would no longer redeem dollars from foreign nations with gold. The consequences included the huge consumer price inflation of the 1970s, interest rates spiking into the teens in 1980, a stagnant stock market from 1965 until the early 1980s, and much social anguish.

Consequences always arise from actions. “Take a pill” thinking pretends actions are disconnected from consequences, but “the piper must be paid.”

• What are the consequences of central banks creating $20 trillion in digital currency units from “thin air?”

• What are the consequences of the Swiss Central Bank creating billions of Swiss Francs to buy American stocks?
• What are the consequences of Japanese government debt exceeding 250% of their GDP?

• What are the consequences of debt increasing more rapidly than GDP and government revenues?

THOUGHTS ON CONSEQUENCES:

• If debts cannot be paid, they will not be paid. That will cause massive defaults or huge currency inflation to pretend to pay the debts. Either alternative creates a currency crisis and devalued dollars, euros, yen, and pounds.

• If debt increases more rapidly than revenues, debt service will eventually dominate spending. What comes then? Confiscation of private assets? Negative interest rates? Higher taxes? Sovereign default? A distracting global war? Read Shelter From The Storm?

• Because “take a pill” thinking treats symptoms and not causes, the structural problems in the economy, government and foreign policy will not be resolved. The American public will dislike the consequences.

• The U.S. economy runs on debt and credit. If debts aren’t paid, credit disappears. If credit weakens, as in 2008, confidence and trust vanish and the economy slows or collapses.

• A run-away train will crash. Will out-of-control spending and run-away debt create a different result?

• The ugly consequences of decades of bad policy, excessive spending and “take a pill” thinking will not smash us in the face next week, but they will arrive.

• Prepare for the consequences of “take a pill” thinking. A currency crisis will cause devalued currencies. Gold and silver will help protect your savings and assets.

• A debt default will devastate many debt-based assets. Your debt is someone’s asset only if you can pay. If you default, the asset is worth much less. Gold and silver have no counter-party risk.

• Many governments survive only by borrowing each year. When the music stops, those who prepared and faced unpleasant truths will fare better.

Be wary of the consequences of “take a pill” thinking, run-away debt creation, bad policies, excessive spending, and currency unit devaluations. Do your due diligence, and protect your savings and retirement with real assets such as precious metals.

via RSS https://ift.tt/2HduvB5 Tyler Durden

The city of Pittsburgh has ordered its detectives to bring riot gear to work Thursday in case President Donald Trump fires Special Counsel Robert Mueller, according to an internal email. 

Police Commander Victor Joseph reportedly told detectives in the Major Crimes unit to show up to work in full uniforms and riot gear “until further notice.“

Pittsburgh’s local CBS station obtained the internal memo, in which Joseph writes “there is a belief” that Mueller may be fired, and that “large-scale” protests are expected to ensue in the central business district within 24 hours if that occurs. 

“We have received information of a potential large scale protest in the Central Business District. The protest would be semi-spontaneous and more than likely happen on short notice,” the email reads. “Beginning Thursday, all Major Crimes detectives are required to bring a full uniform and any issued protective equipment (riot gear) with them to work until further notice.”

Special Counsel Robert Mueller is of course investigating Russian involvement in the 2016 US election. Well – he started out with that anyway, and moved on to raiding Trump’s attorney’s office last week in search of documents tied to an alleged affair Trump had with porn star Stormy Daniels. Coincidentally, we’re sure, several embarrassing  leaks were published in the press in the days following the raid. 

Pittssburgh Public Safety Director Wendell Hissrich said in a statement that the city’s police officials will evaluate and prepare for such situations as a precautionary measure. 

“We receive information regularly about potential events and/or threats, assess the credibility of the information and plan for a potential event,” Hissrich said. “In this case, we have not assessed the credibility of the potential for disturbances, and we do not have any knowledge of the President’s decision-making process.”

Hissrich added, “On a routine basis, we receive intelligence about potential problems that may occur in the city, whether it be weather-related, whether it be man-made, whether it be demonstrations, and we act accordingly and appropriately to have a plan in place.”

The ironically named “Moveon.org” – which hasn’t moved on from the 2016 election, has organized a “Nobody is Above the Law Rally,” which calls for Pittsburgh residents to show up at the City-County building to protest: 

“This is an event planned as a rapid-response protest in the event that Donald Trump fires Special Counsel Robert Mueller or acts in other ways to seriously threaten the Trump-Russia investigation. Please note that the listed date is a placeholder and will be updated to be within 24 hours of the firing, should it occur.” –Moveon.org

On Tuesday, Senate Majority Leader Mitch McConnell (R-KY) derailed a bipartisan attempt to protect Mueller’s job – saying he would not hold a floor vote on the legislation regardless of whether it is first approved in the Senate Judiciary Committee. The Senator says that the bill is not necessary because President Trump isn’t going to fire Mueller.

Then on Wednesday, Trump tamped down concerns over whether he was going to fire Mueller or Deputy AG Rod Rosenstein. 

“They’ve been saying I’m going to get rid of them for the last three months, four months, five months and they’re still here,” the President told reporters.

Speculation over whether Trump would fire Mueller grew following the raid on Trump attorney Michael Cohen’s house, office and hotel room last week – which many say crossed the President’s “red line” for appropriate limits on the special counsel “witch hunt” as Trump calls it. 

 

via RSS https://ift.tt/2Hch9F8 Tyler Durden

Captain Tammie Jo Shults, the hero pilot who safely piloted Southwest Airlines flight 1380 to safety after its engine exploded on Tuesday, sending shrapnel crashing through a window and ultimately causing the death of one passenger, wasn’t your average pilot.

Thankfully for the passengers aboard that faithful flight, Shults was an experienced Navy fighter pilot who learned to fly as one of the first female pilots in the service roughly 30 years ago.

She piloted the F/A-18 Hornet in an era when women were barred from combat missions and received accolades during her time in the service, per the New York Time.

When the left engine of her Boeing 737 exploded just before reaching cruising altitude, her co-pilot and other members of the crew attested that Shults didn’t bat an eye.

Instead, she remained calm as she steadied the aircraft and radioed to air traffic controllers, without a hint of alarm in her voice, that her aircraft was experiencing and engine fire, and that she was descending. Again, as they drew closer and flight attendants fought to save the life of Jennifer Riordan – ultimately a losing battle – she got on her radio and asked air traffic control to have medical meet them on the runway.

Later, Passengers would praise Shults’s poise and “nerves of steel” in the face of what appeared to be imminent doom.

“Can you have the medical meet us there on the runway,” Captain Shults calmly told air traffic controllers in Philadelphia. “They said there’s a hole and, uh, someone went out.”

At 11:20 am, Captain Shults steered the plane, a two-engine Boeing 737, to a smooth landing on Runway 27L at Philadelphia International Airport. The left engine looked as if it had been ripped apart.

“This is a true American hero,” Diana McBride Self, a passenger, wrote in a Facebook post. “A huge thank you for her knowledge, guidance and bravery in a traumatic situation. God bless her and all the crew.”

Another passenger, Alfred Tumlinson, was more direct in his praise. “She has nerves of steel,” Mr. Tumlinson told The Associated Press. “I’m going to send her a Christmas card — I’m going to tell you that — with a gift certificate for getting me on the ground. She was awesome.”

Shults’s career in aviation can only be described as pioneering. While there are few female pilots in commercial and military aviation today, 30 years ago, there were even fewer.

She faced rejection from the Air Force – she enrolled in Navy flight school instead – after graduating from MidAmerica Nazarene University in Olathe, Kan. with a bachelor’s degree in biology and agribusiness.

While women still make up a small percentage of commercial pilots, Captain Shults took up flying when there were far fewer in the industry and when women were often told to find other careers. In her junior year at MidAmerica Nazarene University in Olathe, Kan., she attended an Air Force event and spotted a woman in a piloting class, she told an alumni publication.

She graduated from MidAmerica in 1983 with a bachelor’s degree in biology and agribusiness and then set off to join the military, the university said on Wednesday. The Air Force would not accept her, she told the publication, but the Navy would. She enrolled in Navy flight school in Pensacola, Fla., in 1985 — the start of a decade of groundbreaking service.

“We can confirm that Lt. Commander Shults was among the first cohort of women pilots to transition to tactical aircraft,” the Navy said in a statement on Wednesday.

She flew the F/A-18 Hornet, the twin-engine supersonic fighter jet and bomber. After flight school, in 1989, she was assigned to the Tactical Electronic Warfare Squadron 34 in Point Mugu, Calif. During the Gulf War, her squadron was led by the first female air commander in the Navy.

But despite her accomplishments, she came up against the limits placed on women in the military. She left active service on March 31, 1993 – two days before the Navy asked the Clinton administration to open combat assignments to women. She then spent about a year in reserves before leaving the military in 1994, reaching the rank of lieutenant commander.

After leaving the military, she and her husband, pilot Dean M Shults, became pilots for Southwest Airlines.

In a brief interview with the New York Times, her husband declared that the “media has it right – she’s a hero.”

Meanwhile, her story has inspired fellow female fighter pilots who started to message one another about Captain Shults.

One of Shults’s friends from the military told Fox News that she had texted Shults after hearing about the landing. Shults offered only a simple reply: “God is good.”

via RSS https://ift.tt/2vqcMRr Tyler Durden

Authored by Troy Vincent via The Mises Institute,

The Kentucky state workers’ pension system is by some measures the worst funded pension in the entire country with an estimated $70 billion dollars of unfunded liabilities. A recent audit of the pension system found that the plan has had $6.9 billion in negative cash flows since 2005.

At $40 billion, Kentucky teachers make up the largest portion of this unfunded liability. But even in the face of impending insolvency, many teachers in Kentucky are still protesting the slightest changes and cuts to their compensation that have been proposed in an effort to prevent catastrophe.

A minor reform bill recently signed into law that Governor Bevin admits “doesn’t come close” to solving the pension crises, and in no way changes current worker or past retiree’s pension or healthcare benefits, has been met with hysteria.

Many teachers and the Kentucky Education Association (KEA), the teacher’s union, are demanding the state raise revenue instead of cutting costs. The grand plan by the KEA and their lobby of teachers opposing pension reform is to take more money from those that are already responsible for paying teacher incomes – the Kentucky taxpayer. Instead of making concessions in an effort to fix their own underlying problem, they want a bailout. Not only would such a bailout set a very dangerous precedent, but for reasons I will explore below, it would be economically disastrous for Kentucky’s economy and private sector.

To put the $70 billion of unfunded pension liabilities in perspective, Standard & Poor’s has ranked Kentucky’s public pension as the worst-funded of any state in the US, with just 37.4 percent of the money it needs to pay obligations to retirees. Moody’s has ranked Kentucky as having the third-highest pension debt when measured against a state’s capacity to pay it off. With just over $10 Billion in total annual tax revenue for Kentucky’s General Fund, every state run institution and service in Kentucky would need to close for nearly 7 years just to fund past pension liabilities.

But despite this fact, the KEA and supporting teachers still insist that the state can somehow tax its way to solvency.

How Did We Get Here? The Moral Hazard of an “Inviolable Contract”

Over the past 30 years, and particularly in periods of unsustainable stock market booms, politicians from across the country sweetened government employee compensation packages by making ill-conceived promises. These promises, largely in the form of defined benefit pensions and health insurance, relied on market investments performing at levels that were wholly unrealistic. Kentucky was one such state, requiring a consistent near 8% rate of return annually to stay solvent. The problem was not, as the KEA and its supporters would have you believe, politicians using the money nefariously. In fact, the official audit of the pension plan stated that 23 percent of the growth in unfunded liabilities was due to the market underperforming the assumed rate of return. An additional 47 percent of the shortfall was found to be a result of making unrealistic actuarial assumptions and negative amortization caused by making inaccurate forecasts for state payroll growth. In layman’s terms, the financial assumptions made when projecting the plan’s ability to pay out were simply out of touch with reality.

In recent weeks Kentucky teachers have been calling in sick to hold protest rallies at the state capital, effectively striking, while entire school districts are forced to shut down. They condemn any cuts to their retirement benefits as a “broken promise.” Not only should the state honor their promise they say, but they must given that these benefits are part of an “inviolable contract.” So what is this magic “inviolable contract” that guarantees future payment despite having no money to pay out? Essentially, this “contract” is nothing more than a state decree supposedly guaranteeing public worker benefits no matter the financial circumstance. Which is, of course, an astoundingly ignorant economic proposition. As the saying goes, you cannot draw blood from a turnip.

With this problem growing for well over a decade, why then are teachers, the KEA, and politicians just now confronting the problem? The answer is quite simple: economic moral hazard. Neither the politician nor the teachers have any skin in the game. The creation of an “inviolable contract” which puts future taxpayers on the hook for promises made by past politicians is practically the textbook definition of an economic moral hazard. An “inviolable contract” with the state is a promise by politicians that government will extort whatever amount of income necessary from those in the private sector to make government workers whole. In this arrangement there is no incentive for teachers to keep an eye on the health of their own retirement. Why would a pensioner care to keep up with and address the problems as they have unfolded over the past decade if they are guaranteed government protection from the fallout? Obviously they would not and they did not. It was not until Governor Bevin was elected and began speaking honestly about the necessary budget cuts that teachers were impelled to action.

Beyond the simple fact that they are often years removed from political office before their grand plans turn into grand catastrophes, economics also explains why politicians make such unrealistic promises. The lesson is one of concentrated benefits and disperse costs. That is to say, a promise to teachers and state workers to sweeten their terms of employment is sure to gain the support of a large state worker voting pool. Meanwhile, the taxpayer which is busy trying to make a living in their respective field, has little time to assess and weigh in on such matters. In fact, up and to a point, the cost of engaging in this political process is more costly to the taxpayer than just forking over their additional portion in tax money to the lobby.

The Underpaid Kentucky Public Teacher Myth

More recently, teachers have begun not only protesting any changes to their retirement benefits, but also bringing attention to their claim that they are not paid fairly. Economically speaking, one could never actually know what the fair market value is for an employment arrangement that is forced upon the ‘buyer’ of the service, as is the case with public education. This claim also shows the KEA and supporting teacher’s unwillingness or inability to assess the value of their total compensation. After all, retirement benefits, hours worked, vacation days and salary must all be considered when honestly discussing compensation.

Based on Fidelity Financial’s retirement planning tool, an individual that works 27 years before retirement (the threshold for Kentucky teachers), earning an average $50,000 per year over the period, and that contributes to their retirement at the rate of Kentucky teachers (just over 9%) could only hope to have a yearly payout of just over $10,600 in retirement. When you compare this to the average Kentucky teacher pension distribution in retirement of $36,000 per year, it is clear that teachers are contributing very little to their own retirements and are compensated extremely well by taxpayers. If a teacher retires at age 55 and lives until age 85, this puts the taxpayers of Kentucky on the hook for $762,000 per teacher in retirement alone. This claim of “unfair pay” is especially suspect given that teachers in private schools average significantly lower incomes in terms of both salary and total compensation.

That said, Kentucky teachers do not do themselves any favor by bringing attention to even the salary portions of their compensation. Public teachers in the state, when adjusted for cost of living, are the seventh best paid public teachers of any state in the US with an average salary of over $52,000 per year. When you consider that Kentucky teachers work a total of 185 days, or just half the year, the figure is even more impressive. Put in terms of hourly compensation, Kentucky teachers earn roughly double that of the average worker in the state. This salary is even more staggering when put in perspective of the taxpayers of Kentucky’s ability to pay: Kentucky ranks 47th in the country for worker incomes, with a median income of $43,000 per year. This enormous disparity is undoubtedly unknown by the majority of Kentucky voters and taxpayers that succumb to the teacher’s emotional appeals of being shortchanged.

Moving Forward

Kentucky is currently ranked 33’rd of all states in the Tax Foundation’s Business Tax Climate Index, while neighboring Indiana is ranked 9th and Tennessee is ranked 14th. The only adjoining state to have a less attractive tax policy is Ohio. The KEA, teachers, and politicians coming to their defense are proposing to make the state even less competitive with our neighbors by advising to increase tax revenues instead of cutting costs. Not only would such a policy only serve to cover over the fundamental problem of making financial promises in retirement that are out of line with economic reality, but this sort of policy prescription puts the health of the entire state economy at risk. Individuals and businesses respond to higher taxes – they buy less, move here less, expand less, and hire fewer people. This is the underlying reason why simply raising tax rates does not always create more tax revenue, as people and companies move to more tax friendly states and avoid taxable activities. For those that think this is economic hyperbole or purely theory, just look to our neighbors in Illinois. The recent fallout from such policy folly has ultimately led to an exodus from the state.

If Kentucky is to prevent economic catastrophe and keep checks flowing to current retirees it can only be done by dramatically slashing spending and transitioning new and current teachers to a more private-sector-like compensation plan. Working for state government cannot both be more profitable than working in the private sector while also coming with zero risk of losing your job, having your pay cut or benefits renegotiated. Suggesting otherwise not only makes a mockery of the often referred to “public servant” but suggests that a young college graduate would be foolish to entertain work in the private sector that comes with far fewer benefits and far greater risks. The KEA and teachers unwilling to see cuts to their benefits are ultimately setting the stage for a long drawn out economic failure similar to that seen in Illinois, where individuals and businesses leave the state creating an ever smaller need for teachers and ever smaller pool of tax revenue. It is imperative to remember that the success of the private sector precedes the ability to have any employment in the public sector at all.

via RSS https://ift.tt/2F0iEjY Tyler Durden

Back in the summer of 2015, Deutsche Bank mistakenly paid $6 billion to a hedge fund client in a “fat finger” trade on its foreign exchange desk. The embarrassed bank recovered the money from the US hedge fund the next day, and quickly accused a junior member of the bank’s forex sales team of being responsible for the transfer while his boss was on holiday; as the bank further explained, instead of processing a net value, the person processed a gross figure: “That meant the trade had too many zeroes” a staffer helpfully explained.

Fast forward to today when Germany’s largest bank has done it again.

According to Bloomberg, a routine payment at Deutsche Bank “went awry” (or as the article notes “was flubbed”) last month when the bank with the €48 trillion in derivatives…

… mistakenly sent 28 billion euros ($35 billion) to an exchange as part of its daily dealings in derivatives, according to a person familiar with the matter.

While the error was quickly spotted and no financial harm was suffered by the bank which has made clusterfucks into its business model, it represents a terrific case study why one should never confuse gross and net derivative exposure: as Bloomberg adds, the “errant” transfer occurred about a week before Easter as Deutsche Bank was conducting a daily collateral adjustment. The delighted – if only for a short time – recipient of the massive transfer was the Deutsche Boerse AG’s Eurex clearinghouse, in whose account the sum landed.

“This was an operational error in the movement of collateral between Deutsche Bank’s principal accounts and Deutsche Bank’s Eurex account,” Charlie Olivier, a spokesman for Deutsche Bank, wrote in an emailed statement. “The error was identified within a matter of minutes, and then rectified. We have rigorously reviewed the reasons why this error occurred and taken steps to prevent its recurrence.”

Of course, Deutsche Bank vowed the same “rigorous” review took place after the 2015 FX transfer fiasco and clearly nothing changed. Actually no, what changed is that Deutsche Bank has been a chronic underperformer, its stock crashed in 2016 to levels below the financial crisis amid speculation about its solvency, and just last week the bank’s latest CEO was fired for what really amounted to incompetence.

Surely a pattern is emerging.

Indeed, as Bloomberg adds, “the episode raises fresh questions about the bank’s risk and control processes, at a time when lenders are faced with increased scrutiny from regulators. It’s another embarrassment for Deutsche Bank at a time when it is undergoing a change of leadership in the wake of its third straightannual loss.”

And while the “glitch” took place during the last days of now ex-CEO John Cryan’s tenure, it will surely be seen as another wrinkle for the bank’s new chief executive Christian Sewing who even before this news already had a mountain to climb, as Deutsche Bank is the worst performing member of the Stoxx 600 banks index this year, with the shares having fallen 26% YTD.

Also, in light of the latest debacle, one wonders if the transfer had anything to do with the recent ouster of bank COO Kim Hammonds, who reportedly called Deutsche Bank “the most dysfunctional company” she’d ever worked for.

Finally, adding insult to injury, as we reported over the weekend Deutsche Bank was asked by the ECB to simulate a “crisis scenario” and an orderly wind-down of its trading book, making the German lender the first European bank to receive such a request from the ECB, which is reportedly using Europe’s largest investment bank as a “guinea pig” before it sends similar requests to other banks.

Then again, other European banks don’t have €48.3 trillion in derivatives they would need to wind-down overnight.

via RSS https://ift.tt/2qJk11R Tyler Durden