Steve Bull's Blog, page 1298
October 1, 2017
Eric Peters On Tipping Points: “It All Worked Incredibly Well, Until It Blew Up”
Two years ago, long after we first suggested that the transformation of VIX from a measure of implied market volatility to a reflexive instrument that can be traded – and thus influence the underlying assets whose volatility it was supposed to measure – allowed the VIX to serve as the “fulcrum security” for broad asset manipulation, first the FT, then the WSJ confirmed what we said, namely that pervasive market manipulation was not only possible, but took place on a regular basis, courtesy of the VIX (see “Conspiracy “Fact” – VIX Manipulation Runs The Entire Market” and “Another Rigged Market: Scientific Study Finds Systemic VIX Auction Manipulation“).
Today, one of our favorite hedge fund commentators, One River Asset Mgmt CIO Eric Peters, discussed various market “tipping points” in his latest weekly notes, which emphasized why volatility is no longer a “measurement”, as much as a “target.” More his latest Sunday anecdote:
“When a measure becomes a target, it ceases to be a good measure,” said the Englishman, stepping outside of himself.“That’s Goodhart’s Law.” Charles Goodhart observed that central banks measured money supply, and found certain M1 growth rates to be optimal. But once they targeted that optimal range, M1 lost its value as a measure.
Market and economic actors adjusted their behavior to game the M1 system. So central bankers shifted to M2, then M3, and M4.
“Investing is obviously not a science, but if it were, we would say that you can’t act on something and observe it at the same time.” French colonialists discovered this in rat infested Hanoi, when they offered a bounty for killing rodents. To receive the reward, the Vietnamese were required to produce severed tails. Soon thereafter, tail-less rats scurried throughout the city. The bounty hunters removed their tails and released them to the filthy sewers to breed. Boosting their bounty.
…click on the above link to read the rest of the article…
Pax Syriana: Neither Vanquished, Nor All-Conquering
Former British spy and diplomat Alastaire Crooke, writing in Consortium News over the weekend, correctly outlines a new Middle East trajectory based on Syria having weathered the storm of a six year long proxy war while remaining largely in-tact: “Plainly, Syria’s success – notwithstanding the caution of President Bashar al-Assad in saying that signs of success are not success itself – in resisting, against the odds, all attempts to fell the state suggest that a tipping point in the geopolitics of the region has occurred.” At the same time, Foreign Policy predicts in its latest Syria analysis, headlined Israel Is Going to War in Syria to Fight Iran, that Israel will continue ramping up hostile actions against Syria as “Israeli officials aren’t shying from confronting Tehran’s forces – since no one else will.”
Such desperation has increased due to the entirely new geopolitical order which has emerged as a result the Syrian state’s perseverance and which runs directly counter to Israeli plans in the region. As Crooke explains further, “But, aside from the geopolitics, the Syria outcome has created a physical connectivity and contiguity that has not existed for some years: the border between Iraq and Iran is open; the border between Syria and Iraq is opening; and the border between Lebanon and Syria, too, is open. This constitutes a critical mass both of land, resources and population of real weight.” Crooke also assesses that Western officials have been “wrong on almost everything pertaining to Syria.” Failed predictions, miscalculations, and an underestimation of the Syrian state’s resolve has defined much of both Israel’s and West’s approach to Syria throughout the war.
…click on the above link to read the rest of the article…
Humor is Where You Find It, by Robert Gore
Looking for a good laugh? Consider the United States.
Football is a tedious game that fills three-and-a-half hours of airtime with 30 minutes of action, commercials, commentary, instant replays, more instant replays, closeups of pretty cheerleaders, and halftime pageantry. The players are paid great gobs of money but run the risk of rendering themselves concussive basket cases. The super rich owners hold up municipalities for taxpayer-funded stadiums while keeping the TV, ticket, merchandising, and concessions revenues. They’ve also climbed into bed with the federal government, accepting taxpayer money for promoting patriotism. Among other things, this requires players, who until 2009 could stay in the locker room while the National Anthem was played, to be on the field, presumably standing at respectful attention.
Presumably—aye, there’s the rub. Last season, quarterback Colin Kaepernick expressed his disagreement with certain governmental policies and practices by kneeling during the Star Spangled Banner. Since then, other players have done the same, to the consternation of many fans, including President Trump. Ratings and attendance are tanking and the crony socialist owners are caught between the rock of their payrolls’ politics and the hard place of their fans’ disgust. To borrow from Oscar Wilde, one must have a heart of stone to ponder their plight without laughing. It couldn’t have happened to a nicer group of guys and gals.
Last year’s losing presidential candidate has written a book blaming virtually everyone for her loss…except the one person who was responsible. A cottage industry has sprung up to feed this self-exculpatory fantasy, affixing on Russia as the author of Hillary’s woes. Russia “hacked” DNC computers, except technically they couldn’t have been hacked, they were downloaded, an inside job (LINK to INTel Vets Challenge ‘Russia Hack’ Evidence). The materials Russia couldn’t have hacked were given by someone, presumably whomever downloaded them, to WikiLeaks, which disclosed them.
…click on the above link to read the rest of the article…
Rickards On “The Fragility Of The North Korean Nuclear Showdown”
Amid today’s contradictory statements from President Trump that Secretary of State Rex Tillerson “is wasting his time trying to negotiate with Little Rocket Man… Save your energy Rex, we’ll do what has to be done!” and The State Department’s statement that “The White House is still committed to a diplomatic approach” on North Korea, it appears the fragility of the North Korean nuclear showdown is a great as ever.
As James Rickards writes in The Daily Reckoning, right now, there’s no doubt that the greatest threat to world peace in general, and the U.S., in particular is coming from the Democratic People’s Republic of Korea, DPRK, commonly referred to as “North Korea.”
North Korea has made great strides in short-range and intermediate-range missiles, and is working rapidly toward an intercontinental ballistic missile (ICBM), that could reach Los Angeles and much of the rest of the United States from their territory.
North Korea has a store of plutonium and highly-enriched uranium (HEU) that can be converted into nuclear weapons. It has also made progress in the miniaturization and ruggedization of those weapons so they can be converted to warheads and placed on the missiles.
North Korea has also reached another important nuclear milestone…
North Korea detonated a nuclear weapon earlier this month on Sunday, Sept. 3. This was the sixth time they had done so, but the first time since their ICBM missile tests and the first time under President Trump’s administration.
This test was different in another important way. It is estimated to be a hydrogen bomb instead of an atomic bomb. The difference is significant.
…click on the above link to read the rest of the article…
September 30, 2017
Every Single Cognitive Bias In One Infographic
The human brain is capable of incredible things, but it’s also extremely flawed at times.
Science has shown that we tend to make all sorts of mental mistakes, called “cognitive biases”, that can affect both our thinking and actions. These biases, as Visual Capitalist’s Jeff Desjardins points out, can lead to us extrapolating information from the wrong sources, seeking to confirm existing beliefs, or failing to remember events the way they actually happened!
To be sure, this is all part of being human – but such cognitive biases can also have a profound effect on our endeavors, investments, and life in general. For this reason, today’s infographic from DesignHacks.co is particularly handy. It shows and groups each of the 188 known confirmation biases in existence.
Courtesy of: Visual Capitalist
WHAT IS A COGNITIVE BIAS?
Humans tend to think in certain ways that can lead to systematic deviations from making rational judgments.
These tendencies usually arise from:
Information processing shortcuts
The limited processing ability of the brain
Emotional and moral motivations
Distortions in storing and retrieving memories
Social influence
Cognitive biases have been studied for decades by academics in the fields of cognitive science, social psychology, and behavioral economics, but they are especially relevant in today’s information-packed world. They influence the way we think and act, and such irrational mental shortcuts can lead to all kinds of problems in entrepreneurship, investing, or management.
COGNITIVE BIAS EXAMPLES
Here are four examples of how these types of biases can affect people in the business world:
Familiarity Bias: An investor puts her money in “what she knows”, rather than seeking the obvious benefits from portfolio diversification. Just because a certain type of industry or security is familiar doesn’t make it the logical selection.
…click on the above link to read the rest of the article…
Morning Joe: Ministry of Truth Is Needed To Fight War On Fake News, ‘Russian Operatives’ On Social Media
On Friday’s Morning Joe, Willie Geist hosted a panel to discuss the latest news on the Russian hacking narrative regarding Facebook ads that were purportedly used by Russian intelligence to stoke “racial tensions” during the 2016 presidential election. The panel’s primary reaction, with only one dissenting voice, was to call for increased government “regulation” and financial “penalties in the hundreds of millions” to shut down alleged Russian influencers.
The segment started off with Geist introducing the latest reporting on the topic:
GEIST: Twitter says it has shut down more than two-hundred accounts that were tied to the same Russian operatives who bought political ads on Facebook. Of the 450 accounts released by Facebook as part of its investigation, Twitter was able to match 22 of them to its own site. The disclosure by Twitter followed a briefing by company officials to staffers of the Senate and House Intel committees yesterday. Following that meeting, the top Democrat on the Senate committee, Mark Warner, slammed Twitter for its presentation.
SEN. MARK WARNER [D-VA]: [playing clip] The presentation that the Twitter team made to the Senate Intel staff today was deeply disappointing. The notion that their work was basically derivative based upon accounts that Facebook had identified showed enormous lack of understanding from the Twitter team of how serious this issue is, the threat it poses to democratic institutions, and, again, begs many more questions than they offered.
(…)
GEIST: The top Democrat on the House Intel Committee, Adam Schiff, also weighed in on Twitter’s briefing to his committee, releasing a statement that read, in part: “… it is clear that Twitter has significant forensic work to do to understand the depth and breadth of Russian activity during the campaign. This additional analysis will require far more robust investigation into how Russian actors used their platform as a part of their active measures campaign…”
…click on the above link to read the rest of the article…
Dark Days Ahead for Catalonia
It isn’t just about what happens on Sunday; it’s about the ensuing days and weeks.
The next 72 hours could be crucial not only for Catalonia, but also for the rest of Spain and Europe. For now, the cards are overwhelmingly stacked in Madrid’s favor. The central government enjoys the outward support of all European institutions, key Western partners and has the full power of the law on its side as well as the full arsenal of state repression at its disposal.
After confiscating millions of ballot slips and thousands of ballot boxes, and launching what Wikileaks’ Julian Assange has termed the “world’s first Internet War” against Catalonia, freezing telecommunications links, occupying telecoms buildings and censoring hundreds of websites, the Rajoy administration has made it logistically difficult, if not impossible, for the region to hold a credible referendum.
Spain’s constitutional court even went so far as to ask Google to shut down the app that allows Catalans to see where they have to vote on Sunday. Even the two main civil associations behind Catalonia’s push for independence have begun to tamp down expectations, conceding that the police operations have made it “very difficult” to hold a meaningful vote.
Now, all the government in Madrid has to do is sit back, watch and enjoy as the referendum’s organizers struggle to achieve a turnout even close to that of the purely symbolic consultation it held on November 9, 2014. Then, on Monday or Tuesday, Rajoy, with a small dose of humility, can launch political negotiations with Catalonia’s representatives from a position of strength.
But he probably won’t.
The Spanish government’s strategy so far has been to use the full extent of Spanish law to crush each and every attempt by Catalonia’s independence movement and regional government to organize this vote. It’s unlikely to stop now, when it’s winning.
…click on the above link to read the rest of the article…
John McCain Is Pushing For War With Russia: “What Has Been Set Into Motion Is Still In Motion”
The “Founding Father” of Ukraine
Could only be Senator John McCain
As Civil War splits East and West
Johnny smiles and takes a breath
(A few brain cells short) …nonetheless,
His plans unfolding once again.
What has been set into motion is still in motion and coming around for a second lap. The consortium of John McCain (the ringleader with the Soros connections), acted with the “authority” of Barack Hussein Obama II and “independently,” aided by Victoria Nuland (commissioned by Hillary Clinton, also acting on behalf of Soros) and Lindsay Graham (a ventriloquist dummy in the hands of McCain). What a team! Arseniy Yatsenuk quacked and chirped under orders, until it was determined that he was too weak.
Yatsenuk couldn’t stem the tide of fighting between the self-proclaimed autonomous Eastern districts of Ukraine and the Kiev government. The IMF had offered to pay the Gazprom bill of $9 billion to Russia, and Ukraine was well on its way in 2014 to becoming a part of NATO and another IMF puppet of Europe. The Separatists had other plans, though, and Russia aided them and offered to support them in the manner of South Ossetia in the Georgian War of 2005.
The IMF realized that Yatsenuk was not strong enough to hammer down the Separatists, and guarantee the enslavement with interest to pay the $9 billion. The IMF realized that under Yatsenuk, perhaps the entire country would either revolt, be permanently split, or that the Russians might come in. Soros had a vested interest in all of this: Soros wanted to purchase billions of dollars-worth of contracts, leases, and buy options for the paltry sum of $50 million. US interests (and hence Soros’ interests indirectly) and those of the IMF were falling by the wayside.
…click on the above link to read the rest of the article…
Oil Prices Steady, But $80 Oil Is Coming, Says Analyst
Oil prices were basically flat early on Wednesday, but $80 oil could be just around the corner, according to analyst Jodie Gunzberg, head of commodity and real asset indices at S&P Dow Jones Indices in a CNBC interview on Wednesday.
While prices are holding just below highs from earlier this week after U.S. crude inventories surprisingly declined amid higher demand, Gunzberg sees a “real rebalancing” taking place in the oil market.
The catalysts, Gunzberg explains, are improved OPEC compliance, strong demand growth in China—not to mention Hurricane Harvey, which disrupted US refineries.
“When we look at the index data, we can see the price could move even as high as $80 to $85 (a barrel),” Gunzberg said, noting that this would not happen immediately. “…with their structural backwardation and shortages in the market, you just can’t replenish it overnight,” she said.
Another catalyst for higher oil prices is the fact that Turkey could cut off the crude oil flow from the northern Iraqi region of Kurdistan, Turkish President Recep Tayyip Erdogan said on Monday. That threat has sparked concern that cutting off Kurdish oil could take around 500,000 bpd off the market.
West Texas Intermediate hit US$52.22 a barrel at the close of trade on Monday, up by 3 percent, as the Kurdistan issue, coupled with evidence that the global overhang is depleting, joined forces to push up international benchmarks. WTI is now back in a bull market, having risen more than 20 percent since the June lows. Brent crude settled at US$59.02 on Monday, its highest since July 2015. On Tuesday, Brent settled 1 percent down, as investors took profits after the price had hit a 26-month high the previous day.
…click on the above link to read the rest of the article…
Financial Hell: 57% in Australia Cannot Afford An Extra $100 if Interest Rates Rise, Stress in Wealthiest Areas
A new study shows 57% of Australia mortgage holders could not handle a $100 increase in their loan repayment.
Stress has turned up in even the wealthiest cities.
But who is truly wealthy? Paper profits on homes with enormous mortgages does not constitute wealth.
Please consider $100 Tipping Point for 57% of Mortgage Holders.
A staggering 57% of mortgage holders could not handle a $100 increase in their loan repayments, according to new research by Finder.com.au.
This additional $100 is equivalent to an interest rate rise of just 0.45% based on the national average mortgage of $360,600. This means the average standard variable rate of 4.83% would only have to rise to 5.28% to put more than half of mortgage holders in stress.
“The typical mortgage holder will begin to struggle once interest rates reach around 5.28% – that’s a pretty small window before borrowing costs start to hurt,” she said.
With the research also showing that 39% of all mortgages are interest-only, this highlights why the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA) have shown some concern, she added.
Comparing genders, 63% of women and 50% of men would struggle to repay their mortgages with an increase of less than $100 per month.
Across the states, South Australian borrowers were the worst placed with 70% saying they could not handle an increase of less than $100 per month. This figure was lower in New South Wales, Tasmania and Western Australia at 59% and further dropped to 51% in Victoria.
Stress in Wealthiest Areas
Also consider Severe mortgage stress is cropping up in some of Australia’s richest suburbs.
…click on the above link to read the rest of the article…
