B.S.

One of the biggest mistakes that investors make is falling prey to cognitive biases that obfuscate rising investment risks. Here are 5 counter-points to the main memes in the market currently...

"You’re picking up pennies on a train track. You are not getting paid much but you are sure that there will be a very negative surprise at some point. The risk / reward profile is as bad as ’07." - Portfolio manager speaking to Citigroup

Who can forget the amazing story of Alex Hope which was all the rage two years ago? Probably everyone. So here is a timely reminder because as it turns out young master Hope, who struck the proverbial gold at the tender age of 23, was nothing more than the latest Ponzi schemer whose only success in life was finding the absolute, and quite rich, idiots who believed his lies. Well, that, and being able to transform himself from a catering manager working at Wembley Stadium into an FX trader.... even if a fake, criminal and absolutely terrible FX trader.

• Q1 revenue $2.5 billion, beats expectations of $2.36 billion
• Q1 revenue from advertising $2.27 billion
• Q1 EPS $0.34, beat expectations of $0.24
• Free cash flow - Free cash flow for the first quarter of 2014 was $922 million.
• Capital expenditures - Capital expenditures for the first quarter of 2014 were $363 million.
• Cash and marketable securities - Cash and marketable securities were $12.63 billion at the end of the first quarter of 2014.
• Monthly active users (MAUs) were 1.28 billion as of March 31, 2014, an increase of 15% year-over-year. Unclear how many of these are bots originating out of Egypt and India.

All of the Chairs of the 9/11 Commission and the Congressional Investigation Into 9/11 Say It’s “Implausible” that the 9/11 Hijackers Acted Without GOVERNMENT Backing

• US admits surveillance on foreign governments ‘reached too far’ (FT)
• He must be so proud: Obama halted NSA spying on IMF and World Bank headquarters (RTRS)
• Obamacare website gets new tech experts; oversight pressure grows (Reuters)
• R.B.S. to Split Off $61 Billion in Loans Into Internal ‘Bad Bank’ (NYT)
• Draghi’s Deflation Risk Complicates Recovery (BBG)
• Abenomics: Nissan slashes full-year profit forecast 15% (FT)
• Credit Suisse Dismisses London Trader Over 'Unusual Trading' Losses (WSJ)
• RBS avoids break-up with 38 billion pounds 'internal bad bank' (Reuters)
• Twitter Said to Attract More Than Enough Interest for IPO (BBG)

Problem ... What Problem?

Corruption thrives when good people do nothing. Societies rebound when good people do something. Isn't it time to make democratic capitalism happen. Democratic capitalism is about worthwhile production and exchange by communities of people who give a damn. It is expressly not about either crony-driven concentration of wealth or government redistribution.

While the attached interview between the Casey Report and HFT expert Garrett from CalibratedConfidence will not reveal much unknown new to those who have been following the high frequency trading topic ever since ZH made it a mainstream issue in April of 2009, it will serve as a great foundation for all those new to the topic who are looking for an honest, unbiased introduction to what is otherwise a nebulous and complicated matter. We urge everyone who is even remotely interested in market structure, broken markets and the future of trading to read the observations presented below.

An Oregon University professor has controversially compared skepticism of global warming to racism. Sociology and environmental studies professor Kari Norgaard wrote a paper criticising non-believers, suggesting that doubters have a ‘sickness’. The professor, who holds a B.S. in biology and a master’s and PhD in sociology, argued that ‘cultural resistance’ to accepting humans as being responsible for climate change ‘must be recognised and treated’ as an aberrant sociological behaviour.

I think it is clear that extremists in an environment of despotism are in most cases people who refuse to abandon that which makes humanity whole.  We are, indeed, dangerous, but only to those who would do liberty harm.  A life of conformity is a life wasted, and a life of slavery is no life at all.  Whatever we may be called today, what we leave behind is ultimately what defines us.  Labels are irrelevant.  If I am an “extremist” because I refuse to participate in the delusion that is America in the new millennium, then so be it.  I am more than happy to join the long list of insurrectionaries who inhabit this nation today and who have been the legitimate makers of the world for generations.  Everything in history revolves not around governments, but rule-breakers.  They alone decide whether humanity will live tight in the fist of the authoritarian machine, or live free in the wilds of unbridled independence.

The UK's Daily Mirror newspaper has uncovered the FX trader who dropped over $300k in a Scouse club. It is a 23-year old 'self-taught' barrow-boy named (somewhat ironically in our view) Alex Hope. Self-described as "talented (three years in and a six-figure salary, hhmm), charismatic (its amazing how much 'charisma' a GBP125k bottle of bubbly will buy), and thoroughly likeable (ditto) man. Alex Hope exudes knowledge..." and is willing to share it with you according to his website. How did he become this B.S.D. of the FX markets? "I took two months off my job at Wembley, got really obsessed with reading charts and got the guts to start trading properly." This self-made rosy-cheeked young chap with a penchant for mind-numbingly-arrogant-looking photos on his website may have just become the poster boy for all that is 'great' about the free market - or perhaps a skim through his blog and media exposure will reassure us all that anything is possible as we note he does have some good taste (not just in Champagne) in RTing our posts on Twitter. We can only HOPE that the next time he decides to go down the rub-a-dub-dub for a Leo Sayer, maybe he'll take some of us Septic Tanks with him on the frog-and-toad...as the days of the ship-it-in-large-on-the-left John, done-a-yard by-breakfast spot FX trader are clearly back with us.

As US financials continue to surge, the far-reaching impacts of the simple-sounding-yet-inordinately-complex Dodd-Frank bill are perhaps still not appreciated by all. BusinessWeek have done us all a favor by creating the One Chart that explains it all (with a tongue-in-cheek overlay). Whether you are a B.S.D. prop desk, a homeowner, a filthy rich CEO, a bank, or a mortgage provider, there is a little 'shared sacrifice' here for everyone in the easiest-to-grasp graphic on the lengthy bill we have seen yet.

GGP part deux, as the hopium high sold by US regulators that allowed banks and borrowers to pretend bad loans were good wears off and reality sets in..

Silver, Schiff & Sheep (not in that order).