http://www.zerohedge.com/fullrss2.xml/component/option%2Ccom_docman/Itemid%2C200023/gid%2C397/BoomBustBlog/BoomBustBlog/BoomBustBlog/BoomBustBlog/Is-this-the-Breaking-of-the-Bear.html/feed en The Case For Brexit http://www.zerohedge.com/news/2016-05-23/case-brexit <p>With the market still strongly disagreeing with the polls over how BREMAIN is a done deal...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_brexit.png"><img height="317" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_brexit_0.png" width="600" /></a></p> <p>&nbsp;</p> <p><a href="http://truesinews.com/2016/05/17/caseforbrexit/">TrueSinews&#39; Sean Corrigan</a> explains why in his contrite <u><strong>&quot;case for Brexit&quot;...</strong></u></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&lsquo;Dear True Sinews, what are your thoughts on Brexit? Roger Bootle wrote a piece in the Telegraph yesterday&nbsp;suggesting&nbsp;that just because everyone is saying one thing, it doesn&rsquo;t necessarily follow they are right Currently, I&nbsp;sit firmly on the fence getting splinters! Neither side is convincing me either way.&rsquo;</em></p> </blockquote> <p><span style="text-decoration: underline;"><strong>So wrote a friend the other day. What follows is my answer to his question.</strong></span></p> <p>Funnily enough, my first response to the letter to the <em>Times</em>, that<strong> highly-orchestrated, Orwellian protestation of orthodoxy,</strong> was to tweet about the infamous 364 economists who wrote decrying Howe&rsquo;s 1981 budget under Thatcher. Ditto the IMF&rsquo;s woeful track record or the Queen&rsquo;s famous <em>&lsquo;How did no-one see it coming?&rsquo; </em>question in 2008/9.</p> <p><strong>Consensus is never a determinant of truth and even, the cynic might say, is often proof of the opposite!</strong> Humanity has not moved from grubbing a living rooting for mammoth carrion to where it is&nbsp;today by being over respectful of consensus. In fact, the very nature of entrepreneurialism is to challenge consensus while mainstream economists are still denying the possibility that anyone could possibly have left a &pound;10 note lying on the pavement!</p> <p>The critical thing is not to get bound up in a further exercise of that stultifying doctrine of paralysis known as the &lsquo;precautionary principle&rsquo; so beloved of the Khmer Vert eco-(in)activists. <strong>If we had never acted in any different fashion until we were absolutely certain of the outcome, we&rsquo;d still be swinging from branches in the primaeval forest canopy.</strong></p> <p>Yes, there are risks &ndash; some calculable, many not &ndash; but there are also opportunities aplenty. <em><strong>That is why it is so shrewdly disingenuous of Project Fear to play up all the things that might go wrong and to try to paint the Leave camp&rsquo;s case as insubstantial simply because the latter are being honest enough not to offer an entirely bogus prospectus of what they will do, once they&rsquo;re out.</strong></em></p> <p>For the record, <strong>I don&rsquo;t see Brexit as a panacea,</strong> but merely the chance to manage one&rsquo;s own affairs and to conduct one&rsquo;s own debates over what should or should not be done by the state in one&rsquo;s name. As in all things, I hew to the&nbsp;principle that politics should be as parochial as possible, that we should be able to grab a delinquent politician by his lapels at any moment and set him to rights, as well as to clap a diligent one on the back in acclamation when he pops in the local pub for a pint.</p> <p><strong>Subsidiarity is the thing.</strong> Politics should work from the bottom up in widening circles of co-operation and conflict resolution, not diffuse down from on high as if it were Holy Writ. <strong>Thus, the smaller the state, the better.</strong> And before anyone quibbles about &lsquo;Balkanisation&rsquo;, being too small to suffer delusions of geopolitical grandeur and too narrowly based to succumb to the temptations of economic autarky, it behoves such statelets&nbsp;to get on well with their neighbours and to concert their efforts with them willingly so as to widen markets and to broaden the&nbsp;scope of mutually-enriching commercial intercourse as far as possible.</p> <p>Thus, though I think a certain level-headed optimism should inform the case for an exit &ndash; over the years,<strong> the Brits have managed rather well outside such groupings,</strong> after all &ndash; the awful warning not to be too starry-eyed about the consequences ought to be what a quasi-independent (but egregiously-subsidised) Scotland is already suffering from the Tartan Taliban under Nicola Maduro Sturgeon!</p> <p>Conversely, to follow up that same example, it is easier to imagine a small, coherent polity centred on Edinburgh eventually summoning up enough (post socialist-collapse) courage to try out the principles of its own Scottish Enlightenment, to erect statues of Sir John Cowperthwaite on every street corner, and so to become a&nbsp;contented, affluent, vibrant Switzerland of the north, than it is to imagine a soulless EU monolith of 510 million disenfranchised regulation-slaves sparking any kind of latter-day Renaissance.</p> <p>The Italian city states who last did that were, you will note, small competitive units, largely free to experiment, and not part of some larger and forcibly homogenized amalgam with demonstrably different priorities. One might also mention the case of the United Provinces of the Netherlands, arguably the<em> fons et origo</em>&nbsp;of our modern, bourgeois prosperity</p> <p><strong>In Britain&rsquo;s case, the change would inevitably give rise to economic winners and losers and it may easily be imagined to involve some additional, net&nbsp;short-term expense of time and effort as the country moves to adapt.</strong> But to pretend, for example, that Europe will maliciously shut out UK exports or discourage the tourists and holiday-homers from visiting in their droves and so risk a devastating retaliation from its biggest source of external income is worse than a joke.<em> (A rational, post-mercantilist economist would note, in any case, that imports are what we benefit from in trade, not exports,&nbsp; just as, in our personal lives, the purpose of &lsquo;exporting&rsquo; our labour is to acquire the goods which we choose to &lsquo;import&rsquo; from others in their turn).</em></p> <p><strong>As for the purported threat to jobs in the City, ask yourself how much has the combination of onerous EU regulation and ECB extremism already cost the industry?</strong> Read Peter Praet&rsquo;s lament this week for the dire straits to which Continental banks have already been reduced. Listen to the howls going up everywhere from the associations of&nbsp;pension and insurance&nbsp;providers in Germany and elsewhere.</p> <p><strong>Alternatively, ponder the question of how the City grew to be great in the first place, absent the EU&rsquo;s gentle nurture.</strong> When assessing any supposed threat, be sure to take in to account how much expertise, what concentration of skills, what time-honoured synergies in the whole panoply of banking, insurance, trade finance, asset management, and trading resides in Frankfurt or Paris as opposed to the Square Mile and Canary Wharf. Spend some time wondering how <em>do</em> New York and Singapore cope without the EU to watch over them and &lsquo;passport&rsquo; their dealings?</p> <p><em><strong>Whatever weight you attach to such studied catastrophism, the plus side of the equation is that it would mean that UK policy could be formulated once more from the perspective of addressing solely British needs and not of contributing unwillingly to the integration of an alien empire &ndash; an approach which is pretty much a summation of what has informed British history to date.</strong></em></p> <p><u><strong>Of course, it won&rsquo;t deliver paradise on earth either </strong></u>&ndash; given a choice between that too-clever-by-half, serial interventionist, Gordon-Blue Osborne, and Jezza &ndash; a kind of intellectually-challenged Michael Foot clone &ndash; the prospect is of more bad than good choices immediately arising from the exploration of the newly liberated, political landscape, post-exit. But at least Britons could not only &lsquo;throw the rascals out&rsquo; from time to time, but most of those rascals would no longer be motivated by the overriding goal of refashioning an entire Continent, largely irrespective of the cost, in their own image, as is the case with today&rsquo;s Jacobins-in-office in Brussels.</p> <p><u><strong>Furthermore, what the UK Leave campaign has been all too shy in highlighting is just how disenchanted the average European him/herself has become with it all.&nbsp;</strong></u></p> <p><strong>Polling shows understandably high levels of discontent</strong> (almost half of Italians, two-fifths of French and even a third&nbsp;of Germans said they, too, would wish to leave the EU in a recent survey) &ndash; and that&rsquo;s not to mention all the various regional separatist movements in Spain, France, Belgium, Italy, etc., whose members don&rsquo;t even want to be part of the <em>existing </em>member state, much less the gestating superstate alternative.&nbsp;In fact, it was recently admitted by a Danish politician that if Britain <em>did</em> vote to leave it might well find that rarest of things, an orderly queue of Europeans, lined up behind it, hoping to do the same!</p> <p>As <em>Die Welt</em> put it only this week:-</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&lsquo;More and more of the 510 million EU citizens not only have no interest in Brussels, they flatly reject the European project and would be shot of it tomorrow. They feel the EU has increasingly become a bureaucratic monster that meddles in too many national interests, rather than worrying about the really important things. One that adopts a cucumber curvature regulation, rather than a viable and permanent solution to the refugee crisis.&nbsp;The British will soon have something of which many other Europeans can only dream: a chance to vote on whether their country remains a member of the Union&hellip;&rsquo;</em></p> </blockquote> <p><u><strong>So it&rsquo;s hardly a Land of Milk and Honey, is it?</strong></u></p> <p><strong>Moreover, the fact that people have become rightly fearful for their lives and livelihoods under the triple assaults of economic stagnation, ECB scorched earth policy, and the &lsquo;<em>Decline &amp; Fall</em>&lsquo; re-run of mass immigration is undeniable. </strong>The fact that those same people feel that their politicians either do not choose to represent their views or are impotent to do so in the face of whatever diktats emerge from the EU hierarchy is leading to a sadly predictable dissolution of European society.</p> <p><strong>So-called &lsquo;fringe&rsquo; parties are now beginning to make real inroads</strong> on the established Tweedledums and Tweedledees to the point these latter are scrabbling about trying to put highly improbable coalitions of not just uneasy, but formerly daggers-drawn, bedfellows together in order to defend their accustomed and long-unchallenged positions at the cosy, Michelin-dining, chauffeur-limo&rsquo;d&nbsp;centres of power &ndash; cynical moves which show up the lack of underlying principle and lay bare the self-serving nature of the relevant politicians all the more starkly and which therefore strengthen the protest parties&rsquo; largely, if&nbsp;necessarily, negative case all the more.</p> <p><strong>Add to that the polarisation which is reducing even the most complex of issues to ones perceived to be so black and white that no democratic compromise is possible.</strong></p> <p>This means that every adverse decision taken<em> inside</em> the parliament building brings forth a howling mob to throw Molotov cocktails<em> outside</em> it. <strong>Look at the farce in France where even the Socialists (or at least one, more pragmatical sub-set of them) have grudgingly recognised that the only way to encourage more hiring is to give back to potential employers some small, extra degree of control over their private relations with their workers. </strong>Far from being welcomed, this turnaround has set student hordes prowling the boulevards at night, worried that somebody might make it easier to sack them from a putative future job which one in four of them will never actually get in any case!</p> <p>Mutti Merkel&rsquo;s capricious, not to say cavalier, Emperor Valens imitation is also going to haunt the place for generations.</p> <p><em><strong>Only Europe could imagine that you could offset the dire implications for an unfunded welfare state of rising demographic dependency ratios by (a) severely reducing the prudent person&rsquo;s pension income via monetary policy; (b) making it ever harder for pitifully large numbers of young natives&nbsp;to find work; and (c) indiscriminately importing millions of underskilled, culturally-incompatible aliens and then paying them tens of billions of euros to become devil-makes-work-for-idle hands, unintegrated dependents in their own right.</strong></em></p> <p>But, to the inner core of European politicians this is dialectical heaven! The greater the chaos,&nbsp;the less legitimate and the more helpless the national governments appear to be,&nbsp;hence&nbsp;the more opportunity to ratchet up the cause of centralisation. Bonaparte would be proud of them.</p> <p>For a case in point, Schaeuble &ndash; whom some Brits seem to imagine&nbsp;is a sceptic of some sort, just because he doesn&rsquo;t suffer (mainly Latin) fools too gladly &ndash; gave an address at Basel University a month or so back in which he said, pretty much verbatim:<em> <strong>&lsquo;Yes, the refugee situation represents an enormous crisis but, as you know, we only make progress in Europe by means of crises so I&rsquo;m hugely optimistic as a result.&rsquo;</strong></em></p> <p><strong>You really don&rsquo;t want to be part of all THAT just so you don&rsquo;t have to fill a few new forms in, do you?</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="264" height="144" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160523_brexit_0.png?1464049242" /> </div> </div> </div> http://www.zerohedge.com/news/2016-05-23/case-brexit#comments B+ Belgium ETC France Germany Italy Monetary Policy Netherlands Renaissance Switzerland Tue, 24 May 2016 08:00:00 +0000 Tyler Durden 561621 at http://www.zerohedge.com If You're Going To The Rio Olympics, Here's How To Make A 56% Return 'Legally' http://www.zerohedge.com/news/2016-05-23/if-youre-going-rio-olympics-heres-how-make-56-return-legally <p>Despite <a href="http://www.zerohedge.com/news/2016-05-11/brazilian-soccer-star-warns-olympic-visitors-stay-home-your-life-risk-here">warnings that "your life is at risk,"</a> the threat of Zika, a collapsing government, and rising social unrest, many will still visit Brazil this summer for the Rio Olympics. As a public service announcement, we believe that <strong>making the trip should be worthwhile for those strong-willed travelers treking to South America</strong>; and, courtesy of Deutsche Bank, we have found a 'foolproof' way to turn a 56% return... should you wish to.</p> <p>&nbsp;</p> <p>Simple - <strong>Buy an iPhone 6 (or two) in United States </strong>(we are sure TSA will be too busy to check bags for anything less than a dozen), and then <strong>Sell them when get to Rio</strong>...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_brazil.png"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_brazil_0.png" width="600" height="532" /></a></p> <p>&nbsp;</p> <p>While the above suggestion is not meant to be taken literally <em>(on advice of Zero hedge counsel)</em>, it is quite shocking how expensive the most ubiquitous electronic device in America is in nations with a fraction of the living standards there... and where Tim Cook's growth is going to be coming from.</p> <p>And if you can't sell them, then we hear the <em>view </em>alone is worth the price of admission...</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_brazil1.png" width="483" height="260" /></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="483" height="260" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160523_brazil1.png?1464047550" /> </div> </div> </div> http://www.zerohedge.com/news/2016-05-23/if-youre-going-rio-olympics-heres-how-make-56-return-legally#comments Brazil Deutsche Bank Tue, 24 May 2016 07:00:00 +0000 Tyler Durden 561616 at http://www.zerohedge.com Ten Riot Police Squads Deployed To Greek Refugee Camp As Evacuation Begins http://www.zerohedge.com/news/2016-05-23/ten-riot-police-squads-deployed-greek-refugee-camp-evacuation-begins <p>Fearing a &quot;forced&quot; evacuation, dozens of migrants have left the refugee camp at Idomeni on the Greek-Macedonian border and are reportedly hiding in the surrounding region. It is perhaps no surprise they are fleeing as <a href="http://www.keeptalkinggreece.com/2016/05/23/ten-riot-police-squads-deployed-to-idomeni-refugee-camp-evacuation-to-start-on-tuesday/?utm_source=feedburner&amp;utm_medium=twitter&amp;utm_campaign=Feed%3A+KeepTalkingGreece+%28Keep+Talking+Greece%29">KeepTalkingGreece reports,</a> <strong>ten riot police squads left Athens this morning and are expected to take position at the camp to aid in what officials call &quot;a friendly evacuation.&quot;</strong> Other police forces from Northern Greece will be deployed in the area for &quot;as long as it takes&quot; to remove the 8,500 men, women, and children.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_idomeni1.png"><img height="447" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_idomeni1_0.png" width="600" /></a></p> <p>According to Greek media, <strong>the evacuation of the camp is scheduled to be launched at 6 a.m. on Tuesday and conclude after a week to ten days.</strong> Spokesman of Migration Coordination Body, Giorgos Kyritsis said Monday morning that operation may start &ldquo;Tuesday or Wednesday.&rdquo;</p> <p><strong>Buses will transfer the refugees to several open accommodation reception centers across the country. </strong>There are apparently empty places in refugee centers, however not enough to host all these people. Therefore, more reception places are to be established in the next days.</p> <p><strong>The evacuation plan has been prepared by the Ministry of Public Order and Greek police.</strong></p> <p><u><strong>Authorities consider a &ldquo;friendly evacuation&rdquo; with the use of &ldquo;as less violence as possible&rdquo;</strong></u> as there are many children, babies and other vulnerable people in the camp. However, they do not exclude problems to arise if refugee groups and/or &ldquo;solidarity organizations&rdquo; that oppose the camp evacuation and support an open border policy.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_idomeni3.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_idomeni3.png" style="width: 600px; height: 438px;" /></a></p> <p><u><strong>It is not clear, how close Greek and international media will be allowed to cover the operation.</strong></u></p> <p>Greek government had long planned the evacuation of the camp, however <strong>reception places were not ready.</strong></p> <p><img src="http://www.thetoc.gr/images/articles/3/article_106379/upl5742b2f7b3c34.jpg" style="height: 400px; width: 600px;" /></p> <p>The evacuation will also free the rail track that has been &ldquo;occupied&rdquo; by refugees and migrants and allow trains to come through again.</p> <p>Plans always seem perfect on the papers.<strong> Let&rsquo;s see how &ldquo;friendly&rdquo; the evacuation will be implemented...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_idomeni2.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_idomeni2_0.png" style="width: 600px; height: 386px;" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="537" height="392" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160523_idomeni3.png?1464046879" /> </div> </div> </div> http://www.zerohedge.com/news/2016-05-23/ten-riot-police-squads-deployed-greek-refugee-camp-evacuation-begins#comments Greece Tue, 24 May 2016 06:00:00 +0000 Tyler Durden 561615 at http://www.zerohedge.com Who Is Right Between Oil And Other Commodities: One Hedge Fund's Opinion http://www.zerohedge.com/news/2016-05-23/who-right-between-oil-and-other-commodities-one-hedge-funds-opinion <p><em>From Francesco Filia of Fasanara Capital</em><a href="fasanara.com"></a></p> <p>So far in May, base metals and Oil decoupled markedly (chart attached below). While the Oil price kept rising and moved closer to 50$, base metals fell off a cliff and descended below March lows. </p> <p><strong>We believe that Oil is the errant outlier, helped by deep but temporary supply outages in Canada and Nigeria and all-time record speculative flows</strong>, and is more likely to catch down to other commodities going forward rather than the other way round. We look at Oil gyrations as short-term heavy volatility, within a long-term downward trend. </p> <ul> <li>Supply disruptions in Canada and Nigeria held back 2mn b/d. Temporarily.</li> <li>Speculation runs at record levels: NYMEX Crude Oil Non-Commercial Long Contracts at all-time highs (chart below)</li> </ul> <p>On the other hand, weakness in commodities is consistent with fundamentals:</p> <ul> <li>Weak aggregate demand (likely to stay shallow in the foreseeable future) vis-a-vis chronic global over-supply, </li> <li>China inability to keep expanding credit at current pace and keep creating an illusion of demand the world over (1trn$ or 10% of GDP per quarter is unsustainable), </li> <li>A stronger US Dollar, and the unease of the FED to talk it down, as current account deficit shrinks and only small hikes are priced in</li> </ul> <p>As such, <strong>at present, we find the price action so far in May to come in confirmation of our <a href="http://www.slideshare.net/fullscreen/FrancescoFilia/fasanara-capital-investment-outlook-may-3rd-2016/1">underlying thesis</a>, thus expect more weakness in commodities from here, and Oil to eventually give in. </strong></p> <p><strong>* * * <br /></strong></p> <p><strong>Extract from our latest Outlook</strong><br /><em><a href="http://www.slideshare.net/fullscreen/FrancescoFilia/fasanara-capital-investment-outlook-may-3rd-2016/1">Investment Outlook 3rd May attached here</a></em></p> <p><span style="text-decoration: underline;"><strong>1.&nbsp;&nbsp;&nbsp; Strong US Dollar Factor: </strong></span></p> <p style="padding-left: 30px;">The weak Dollar is the major factor propelling the reflation sentiment in the market – EMs and Commodities greeted it with enthusiasm. However, it seems to us more a story of appreciating Yen and Eur out of the failed attempts by the Boj and the ECB to reflate their economies, as markets doubt their capacity at negative rates. It is not the typical weak Dollar out of increasing US current account deficit and increasing spending / imports, positive for the world and inflation. We expect the USD to have another leg up in the months ahead. A stronger Dollar alone has the potential to revive January-type fears over Oil, CNH, EMs, leading to a risk off of global assets, including the S&amp;P. We see drivers of USD strength as follows:</p> <p style="padding-left: 60px;">a.&nbsp;&nbsp;&nbsp; The FED took the steam off the Dollar by moving its expected path of tightening in 2016 from 4 hikes to 2 hikes only. The FED may become more dovish than that, but the market already discounts that. Of the 2 rate hikes planned, a tiny 20% is priced in at present. Not much headwind for the USD is left from FED’s communication. At the other end of the equation, after recent fails, the BoJ first and then the ECB will go back at it, trying again to reflate their stagnant economies, with the debasement of JPY and EUR either a working tool or a side effect. </p> <p style="padding-left: 60px;">b.&nbsp;&nbsp;&nbsp; A contracting current account deficit and budget deficit in the US will help strengthen the US Dollar. Recent trade balance numbers showed an unexpected marked improvement. The propensity to take on more debt for households and businesses may well be on a declining path. Savings rate for lower income brackets may rise as uncertainties loom large, the cost of retirement has gone up on zero rates environment, together with growing healthcare and education costs. Corporates desire for leverage, buybacks and M&amp;As, may also deflate somewhat, as short rate rise, leverage ratios are now high (the median credit rating for S&amp;P companies is now BB and declining, for a median net debt/ebitda above 3), regulation changes (inversion trades), pricing power is weak, excess capacity abounds.&nbsp; The public sector should fill the gap, but that is unlikely to happen in an election year. You can’t increase deficit if you do not take on more debt. If borrowing declines, the deficit declines, the US Dollar rallies.</p> <p style="padding-left: 60px;">c.&nbsp;&nbsp;&nbsp; Most likely, the relative performance of the US economy will continue to outclass growth in EMs, Europe and Japan. Technology is a huge plus for the US economy, their lead likely to outlast any speed-bump due to elections.</p> <p><span style="text-decoration: underline;"><strong>2.&nbsp;&nbsp;&nbsp; China factor: </strong></span></p> <p style="padding-left: 30px;"><strong>In the first quarter of 2016, it only managed to keep GDP in shape by means of monumental 1trn$ credit expansion (a whopping 10% of GDP in one quarter); unsustainable pace, and clearly a Pyrrhic victory. Unsurprisingly, you cannot borrow 10% of GDP per quarter for long without a currency adjustment, whether desired or not. </strong>And generally, what is the point in selling reserves to defend the peg, thus doing monetary tightening, when you seek so desperately monetary expansion.</p> <p><strong>China’s slowdown will continue affecting commodities markets front and center, metals in primis. </strong>China has grown to become the world’s largest purchaser of aluminum, iron ore, zinc, nickel and copper, asking every year for more than double the needs o the US, Europe and Japan altogether. Incidentally, moreover, the speculative flows that determined massive volatility in RMB equity markets earlier on and possibly boosted propensity to currency outflows, are now to be seen in the commodity market. Not only then China buys a lot of metals, but speculative flows multiply those flows a few times over. Anecdotally, twice in the last few months, trading volumes in Iron Ore on the Dallan Commodities Exchange exceeded total China’s 2015 imports (950m tonnes), in a single day. Rebar trading volumes exceeded Iron Ore, across 100 million trading accounts. Authorities rushed to curb speculation through higher fees and more margin requirements, but we have seen how effective they were last time around. An epic unwind may loom large (<a href="https://twitter.com/zerohedge/status/723631773893201924">Read</a>).</p> <p><strong>Base Metals vs. Brent </strong></p> <p>In May, there has been a clear divergence between Oil and other commodities. We believe that Oil is the errant outlier, helped by deep but temporary supply outages in Canada and Nigeria, and is more likely to catch down to other commodities going forward rather than the other way round. We look at Oil gyrations as short-term heavy volatility, within a long-term downward trend.</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/05/13/base%20vs%20brent_0.jpg" width="500" height="220" /></p> <p>&nbsp;</p> <p><strong>Speculative flows on Oil at all-time record highs</strong></p> <p>NYMEX Crude Oil Light Sweet Non-Commercial Long Contracts/Futures Only at all-time highs</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/05/13/spec%20oil%20fas_0.jpg" width="500" height="219" /></p> <p>&nbsp;</p> <p><strong>Iron Ore Futures</strong></p> <p>Iron Ore has recently broken below March lows, falling by almost 30% this month. More weakness may be expected in the following weeks.</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/05/13/iron%20ore%20fas_0.jpg" width="500" height="306" /></p> <p><strong>Rebar Futures</strong></p> <p>Similarly to Iron Ore, Rebar lost more than 30% in the last month.</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/05/13/rebar%20futures_0.jpg" width="500" height="269" /></p> <p>&nbsp;</p> <p><strong>US Crude Oil Production</strong></p> <p>US Crude Oil Production is slowing but not falling off a cliff (differently than what most market participants seem to believe).</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/05/13/crude%20fas_0.jpg" width="500" height="270" /></p> <p>&nbsp;</p> <p><strong>DOE Crude Oil Total Inventories</strong></p> <p>Crude Oil inventories remain close to historical highs (despite 60+ defaults in the US energy sector alone this year).</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/05/13/doe%20fas_0.jpg" width="500" height="294" /></p> <p>&nbsp;</p> <p><strong>US Interest Rate Implied Probabilities</strong></p> <p>A 32% hike probability is now priced in for the June meeting, from just 4% last week. </p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/05/13/rates%20fas_0.jpg" width="500" height="273" /></p> <p><strong>US 2yr Treasuries’ yield</strong></p> <p>2yr US yields are currently close to a major resistance. </p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/05/13/US%202Y_0.jpg" width="500" height="306" /></p> <p>&nbsp;</p> <p>&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="745" height="328" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/base%20vs%20brent.jpg?1464050893" /> </div> </div> </div> http://www.zerohedge.com/news/2016-05-23/who-right-between-oil-and-other-commodities-one-hedge-funds-opinion#comments B+ Budget Deficit China Copper Crude Crude Oil Equity Markets Japan NYMEX Price Action Savings Rate Trade Balance Volatility Yen Tue, 24 May 2016 03:22:10 +0000 Tyler Durden 561622 at http://www.zerohedge.com FBI's Own Report Exposes "War On Cops" As Pure Propaganda http://www.zerohedge.com/news/2016-05-23/fbis-own-report-exposes-war-cops-pure-propaganda <p><a href="http://thefreethoughtproject.com/fbis-report-exposes-war-cops-pure-propaganda-citizens-danger/"><em>Submitted by William Grigg via The Free Thought Project,</em></a></p> <div class="copy-paste-block"> <p>Following a year in which the public was<strong> relentlessly barraged with alarmist rhetoric about a &ldquo;war on cops&rdquo; </strong> and the dreadful impact of the so-called &ldquo;Ferguson Effect,&rdquo; official <strong>FBI statistics confirm that violent line-of-duty police deaths declined precipitously in 2015</strong>.</p> <p><a href="https://www.fbi.gov/news/pressrel/press-releases/fbi-releases-2015-preliminary-statistics-for-law-enforcement-officers-killed-in-the-line-of-duty?utm_campaign=email-Immediate&amp;utm_medium=email&amp;utm_source=national-press-releases&amp;utm_content=544850">According to the Bureau:</a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;Preliminary statistics &hellip; show that 41 law enforcement officers were feloniously killed in the line of duty in 2015. This is a decrease of almost 20 percent when compared with the 51 officers killed in 2014.&rdquo; A greater number of officers (45) suffered fatal injuries in duty-related accidents, 41 of which involved motor vehicles.</p> <p>&nbsp;</p> <p>Through May 17 of this year, <a href="https://www.odmp.org/search/year/2016?ref=sidebar">according to the Officer Down Memorial Page</a>, there have been 35 line-of-duty police officer deaths, 21 of which involve violence, such as gunfire or vehicular assault. This suggests that 2016 might see an increase in that grim total, but fortunately that remains only a possibility.</p> </blockquote> <p><strong>Throughout 2015, law enforcement officials, police unions, and even FBI Director James Comey warned of a &ldquo;war on cops&rdquo; that was supposedly an outgrowth of what they called the &ldquo;Ferguson Effect&rdquo; &ndash; police reluctance to use force because of concerns over negative publicity.</strong> On May 10, for instance, Comey reiterated that theme, insisting that the &ldquo;viral video effect&rdquo; has changed &ldquo;the way police may be acting&rdquo; by inhibiting them from taking assertive action to deal with violent crime. This supposedly leaves police more insecure, thereby emancipating criminals to wreak havoc on under-protected communities.</p> <p>However, <a href="https://theintercept.com/2016/05/12/myth-of-the-ferguson-effect-is-hard-to-kill/">as former Baltimore police officer-turned-police reform advocate Michael Wood Jr. told The Intercept</a>, there are cases in which less aggressive policing has corresponded to a decline in violent crime: Where police don&rsquo;t treat the public as an enemy to be subdued, the public responds by seeking help, and giving it, in the effort to deter crimes against persons and property.</p> <p><em><strong>&ldquo;Police now for the first time are having to consider the consequences of being brutal, being unethical, and doing things that for the longest time they could do and not be accountable for,&rdquo;</strong></em> Wood declares. &ldquo;But that doesn&rsquo;t make crime happen.&rdquo;</p> <p><strong>Comey&rsquo;s melodramatic statements about a &ldquo;chill wind blowing through law enforcement,&rdquo; and reliance on things he has been told &ldquo;in lots of conversations privately with police leaders&rdquo; demonstrate that &ldquo;he is pushing an ideology,&rdquo; </strong>Woods continues. &ldquo;Comey&rsquo;s position is that if the armed enforcement wing of the government takes its boot off the neck of the public, just a little, then we will just become killers.&rdquo;</p> <p>While fewer police suffered violent deaths last year than in any year since 2013 &ndash; when 27 officers were feloniously killed &ndash;<strong> there is no evidence that the police have been inhibited in the use of deadly force.</strong> According to unofficial tabulations, at least&nbsp;<a href="http://thefreethoughtproject.com/app-sends-push-notification-time-police-kill/" target="_blank">1,200 Americans died in violent encounters with the police last year</a>. Official notice is taken of each of the exceedingly rare instances in which police are violently killed, but there is no official tally of people killed <em>by</em> the police, or accounting for whether each use of lethal force was legally justified.</p> <p>It is true, as Comey and other law enforcement officials have said, that last year&rsquo;s murder rate was about eleven percent higher than the year before, as defined by crime statistics gathered in the country&rsquo;s 30 largest cities. However, <a href="https://www.brennancenter.org/sites/default/files/analysis/Crime_in_2015_A_Final_Analysis.pdf">as the Brennan Center for Justice points out in its detailed report on the subject</a>, &ldquo;Even with the 2015 increases, murder rates are roughly the same as they were in 2012&rdquo;; furthermore, while murder rates were up in 14 of the 30 largest cities, 11 others saw that rate go down last year.</p> <p>When all documented offenses against persons and property were taken into account, elaborates the Brennan Center, the crime rate for 2015 declined by 1.5 percent.</p> <p><strong>&ldquo;It is important to remember just how much crime has fallen in the last 25 years,&rdquo; underscores <a href="https://www.brennancenter.org/sites/default/files/analysis/Crime_in_2015_A_Final_Analysis.pdf">the Brennan Center report</a>. &ldquo;The crime rate is now half what it was in 1990, and almost a quarter (22 percent) less than it was at the turn of the century.&rdquo;</strong></p> <p>Since violent on-duty police deaths are vanishingly rare, and crime of all kinds at near-historic lows, what is the real &ldquo;Ferguson Effect&rdquo;?</p> <p>Perhaps the true meaning of that expression is found in the emergence of a movement spearheaded by police unions to define law enforcement as a &ldquo;specially protected category&rdquo; for the purposes of &ldquo;hate crimes&rdquo; prosecution.</p> <p><strong>Police officers already enjoy the benefits of &ldquo;Blue Privilege&rdquo; &ndash; qualified immunity and special consideration in the use of occupational violence.</strong> Criminal offenses against police officers are already treated as serious felonies. However, at the urging of police unions and their allies, legislatures in several states are considering bills that would treat violence against police &ndash; such as actively resisting arrest &ndash; as hate crimes.</p> <p><strong>Versions of that legislation, which is supported by the Fraternal Order of Police (FOP) &ndash; the country&rsquo;s largest police union &ndash; have been introduced in Maryland and Louisiana, and as ordinances in several cities</strong><a href="http://thefreethoughtproject.com/blue-lives-matter-bill-resisting-arrest-hate-crime-add-police-protected-class/" target="_blank"><strong>.</strong> The Louisiana bill, HB 953</a>, would make any offense committed against a person or property because of &ldquo;actual or perceived &hellip; employment as a law enforcement officer or firefighter&rdquo; a felony punishable by up to five years in prison and a $5,000 fine.</p> <p><a href="http://www.wbaltv.com/politics/bill-would-expand-hate-crime-law-to-include-police-officers/37820286">An FOP-supported bill in Maryland</a> that would likely serve as a model for federal legislation would make resisting arrest a &ldquo;hate crime&rdquo; owing to the identity of the supposed victim. State legislatures elsewhere are considering similar measures, <a href="http://www.csmonitor.com/USA/Justice/2015/1021/US-towns-call-for-hate-crime-protections-for-cops.-Helpful">and</a> some <a href="http://www.fox9.com/news/30980794-story">municipal governments</a> are enacting <a href="http://isanticountynews.com/2015/10/21/cambridge-supports-resolution-to-expand-federal-hate-crimes-to-protect-police/">resolutions endorsing the FOP&rsquo;s demand to swaddle police officers in federal &ldquo;specially protected&rdquo; status</a>.</p> <p><a href="https://www.facebook.com/permalink.php?story_fbid=1067931523267434&amp;id=239668346093760&amp;fref=nf&amp;pnref=story">In a letter to President Obama</a>, Chuck Canterbury, National President of the armed tax-feeders&rsquo; union, demanded that &ldquo;the current Federal hate crimes <a href="http://www.ijreview.com/2016/02/538463-8cops-8days/">law be expanded to include law enforcement officers. This call has gone unanswered and our nation&rsquo;s law enforcement officers continue to die in the streets.&rdquo;</a></p> <p><strong>Displaying tone-deafness as to what his comments say about the supposed valor of police officers, Canterbury demanded that cops be designated a &ldquo;specially protected&rdquo; group who are &ldquo;hunted and targeted just because of the uniform they wear.&rdquo;</strong> This woeful account of insurgent criminals and besieged cops evolved into a demand that &ldquo;hate speech&rdquo; be treated as a federal offense.</p> <p>&ldquo;Elected officials are quick to console the families of the fallen and praise us for the difficult and dangerous work that we do every day,&rdquo; sniffles the FOP commissar. <span style="text-decoration: underline;"><em><strong>&ldquo;Yet, too many are silent when the hate speech floods the media with calls for violence against police or demands that police stand down and give them&rdquo;</strong></em></span> &ndash; Canterbury never defines &ldquo;them,&rdquo; interestingly &ndash; &ldquo;`room to destroy.&rsquo; <strong>The violence will not end <em>until the rhetoric does</em></strong> which is why I have called on Congress and your Administration to work with us to address the surge of violence against police by expanding the Federal hate crimes law to protect police.&rdquo; (Emphasis added.)</p> <p><span style="text-decoration: underline;"><strong>The objective here, once again, is to penalize <em>rhetoric</em> as a criminal act against a member of a specially protected class.</strong></span> Apparently, the &ldquo;War on Cops&rdquo; won&rsquo;t be won until citizens who criticize them face criminal prosecution for doing so.<span>&nbsp;</span></p> </div> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="470" height="253" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160523_cops.png?1464042651" /> </div> </div> </div> http://www.zerohedge.com/news/2016-05-23/fbis-own-report-exposes-war-cops-pure-propaganda#comments FBI President Obama Tue, 24 May 2016 02:40:00 +0000 Tyler Durden 561609 at http://www.zerohedge.com The Fed's Loss Of Credibility Is Real: This Is What It Looks Like http://www.zerohedge.com/news/2016-05-23/feds-loss-credibility-real-what-it-looks <p><strong>Asset markets aren&#39;t prepared for a hawkish Fed. </strong>As Bloomberg&#39;s Richard Breslow notes Fed speakers have even taken to the Sunday talk shows to beat the rate-rise drum as economics is morphing into punditry. <strong><em>They&rsquo;re going to raise rates because they can, are independent, apolitical and can&rsquo;t be bullied by foreigners.</em></strong> The numbers notwithstanding...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><u><strong>Hallelujah</strong></u></p> <p>&nbsp;</p> <p>Perhaps we&rsquo;ll know more when Chair Janet Yellen speaks on Friday in the more rarefied surroundings of Radcliffe Yard.<strong> For all the talk, one thing is true: asset markets aren&rsquo;t priced for a FOMC ready to raise rates and looking to do more.</strong></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_feddead.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_feddead_0.png" style="width: 600px; height: 313px;" /></a></p> <p>&nbsp;</p> <p><u><strong>The yield curve continues to flatten, reaching its tightest levels since 2007</strong></u>. That&rsquo;s a sign of low medium-term inflation expectations and concern that the economic cycle is closer to recession than boom.</p> <p>&nbsp;</p> <p><strong>It also reflects investors continuing to extend duration in search for yield, exactly what the Fed has forced them to do.</strong></p> </blockquote> <p>Simply put, as BofAML warns, <strong>a lack of credibility constrains Fed effectiveness drastically as they have &quot;cried hawk&quot; one too many times...</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>The policy mistake angle assigned to the Fed is visible in more areas than the yield curve.</strong></p> <p>&nbsp;</p> <p>As we have said repeatedly stated before, <strong>the TIPS market continues to believe that the Fed will deliver real rates that are far too high and miss on its long-term inflation target by at least 50bp.</strong></p> <p>&nbsp;</p> <p>To us, <u><strong>the lack of focus and the inability of the Fed to improve longerterm expectations priced-in to the rates market the line of igniting a bigger concern: getting dangerously close to the market pricing in inverted yield curves, two to three years forward.</strong></u></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_fedcred.png"><img height="927" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_fedcred_0.png" width="600" /></a></p> <p>&nbsp;</p> <p><strong>The policy mistake feedback loop in the rates market will unwind only when the focus shifts to boosting longer-term global growth and inflation expectations as opposed to shifting near-term hike probabilities in an environment where structural risks remain (China, potential growth).</strong></p> </blockquote> <p>Therefore, as Breslow concludes, <strong>if the Fed plans to preemptively tighten, many investors will be caught massively off side doing the central bank&rsquo;s bidding.</strong> Unless the Fed immediately starts intoning the mantra of &ldquo;gradualism&rdquo; in every speech.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Which raises the question, &ldquo;why tighten now?&rdquo; </strong>Inflation below target, but too many jobs being created seems an odd rationale after so many lean years.</p> <p>&nbsp;</p> <p>With equities still hovering near all-time highs despite earnings being suspect, and global trade under attack, <u><strong>it&rsquo;s hard to argue anything priced in.</strong></u></p> <p>&nbsp;</p> <p><u><strong>What cost are they prepared to pay to give banks better net-interest-margins?</strong></u></p> <p>&nbsp;</p> <p>The dollar has been bouncing in the last three weeks from silly levels and amid further global economic weakness. <strong>A hawkish Fed could see the rally pick up a head of steam. </strong></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_fedcred1.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_fedcred1_0.png" style="width: 600px; height: 314px;" /></a></p> <p>&nbsp;</p> <p><strong>Dollar strength protesting as game theory: Get it low so it can go up from a lower level.</strong></p> </blockquote> <p>If the Fed wants to rack up a success, they should let the economy continue to improve. <u><strong>Raising rates when they aren&rsquo;t sure risks being a &ldquo;Mission Accomplished&rdquo; moment.</strong></u></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="966" height="504" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160523_feddead.png?1464031212" /> </div> </div> </div> http://www.zerohedge.com/news/2016-05-23/feds-loss-credibility-real-what-it-looks#comments China Janet Yellen Recession Yield Curve Tue, 24 May 2016 02:15:00 +0000 Tyler Durden 561599 at http://www.zerohedge.com The CME Admits Futures Trading Was Rigged Under Old System http://www.zerohedge.com/news/2016-05-23/cme-admits-futures-trading-was-rigged-under-old-system <p>Ask any trader what they believe to be the hallmark feature of any "rigged market" and the most frequent response(in addition to flagrant crime of the type supposedly demonstrated every day by Deutsche Bank and which should not exist in a regulated market) will be an institutionally bifurcated and legitimized playing field, one in which those who can afford faster, bigger, more effective data pipes, collocated servers and response times - and thus riskless trades - outperform everyone else who may or may not know that the market is <em><strong>legally</strong></em> rigged against them. </p> <p>Think of it as baseball game for those who take steroids vs a 'roid free game, only here the steroids are perfectly legal for those who can afford them. Or like a casino where the house, or in this case the HFTs, always win. </p> <p>However, as it turned out, the vast majority of the public had no idea that a small subset of the market was juicing, despite our constant reports on the topic since 2009, until the arrival of Michael Lewis' book Flash Boys, which explained the secret sauce that made all those HFT prop shops into unbeatable "<em>trading titans</em>":&nbsp;<strong>frontrunning. </strong></p> <p>That's really all one had to know about the mystical inner working of the modern market. All Reg NMS did was legitimize and legalize frontrunning at a massive scale for those who could afford (and hide) it, all the while the technology race ran in the background making it increasingly more expensive to stay at the top: fiber optics, microwaves, lasers, FPGAs, PCI-Express and so on. </p> <p>And, as we have also discovered in recent years especially since the advent of IEX, for many exchanges providing a two-tiered marketplace was the lifeblood of the business model: the bulk of the revenues for "exchanges" such as BATS and Nasdaq would come from selling non-HFT retail and institutional orderflow to HFT clients. Since the HFTs made far more than the invested cost in permitting such perfectly legal frontrunning, they were happy, the exchanges were happy too as they betrayed only those clients who didn't pay up the "extra fee", and only the true outsiders lost. And any time they complained how rigged the system was against them, the HFTs would scream that "they provide liquidity" as they are the real modern-day market makers. </p> <p>Except that's not true: the only time HFTs provide liquidity it when it is <strong>not needed. </strong>When liquidity is truly scarce and required in the market, such as on days like the May 2010 flash crash, or August 2015...&nbsp; they disappear. </p> <p>Meanwhile, nothing changes, because the regulators are just as corrupt as the exchanges and the HFTs, and their role is <em><strong>not to bring transparency </strong></em>to a broken, manipulated market, but to keep retail investors <em><strong>in the dark </strong></em>about just how rigged everything is.</p> <p>It appears that the CME was doing just that as well. </p> <p>According to <a href="http://www.bloomberg.com/news/articles/2016-05-23/cme-upgrade-soothes-critics-who-viewed-prior-system-as-unfair">Bloomberg</a>, the CME Group - the world’s largest exchange operator - just completed an "upgrade" traders said would eliminate a shortcoming that gave some participants an advantage. </p> <p><strong>Under the old system, data connections that linked customers to CME - where key products like Treasury futures and contracts tied to the Standard &amp; Poor’s 500 Index trade - had noticeably different speeds, opening up the potential for gaming, according to traders and other experts. </strong>Those who knew how to gain faster access could increase their odds of being first in line to trade.</p> <p>The <a href="http://www.cmegroup.com/confluence/display/EPICSANDBOX/New+iLink+Architecture">new design supposedly </a>stamps that out.</p> <p>Oh, so it was a design glitch that allowed those who "knew" how to frontrun everyone else to do so. That's the first time we have heard of the particular excuse. Usually the scapegoat is a "glitch", only in this case the CME didn't even bother.</p> <p>"It’s an excellent step forward,” said Matthew Andresen, co-owner of Headlands Technologies LLC, a quantitative trading firm. “<strong>The new architecture is flat and fair, a great improvement</strong>,” said Andresen, whose knowledge of market infrastructure goes back to the 1990s, when he worked for electronic trading pioneer Island ECN.</p> <p>But, wait... if it is an "excellent step" that some traders can no longer frontrun other traders on the CME, <strong>why is it not a "poor step" that virtually every other exchange still enables precisely this kind of tiered marketplace, which is neither flat nor fair?</strong></p> <p>Actually, scratch that: that's precisely what IEX is trying to resolve. The reaction? An exchange which explicitly profits from providing a two-tiered market and charging an arm and a leg for those who can afford it (and thus frontrun everyone else) namely the Nasdaq, has threatened to sue the SEC if it permits IEX to <a href="http://www.wsj.com/articles/nasdaq-raises-lawsuit-threat-over-secs-iex-speed-bump-plan-1463681607">become a full-fledged stock exchange</a>.</p> <p>As <a href="http://www.bloomberg.com/news/articles/2016-05-23/cme-upgrade-soothes-critics-who-viewed-prior-system-as-unfair">Bloomberg adds</a>, the situation involving CME’s data connections highlights a fresh set of difficulties ensuring a level playing field in the era of light-speed markets, in which even the smallest bits of a second matter. The race to shave off milliseconds has spurred efforts to carve through mountains, span continents with microwave networks and prompted a backlash championed by the likes of IEX Group Inc., the upstart stock market that delays trading to impose fairness.</p> <p>Unlike some of today's state of the art means of being faster than everyone else, frontrunning orderflow on the CME was more of a "brute force" mechanism: CME customers are allotted data connections to the exchange. Some have more, some have less. Given that their speeds varied noticeably under the old architecture, the more lines a trading firm had, the better odds it could find a faster one. Trading firms with a lot of links had the chance to fish around for the fastest way to get trades done. <strong>Other firms that didn’t have as many connections or the computer programming resources to test around and find the quickest, most efficient way in were at the mercy of the connections they had.</strong></p> <p>“The performance could vary widely” with data connections under the former CME architecture, Andresen said. By which he meant that those who could afford to pay much more than everyone else, would also be able to frontrun almost everyone else.</p> <p>But no more. The new system “is an important innovation that will set a new standard for fair and efficient access to the futures markets,” said Benjamin Blander, managing member of Radix Trading, a Chicago-based trading firm.</p> <p><strong>CME declined to comment on claims the old system was unfair, </strong>Bloomberg adds. “We are continuously enhancing our infrastructure in order to provide the latest and best technology architecture for our clients,” said Michael Shore, a spokesman for CME.</p> <p>CME has been installing the new architecture since February. The last group of futures and options became available on the new system last week, according to CME. Traders aren’t required to switch over to the new system and can keep trading the old way if they want.</p> <p>This isn’t the first time CME revamped its systems to stamp out an imperfection. Before an upgrade more than two years ago, traders were notified that their own orders were completed before everyone else found out, potentially giving initiators of transactions time to buy or sell on other exchanges with knowledge of their executions.</p> <p>We expect more violations of "accidentally" rigged markets to be uncovered in time, both on the CME and elsewhere, although we wonder at this time does it even matter: besides central banks trading with other central banks (especially courtesy of the CME's own Central Bank Incentive Program), does anyone else even bother? If judging by the total collapse in trading volumes over the past decade in virtually every product class, the answer is clear.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="580" height="386" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/o.126177.jpeg?1464054433" /> </div> </div> </div> http://www.zerohedge.com/news/2016-05-23/cme-admits-futures-trading-was-rigged-under-old-system#comments BATS Central Banks Deutsche Bank HFT NASDAQ Reg NMS Transparency Tue, 24 May 2016 02:02:33 +0000 Tyler Durden 561627 at http://www.zerohedge.com Wheelbarrow Economics http://www.zerohedge.com/news/2016-05-23/wheelbarrow-economics <p><a href="http://www.internationalman.com/articles/wheelbarrow-economics"><em>Submitted by Jeff Thomas via InternationalMan.com,</em></a></p> <p>In 2014, we published an article entitled &ldquo;<a href="http://www.internationalman.com/articles/watch-the-movie-before-it-is-filmed" target="_blank">Watch the Movie Before It Is Filmed</a>.&rdquo; In that article,<strong> I described the situation in Venezuela at that time. </strong> The effects of fifteen years of collectivism were threatening to collapse the economy. <strong>The government was reacting by printing bolivares (Venezuelan currency) on a large scale&mdash;a knee-jerk solution that has been utilized by over twenty other countries in the last century&mdash;always with the same outcome: hyperinflation, resulting in economic collapse.</strong></p> <p>At the time, I recommended to readers that they &ldquo;watch the movie&rdquo; as it was being played out in Venezuela, as it would offer them insight into what was on the way in their own country, should they reside in Europe or North America.</p> <p>The pattern followed by Venezuela is roughly the same as for the other jurisdictions; Venezuela is just a bit more advanced in the progression. Therefore, what we are observing in Venezuela is likely to be played out in other countries that have made the same mistake of taking on more debt than they can ever pay back.</p> <p><em><strong>As predicted, Venezuela is now well along with regard to hyperinflation.</strong></em></p> <p>The traditional definition of &ldquo;inflation&rdquo; is &ldquo;the increase of the amount of money in circulation.&rdquo; Today, we think of inflation as an increase in the cost of goods, but this is merely a predictable by-product of inflation. If the amount of money increases, the cost of goods will always rise to meet it. Therefore, the issuance of large amounts of paper money has only a very temporary positive effect. <strong>Ultimately, it creates an increase in the price of goods and services, which, in turn, calls for further printing.</strong></p> <p><u><strong>In 1922, Germany was up to its eyes in debt, to the point that it was beyond repayment. </strong></u>The government, in attempting to overcome the dire poverty that had developed, decided to print more paper banknotes. The printing didn&rsquo;t (and couldn&rsquo;t) solve the problem, so they printed more. Then more again. They kept up the printing, until, by the autumn of 1922, the reichsmark was worth so little that new bills were being delivered to the banks in boxcars. A story of the time describes a man bringing a wheelbarrow of reichsmarks to a baker to buy a loaf of bread. Whilst in the shop, making the deal with the baker, he was robbed&mdash;the wheelbarrow full of money that he had left out on the sidewalk had been stolen. The thief dumped the reichsmarks on the pavement and made off with the wheelbarrow.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_hyper.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/22/20160523_hyper.png" style="width: 429px; height: 186px;" /></a></p> <p><u><em><strong>Above, we see a photo from the time&mdash;a wheelbarrow full of reichsmarks. Next to it, we see a photo from present-day Venezuela&mdash;a wheelbarrow full of bolivares.</strong></em></u></p> <p><strong>So, are the leaders of Venezuela learning from the mistakes of other countries that have followed this pattern? </strong>Far from it. Recently, they took delivery of over five billion banknotes&mdash;enough to fill three dozen 747 cargo planes. At the same time, Venezuela is selling off its gold in order to pay for the new currency and other debts. Venezuela will soon run out of <em>real</em> money to pay for the fiat money, and that will bring the charade to a disastrous end.</p> <p>The reader may say to himself, &ldquo;When will people learn?&rdquo; Sadly, they don&rsquo;t. Incredibly, when the reichsmark collapsed in 1923, <em>no one blamed the excessive printing</em>. In fact, many people felt that if only the printing had continued just a bit longer, everything might have been all right.</p> <p><strong>What we can take away from this is that what happened in Weimar Germany in 1922&ndash;1923 is happening now in Venezuela in 2016. </strong><em>(And has happened in some twenty other countries over the last hundred years, most recently in Argentina in 2000 and in Zimbabwe in 2008.)</em></p> <p><u><strong>The same will occur in Europe and America in the fairly near future. </strong></u>That&rsquo;s not a &ldquo;Chicken Little&rdquo; overreaction; it&rsquo;s a virtual certainty. <strong><em>The same economic errors always bring the same catastrophic results.</em></strong></p> <p>Ben Bernanke, just two years prior to being named head of the Federal Reserve, assured an audience that the Fed would react to any deflationary trend by printing as many currency notes as necessary. This was no idle threat. Remember, the owners of the Fed profit heavily from the hidden tax of inflation, but lose money if there is deflation. That assures us that, with the present unsustainable level of U.S. national debt (nominally, some nineteen trillion dollars, but actually some hundred trillion dollars, including unfunded liabilities), a collapse in the dollar is a given.</p> <p><strong>And, of course, the severity of the crash is always commensurate with the level of the debt, which promises us that, since this debt load is by far the greatest the world has ever seen, the crash will be the greatest the world has ever seen.</strong></p> <p>Those who have studied the histories of countries after they&rsquo;ve experienced a hyperinflationary collapse will be aware of what&rsquo;s headed their way, if they reside in Europe or North America. Those who have not undertaken such a study might choose instead to watch the movie&mdash;to observe what happens in Venezuela as its hyperinflation plays out and learn what their own fate might be.</p> <p><strong>Our predicted outcome, which may have seemed hypothetical in 2014, is now right around the corner in Venezuela. </strong>This will be of value to the reader who watches as the collapse occurs, then observes what follows. The events that unfold will be essentially the events that will unfold in Europe and North America when their respective collapses occur.</p> <p><strong><em>This &ldquo;movie&rdquo; is not meant to be entertainment at the expense of others&rsquo; suffering; watching it is a way to forewarn oneself as to what&rsquo;s coming to those countries that are irrevocably on the same path, but have not yet reached the same point.</em></strong></p> <p>By watching, the reader may be forewarned as to how to prepare himself so that, whilst his country may be headed toward economic collapse, he may take action to assure that the impact to himself, his family and his investments are diminished.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="429" height="186" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160523_hyper.png?1464041684" /> </div> </div> </div> http://www.zerohedge.com/news/2016-05-23/wheelbarrow-economics#comments Ben Bernanke Ben Bernanke Chicken Little Federal Reserve Germany Hyperinflation National Debt Tue, 24 May 2016 01:50:00 +0000 Tyler Durden 561607 at http://www.zerohedge.com We're In The Eye Of A Global Financial Hurricane http://www.zerohedge.com/news/2016-05-23/were-eye-global-financial-hurricane <p><a href="http://charleshughsmith.blogspot.com/2016/05/were-in-eye-of-global-financial.html"><em>Submitted by Charles Hugh-Smith via OfTwoMinds blog,</em></a></p> <p><em>The only &quot;growth&quot; we&#39;re experiencing are the financial cancers of systemic risk and financialization&#39;s soaring wealth/income inequality.</em></p> <p><strong>The Keynesian gods have failed, and as a result we&#39;re in the eye of a global financial hurricane.</strong></p> <p><img align="middle" border="0" src="http://www.oftwominds.com/photos2016/hurricane4.png" /></p> <p><strong>The Keynesian god of growth has failed. </strong></p> <p><strong>The Keynesian god of borrowing from the future to fund today&#39;s consumption has failed. </strong></p> <p><strong>The Keynesian god of monetary stimulus / financialization has failed.</strong></p> <p><strong>Every major central bank and state worships these Keynesian idols:</strong></p> <p>1. Growth. (Never mind the cost or what kind of growth--all growth is good, even the financial equivalent of aggressive cancer).</p> <p>2. Borrowing from the future to fund today&#39;s keg party, worthless college diploma, particle board bookcase, stock buy-back, etc. (oops, I mean &quot;investment&quot;)--a.k.a. <em>deficit spending</em> which is a polite way of saying this unsavory truth: <em>stealing from our children and grandchildren to fund our lifestyles today</em>.</p> <p>3. Monetary stimulus / financialization. If private investment sags (because there are few attractive investments at today&#39;s nosebleed valuations and few attractive investments in a global economy burdened with massive over-production and over-capacity), drop interest rates to zero (or below zero) to &quot;stimulate&quot; new borrowing... for whatever: global carry trades, bat guano derivatives, etc.</p> <p><strong>Here is my definition of Financialization:</strong></p> <p><em>Financialization is the mass commodification of debt and debt-based financial instruments collaterized by previously low-risk assets, a pyramiding of risk and speculative gains that is only possible in a massive expansion of low-cost credit and leverage.</em></p> <p>That is a mouthful, so let&#39;s break it into bite-sized chunks.</p> <p><strong>Home mortgages are a good example of how financialization increases financial profits by jacking up risk and distributing it to suckers who don&#39;t recognize the potential for staggering losses.</strong></p> <p>In the good old days, home mortgages were safe and dull: banks and savings and loans institutions issued the mortgages and kept the loans on their books, earning a stable return for the 30 years of the mortgage&#39;s term.</p> <p><strong>Then the financialization machine revolutionized the home mortgage business to increase profits.</strong> The first step was to generate entire new types of mortgages with higher profit margins than conventional mortgages. These included no-down payment mortgages (liar loans), no-interest-for-the-first-few-years mortgages, adjustable-rate mortgages, home equity lines of credit, and so on.</p> <p>This broadening of options (and risks) greatly expanded the pool of people who qualified for a mortgage. In the old days, only those with sterling credit qualified for a home mortgage. In the financialized realm, almost anyone with a pulse could qualify for an exotic mortgage.</p> <p>The interest rate, risk and profit margins were all much higher for the originators. What&#39;s not to like? <strong>Well, the risk of default is a problem.</strong> Defaults trigger losses.</p> <p><strong>Financialization&#39;s solution: package the risk in safe-looking securities and offload the risk onto suckers and marks.</strong> Securitizing mortgages enabled loan originators to skim the origination fees and profits up front and then offload the risk of default and loss onto buyers of the mortgage securities.</p> <p>Securitization was tailor-made for hiding risk deep inside apparently low-risk pools of mortgages and rigging the tranches to maximize profits for the packagers at the expense of the unwary buyers, who bought high-risk securities under the false premise that they were &quot;safe home mortgages.&quot;</p> <p><strong>Financialization--</strong> which can only expand to dominate an economy if it is supported by a central bank bent on expanding credit--<strong>has two inevitable and highly toxic consequences:</strong></p> <p>-- <strong>Risk seeps into every nook and cranny of the financial system</strong>, greatly increasing the odds of a systemic domino reaction in financial meltdowns. This is precisely what we saw in the 2008-09 Global Financial Meltdown (GFM): supposedly &quot;contained&quot; subprime mortgages toppled dominoes left and right, bringing the entire risk-saturated system to its knees.</p> <p>-- <strong>Extraordinary wealth and income inequality</strong>, as those closest to the central bank money/credit spigots can scoop up income-producing assets first at much lower costs than Mom and Pop Main Street investors.</p> <p><strong>The rising anger of the masses left behind by the central bank / financialization wealth harvesting machine is the direct result of Keynesian monetary stimulus</strong> that rewards debt-based speculative gambles by those closest to the cheap-credit spigots.</p> <p>As I explain in my book <a href="http://www.amazon.com/gp/product/B01ELXQZGE/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=B01ELXQZGE&amp;linkCode=as2&amp;tag=charleshughsm-20&amp;linkId=33DAOPEVGBNGBS37" target="resource">Why Our Status Quo Failed and Is Beyond Reform</a>, <strong>the only possible output of central bank monetary stimulus is financialization</strong>, and the only possible output of financialization is unprecedented wealth and income inequality.</p> <p><strong>The global financial system is in the eye of an unprecedented hurricane.</strong> While central bankers are congratulating themselves on their god-like mastery of Nature, and secretly praying to the idols of the Keynesian Cargo Cult every night, <strong>the inevitable consequence</strong> of borrowing from the future, the obsession with &quot;growth&quot; at any cost and financialization /monetary stimulus, a.k.a. <em>the rich get richer thanks to central banks</em> <strong>is systemic collapse</strong>.</p> <p>Don&#39;t fall for the mainstream media and politicos&#39; shuck-and-jive that all is well and &quot;growth&quot; will return any day now. <strong>The only &quot;growth&quot; we&#39;re experiencing are the financial cancers of systemic risk and financialization&#39;s soaring wealth/income inequality.</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="535" height="364" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160523_eye.png?1464005694" /> </div> </div> </div> http://www.zerohedge.com/news/2016-05-23/were-eye-global-financial-hurricane#comments Central Banks default Deficit Spending ETC Global Economy Home Equity Main Street Meltdown Subprime Mortgages Tue, 24 May 2016 01:46:35 +0000 Tyler Durden 561527 at http://www.zerohedge.com Here’s How The U.S. Government Treats Whistleblowers http://www.zerohedge.com/news/2016-05-23/here%E2%80%99s-how-us-government-treats-whistleblowers <p><em>Submitted by Michael Krieger of <a href="http://libertyblitzkrieg.com/2016/05/23/heres-how-the-u-s-government-treats-whistleblowers/">LibertyBlitzkrieg</a></em></p> <p><strong>Here’s How the U.S. Government Treats Whistleblowers</strong></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/05/13/Screen-Shot-2016-05-23-at-4.39.59-PM-768x376_0.jpg" width="552" height="270" style="width: 600px; height: 294px;" /></p> <p>&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>What is it about whistleblowers that the powers that be can’t stand?</p> <p>&nbsp;</p> <p>When I blew the whistle on the CIA’s illegal torture program, I was derided in many quarters as a traitor.&nbsp;My detractors in the government attacked me for violating my secrecy agreement, even as they ignored the oath we’d all taken to protect and defend the Constitution.</p> <p>&nbsp;</p> <p>All of this happened despite the fact that the torture I helped expose is illegal in the United States. Torture also violates a number of international laws and treaties to which our country is signatory — some of which the United States itself was the driving force in drafting.</p> <p>&nbsp;</p> <p>I was charged with three counts of espionage, all of which were eventually dropped when I took a plea to a lesser count. I had to choose between spending up to 30 months in prison and rolling the dice to risk a 45-year sentence. With five kids, and three of them under the age of 10, I took the plea.</p> <p>&nbsp;</p> <p>Tom Drake — the NSA whistleblower who went through the agency’s chain of command to report its illegal program to spy on American citizens —&nbsp;was thanked for his honesty and hard work by being&nbsp;charged with 10 felonies, including five counts of espionage.&nbsp;The government eventually dropped the charges, but not before Drake had suffered terrible financial, professional, and personal distress.</p> <p>This is an ongoing theme, especially in government</p> </blockquote> <p>&nbsp;&nbsp;&nbsp;&nbsp; – From the post:&nbsp;<a href="https://libertyblitzkrieg.com/2015/10/19/cia-torture-program-whistleblower-speaks-on-the-sad-fate-of-americas-whistleblowers/#more-28305">CIA Torture Program Whistleblower Speaks – “The Sad Fate of America’s Whistleblowers”</a></p> <p>&nbsp;</p> <p>While we always knew the U.S. government’s line that Snowden had avenues for effective whistleblowing through official channels was a heaping pile of bullshit, it’s always good to prove the point.</p> <p><a href="http://www.theguardian.com/us-news/2016/may/22/snowden-whistleblower-protections-john-crane?CMP=Share_AndroidApp_Facebook">The Guardian</a> reports:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Edward Snowden&nbsp;has called for a complete overhaul of US whistleblower protections after a new source from deep inside the Pentagon came forward with a startling account of how the system became a “trap” for those seeking to expose wrongdoing.</p> <p>&nbsp;</p> <p>The account of John Crane, a former senior Pentagon investigator, appears to undermine Barack Obama, Hillary Clinton and other major establishment figures who argue that there were established routes for Snowden other than leaking to the media. </p> <p>&nbsp;</p> <p>Crane, a longtime assistant inspector general at the Pentagon, has accused his old office of retaliating against a major surveillance whistleblower, Thomas Drake, in an episode that helps explain Snowden’s 2013 National Security Agency disclosures. Not only did Pentagon officials provide Drake’s name to criminal investigators, Crane told the Guardian, they destroyed documents relevant to his defense. </p> <p>&nbsp;</p> <p>Snowden, responding to Crane’s revelations, said he had tried to raise his concerns with colleagues, supervisors and lawyers and been told by all of them: “You’re playing with fire.”</p> <p>&nbsp;</p> <p>Thomas Drake’s legal ordeal ruined him financially and ended in 2011 with all serious accusations against him dropped. His case served as a prologue to Snowden’s. Now Crane’s account has led to a new investigation at the US justice department into whistleblower retaliation at the Pentagon that may serve as an epilogue – one Crane hopes will make the Pentagon a safe place for insiders to expose wrongdoing and illegality. </p> <p>&nbsp;</p> <p>Snowden cited Drake’s case as a reason for his lack of faith in the government’s official whistleblower channels.</p> <p>&nbsp;</p> <p>“When I was at NSA, everybody knew that for anything more serious than workplace harassment, going through the official process was a career-ender at best. It’s part of the culture,” Snowden told the Guardian.</p> <p>&nbsp;</p> <p>“If your boss in the mailroom lies on his timesheets, the IG might look into it. But if you’re Thomas Drake, and you find out the president of the United States ordered the warrantless wiretapping of everyone in the country, what’s the IG going to do? They’re going to flush it, and you with it.”</p> </blockquote> <p>Thanks for playin’.</p> <p><em>For related articles, see:</em></p> <p><a href="http://libertyblitzkrieg.com/2015/10/13/cia-torture-victims-launch-lawsuit-against-psychologist-masterminds-behind-the-program/" title="Permanent Link to CIA Torture Victims Launch Lawsuit Against Psychologist Masterminds Behind the Program" rel="bookmark">The “Insider Threat Program” and the Government’s War on Whistleblowers<br />The 3 Key Takeaways from the Ridiculous “Insider Threat Program”<br />CIA Torture Program Whistleblower Speaks on – “The Sad Fate of America’s Whistleblowers”<br />Have You Heard of John Kiriakou?<br />Revelations from the Torture Report – CIA Lies, Nazi Methods and the $81 Million No-Bid Torture Contract<br />CIA Torture Victims Launch Lawsuit Against Psychologist Masterminds Behind the Program</a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="768" height="376" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Screen-Shot-2016-05-23-at-4.39.59-PM-768x376.jpg?1464051479" /> </div> </div> </div> http://www.zerohedge.com/news/2016-05-23/here%E2%80%99s-how-us-government-treats-whistleblowers#comments Barack Obama national security SPY Tue, 24 May 2016 01:23:31 +0000 Tyler Durden 561625 at http://www.zerohedge.com