http://www.zerohedge.com/fullrss2.xml/%20http%3A/What%20hath%20QE%20wrought en How Government Agents Troll Online to Divide and Confuse http://www.zerohedge.com/news/2017-12-13/how-government-agents-troll-online-divide-and-confuse <p><a href="http://www.thedailybell.com/news-analysis/how-government-agents-troll-online-to-divide-and-confuse/">Via The Daily Bell</a></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">The real story of online deception isn’t about the Russians. Sure, the Russians certainly have their own programs to disrupt and steer online discourse. But how quickly the public has forgotten about the U.S. government’s own internet troll program.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Edward Snowden leaked documents used by the “Five Eyes” alliance of governments. The United States, Canada, the United Kingdom, New Zealand, and Australia–<a href="http://amzn.to/2ATz796" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">basically Oceania from&nbsp;<em style="box-sizing: border-box; line-height: 24px; padding-bottom: 8px;">1984</em></a>–get together to spy on each other’s citizens. That’s how they cleverly get around laws against spying on their own citizens.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">The&nbsp;<a href="https://theintercept.com/2014/02/24/jtrig-manipulation/" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">leaked documents</a>&nbsp;included a presentation about how government agents should disrupt online discourse.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"><a href="http://cdn.thedailybell.com//wp-content/uploads/2017/10/NSAslide1.gif" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;"><img src="http://cdn.thedailybell.com//wp-content/uploads/2017/10/NSAslide1.gif" width="1000" height="750" style="box-sizing: border-box; vertical-align: middle; max-width: 100%; display: block; margin: 5px auto; height: auto !important;" class="aligncenter size-full wp-image-24230" /></a>There is a lot of overlap between these tactics, and often more than one are used simultaneously. For example, there has been a big push by the media to convince you that the end of net neutrality is a bad thing. They are masking the true nature of net neutrality–it really gives the government power to regulate aspects of the internet. And then they repackage net neutrality as necessary for freedom and open access to the internet.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">When deploying government sponsored trolls online, the agents will mimic real commenters in order to sound more believable. They gain credibility since people are more likely to trust those they perceive as similar to them.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Sometimes government agents invent a crazy story and attribute it to a movement. This discredits the movement. Think Flat Earth Theory. Those primed to believe conspiracy theories get sucked in. Then all the true conspiracies are grouped in with the bogus one.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">If a true conspiracy theory comes out, they invent 100 others to obscure the real one. In order for the truth to be lost among the falsities, they invent various&nbsp;levels of “conspiracy theories” from the slightly believable, to the absurd.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Hillary Clinton really is a corrupt psychopath. But she is not a shape-shifting reptilian alien.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">From the evidence, it seems the United States government was in some way involved in the 2001 attacks on the twin towers. But did they use holograms of the planes, and fire a laser into the towers? Probably not.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">The conspiracies become too unbelievable to some, and they throw the truth out with the government manufactured lies. For those that do believe the false details of a true conspiracy, they walk away with an inflated sense of how powerful and all knowing the government really is.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">This also works to the government’s benefit. The over-the-top conspiracy theories become the decoy. They can then exploit those beliefs to create cognitive stress, which is another tactic of control.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"><a href="http://cdn.thedailybell.com//wp-content/uploads/2017/10/nsaslide2.gif" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;"><img src="http://cdn.thedailybell.com//wp-content/uploads/2017/10/nsaslide2.gif" width="1000" height="750" style="box-sizing: border-box; vertical-align: middle; max-width: 100%; display: block; margin: 5px auto; height: auto !important;" class="aligncenter size-full wp-image-24231" /></a>Trump is the ultimate manifestation of their tactics to control attention. Trump is a big move which does a lot of masking the small moves. The media pays attention to his tweets, not his actions. When he does push for legislation, like a repeal of Obamacare, and it fails, attention drops because that seems to be the end of that.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">And every time this happens, vigilance wanes.&nbsp;<em style="box-sizing: border-box; line-height: 24px; padding-bottom: 8px;">Another tweet, another legislative failure, another snub? We get it.</em>&nbsp;But do we really get it?</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Repetition. By now we are so used to misconduct by government officials, we just don’t pay attention anymore. Yet when the story about Pizzagate came to light, it was grouped in with conspiracy theories.&nbsp;<em style="box-sizing: border-box; line-height: 24px; padding-bottom: 8px;">No need to investigate.</em>&nbsp;We were primed to put that story into the false category. But the new cue is&nbsp;<a href="http://www.thedailybell.com/news-analysis/sex-power-and-consent-how-to-interpret-the-media-frenzy-around-sexual-assault/" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">sexual assault, and we are primed to believe any accusation</a>, regardless of the evidence.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">In efforts to demonize Bitcoin, many of these tactics are used. I’m not saying Bitcoin is beyond criticism. But I’ve seen commenters claim it was created by the CIA. That is just silly.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">More likely, the government exploits the distrust libertarians tend to have in government in order to cast doubt on the legitimacy of cryptocurrencies. That means fewer people will adopt technology that has the potential to bring down the worldwide banking cartel and free people from the shackles of government monetary policy.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">White Nationalists and AntiFa are right out of this playbook. Each exploits the beliefs of the “other side.” The left is primed to assume anyone who disagrees with them is secretly a racist white supremacist. And the right is primed to believe the left is full of violent fanatics who want to implement a communist coup.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">To be sure,&nbsp;<em style="box-sizing: border-box; line-height: 24px; padding-bottom: 8px;">some</em>&nbsp;of these people exist in the real world. So government agents seize on this and magnify it with their own agents. By doing this, they cause unsuspecting citizens to join the fray. Behavior is influenced by our peers. So the perception that something is widespread or normal makes people more likely to follow the crowd.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Notice how they mention Cialdini in there?&nbsp;<a href="http://amzn.to/2ynT84x" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">Robert B. Cialdini wrote the book&nbsp;<em style="box-sizing: border-box; line-height: 24px; padding-bottom: 8px;">Influence: The Psychology of Persuasion</em></a>. I recommend reading it, not so that you can manipulate others, but so that you can prevent yourself from being manipulated.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">He describes how to trigger shortcuts people use in their mental processes. For instance, a higher price usually means higher quality, so often people assume a higher priced item will be better made. But this works in many areas. People might assume a southern accent makes someone a racist, or USDA approval means healthy.<br style="box-sizing: border-box;" /><a href="https://www.amazon.com/Influence-Psychology-Persuasion-Robert-Cialdini/dp/006124189X/ref=as_li_ss_il?ie=UTF8&amp;linkCode=li3&amp;tag=joejarme-20&amp;linkId=bdffe2ad0768f79312c88a1accd466d9" target="_blank" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;" rel="noopener"><img src="http://ws-na.amazon-adsystem.com/widgets/q?_encoding=UTF8&amp;ASIN=006124189X&amp;Format=_SL250_&amp;ID=AsinImage&amp;MarketPlace=US&amp;ServiceVersion=20070822&amp;WS=1&amp;tag=joejarme-20" border="0" style="box-sizing: border-box; vertical-align: middle; max-width: 100%; display: block; margin: 5px auto; height: auto !important;" class="aligncenter" /></a><img src="https://ir-na.amazon-adsystem.com/e/ir?t=joejarme-20&amp;l=li3&amp;o=1&amp;a=006124189X" width="1" height="1" border="0" style="box-sizing: border-box; vertical-align: middle; max-width: 100%; border-width: initial !important; border-style: none !important; height: auto !important;" /></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Cialdini also goes into how people are influenced by social proof, gift giving, making commitments, and a sense of inclusion. It is no surprise that the government would use these advertising and sales tactics to push their agenda online.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">An Obama policy adviser, Cass Sunstein,&nbsp;<a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1084585" style="box-sizing: border-box; background: 0px 0px; color: #0c5b3c;">wrote a paper in 2008</a>&nbsp;which suggests using these tactics.</p> <blockquote style="box-sizing: border-box; padding: 10px 20px; margin: 0px 0px 20px; font-size: 17.5px; border-left: 5px solid #eeeeee; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"><p style="box-sizing: border-box; font-size: 16px; line-height: 24px; padding-bottom: 8px;">Those who subscribe to conspiracy theories may create serious risks, including risks of violence, and the existence of such theories raises significant challenges for policy and law. The first challenge is to understand the mechanisms by which conspiracy theories prosper; the second challenge is to understand how such theories might be undermined… Because those who hold conspiracy theories typically suffer from a crippled epistemology, in accordance with which it is rational to hold such theories, the best response consists in cognitive infiltration of extremist groups.</p> </blockquote> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Sunstein later went on to serve on the NSA review panel.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif; text-align: center;"><span style="box-sizing: border-box; font-weight: bold;">But finally, here’s the real head spinner.</span></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">The documents mention a Haversack Ruse. This ruse involves planting false information by making the enemy think you accidentally lost it. The target thinks they got their hands on your actual plans. But in reality, they acquired fake plans.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">For instance, was Edward Snowden really a leaker, or was he told to drop all this “evidence” in order to distract from what is really happening?</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">In such a case, the intelligence officers would be laughing their asses off. They had the balls to put the Haversack reference into a fake document that was intentionally leaked as a ruse. This fits with the elite’s serial-killer-like tendency to leave hints of their true agenda in plain sight.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">That means one of two things.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Either these documents are not part of a ruse and everything in them is true.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Or, these documents&nbsp;<em style="box-sizing: border-box; line-height: 24px; padding-bottom: 8px;">are</em>&nbsp;part of a Haversack Ruse. But why would the government leak these damning documents which prove their lies and untrustworthiness?</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;">Only if the truth is so much worse.</p> http://www.zerohedge.com/news/2017-12-13/how-government-agents-troll-online-divide-and-confuse#comments 9/11 conspiracy theories Activism B+ Bitcoin Cass Sunstein Central Intelligence Agency Conspiracies Conspiracy theories involving Israel Conspiracy theory Conspiracy Theory with Jesse Ventura Denialism Edward Snowden Fringe theory laser Monetary Policy New Zealand Obamacare Pejoratives Persuasion Politics Reality SPY United Kingdom United States government US government USDA Wed, 13 Dec 2017 19:00:08 +0000 TDB 609089 at http://www.zerohedge.com The Stock Market & The FOMC - An Astonishing Statistic http://www.zerohedge.com/news/2017-12-13/stock-market-fomc-astonishing-statistic <p><a href="http://www.acting-man.com/?p=51950"><em>Authored by Pater Tenebrarum via Acting-Man.com,</em></a></p> <h3><u><strong>An Astonishing Statistic</strong></u></h3> <p>As the final FOMC announcement of the year approaches, <strong>we want to briefly return to the topic of how the meeting tends to affect the stock market from a statistical perspective.</strong> As long time readers may recall, the typical performance of the stock market in the trading days immediately ahead of FOMC announcements was quite remarkable in recent decades. We are referring to the Seaonax event study of the average (or seasonal) performance across a very large number of events, namely the past 160 monetary policy announcements and the 10 trading days surrounding them. It looks as follows:</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171213_seas1.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171213_seas1_0.png" style="width: 600px; height: 373px;" /></a></p> <p><em>We have highlighted the period of maximum profit over the past 20 years in dark gray, which is achieved over a holding period of&nbsp; 8 trading days and amounts to an average of 60 basis points. At first glance that may not look like much, but it actually works out to a 21.89 percent annualized gain, which exceeds the gain generated in the &ldquo;rest of the time&rdquo; by a vast margin. As the detailed returns in individual years at the bottom show, in some years particularly large gains were posted around FOMC meetings &ndash; these were as a rule associated with new cyclical bull markets just after the end of major bear markets. The largest losses were obviously primarily associated with bear market periods, but they are both much fewer in number than the gains and much smaller on average &ndash; click to enlarge.</em></p> <p>&nbsp;</p> <p><strong>It makes little difference if one extends the study to a 30 year time frame (or 240 events) &ndash; the return is almost the same, only the optimal holding period becomes 9 days instead of 8 trading days. </strong>The same holds if one compresses the study to 15 years or 120 events &ndash; the return and optimal holding period are equal to those of the 20 year study.&nbsp; If one compresses it further to just 10 years (or 79 events), the result actually gets better: the average return per event expands to 0.72%, boosting the annualized return to 27.10 percent.</p> <p>Obviously, the smaller the sample size, the less statistical validity the result will have, but we have noticed that it often makes sense in seasonal studies to look at studies in shorter time frames as well. In fact, as long as a major market trend remains intact, &ldquo;recency bias&rdquo; will increasingly tend to hold sway.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171213_seas2.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171213_seas2_0.png" style="width: 600px; height: 372px;" /></a></p> <p><em>When halving the number of events in the study, the result becomes even more impressive &ndash; obviously, this is mainly due to the strength of the post-GFC echo bubble &ndash; click to enlarge.</em></p> <p>&nbsp;</p> <p>When the number of events included in the study is expanded to 700, or a 90-year time period, a significantly smaller average return of 0.38% is achieved (however, the median is higher at 0.50%, due to the proliferation of large gains in more recent decades). This is still an impressive 14.69 percent annualized, which beats the &ldquo;rest of the time&rdquo; gain handily as well.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171213_seas3.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171213_seas3_0.png" style="width: 600px; height: 372px;" /></a></p> <p><em>Measured over a 90 year stretch (700 events), the average return declines to 0.38% for the 8 day holding period, but that still amounts to 14.69 percent annualized and handily beats the &ldquo;rest of the time&rdquo; gain in the index &ndash; click to enlarge.</em></p> <p>&nbsp;</p> <p>The explanation for the much smaller &ldquo;event return&rdquo; over the 90 year stretch is that central bank intervention has become a great deal more important to financial markets since the adoption of the pure fiat money system in the wake of Nixon&rsquo;s gold default in 1971. One only has to take a look at the long term trend in total US credit market debt to see why that is the case.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171213_seas4.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171213_seas4_0.png" style="width: 600px; height: 368px;" /></a></p> <p><em><strong>As a result of the huge expansion in credit market debt once the pretense that governments were going to be keep their currencies sound was finally abandoned entirely, central bank decisions have become far more important to financial markets than they used to be.</strong></em></p> <h3><u><strong>It Gets Even Crazier&hellip;</strong></u></h3> <p>The upcoming FOMC announcement seemed a good opportunity to return to this topic, but what we are actually most eager to show is a chart that compares the cumulative gain one would have achieved if one had invested <em>exclusively in the 2 days preceding every FOMC announcement</em> (i.e., for the duration of the FOMC meeting) with the gain that would have been achieved by being invested exclusively on all other days. The total gain achieved by the SPX as such is shown as well:</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171213_seas5.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171213_seas5_0.png" style="width: 600px; height: 428px;" /></a></p> <p><em>If one had been long the S&amp;P 500 days exclusively over the 2 days of every FOMC meeting (while being out of the market the entire rest of the time), one would have achieved a capital gain almost equal to that of a buy &amp; hold strategy. Since there are eight FOMC meetings per year, one would have been in the market for a total of just 16 days per year, or 320 days in 20 years. Being in the market exclusively over the rest of the time would have made no sense at all; the net gain achieved in this time period over the past two decades was negligible. In fact, most of the time one would have sported large paper losses. Obviously, a very big loss would have been made in real terms anyway &ndash; click to enlarge.</em></p> <p>&nbsp;</p> <p><strong>This chart is quite the stunner &ndash; and what makes it so stunning is that the <em>risk-adjusted return</em> when being exposed to the market over just 16 trading days every year is of course vastly superior to that of a buy &amp; hold approach. </strong>One can safely ignore trading commissions, considering that discount brokers charge less than $5 per trade these days, regardless of size.</p> <p>One might object that the method fails to capture the microscopic dividend yield of the SPX, but consider the fact that the entire sum invested will be available for alternative purposes 336 days every year. Surely it won&rsquo;t be too hard to make up for missing out on the current SPX dividend yield of 1.83%. There once was a time when dividends generated the bulk of long term stock market returns, but that was before the modern age of massive money supply and credit inflation.</p> <p>&nbsp;</p> <h3><u><strong>Conclusion </strong></u></h3> <p>The statistics discussed above are yet another (indirect) hint that broad stock market returns are largely dependent on monetary inflation and hence on the actions taken by central planners. Everything else is secondary. This strikes us as a rather deplorable state of affairs. In fact, it can be shown that prior to the institution of pure fiat money, the stock market delivered far larger returns in real terms than it has delivered ever since (this can be ascertained by comparing long term cumulative stock market returns in terms of gold).</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171213_seas6.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171213_seas6_0.png" style="width: 600px; height: 698px;" /></a></p> <p><em>Robert Prechter of EWI published a chart that compares real returns in the stock market under a sound money regime with those achieved under the fiat money&nbsp; regime. The 1965 cut-off date was chosen on the basis that this was the year in which the last precious metals coins (silver dollars) were minted to serve as general media of exchange. Incidentally, this was also very close to the end of a major wave up in the stock market in nominal terms &ndash; click to enlarge.</em></p> <p>However, we cannot change this, so our focus is mainly on making the best of the situation. Obviously, the information presented here can be used profitably if one employs it in a disciplined manner, with the caveat that even if the statistics show us&nbsp; high probability outcomes, there is no guarantee that market action won&rsquo;t change in the future.</p> <p><strong><em>An important thing to keep in mind in this context is also that the behavior of the market around the FOMC announcement can be used as a signal. In other words, if the market&rsquo;s behavior begins to deviate significantly from the statistical average and FOMC announcements begin to be associated with losses rather than gains, it will be a strong sign that the market&rsquo;s character has changed from a bull to a bear market phase.</em></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="574" height="330" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171213_seas.jpg?1513181363" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-13/stock-market-fomc-astonishing-statistic#comments Bear Market Business Capitalism default Economy Federal Open Market Committee Federal Reserve System Finance Financial markets Investment Mathematical finance Monetary Policy Money Money Supply Precious Metals Rate of return Robert Prechter S&P 500 S&P 500 Index Stock market Wed, 13 Dec 2017 18:50:17 +0000 Tyler Durden 609075 at http://www.zerohedge.com "Trump Should Go F Himself" - Texts Leak From FBI Agents On Russia Probe, Hillary Emails Investigation http://www.zerohedge.com/news/2017-12-13/anti-trump-texts-between-fired-fbi-agents-having-extramarital-affair-leak-and-theyre <p>Over 10,000 text messages sent between two top FBI investigators - one of whom led both the Clinton email investigation and the early Trump-Russia probe, have been turned over to Congress Tuesday evening and promptly leaked to the press. The profanity-laced messages reveal a deep hatred for Trump between veteran agent Peter Strzok and FBI attorney Lisa Page, who were having an extramarital affair while working together on the Clinton email investigation when the texts were exchanged. Strzok and Page were fired from Robert Mueller&#39;s special counsel in mid-August over the messages, yet the reason was not revealed until last month. Strzok notably changed the wording of then-FBI Director James Comey&#39;s statement on Clinton&#39;s mishandling of classified information from &quot;grossly negligent&quot; to &quot;extremely careless.&quot;</p> <p><img alt="" height="282" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/13/strozk%20page_0.jpg" width="503" /></p> <p><em>Peter Strzok and Lisa Page</em></p> <p>The leaked texts leave no doubt that Muller&#39;s probe has been tainted from the beginning. In one exchange obtained by <em><a href="https://www.cbsnews.com/news/here-are-peter-strzoks-texts-to-lisa-page-about-trump/?linkId=45835739" target="_blank">Fox News</a></em> sent on March 4th, 2016 - right around the time Trump emerged as a serious threat in the GOP primary race, Page texted Strzok &quot;<strong>God, Trump is a loathsome human</strong>,&quot; to which Strzok responded <strong>&quot;Yet he many[win]&quot; </strong>Strzok responded, adding <strong>&quot;</strong>Good for Hillary.&quot;&nbsp;</p> <p>Later that day, <strong>Strzok texted Page, &quot;OMG [Trump&#39;s] an idiot&quot; </strong>to which Page replied <strong>&quot;He&#39;s awful.&quot; </strong>Strzok then texted Page &quot;<strong>America will get what the voting public deserves</strong>,&quot; to which Page responded <strong>&quot;That&#39;s what I&#39;m afraid of.&quot;&nbsp;</strong></p> <p>In messages obtained by <em><a href="https://www.cbsnews.com/news/here-are-peter-strzoks-texts-to-lisa-page-about-trump/?linkId=45835739" target="_blank">CBS</a></em>, Page wrote to Strzok &quot;<strong>I just saw my first Bernie Sander </strong>[sic] <strong>bumper sticker. Made me want to key the car,&quot;</strong>&nbsp;to which Strzok replied &quot;<strong>He&#39;s an idiot like Trump. Figure they cancel each other out.&quot;</strong></p> <p>On election night, Strzok called the glowing red map showing Mr. Trump winning &quot;<strong>F***ing terrifying.</strong>&quot; A week later when Jeff Sessions was the top contender for Attorney General, Strzok texted Page &quot;<strong>Sesions for AG,</strong>&quot; to which Page replied &quot;<strong>Good god.</strong>&quot;&nbsp;Page and Strzok <strong style="font-size: 13.008px;">also disparaged House Speaker Paul Ryan</strong>, with Page telling Strzok she hopes Ryan &quot;<strong style="font-size: 13.008px;">fails and crashes in a blaze of glory</strong>.&quot;&nbsp;</p> <p><em>Fox </em>reporter Shannon Brem tweeted that Fox News producer Jake Gibson <strong>has obtained 10k texts between Peter Strzok and Lisa Page</strong>, one of which says &quot;<strong>Trump should go f himself</strong>,&quot; and <strong>&quot;F TRUMP.</strong>&quot;</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Our <a href="https://twitter.com/FoxNews?ref_src=twsrc%5Etfw">@FoxNews</a> producer <a href="https://twitter.com/JakeBGibson?ref_src=twsrc%5Etfw">@JakeBGibson</a> has obtained 10K texts between Peter Strzok and Lisa Page</p> </blockquote> <p class="twitter-tweet">&mdash; Shannon Bream (@ShannonBream) <a href="https://twitter.com/ShannonBream/status/940770703317585921?ref_src=twsrc%5Etfw">December 13, 2017</a></p> <p><script src="https://platform.twitter.com/widgets.js"></script></p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Strzok/Page texts obtained by Fox&#39;s <a href="https://twitter.com/JakeBGibson?ref_src=twsrc%5Etfw">@JakeBGibson</a></p> <p>&quot;LP &ndash; Jesus. You should read this. And Trump should go f himself. Moment in Convention Glare Shakes Up Khans American Life <a href="https://t.co/1nZ11E3gBC">https://t.co/1nZ11E3gBC</a></p> <p>PS &ndash; God that&rsquo;s a great article. Thanks for sharing. And F TRUMP.&quot;</p> </blockquote> <p class="twitter-tweet">&mdash; Shannon Bream (@ShannonBream) <a href="https://twitter.com/ShannonBream/status/940785243715403777?ref_src=twsrc%5Etfw">December 13, 2017</a></p> <p>In another tweet posted by Bream, Peter Strzok says <strong>&quot;I am riled up. Trump is a f*cking idiot, is unable to provide a coherrent answer</strong>,&quot; and <strong>&quot;I CAN&#39;T PULL AWAY, WHAY THE F*CK HAPPENED TO OUR COUNTRY (redacted)??!?!&quot;</strong></p> <p>Page responds <strong>&quot;I don&#39;t know, But we&#39;ll get it back. ...&quot;</strong></p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Strzok/Page texts 10/20/16</p> <p>PS - I am riled up. Trump is a f*cking idiot, is unable to provide a coherent answer.</p> <p>PS - I CAN&#39;T PULL AWAY, WHAT THE F*CK HAPPENED TO OUR COUNTRY (redacted)??!?!</p> <p>LP - I don&#39;t know. But we&#39;ll get it back. ...</p> </blockquote> <p class="twitter-tweet">&mdash; Shannon Bream (@ShannonBream) <a href="https://twitter.com/ShannonBream/status/940797491338993664?ref_src=twsrc%5Etfw">December 13, 2017</a></p> <p>Page then messages Strzok, saying &quot;And maybe you&#39;re meant to stay where you are because you&#39;re meant to <strong>protect the country from that menace</strong>. (links to NYT article), to which Strzok replied &quot;<strong>I can protect our country at many levels</strong>.&quot;&nbsp;</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Strzok/Page texts</p> <p>LP &ndash; And maybe you&rsquo;re meant to stay where you are because you&rsquo;re meant to protect the country from that menace. (links to NYT article)</p> <p>PS &ndash; ... I can protect our country at many levels, not sure if that helps</p> </blockquote> <p class="twitter-tweet">&mdash; Shannon Bream (@ShannonBream) <a href="https://twitter.com/ShannonBream/status/940779309802942464?ref_src=twsrc%5Etfw">December 13, 2017</a></p> <p>If you&#39;re still confused as to who they&nbsp;wanted to win the election, look no further than Peter Strzok&#39;s text to&nbsp;Page: &quot;<strong style="font-size: 13.008px;">God Hillary should win. 100,000,000-0&quot;&nbsp;</strong></p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Strzok/Page texts obtained by <a href="https://twitter.com/JakeBGibson?ref_src=twsrc%5Etfw">@JakeBGibson</a> - &quot;PS: God Hillary should win. 100,000,000-0. LP: I know&quot;</p> </blockquote> <p class="twitter-tweet">&mdash; Shannon Bream (@ShannonBream) <a href="https://twitter.com/ShannonBream/status/940771617013149696?ref_src=twsrc%5Etfw">December 13, 2017</a></p> <p>The messages between Strzok and Page make it <strong style="font-size: 13.008px;">abundantly clear</strong>&nbsp;that the agents investigating both candidates for President were <strong style="font-size: 13.008px;">extremely biased </strong>against then-candidate Trump, while going <strong style="font-size: 13.008px;">extremely easy</strong>&nbsp;on Hillary Clinton over her mishandling of classified information.&nbsp;</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">MORE: Timeline of texts from former Special Counsel investigator Peter Strzok may raise concerns about his impartiality and will likely raise more questions about the Clinton server investigation, <a href="https://twitter.com/PaulaReidCBS?ref_src=twsrc%5Etfw">@PaulaReidCBS</a> says</p> </blockquote> <p class="twitter-tweet">&mdash; CBS News (@CBSNews) <a href="https://twitter.com/CBSNews/status/940772980690444288?ref_src=twsrc%5Etfw">December 13, 2017</a></p> <p>The messages sent between Strzok and Page, as well as <strong>Strzok&#39;s conduct in the Clinton investigation and several prior cases are now under review for political bias by the Justice Department</strong>. Furthermore, the fact that the reason behind Strzok&#39;s firing was kept a secret for months is of keen interest to House investigators. According to <em><a href="http://www.foxnews.com/politics/2017/12/03/mueller-aide-fired-for-anti-trump-texts-now-facing-review-for-role-in-clinton-email-probe.htm.html?x" target="_blank">Fox News</a> </em>two&nbsp;weeks ago<em>:&nbsp;</em></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;While Strzok&rsquo;s removal from the Mueller team had been publicly reported in August, the Justice Department never disclosed the anti-Trump texts to the House investigators.&quot;</p> <p>&nbsp;</p> <p>&quot;Responding to the revelations about Strzok&rsquo;s texts on Saturday, Nunes said he has now directed his staff to draft contempt-of-Congress citations against Rosenstein and the new FBI director, Christopher Wray.&quot; -Fox News</p> </blockquote> <p><strong>Strzok also relied on the Trump-Russia dossier</strong>&nbsp;created by opposition research firm Fusion GPS.&nbsp;In August, 2016 - nine months before Robert Mueller&#39;s Special Counsel was launched, the New York Times reported that <strong>Strzok was hand picked by FBI brass to supervise an investigation into allegations of Trump-Russia collusion</strong>.&nbsp;The FBI investigation grew legs after they received the infamous anti-Trump &quot;dossier&quot; and decided to act on its salacious and largely unproven claims, According to <em><a href="http://www.foxnews.com/politics/2017/12/03/mueller-aide-fired-for-anti-trump-texts-now-facing-review-for-role-in-clinton-email-probe.htm.html?x" target="_blank">Fox News</a></em>:</p> <div> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div> <p>House investigators told Fox News they have long regarded Strzok as a key figure in the chain of events when the bureau, <strong>in 2016, received the infamous anti-Trump &quot;dossier&quot; and launched a counterintelligence investigation into Russian meddling in the election that ultimately came to encompass FISA surveillance of a Trump campaign associate.</strong></p> <p>&nbsp;</p> <p>The &quot;dossier&quot; was a compendium of salacious and largely unverified allegations about then-candidate Trump and others around him that was compiled by the opposition research firm Fusion GPS. The firm&#39;s bank records, obtained by House investigators, revealed that the project was funded by the Clinton campaign and the Democratic National Committee. -<em>Fox News</em></p> </blockquote> <p>Weeks before the 2016 election, <strong>Peter Strzok&#39;s FBI team agreed to pay former MI6 agent and Fusion GPS operative Christopher Steele $50,000 </strong>if he could verify the claims contained within the dossier - which relied on the cooperation of two senior Kremlin officials.&nbsp;</p> </div> <p><img src="http://www.zerohedge.com/sites/default/files/images/user237925/imageroot/2017/12/10/officialsa.PNG" style="width: 558px; height: 143px;" /></p> <p><em><a href="https://www.vanityfair.com/news/2017/03/how-the-explosive-russian-dossier-was-compiled-christopher-steele" target="_blank">Vannity Fair</a></em></p> <p>&nbsp;</p> <p>When Steele was unable to verify the claims in the dossier, <strong>the FBI wouldn&#39;t pay him</strong>&nbsp;according to the <em><a href="http://archive.is/QrLS8" target="_blank">New York Times</a></em>.&nbsp;</p> <div> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div> <p>Mr. Steele met his F.B.I. contact in Rome in early October, bringing a stack of new intelligence reports. One, dated Sept. 14, said that Mr. Putin was facing &ldquo;fallout&rdquo; over his apparent involvement in the D.N.C. hack and was receiving &ldquo;conflicting advice&rdquo; on what to do.</p> <p>The agent said that, if Mr. Steele could get solid corroboration of his reports, the F.B.I. would pay him $50,000 for his efforts, according to two people familiar with the offer. <strong>Ultimately, he was not paid</strong>. -<em>NYT</em></p> </blockquote> <p>Did you catch that? Despite the fact that Steele was not paid by the FBI for the dossier, <strong>Peter Strzok used it to launch a counterintelligence investigation into President Trump&#39;s team</strong>. Steele was ultimately paid <a href="http://thehill.com/homenews/campaign/358362-fusion-gps-paid-ex-british-spy-168000-for-work-on-dossier" target="_blank">$168,000</a> by <strong>Fusion GPS</strong>&nbsp;to assemble the dossier.&nbsp;</p> </div> <p><strong>There&#39;s more - </strong>according to journalist Sara Carter <strong style="font-size: 13.008px;">there are more anti-Trump messages exchanged between&nbsp;<em>other</em>&nbsp;members of Mueller&#39;s team</strong>:</p> <div> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div> <p>Sean Hannity:<strong> I&rsquo;m hearing rumors all over the place Sara Carter that there are other anti-Trump text-emails out there. And we know about them.</strong></p> <p>&nbsp;</p> <p><strong>Sara Carter: I think you&rsquo;re hearing correctly Sean and<strong> I think a lot more is going to come out. In fact, I know a lot more is going to come out based on the sources I&rsquo;ve spoken to.</strong></strong></p> </blockquote> </div> <div> <p style="box-sizing: border-box; margin-top: 0.25em; margin-bottom: 0.75em; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">The clip is below:</p> <p style="box-sizing: border-box; margin-top: 0.25em; margin-bottom: 0.75em; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;"><iframe frameborder="0" height="315" src="https://www.youtube.com/embed/8i5fDEmTHvA" width="560"></iframe></p> </div> <p>The text messages between Peter Strzok and Lisa Page are <strong>highly compromising</strong>, and prove that both FBI investigations into Clinton and Trump were headed by a man, aided by his mistress,&nbsp;who did not want to see Trump win the White House.&nbsp;Furthermnore,&nbsp;if&nbsp;anti-Trump text messages&nbsp;were exchanged&nbsp;between <em>other</em>&nbsp;members of Robert Mueller&#39;s special counsel, which are apparently on deck for later this month or January, it&#39;s hard to imagine anyone taking anything concluded by this dog-and-pony show seriously.</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="600" height="338" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/strzok%20page.jpg?1513171695" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-13/anti-trump-texts-between-fired-fbi-agents-having-extramarital-affair-leak-and-theyre#comments B+ Congress Democratic National Committee Department of Justice Director of the Federal Bureau of Investigation Dismissal of James Comey Dismissal of United States Attorneys controversy Donald Trump F.B.I. FBI Federal Bureau of Investigation Federal Bureau of Investigation Fox News GPS Hillary Clinton email controversy James Comey New York Times Republican Party Russian interference in the 2016 United States elections Trump campaign–Russian meetings United States United States Department of Justice United States intelligence agencies White House White House Wed, 13 Dec 2017 18:47:09 +0000 Tyler Durden 609052 at http://www.zerohedge.com Crypto Is Suddenly Crashing - Bitcoin Back Below $16,000 http://www.zerohedge.com/news/2017-12-13/crypto-suddenly-crashing-bitcoin-back-below-16000 <p>While Ethereum remains solidly higher on the day,<strong><em> the entire crypto space just took a notable leg lower. </em></strong></p> <p>The day&#39;s slide started around 9amET, when a burst of gold buying appears to have reset the correlation between XAU and BTC:</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/13/2017-12-13%20%283%29.jpg"><img alt="" height="313" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/13/2017-12-13%20%283%29_0.jpg" width="599" /></a></p> <p>Just a few hours later, Bitcoin is back below $16,000</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/13/20171213_crypto1.jpg"><img height="297" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/13/20171213_crypto1_0.jpg" width="600" /></a></p> <p>Litecoin - yesterday&#39;s big winner - is tumbling...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/13/20171213_crypto3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/13/20171213_crypto3_0.jpg" style="width: 600px; height: 303px;" /></a></p> <p>And while Ethereum is up 11% still, it is roling over...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/13/20171213_crypto2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/13/20171213_crypto2_0.jpg" style="width: 600px; height: 293px;" /></a></p> <p>&nbsp;</p> <p>Futures are underperforming spot and collapsing the arbitrage...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/13/20171213_crypto4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/13/20171213_crypto4_0.jpg" style="width: 600px; height: 316px;" /></a></p> <p>While no immediate catalyst for the moves is obvious, we note that <strong>Interactive Brokers has allowed clients to short Bitcoin futures</strong> (with a massive $40,000 margin) and <a href="https://www.reuters.com/article/us-markets-bitcoin-southkorea/south-korea-considers-cryptocurrency-tax-as-regulators-grapple-with-speculative-mania-idUSKBN1E703O"><strong>South Korea said on Wednesday it may tax capital gains from cryptocurrency trading</strong> </a>as global regulators worried about a bubble, with Australia&rsquo;s central bank chief warning of a &lsquo;speculative mania&rdquo; that has seen the digital asset making rip-roaring gains.</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="898" height="453" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171213_crypto3.jpg?1513189753" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-13/crypto-suddenly-crashing-bitcoin-back-below-16000#comments Alternative currencies Arbitrage Australia Bitcoin Bitcoin Blockchains Book:20 Crypto Currencies you should know about BTC Markets Cross-platform software Cryptocurrencies Cryptography Ethereum Finance Futures contract Joseph Lubin Litecoin Money Reserve Bank of Australia Wed, 13 Dec 2017 18:29:21 +0000 Tyler Durden 609086 at http://www.zerohedge.com Another Peak Alert: The Blank Check "SPACs" Boom Has Just Surpassed 2007 http://www.zerohedge.com/news/2017-12-12/uh-oh-peak-alert-blank-check-spacs-boom-has-just-surpassed-2007 <p>In 2017, stock issuance by SPACs has made a new post-crisis high, surpassing the last peak in 2007 which saw the equity market peak in October of that year prior to the crisis. Before we go any further,<strong> we&rsquo;d better define a &quot;SPAC&quot; just in case you&rsquo;re unfamiliar with the acronym, although they are also often known as &ldquo;blank check&rdquo; companies or &ldquo;blank check&quot; IPOs.</strong> From <a href="https://www.investopedia.com/ask/answers/08/blank-check-company.asp">Investopedia</a>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>A popular type of blank-check company is a special purpose acquisition corporation (SPAC). The founder of a SPAC pools money from investors and he or she may contribute to the SPAC to form a blank-check company with the sole purpose of acquiring another company or companies.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Investors do not have knowledge of how their money will be spent, so they issue blank checks to the SPAC. In turn, the SPAC must receive shareholder approval for all acquisitions and 80% of investor funds must be used in any single deal. If the SPAC fails to find a shareholder-approved deal within two years of creation, it is liquidated and the SPAC&#39;s founder loses the investment. Blank-check companies present investors with an alternative similar to private equity.</p> </blockquote> <p>Here is the <a href="https://www.wsj.com/articles/another-sign-of-frothy-markets-blank-check-boom-1512995623">Wall Street Journal</a> on the latest iteration of a SPACs boom.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><u><em><strong>Would you invest in a company that couldn&rsquo;t tell you what its business was going to be? </strong></em></u>Some would, in fact they are doing so in record amounts. Blank-check companies, otherwise known as special purpose acquisition companies, or SPACs, are listed companies that raise money from investors to go and buy a company as yet unidentified. The returns to investors can be stellar&mdash;but on average they aren&rsquo;t great. Investing blind looks to be as high-risk as it sounds.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>This year, there have been almost $14 billion worth of new listed shares in blank-check companies, a record, outstripping 2007&rsquo;s $12.3 billion global issuance, and giving it all a peak-of-the-markets feel. Between 2007 and 2017, listings were fewer and issuance averaged less than $3 billion a year.</p> </blockquote> <p><u><strong>Equity raised by special purpose acquisition companies</strong></u><br /><a href="http://www.zerohedge.com/sites/default/files/images/user235761/imageroot/2017/11/22/spac2_0.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user235761/imageroot/2017/11/22/spac2_0.png" style="width: 500px; height: 224px;" /></a><br /><span style="font-size:9px;">Note: 2017 is year to date; issuance in 2009 was negligible<br />Source: Dealogic</span></p> <p><strong>In terms of peak signals, the primary drivers of the current SPACs boom are euphoric markets and excess liquidity. </strong>The WSJ draws the comparison.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Today&rsquo;s SPAC boom is driven by the same thing as 2007: vast sums of money trying to find a home and any kind of half-decent returns. And private-equity deal makers, who already have more buyout money to invest than at any time in history, are increasingly sponsoring SPACs too, to buy assets that wouldn&rsquo;t fit the return aims of their private funds.</p> <p>&nbsp;</p> <p>Firms such as Carlyle , Fortress , Riverstone and TPG have been all behind large deals this year.</p> </blockquote> <p>Aside from the often illusory lure of high returns (see below), the appeal of investing in a SPACs is a manager or management team with a strong track record. For example, the largest SPAC in 2017 is J2 Acquisition, which raised $1.21 billion. J2 Acquisition is headed by Martin Franklin, which built up the Jarden Corporation through the acquisition of more than 20 consumer businesses. Investors in Jarden made fifty times their initial investment.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user235761/imageroot/2017/11/22/spac1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user235761/imageroot/2017/11/22/spac1_0.jpg" style="width: 500px; height: 314px;" /></a></p> <p>The second largest SPAC in 2017 is Silver Run Acquisition Corp. II, which raised $1.035 billion. It boasts the services of former Anadarko CEO, James Hackett.</p> <p><strong>Money raised by the top five SPACs globally in 2017</strong><br /><a href="http://www.zerohedge.com/sites/default/files/images/user235761/imageroot/2017/11/22/spac3_0.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user235761/imageroot/2017/11/22/spac3_0.png" style="width: 500px; height: 288px;" /></a><br /><span style="font-size:9px;">Source: Dealogic</span></p> <p>The major problem for SPACs right now is twofold, firstly the very high valuations of targets and, secondly, the competition for deals between SPACs, private equity and existing corporate buyers has never been more intense. While not specifying this directly, the WSJ ponders on the varying performance of SPACs.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The performance of blank-check companies vary. Plenty close and hand back investors&rsquo; cash by reaching the end of their typical two-to-three-year lifespan without finding a deal. Of nearly 300 SPACs that have listed in the U.S. since 2003, 80 have closed and handed back cash, while the total returns to shareholders for the 151 that have completed a deal up to the end of last week amount to an annualized average of 5.1%, according to specialist website Spacanalytics. That compares to 9.4% for the S&amp;P 500 over the same period. (Another 40 SPACs are looking for their acquisition, while 12 have announced a deal but are yet to complete it).</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Milos Vulanovic, a professor at Edhec business school in Paris, who studies SPACs, says on average they perform poorly, but he has found common factors to some that do well. SPACs focused on the shipping industry, for example, happen to have performed particularly well, returning on average 154%. But again, that&rsquo;s a small sample. Some do very well: Centennial Resource Development , which began as a Riverstone-sponsored SPAC, has delivered total returns of 107% since April 2016. Others do poorly: Freedom Acquisition bought U.S. hedge-fund manager GLG in 2007, but after losing roughly half its value it was taken out three-years later by U.K.-listed Man Group.</p> </blockquote> <p>In the end, the WSJ almost throws up its hands, lamenting that its nigh on impossible to tell which SPACs will be successful before the fact. It notes that some management teams can do both good deals and bad deals. SPACs, it concludes are a &ldquo;high risk play&rdquo; and we wouldn&rsquo;t disagree. <strong>However, given they have also acted as a signal for a market top, they are a far higher risk play than they&rsquo;ve been for a decade.</strong><br />&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="946" height="548" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/checkbook.jpg?1513189754" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-12/uh-oh-peak-alert-blank-check-spacs-boom-has-just-surpassed-2007#comments Business Carlyle Corporate finance Economy Edhec Finance Money Private Equity Private equity S&P 500 Special-purpose acquisition company Wall Street Journal Wed, 13 Dec 2017 18:06:03 +0000 Tyler Durden 608997 at http://www.zerohedge.com Full Preview Of Janet Yellen's Last Ever Rate Hike http://www.zerohedge.com/news/2017-12-13/full-preview-janet-yellens-last-ever-rate-hike <p>In previewing today&#39;s FOMC decision, which will also be Janet Yellen&#39;s last rate hike decision and press conference before she is replaced by Jay Powell, there is a TL/DR version, which is summarized by the chart below and which shows that according to the market, the probability of a rate hike today is 100%... which is really all you need to know as the rest is Fed explanations and forecasts, both of which are always wrong:</p> <p><img height="220" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/13/dec%20rate%20hike%20odds_0.jpg" width="500" /></p> <p>Desperate to get more excited about today&#39;s episode of central planning? Below is <a href="http://www.ransquawk.com">RanSquawk</a>&#39;s full preview of what to expect from Yellen today:</p> <ul> <li><strong>The FOMC will release its rate decision and economic forecasts at 1900 GMT (1400 ET/1300 CT) on Wednesday</strong></li> <li><strong>13 December 2017; Chair Janet Yellen will begin her press conference at 1930 GMT (1430 ET/1330 CT)</strong></li> <li><strong>The central bank is expected to lift the Federal Funds Rate target by 25bps to 1.25-1.50%</strong></li> <li><strong>Little change is seen in the &lsquo;dots&rsquo;; there is potential for upward revisions to growth in 2018 and beyond, factoring in US fiscal reform; however, analysts still forecast that inflation will undershoot the Fed&rsquo;s forecasts</strong></li> </ul> <p><strong>EXPECTATIONS:</strong></p> <p>Money markets have been pricing in a 25bps FOMC hike at the 13 December meeting for some time, which would take the Federal Funds Rate target range to 1.25%-1.50%, and represent the third hike this year (and fifth of this hiking cycle).</p> <p>Minneapolis Fed&rsquo;s Neel Kashkari is likely to continue his dissent over the lifting of the Federal Funds Rate target, while there will also be attention on Chicago Fed&rsquo;s Charles Evans, who has also recently cautioned on hikes.</p> <p><strong>INFLATION CONCERNS MAY EASE:</strong></p> <p>Concerns regarding the inflation outlook were noted in the minutes of the FOMC&rsquo;s October/November meeting minutes. But the recent run of data will likely provide support to the hawks. The October CPI data ticked up slightly, with the core Y/Y rate now at 1.8%, and the headline rate at 2.0%.</p> <p>November&rsquo;s inflation data will also be released on Wednesday 13 December - which the FOMC will likely have sight of during its two-day meeting &ndash; and the consensus expects the headline to tick up further, while the core rate is seen steady. The Fed will have been encouraged by the better-than-expected November PPI data, which suggests that pipeline inflation pressures may be emerging.</p> <p><strong>ECONOMIC PROJECTIONS: </strong></p> <p>The FOMC is due to update its economic projections, and there may be scope for upward revisions to the growth estimates made in September - analysts are certainly more optimistic than the Fed&rsquo;s current projections.</p> <p>The forecasts made in September did not include any of the proposed fiscal stimulus into its projections; while there remains uncertainty about the exact impact the recent tax cuts are likely to have on the US economy, some Fed policymakers have argued that there will be only limited upside potential at the very minimum.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/13/econ%20projections%20ran.jpg"><img height="304" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/13/econ%20projections%20ran_0.jpg" width="500" /></a></p> <p>However, the consensus view for PCE and core PCE is below the Fed&rsquo;s September forecasts, and meanwhile, the market and the Fed are more-or-less in-line on the rate of joblessness from 2018 onwards.</p> <p>It is worth noting that, as at the previous five Fed meetings, there will only be nine voters at the December meeting, rather than the full contingent of 12. IFR points out that, this means there will only be 16 (of a possible 19) dots on the dot plot.</p> <p>There will be speculation around the forecasts of newly instated Governor Randall Quarles. &ldquo;Although Fed Governor Quarles voted in the last meeting, this will be the first time we see his dot,&rdquo; IFR writes, &ldquo;we suppose, for now, his dots will fall next to the median projections for end-2018, end-2019 and end-2020.&rdquo;</p> <p><strong>HIKE TRAJECTORY: </strong></p> <p>Federal Funds futures are currently pricing in just over three hikes (including one at this meeting) through to the end of 2020, undershooting the Fed&rsquo;s view of another seven hikes over that horizon. Analysts at ING suggest that there will be two factors to consider on this front:</p> <p>1) Persistently low US inflation dynamics: &ldquo;such signs remain few and far between &ndash; and trackers of long-run US inflation expectations (like the 5Y5Y break-evens) are right to be pricing in structurally lower price dynamics,&rdquo; ING writes, &rdquo;it&rsquo;s a tall order for the median Fed dots to shift lower, but we may see a slight downshift in the distribution.&rdquo;</p> <p>2) The impact of fiscal stimulus on the Fed&rsquo;s outlook: &ldquo;Odds of the Trump Tax Bill being passed have increased since the Sep FOMC projections and it will be interesting to see whether officials will incorporate any fiscal stimulus into their forecasts,&rdquo; ING writes. &ldquo;We think it is too early for this, while some Fed officials have also downplayed the reflationary effects of proposed policies.&rdquo;</p> <p><strong>POST-MEETING PRESS CONFERENCE: </strong></p> <p>The post-meeting press conference with Chair Janet Yellen will be her last, and she is expected to strike a balanced tone regarding future policy, HSBC says, reiterating her view that the FOMC will tighten policy gradually (as the incoming Fed Chair Powell recently endorsed in his confirmation hearing).</p> <p><strong>WHAT BANKS DESKS ARE SAYING: </strong></p> <p><strong>ABN AMRO: </strong>We expect the FOMC to raise its target range for the Fed funds rate by 25bp to 1.25-1.5% at its meeting on Wednesday, with the policy rate (the IOER) also moving up by the same amount to 1.5%. This is widely expected by economists and is virtually fully priced in by financial markets (98.3% according to the Bloomberg probability calculator based on futures pricing). So investors will be largely focused on the Fed&rsquo;s guidance for 2018, which will be shaped by the dot plot and communication in the press conference. Our sense is that the FOMC must be torn by conflicting signals on the economy and inflation. Its confidence in a continued positive outlook for economic growth and the labour market must have strengthened in recent months. On the other hand, its confidence in its view that inflation will return to target over the medium term must have softened somewhat given continued subdued readings for wage growth, unit labour cost growth and core inflation numbers (even though the latter appear to have stabilised recently after falling for much of the year). Against these conflicting signals, we think the FOMC may continue to project 3 rate hikes in 2018. Given that financial markets are pricing in less than two hikes, this might be negative for Treasury markets in the near term (in particular the short-end), but positive for the US dollar. Our own view is that the Fed will eventually deliver less rate increases than it is signalling (two rather than three) given that underlying inflationary pressures are likely to remain subdued.</p> <p><strong>BARCLAYS: </strong>We expect a 25bp increase in the federal funds rate in December. We expect a modest upgrade to the description of labour markets following the landfall of the major hurricanes which disrupted labor markets temporarily. In the updated SEPs, we expect a modest upgrade to growth in 2017 and 2018 alongside a lower unemployment rate path along the forecast horizon. This should lead to increased confidence about the outlook for inflation and, in our view, will result in a 12.5bp firming in the average funds rate over the next two years. We no longer expect a delay in the rate hike cycle early next year and restore our outlook for three further rate increases in 2018 in March, June, and December.</p> <p><strong>BAML: </strong>The final FOMC meeting of the year will give us a sense of how FOMC officials see the economy evolving as we head into 2018. A key question is whether FOMC officials include the potential impact of tax reform. Moreover, Randy Quarles will be submitting his forecasts for this meeting, replacing Stanley Fischer&#39;s submissions. In our view, the forecasts are likely to be quite similar, but there is a risk Quarles has a more positive outlook for the longer term, buying into the argument fiscal stimulus and de-regulation could boost longer-term growth prospects. On balance we think the risk is that the dots shift slightly higher in 2019 and beyond, sending the forecast for long-run rates back to 3.0%, therefore reversing the move in September. This would send a more hawkish signal. However, we believe the risks are that Chair Yellen strikes a more cautious tone in the press conference as she expresses the need for caution as the hiking cycle progresses. She will also likely have to answer questions on the recent flattening of the curve.</p> <p><strong>CAPITAL ECONOMICS: </strong>A 25bp rate hike at next week&rsquo;s FOMC meeting is all-but guaranteed. Of more interest will be whether the increased prospect of a near-term fiscal stimulus prompts officials to revise up their projections for GDP growth, inflation and interest rates. Regardless, we still expect a rebound in inflation to convince the Fed to raise rates an above consensus four times in 2018.</p> <p><strong>GOLDMAN SACHS</strong>: FOMC to hike by 25bps as widely expected (95%+ priced). The pressing question is how much tax reform makes its way into the FOMC forecasts; we think for now more into the &ldquo;balance of risks&rdquo; around the forecasts than the forecasts themselves. Otherwise more of the same: strong labor market, solid activity data, easing financial conditions and somewhat sluggish inflation. We expect lower Unemployment Rate forecasts (including Nairu) and slightly higher real GDP forecasts with upside risks. We expect an unchanged three hike median for 2018 but see hawkish risks to September&rsquo;s 2.25 median pace of hikes for 2019. We don&rsquo;t expect explicit mention of tax reform progress in the policy statement but near-term upside risks to be acknowledged by finally moving from &ldquo;roughly balanced&rdquo; to &ldquo;balanced&rdquo;. Without material surprises, Wednesday morning&rsquo;s CPI might matter more than the FOMC release. A stronger print might also lead to an upgrade of the inflation language in the policy statement. Our baseline below is likely slightly dovish to market expectations but as flagged we see risks almost entirely to the hawkish side.</p> <p><strong>HSBC: </strong>We expect the FOMC to raise the federal funds rate by 25bp, lifting the target range to 1.25%- 1.50% from 1.00- 1.25%. This would be the third hike this year and the fifth increase since the FOMC first began to raise policy interest rates at the end of 2015. Minneapolis Fed President Neel Kashkari is likely to dissent in favour of leaving rates unchanged, as he did in March and June. It is possible that Chicago Fed President Charles Evans could also vote against the rate hike; this would be his first dissent this year. We do not expect any major surprises from the policy statement. The statement will probably repeat that economic activity has been rising at a solid rate, while dropping earlier references to hurricane-related disruptions. The FOMC will likely repeat that near-term risks appear roughly balanced and that inflation developments will be monitored closely. Finally, the statement will likely reiterate the guidance that the Committee anticipates gradual increases in the federal funds rate. We expect the FOMC&#39;s median projection for GDP growth to be lifted slightly for the next several years. The projection for 2017 could be increased to 2.5%, up from 2.4% in September. The 2018 projection could be raised to 2.3% from 2.1%, and the 2019 projection could be raised to 2.1% from 2.0%. We expect the FOMC&#39;s median projection for unemployment at the end of 2018 to be lowered slightly to 4.0% from 4.1%. The FOMC&#39;s median estimates for core PCE inflation in 2018 and 2019 could be left unchanged, at 1.9% and 2.0%, respectively. We expect the FOMC&#39;s median projection for policy rates at the end of 2018 to remain at 2.1%, implying three 25bp rate hikes over the course of next year. Some of the policymakers may shift their rate projections for 2019 and 2020, but on balance we expect the median projections for those years will stay at 2.7% and 2.9%, respectively. This will be Ms Yellen&#39;s final post-meeting press conference as Fed Chair. She is likely to strike a balanced tone with respect to the future course of policy, continuing to endorse the FOMC&#39;s message that gradual rate hikes are likely to be warranted in the coming year. The Chair may be asked about the potential macroeconomic effects of the tax reform efforts currently under consideration in Congress.</p> <p><strong>LLOYDS: </strong>We expect the US Federal Reserve to raise interest rates by 0.25% at its December policy meeting As markets already attach a very high probability to a hike there should be little reaction to the announcement Also of interest will be what the Fed signals of its policy intentions for next year We forecast that the &lsquo;dot plot&rsquo; will continue to show that the majority expect to increase rates three times in 2018 The gap between market pricing and the Fed&rsquo;s interest rate forecasts has shrunk sharply in recent weeks Nevertheless there remains room for markets to be surprised by the extent of the Fed&rsquo;s actions</p> <p><strong>MORGAN STANLEY: </strong>We expect the Fed to hike its target range by 25bp at its December meeting with little change in its economic or rate projections. We expect the Fed to remain on a gradual path through September 2018, then pause in December. Our strategists suggest a neutral stance on the yield curve into year-end.</p> <p><strong>OXFORD ECONOMICS: </strong>We expect the FOMC to take another step in the slow climb back to normalizing monetary policy with a hike in the fed funds rate target range of 25 basis points to 1.25% - 1.50%. The majority of FOMC participants will continue to forecast that inflation will reach its 2% target in the medium-term. The recent uptick in core inflation readings, albeit modest, provides support to their forecasts. it looks very likely that the $1.5 trillion fiscal stimulus bill will soon be passed into law. Since most Fed officials had not factored fiscal stimulus into their forecasts. Doing so would support further rate hikes next year with monetary policy still deemed accommodative. There is the possibility that higher economic and inflation growth estimates will boost the interest rate dot plot estimates for 2018 and 2019.</p> <p><strong>RABOBANK: </strong>Although puzzled by this year&rsquo;s decline in inflation when unemployment has dropped below its own estimate of the NAIRU, the FOMC seems determined to deliver its third rate hike of the year on December 13. However, by trying to squeeze in a third hike before the end of the year they may also reduce the probability of delivering three hikes next year.</p> <p><strong>RBC: </strong>The FOMC meeting is the highlight of the week but it is likely to come and go with very little fanfare. An increase in rates is baked in the cake with the market pricing in 98% odds of a 25bps hike, according to Bloomberg. Likewise, Chair Yellen&rsquo;s press conference should prove to be a non-event. She just testified before the Joint Economic Committee (Nov 29th) and thus her most recent views are out there and well-known. She is also leaving once Powell is confirmed (really a formality now as his nomination cleared the Senate Banking Committee with a bipartisan 22-1 vote) so expect the news conference to look more like a deferential send-off than a grilling. The bigger question is whether the Fed will significantly alter their economic and rates projections. We think not and believe it is more likely the committee will seek flexibility on this front and wait until March to make significant upgrades. For starters, the Fed will want to wait until they can model the impact&nbsp;&nbsp; of the looming tax plan. Even if it is signed into law by the time the committee meets, there will not be enough time to do a proper vetting of what the plan means for economic growth/inflation/rates. Moreover, by waiting until March to release new estimates, the Fed can still maintain flexibility to raise rates 4 times next year or not. Contingent on tax policy being signed into law, we think members will be out in force on the speaking circuit promoting their upgraded views on the economic backdrop, thus moving the probability of a March hike up sharply through early 1Q (it&rsquo;s around 60% at present). Then they couple a hike in March with a boost in growth/inflation and their dots profile (moving to 4 hikes in 2018).</p> <p><strong>UBS: </strong>The 25bp FOMC rate hike that we&#39;ve long forecast is now almost fully priced into markets&mdash;and therefore unremarkable. More interesting will be how the FOMC incorporates tax reform into their projections. Most FOMC members had not built tax reform into their September projections, and progress has been much more rapid than they (or we) expected. With the FOMC putting the tax cuts into their baseline forecasts, the Summary of Economic Projections is likely to show faster growth, a lower unemployment rate, and a faster pace of rate hikes, but no revision to inflation. They&#39;ll also likely build in an additional rate hike in 2018 and 2019, with the fed funds rate above its long-run neutral level by the end of 2019.For our part, we have said that the single largest upside risk to our baseline forecast is that the Congress passes a large tax cut, which now looks much more likely. The details and timing of the tax cuts matter and are still being negotiated. Without any specifics, we have estimated that a tax cut on the order of what is being debated could result in a boost to real GDP growth on the order of &frac14; to &frac12; percent per year in 2018-19.</p> <p><strong>WESTPAC: </strong>A rate hike at this meeting is the expectation of all in the market, having been well telegraphed by the FOMC since the decision to begin balance sheet normalisation back in September. Justification for the decision can be found in continued above trend GDP growth, led by the consumer, as well as a labour market that has well and truly achieved full employment. Wages growth continues to lag, but the FOMC remain expectant. Confidence and financial conditions are also very supportive for the economy, hence the downside risks of a rate hike are negligible. &ndash; Inflation on a PCE basis is expected to firm slowly to target over the coming two to three years. If this occurs and we see two additional hikes in 2018, then the Fed Funds rate will remain neutral to the economy, sustaining growth.</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="1024" height="576" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/yellen%20teaser%205_5.jpg?1513187512" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-13/full-preview-janet-yellens-last-ever-rate-hike#comments Barclays Business Chicago Fed Congress CPI Economy fed Federal funds rate Federal Open Market Committee Federal Reserve Federal Reserve System goldman sachs Goldman Sachs Inflation James B. Bullard Janet Yellen Janet Yellen Joint Economic Committee Joint Economic Committee Lloyds Macroeconomics Minneapolis Fed Monetary Policy Money Morgan Stanley Neel Kashkari Nomination RANSquawk Senate Banking Committee Unemployment Yield Curve Wed, 13 Dec 2017 17:53:30 +0000 Tyler Durden 609084 at http://www.zerohedge.com Overstock.com CEO Exploring Sale To Fund Blockchain-Backed Global Property Venture http://www.zerohedge.com/news/2017-12-13/overstockcom-ceo-exploring-sale-fund-blcokchain-backed-global-property-venture <p>It&rsquo;s fairly easy to categorize Patrick Byrne, the founder of Overstock.com, as a visionary, although he is usually described in less glowing terms in the mainstream media, a typical adjective being &ldquo;controversial&rdquo;. Byrne founded the $1.4 billion internet retailer of mainly &ldquo;closeout&rdquo; merchandise in 1997. In January 2014, Overstock became the first major online retailer to accept Bitcoin in payment for goods. Byrne explained how he became an advocate of cryptocurrencies in an <a href="http://www.zerohedge.com/news/2017-07-31/patrick-byrne-why-cryptocurrencies-matter">interview</a> with Adam Taggart of PeakProsperity.com.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>In the 1980s, I was a graduate student at Stanford in philosophy, but with a heavy quantitative and logic approach. I studied the mathematics that underlies cryptography. It&rsquo;s called computation theory. It was a fascinating field, probably the only religious experience I&rsquo;ve ever had in my life. I felt like I was seeing the face of God -- I loved it. So, in about 2012, I was reading Fast Company or Wired, and I saw this blurb about this new form of money that no government was behind, based on cryptography. And, I realized, Gee, this is like an application of that math I&rsquo;d studied 30 years earlier. Someday I want Overstock.com to be one of the first companies to take it.</p> </blockquote> <p><a href="http://www.zerohedge.com/sites/default/files/images/user235761/imageroot/2017/11/22/byrne1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user235761/imageroot/2017/11/22/byrne1_0.jpg" style="width: 500px; height: 281px;" /></a></p> <p>In 2017, Overstock&rsquo;s share price has more than doubled due to its blockchain investments rather than its online retailing activities, which have seen it categorised as a cryptocurrency &ldquo;play&rdquo;. Blockchain investments are contained in its Medici Ventures business and include a digital currency trading platform tZero. As the <a href="https://www.ft.com/content/d4a6d698-dfa6-11e7-8f9f-de1c2175f5ce">Financial Times</a> notes.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Medici&rsquo;s most closely watched bet is tZERO, a regulation compliant exchange geared towards initial coin offerings, which has been touted as Wall St meets blockchain. It will launch its own much-hyped initial coin offering to raise funds next week.</p> </blockquote> <p>On Monday, Overstock&rsquo;s share price surged 23% after Morgan Stanley Investment Management disclosed an 11.4% stake in the company.&nbsp;</p> <p>In an interview published in the Financial Times today, Byrne discussed how he&rsquo;s planning on selling the online retailing business to develop a global blockchain business focused on the property sector. According to the FT.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Patrick Byrne, the controversial entrepreneur who runs Overstock.com, is exploring options to sell the online retailer, whose stock has soared amid this year&rsquo;s cryptocurrency mania, to fund an ambitious attempt to make a global property registry on blockchain. Hernando de Soto, a well-known Peruvian economist who argues that formalising land rights is key to alleviating poverty, has joined forces with Mr Byrne in the latest attempt to leverage the distributed ledger technology to tackle social problems. Mr de Soto and Mr Byrne, a long-term cryptocurrency and blockchain enthusiast who waged a campaign against short selling, have formed a non-profit venture called De Soto, Inc. that intends to gather local informal ownership records into a blockchain database. A pilot is expected early 2018.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;One of the possibilities is I sell the (Overstock) business and we have all the capital we need&rdquo; to fund the new venture, Mr Byrne told the Financial Times on Tuesday, adding that he would cherry-pick a dozen of Overstock&rsquo;s top talent to take over to De Soto by late January. &ldquo;I feel a great moral obligation to refocus my life around this,&rdquo; he added.</p> </blockquote> <p>You could be forgiven for getting confused between Hernando de Soto the Spanish conquistador who led the first European expedition deep into the modern United States (he was the first European to cross the Mississippi) and Hernando de Soto Polar, the economist and President of the Institute for Liberty and Democracy (ILD) in Lima. The ILD is credited with more than 400 initiatives, laws and regulations which have changed the Peruvian economy. On de Soto Polar, <a href="https://en.wikipedia.org/wiki/Hernando_de_Soto_Polar">Wikipedia</a> notes.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The main message of de Soto&#39;s work and writings is that no nation can have a strong market economy without adequate participation in an information framework that records ownership of property and other economic information. Unreported, unrecorded economic activity results in many small entrepreneurs who lack legal ownership of their property, making it difficult for them to obtain credit, sell the business, or expand. They cannot seek legal remedies to business conflicts in court, since they do not have legal ownership. Lack of information on income prevents governments from collecting taxes and acting for the public welfare.</p> </blockquote> <p>In its special May 1999 issue, Time Magazine named de Soto as one of the &ldquo;five leading innovators of the century&rdquo; while Forbes&rsquo; 85th anniversary edition named him as one of the fifteen innovators &ldquo;who will reinvent your future&rdquo;.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user235761/imageroot/2017/11/22/byrne.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user235761/imageroot/2017/11/22/byrne_0.png" style="width: 500px; height: 218px;" /></a></p> <p>In May 2015, de Soto attended the 1st Annual Block Chain Summit hosted by British billionaire, Richard Branson, at this private Caribbean residence, Necker Island. De Soto was one of three moderators along with a former WSJ columnist and an editor of The Economist.</p> <p>Byrne, who owns 40% of Overstock&rsquo;s equity with other family members, has committed himself for five years to set up the blockchain property registry. The FT reviews the three options for selling Overstock which Byrne is mulling.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>One option is selling Overstock&rsquo;s retail business to a bricks and mortar company seeking a strong online presence, to avoid disruption by Amazon. &ldquo;Really, since this summer there&rsquo;s a mass freak-out in corporate America,&rdquo; Mr Byrne observed.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The second is for the entire company to be bought by or take a large investment from a multibillion-dollar investment fund that does not &ldquo;want to cede the earth to Amazon&rdquo;. Mr Byrne claimed that one such fund had approached the company two months ago. He would not name the fund, but hinted that interest from Asia was especially strong.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The third option is to be bought out by a large private equity firm, which would allow Mr Byrne to step away from Overstock to pursue the De Soto project. Mr de Soto, a recipient of the $500,000 Milton Friedman Prize from the Cato Institute, a conservative think-tank, was linked to a land registry blockchain project with the Republic of Georgia in April 2016. But he says that after the inauguration ceremony, he was not consulted further.</p> </blockquote> <p>The combination of Byrne and de Soto could be powerful force for good, exploiting blockchain technology in a positive way for free market capitalism. However, they will no doubt have to contend with central planners and central bankers who will attempt to hijack the technology for collectivist purposes. This was Ronald Reagan&rsquo;s view on de Soto&rsquo;s work.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;De Soto and his colleagues have examined the only ladder for upward mobility. The free market is the other path to development and the one true path. It is the people&#39;s path&hellip; it leads somewhere. It works.&rdquo;</p> </blockquote> <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="1920" height="1080" alt="" src="http://www.zerohedge.com/sites/default/files/images/user235761/imageroot/byrne1.jpg?1513163628" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-13/overstockcom-ceo-exploring-sale-fund-blcokchain-backed-global-property-venture#comments Alternative currencies Bitcoin Bitcoin Blockchains Business Caribbean Cato Institute CATO Institute Corporate America Cryptocurrencies cryptography Decentralization distributed ledger technology Economy Finance Hernando de Soto Polar Institute for Liberty and Democracy Institute for Liberty and Democracy Milton Friedman Money Morgan Stanley Overstock.com Private Equity Stanford The Economist The Other Path: The Economic Answer to Terrorism Time Magazine Wed, 13 Dec 2017 17:25:20 +0000 Tyler Durden 609046 at http://www.zerohedge.com The Fed is Arranging Deck Chairs on the Titanic (the Iceberg Comes in 2018). http://www.zerohedge.com/news/2017-12-13/fed-arranging-deck-chairs-titanic-iceberg-comes-2018 <p>The Fed concludes its final FOMC meeting of the year today.</p> <p>The entire financial world expects the Fed to raise rates a final time. This will mark the fifth rate hike since December 2015, and the fourth of the last 12 months.</p> <p>Throughout this time period, the Fed has routinely stated that it is confused as to why inflation is &ldquo;too low.&rdquo;</p> <p>Inflation is not too low. The method the Fed uses to measure inflation is intentionally incorrect. As a result, the official inflation numbers reflect whatever the Fed wants, as opposed to reality.</p> <p>Alan Greenspan devised this entire gimmick back in the 1990s. At that point, the amount of debt in the US financial had already become a systemic issue.</p> <p><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user20289/imageroot/2017/11/30/GPC121317.jpg" style="width: 460px; height: 287px;" /></p> <p>So Greenspan opted to &ldquo;paper over&rdquo; this fact via inflation&hellip; hoping that by aggressively devaluing the US Dollar he could keep this game going.</p> <p>The only problem as far as the Fed was concerned was that the inflation numbers would reveal the Fed&rsquo;s strategy. So Greenspan started tinkering with how the Fed measured inflation, removing various components (food and energy) and tweaking things so the Fed would no longer measure the cost of maintaining the same quality of life.</p> <p>Greenspan hoped understating inflation publicly he would give him the cover he needed to pursue an aggressive devaluation of the US Dollar. The flip side of this was that the Fed would begin intentionally creating asset bubbles by maintaining loose monetary policy ad infinitum.</p> <p><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user20289/imageroot/2017/11/30/GPC1213172.png" style="width: 460px; height: 284px;" /></p> <p>The late &lsquo;90s was the Tech Bubble.</p> <p>When that burst in the mid-&lsquo;00s, the Fed created a bubble in housing.</p> <p>When that burst in &rsquo;08 the Fed created a bubble in US sovereign bonds or Treasuries.</p> <p>And because these bonds are the bedrock of the US financial system, the &ldquo;risk-free rate&rdquo; of return against which ALL risk assets are valued, when the Fed did this it created a bubble in EVERYTHING.</p> <p>That bubble is now beginning to burst. And ironically it is inflation (which the Fed claims is too low) that will do it.</p> <p>It will take time for this to unfold, but as I recently told clients, we&#39;re currently in &quot;late 2007&quot; for the coming crisis.</p> <p>The time to prepare for this is NOW before the carnage hits.</p> <p>On that note, we are putting together an Executive Summary outlining all of these issues as well as what&rsquo;s to come when The Everything Bubble bursts.</p> <p>It will be available exclusively to our clients. If you&rsquo;d like to have a copy delivered to your inbox when it&rsquo;s completed, you can join the wait-list here:</p> <p><a data-mce-="" href="https://phoenixcapitalmarketing.com/TEB.html"><strong>https://phoenixcapitalmarketing.com/TEB.html</strong></a></p> <p>Best Regards</p> <p>Graham Summers</p> <p>Chief Market Strategist</p> <p>Phoenix Capital Research</p> http://www.zerohedge.com/news/2017-12-13/fed-arranging-deck-chairs-titanic-iceberg-comes-2018#comments Alan Greenspan Alan Greenspan Business Economic bubble Economy fed Federal Open Market Committee Federal Reserve System Financial crises Freemen of the City of London Greenspan put Inflation James B. Bullard Macroeconomics Monetary Policy Monetary policy Reality US Federal Reserve Wed, 13 Dec 2017 17:22:06 +0000 Phoenix Capital Research 609080 at http://www.zerohedge.com House, Senate Republicans Reach Tax Deal: Here Are The Initial Details http://www.zerohedge.com/news/2017-12-13/house-senate-republicans-reach-tax-package-deal-stocks-pump-then-dump <p>One day after we reported that "<a href="http://www.zerohedge.com/news/2017-12-12/republicans-reach-tentative-tax-agreement-raise-corporate-tax-21-cut-individual-tax-">Congressional Republicans reached a tentative tax agreement</a>", the news of which sparked another risk surge into the close of trading, moments ago we got the second tax deal in 24 hours - if only for algo consumption - when the AP reported that House and Senate GOP leaders have reached a "tentative deal" on tax overhaul "in principle." </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/13/trump%20tax%20teaser%202.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/13/trump%20tax%20teaser%202_0.jpg" width="500" height="281" /></a></p> <p>The AP quoted a "person familiar with the conversations who asked not to be named because the discussions are private" and who is certainly long stocks, as the replica headline was enough to send the S&amp;P to new all time highs.&nbsp; </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The agreement "in principle" paves the way for final votes next week to slash taxes for businesses and give most people tax cuts starting next year. Top GOP aides say the deal was reached on Wednesday. They spoke on condition of anonymity because they were not authorized to speak publicly about the deal. Details still need to be drafted and assessed by congressional scorekeepers but the final House-Senate compromise is on track to be unveiled this week.&nbsp; </p> </blockquote> <p>The details, virtually <a href="http://www.zerohedge.com/news/2017-12-12/republicans-reach-tentative-tax-agreement-raise-corporate-tax-21-cut-individual-tax-">identical to what we reported yesterday</a>: <strong>the top individual tax rate would be lowered to 37% as and set the corporate tax rate at 21%, slightly higher than the 20% initially favored by President Trump</strong>. The mortgage interest deduction would be capped at $750,000, a mid-point compromise between the Senate and House bills. </p> <p><strong>The deduction for pass-through companies will be set at 20 percent, somewhat lower than the 23 percent included in the Senate-passed bill. That will be offset by lowering the top individual income rate to 37%. It is now 39.6%. </strong></p> <p>* * * </p> <p>Still, lawmakers will need to get a cost analysis of their agreement, so it’s not yet definite, "the person" said, who clearly gets around and was this time quoted by Bloomberg.</p> <p>And since lawmakers still need to get a cost analysis of their agreement, not only is today's "tentative deal" not yet definite, but it will almost surely be unwound when someone actually brings a calculator into the room.</p> <p>Curiously, after jumping higher, stocks have since faded the kneejerk reaction higher, perhaps realizing that the more fiscal stimulus that is injected, the more tightening the Fed will have to unleash in the coming months as inflation become red hot. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/13/2017-12-13%20%282%29.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/13/2017-12-13%20%282%29_0.jpg" width="500" height="327" /></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="640" height="360" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/trump%20tax%20teaser%202.jpg?1513185456" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-13/house-senate-republicans-reach-tax-package-deal-stocks-pump-then-dump#comments 112th United States Congress Amazon tax Business Congress Politics Presidency of Barack Obama Rates Republican Party S&P Senate Tax Tax Cuts and Jobs Act Tax incidence US Federal Reserve Wed, 13 Dec 2017 17:06:56 +0000 Tyler Durden 609079 at http://www.zerohedge.com How GDP Became A Joke, In One Chart http://www.zerohedge.com/news/2017-12-13/how-gdp-became-joke-one-chart <p>For all the rhetoric about above-trend US growth, <a href="http://www.zerohedge.com/news/2017-11-13/ubs-makes-striking-discovery-ex-energy-us-gdp-growth-slowest-2010">one month ago UBS shattered the narrative of surging GDP </a>by showing just one chart, which revealed that excluding contributions from energy investment, which are about to hit a brick wall now that the price of oil has peaked and is reverting lower once again, US growth for the past 2 years has been slowing.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/07/UBS%20summary%201.png"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/07/UBS%20summary%201.png" width="525" height="399" /></a></p> <p>On the other hand, things get even more complicated thank to a chart released yesterday by UBS' global chief economist Paul Donovan who makes a point we have repeatedly underscored over the past decade, namely that economic data is largely worthless, and any instant snapshot reveals more about the political and "goalseeking" climate of the agency releasing the "data" than about the underlying economy itself. </p> <p>As Donovan shows, here are the <em><strong>no less than 6 answers </strong></em>one gets to the question of "<strong>how fast was the US growing at the start of 2015?</strong>."</p> <p>By way of context, recall that this was the quarter when the US was blanketed by deep snow, and when every "expert" was rushing to convince those who bothered to listen that the economy would suffer a sharp slowdown as a result of the weather and nothing but the weather (and yes, that included UBS). And when the number was first reported, that was indeed the case: <strong>with Q1 2015 GDP reportedly growing only 0.2%. The problem is that within just over a year, that 0.2% initial GDP print turned to -0.7%, before subsequently surging to 2% and ultimately 3.2%!</strong> </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/13/UBS%20GDP%20Q1%202015.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/13/UBS%20GDP%20Q1%202015_0.jpg" width="500" height="408" /></a></p> <p>Here is the sarcastic take of UBS' own chief economist on this GDP travesty, which is even more sarcastic&nbsp; - and ironic - considering <em><strong>his </strong></em>entire job is to predict the exact number associated with said travesty:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Economic data is not very precise. Economists are trying to hit a target that is moving rapidly. Economic data is being revised more often, and the revisions are larger than in the past. The following chart shows annualized US GDP growth in the first quarter of 2015. </p> <p>&nbsp;</p> <p>Growth was initially reported very weak, below consensus and barely moving. Then the data was revised to show the US economy was shrinking – and shrinking a lot (the number was –0.7% annualized). Then it was revised to show the economy was shrinking a bit. Then it was revised to show the economy was growing, but a long way below trend growth. </p> <p>&nbsp;</p> <p>The growth number was then revised to be basically in line with trend growth. Now, US growth at the start of 2015 is thought to be 3.2%. </p> <p>&nbsp;</p> <p><strong>So which number in the range of –0.7% to 3.2% is the economist supposed to be forecasting? An economist predicting 3.2% growth when the data was first released would have been ridiculed. According to the latest information we have, that economist would have been right.</strong></p> </blockquote> <p>In other words, that terrible weather which at the time was used to justify why the economy ground to a halt - when in reality it was all a function of China's credit impulse crashing - would eventually serve as a the catalyst to grow the economy at a pace that has been recorded on just a handful of occasions in the past decade.</p> <p>No wonder then economists - especially those who work at the Fed but all of them really - their predictions and their analyses have become the butt of all jokes; and by implication, no wonder traders and algos no longer respond to economic "data."</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="725" height="444" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/ubs%20gdp%20teaser.jpg?1513183189" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-13/how-gdp-became-joke-one-chart#comments Business Economic growth Economy Economy of the United States Finance Financial services Gross domestic product Reality The Economist UBS US Federal Reserve Wed, 13 Dec 2017 16:51:04 +0000 Tyler Durden 609078 at http://www.zerohedge.com