en Tax Cut! Yardeni Research Calculates Effective Corporate Tax Rate Already Fallen To 13% <p>In March 2017, The Institution on Taxation and Economic Policy (ITEP) released its latest <a href="">report</a> examining the corporate tax filings for Fortune 500 companies. It looked at 258 of the companies which had been &quot;consistently profitable&quot; from 2008 to 2015. The report concluded that these companies were collectively paying far less than the statutory 35% federal corporate tax rate &ndash; in fact the average effective tax rate was 21.2%. According to the ITEP report.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Many profitable corporations are finding ways to zero out their corporate taxes.&nbsp; Of the 258 profitable Fortune 500 companies in our sample:</p> <ul> <li>18 paid ZERO in taxes over the full eight-year period.</li> <li>100 paid zero&mdash;or less&mdash;in at least one profitable year during the eight-year period, 58 of those companies had multiple zero-tax years.</li> <li>24 companies zeroed out their taxes in at least four of the eight years.&nbsp;</li> <li>48 companies paid a rate between 0 and 10 percent over eight years.</li> </ul> </blockquote> <p>In general, it found that utility, oil, gas and pipeline companies tend to pay low tax rates. Only about a quarter of the companies paid a tax rate of at least 30% and about 60% of those companies were in two sectors, retail and health care.<br />&nbsp;<br />The report found that the 258 corporations enjoyed tax breaks of $526 billion during the eight years 2008-15. More than half of this total, <strong>$286 billion, went to just 25 companies</strong>.</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 846px;" /></a></p> <p><strong>If you thought that was bad, you&rsquo;re in for a shock because analysis by Yardeni Research suggests that the situation could already be even worse&hellip;and Congress hasn&rsquo;t even passed the tax reform bill. </strong>According to <a href="">CNBC</a>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>U.S. companies on balance already are paying well below the 20 percent tax level targeted in the Republican reform plan, according to an analysis by Yardeni Research. In fact, the typical effective tax rate - the amount paid minus deductions - could be as low as 13 percent over the past years, Yardeni concluded when looking at a cleaner number of how much the government is really collecting. That&#39;s well below other estimates that sought to clarify the impact of the tax reform proposal that would take the current nominal rate from 35 percent to 20 percent. Multiple firms have concluded the benefits will tilt to specific sectors and provide a limited aggregate windfall.</p> </blockquote> <p>Delving in to the data, Yardeni uses the example of the Q3 2017 GDP release from the Bureau of Economic Analysis. The data shows that corporations paid $472.9 billion in taxes during the past four quarter on pre-tax profits of $2281.4 billion. This implied an effective tax rate of 20.7%, which was obviously very close to the effective tax rate calculated by ITEP.</p> <p>However, Yardeni wasn&rsquo;t done. Noting that corporate tax revenues collected by the IRS are consistently less than corporate taxes included in the GDP measure of corporate profits. Using the Treasury&rsquo;s data of corporate tax collected in the four quarters through Q3 2017 - $297 billion and 37% lower than the $472.9 billion in the GDP measure &ndash; Yardeni <a href="">concluded</a>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The shocking result is that the <strong>effective corporate tax rate based on actual tax collections was only 13.0% during Q3</strong>, and has been mostly well below 20.0% since the start of the previous decade. What gives? I&rsquo;m not sure, but I am inclined to follow the money, which tends to support the story told by the IRS data. If so, then Congress may be about to cut a tax that doesn&rsquo;t need cutting. Or else, the congressional plan is actually reform aiming to stop US companies from using overseas tax dodges by giving them a lower statutory rate at home. We may not be able to see the devil in the details of the bill until it is actually enacted.</p> </blockquote> <p>Here are Yardeni&rsquo;s ugly findings in chart form&hellip;<br /><a href=""><img alt="" src="" style="width: 600px; height: 351px;" /></a><br />&hellip;although, as CNBC reports him saying.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&quot;The bottom line is that getting to the bottom line when it comes to matters of taxation is a very taxing exercise&quot;</strong></p> </blockquote> <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="309" height="163" alt="" src="" /> </div> </div> </div> Bureau of Economic Analysis Business Congress Corporate tax in the United States Economy Institution on Taxation and Economic Policy Internal Revenue Service Political debates about the United States federal budget Tax Tax avoidance Wed, 13 Dec 2017 22:26:25 +0000 Tyler Durden 609083 at This Bill In Congress Could Means 10s Of 1000s More Americans Banned From Buying Guns <p><a href=""><em>Authored by Michael Snyder via The American Dream blog,</em></a></p> <p>When news that a &ldquo;concealed-carry reciprocity law&rdquo; had been passed by the U.S. House of Representatives, <em><strong>gun owners all over the nation rejoiced.&nbsp;</strong></em> But what most people didn&rsquo;t realize is that there had been a last minute change to the bill that could <strong>substantially increase the number of Americans that are banned from buying guns.</strong>&nbsp; This poison pill completely ruins the bill, and it must be voted down.&nbsp; What we need is a clean &ldquo;concealed-carry reciprocity bill&rdquo; that does not include &ldquo;Fix-NICS&rdquo; in it.</p> <p>Let&rsquo;s start at the beginning.&nbsp; <strong>Last week, gun owners were elated when the House passed a bill that would enable them <a href="" target="_blank" title="“to legally carry concealed weapons across state lines”">&ldquo;to legally carry concealed weapons across state lines&rdquo;</a>&hellip;</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Republicans rammed a bill through the House on Wednesday that would make it easier for gun owners to legally carry concealed weapons across state lines, the first significant action on guns in Congress since mass shootings in Nevada and Texas killed more than 80 people.</p> <p>&nbsp;</p> <p>The House approved the bill, 231-198, largely along party lines. Six Democrats voted yes, while 14 Republicans voted no.</p> <p>&nbsp;</p> <p>The measure would allow gun owners with a state-issued concealed-carry permit to carry a handgun in any state that allows concealed weapons. It now goes to the Senate.</p> </blockquote> <p><strong>It would be easy to assume that since virtually every single Republican voted for this bill that it must be a good thing.</strong></p> <p>But it turns out that a change was inserted into the bill at the last moment that many lawmakers never read.&nbsp;</p> <p>According to <a href="" target="_blank" title="Fox News">Fox News</a>, <u><em><strong>the bill &ldquo;contained an 11th-hour change to help states and agencies enter such data as criminal and domestic-violence convictions into the National Instant Criminal Background Check System for gun purchases&rdquo;.</strong></em></u></p> <p>A few member of the House immediately figured out what was going on and decided to vote against the bill.&nbsp; One of them was <a href="" target="_blank" title="U.S. Rep. Louie Gohmert">U.S. Rep. Louie Gohmert</a>&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Rep. Louie Gohmert (R-TX) explained on Wednesday that he could not support national reciprocity because House Leadership added the gun control expansions of &ldquo;Fix-NICS&rdquo; to it.</p> <p>&nbsp;</p> <p>&ldquo;Fix-NICS&rdquo; is a measure Sens. Dianne Feinstein (D-CA), Chris Murphy (D-CT), Richard Blumenthal (D-CT), and John Cornyn (R-TX) support. It responds to the Air Force&rsquo;s failure to report Devin Kelley&rsquo;s criminal history <strong>by expanding the number of people who will be barred from gun possession going forward</strong>.</p> </blockquote> <p><strong>So exactly how many people could be &ldquo;barred from gun possession going forward&rdquo;?</strong></p> <p>Well, according to <a href="" target="_blank" title="Gun Owners Of America">Gun Owners Of America</a>, even people with &ldquo;unpaid traffic tickets&rdquo; could be banned from owning guns under this bill&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The goal of the Cornyn-Feinstein-Murphy-Schumer bill is to force every single potential NICS name to be sent to the FBI&rsquo;s NICS system.</p> <p>&nbsp;</p> <p>It was prompted by reports that the Air Force did not send the name of the Sutherland Springs shooter to NICS - even though he certainly could have gotten a firearm in a wide variety of ways, even if he had been in NICS, and even though his carnage was stopped by the real solution to violence ... a good guy with a gun.</p> <p>&nbsp;</p> <p><strong>The problem is that, because of this isolated horror story, the Cornyn bill could add the names of millions of additional law-abiding Americans to NICS.</strong></p> <p>&nbsp;</p> <p>You already know of the 257,000 veterans who have lost their rights because of a bad experience in Iraq.</p> <p>&nbsp;</p> <p>You already know that 95% of NICS denials are &ldquo;false positives.&rdquo;</p> <p>&nbsp;</p> <p><strong>And you probably also know that &ldquo;Fix NICS&rdquo; would require that the rolls of Social Security, Medicare, Medicaid, CHIP, and ObamaCare be trolled for recipients with PTSD, ADHD, or Alzheimer&rsquo;s &mdash; that is, people who have had guardians appointed.</strong></p> <p>&nbsp;</p> <p><strong>What you may not know is that the SECOND LARGEST CATEGORY of prohibited persons is &ldquo;fugitives from justice&rdquo; - and that a good portion of these are Americans who have UNPAID TRAFFIC TICKETS.</strong></p> </blockquote> <p>Needless to say, I would have voted against this bill, and as <a href="" target="_blank" title="a member of Congress">a member of Congress</a> I will never compromise on the 2nd Amendment even a single inch.&nbsp; If you believe in what we are trying to do, I hope that you will help us <a href="" target="_blank" title="to win next May">to win next May</a>.</p> <p>Even though Donald Trump is in the White House, the enemies of the 2nd Amendment are still trying to sneak gun control measures through Congress, and we need leaders in Washington that will tirelessly defend our rights.</p> <p>*&nbsp; *&nbsp; *</p> <p><em><a href="" rel="noopener noreferrer" target="_blank" title="Michael Snyder">Michael Snyder</a>&nbsp;is a Republican candidate for Congress in Idaho&rsquo;s First Congressional District, and you can learn how you can get involved in the campaign on his&nbsp;<a href="" rel="noopener noreferrer" target="_blank" title="official website">official website</a>. His new book entitled&nbsp;<a href="" rel="noopener noreferrer" target="_blank" title="“Living A Life That Really Matters”">&ldquo;Living A Life That Really Matters&rdquo;</a>&nbsp;is available in paperback and for the Kindle on&nbsp;<a href="" rel="noopener noreferrer" target="_blank" title=""></a>.</em></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="267" height="139" alt="" src="" /> </div> </div> </div> Air Force Concealed carry in the United States Congress Donald Trump FBI Federal Bureau of Investigation Fox News Gun Owners of America Gun politics in the United States Iraq John Cornyn John Cornyn Licenses Louie Gohmert Medicare Medicare National Instant Criminal Background Check System Obamacare Politics Politics of the United States Richard Blumenthal Self-defense Senate Texas United States United States firearms law US House of Representatives White House White House Wed, 13 Dec 2017 22:06:10 +0000 Tyler Durden 609068 at Bloomberg Pronounces The Early Death Of The Traditional Long-Short Hedge Fund Model <p>Bloomberg has apparently just taken it upon itself to pronounce the early, unceremonious demise of the traditional Long/Short Hedge Fund model after seemingly declaring that stocks will continue to march higher in perpetuity, with minimal volatility, thus rendering traditional financial analysis and stock picking about as obsolete as a Motorola pager from 1982.&nbsp; Of course, we embellish a little...but not is <a href="">Bloomberg</a>'s take:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>The long and short on hedge funds is that long and short isn’t working so well anymore.</strong></p> <p>&nbsp;</p> <p>That’s the rather simple strategy that built the $3.2 trillion industry — the once-durable buying long when you figure an equity will go up and selling short when you reckon the opposite — and that basically put the “hedge” in hedge fund. <strong>These days it’s unreliable, at best.</strong></p> <p>&nbsp;</p> <p>There are any number of reasons trotted out for long-short’s fallibility: little volatility, low interest rates, so much passive investing in stocks by the likes of Vanguard Group and BlackRock Inc., too many quantitative funds in the business. What’s more, the number of publicly traded companies in the U.S. is, at about 3,700, half what it was in 1996.</p> <p>&nbsp;</p> <p><strong>“The one strategy that is facing an existential question is long-short equity,”</strong> Ted Seides, former head of hedge fund investor Protégé Partners, said recently at an investor conference at the University of Virginia’s Darden School of Business in Charlottesville.</p> </blockquote> <p>As evidence for their controversial call, Bloomberg cites the billions of dollars in capital that have been thrown at long-only, passively managed funds since the stock market started its meteoric rise off the lows back in 2009.&nbsp; <strong>Of course, if self-fulfilling prophecies such as these are actually meaningful then perhaps Bloomberg should just recommend that everyone pile into Bitcoin</strong> because its asset base has grown way faster than that of ETFs and/or other passively managed products.&nbsp;</p> <p><a href=" - BBG.JPG"><img src="" style="width: 600px; height: 429px;" /></a></p> <p>So, where does Bloomberg figure you should put your money these days?&nbsp; How about a nice quant fund?&nbsp; <strong>Better yet, how about an investment advisor that will effectively take your money, buy the SPY and then charge you 1% of assets for his "advice"...a strategy you could easily execute yourself on E-Trade for about $7.95 in trading fees.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The biggest inflows this year have gone to long-biased or long-only products run by the quantitative funds, which use computers to decide what to buy and charge lower fees than most.</p> <p>&nbsp;</p> <p>Renaissance Technologies, for instance, has pulled in $10 billion so far this year, while assets at Two Sigma have risen to $50 billion, up from $38 billion a year ago.</p> <p>&nbsp;</p> <p>At Luxon Financial, investors have asked for products that can wager on rising and falling prices of securities but that charge much lower fees than hedge funds, said President Anson Beard, whose last job was an executive at a stock hedge fund that closed. Luxon's Cary Street Partners is a $2.5 billion firm of about 40 registered investment advisers whose clients are high-net-worth individuals in the Southeast U.S. and Texas.</p> <p>&nbsp;</p> <p>Beard said he sees these so-called liquid alternatives taking the place of hedge funds in many investors’ portfolios.</p> </blockquote> <p>Of course, as <strong>famed hedge fund investor Lee Ainslie points out, sacrificing upside potential to fund hedging costs during a massive equity bubble is almost always blasted as a useless waste of capital</strong> by those chasing that bubble...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Or consider Lee Ainslie, who started Maverick Capital in 1993 after he left Tiger Management, where he trained with famed investor Julian Robertson. He lost about 10 percent last year and is down again this year.</p> <p>&nbsp;</p> <p>Traditional stock hedge-fund managers remain hopeful. Ainslie told investors that he expects short selling to again be a profitable pursuit.</p> <p>&nbsp;</p> <p><strong>“On the short side, periods of frustration are not uncommon and are typically followed by periods in which short selling is actually quite rewarding,” </strong>Ainslie wrote in a letter this summer.</p> </blockquote> <p><strong>...which is true right up until the point that it isn't...</strong></p> <p><a href=" - SPY.jpg"><img src="" style="width: 600px; height: 519px;" /></a></p> <p><strong>What is that saying about "he who laughs last?"</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="671" height="374" alt="" src="" /> </div> </div> </div> Active management Alternative investment management companies Bitcoin Blackrock Business E-Trade Finance Financial markets Funds Hedge funds Investment Investment management Julian Robertson Julian Robertson Maverick Capital Money Motorola Renaissance Renaissance Technologies Short Southeast U.S. SPY Tiger Management University of Virginia’s Darden School of Business Volatility Wed, 13 Dec 2017 21:47:03 +0000 Tyler Durden 609006 at What Causes Asset Bubbles? <p><a href=""><em>As we showed yesterday,</em></a> <strong>the price of bitcoin has finally surpassed &quot;Tulips&quot; in the global bubble race.</strong></p> <p><a href=""><img height="395" src="" width="600" /></a></p> <p>Overnight the <a href="">former Bridgewater analysts Howard Wang and Robert Wu, who make up Convoy Investments</a>, released their thoughts on <u><strong>what happens next</strong></u>... and most importantly, <u><strong>what causes asset bubbles</strong></u>...</p> <p><strong>When we see a dramatic rise in asset prices, there is often an internal struggle between the two types of investors within us. </strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The first is the <u>value </u>investor, &ldquo;is this investment getting too expensive?&rdquo;</p> <p>&nbsp;</p> <p>The second is the <u><strong>momentum </strong></u>investor, &ldquo;am I missing out on a trend?&rdquo;</p> </blockquote> <p>I believe the balance of these two approaches, both within ourselves and across a market, ultimately determines the propensity for bubble-like behavior. When there is a new or rapidly evolving market, our conviction in the value investor can weaken and the momentum investor can take over. Other markets that structurally lack a basis for valuation are even more susceptible to momentum swings because the main indicator of future value is the market&rsquo;s perception of recent value. In this commentary, I quantify the balance of value vs. momentum in a market to explore how that tug of war can result in incredible asset bubbles.</p> <h3>The balance of value vs. momentum determines a market&rsquo;s serial correlation</h3> <p>I believe the outcome of the tug of war between value and momentum in any market can be largely captured by a statistical measure called serial correlation &ndash; how likely is the recent past to determine the near future? A value of -1 means future returns are the exact opposite of recent past returns, a value of 0 means they are independent of each other, and a value of 1 means recent past returns are perfectly predictive future returns. After a dramatic price change, value investing would generally expect a reversion to the mean, suggesting a negative serial correlation. Momentum investing would expect that trend to continue, implying a positive serial correlation. A value focused investor base tends to lower serial correlation while a momentum focused investor base tends to increase serial correlation. The balance of the two determines the aggregate level of serial correlation in a market.</p> <p>In reality, most markets see a relatively even balance between value and momentum and their returns are serially uncorrelated most of the time. Of course, every market will also experience periods when investors lose conviction in value and momentum dominates. A rise in serial correlation can occur when investors don&rsquo;t have an established framework of value in new and opaque markets such as the complex structured products in the years leading up to the 2008 Financial Crisis. Investors didn&rsquo;t trust in their own independent valuation of their portfolio and relied on recent price climbs as an indicator of future returns. Serial correlation can also rise in rapidly evolving markets such as technology in the late 90s. During those periods, the industry is dramatically reshaped and investors lose faith in their traditional value framework and again rely on recent price changes as the main metric for future price changes.</p> <p>While the logic around serial correlation is basically common sense, below I quantify why serial correlation is so statistically important and just how powerful it can be in creating asset bubbles.</p> <h3>What&rsquo;s so important about serial correlation?</h3> <p>As I discussed in my tail risk letter, despite markets being pretty random and chaotic, most of the time they actually closely follow normal distributions because of the Central Limit Theorem &ndash; if you aggregate a large number of transactions each being relatively independent from others, the average of these transactions will follow a normal distribution curve and have well defined statistical characteristics. As a result, massive bubble-like price increases or crashes are predictably rare.</p> <p><strong>Key to the normality of markets is a close to zero serial correlation of prices across time. </strong>Losing this critical condition can produce abnormally large losses or gains. For example, in 2008 a minor group of leveraged players in the markets were squeezed and were forced to sell. This selling pressure lowered the market prices which in turn forced another group of participants who were previously above water to sell, which in turn lowered prices and again brought a new group of people into trouble. This highly serially correlated behavior caused huge losses because a large portion of the market was now basically acting as one.&nbsp; In the opposite direction, a bubble tends to form when a group of people buying something raises the price enough to inspire another group of people to buy, which further raises the price to continue the cycle. Here, the serial correlation between participants produces abnormally large gains.</p> <h3>A quantitative measure for bubble behavior</h3> <p>Before we examine how serial correlation causes asset bubbles, we need a systematic definition because asset bubbles can be subjective and difficult to define. After all, market prices will always fluctuate up and down; what is normal randomness and at what point does it become a bubble?</p> <p>Below, I lay out a relatively straightforward metric &ndash; it is not a comprehensive measure of bubble behavior and is meant to be a naïve illustration. Take any average 3 year period in a market, what is the price path of its best and worst year? We could then look at all 3 year periods for the market and average the paths of those best and worst years to get a systematic pattern of how rapidly a market tends to rise and fall. Below, I averaged the price path of the best and worst years over all 3 year periods for stocks since 1920.</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 333px;" /></a></p> <p>Over an average 3 year period since 1920, stock&rsquo;s best year rose 45% and its worst year fell by -20%. So how does this stack up against a theoretical normal distribution? Is this kind of price increase statistically normal or is it higher than expected (i.e. more bubble-like)? Below, I simulated 10000 3-year periods of a normally distributed theoretical market with the same return and risk as stocks, and then I similarly aggregated and averaged the path of its best and worst year in each of those 10000 3-year periods. In this simulation, I explicitly defined the serial correlation of the market price from one period to the next to be completely independent (zero serial correlation).</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 321px;" /></a></p> <p>What we find is that the average path of rise and fall for stocks actually closely tracks that of a normal distribution with zero serial correlation. Stocks on average have a relatively close to normal distribution and develop major bubbles at a predictably rare rate. To put a single number around the propensity of a market to develop bubbles, I took the ratio of the actual average market rise against the rise predicted by a normal distribution. A ratio of 1 would mean the market is not inclined to form more bubbles than a normal distribution and a higher number would mean a greater propensity for bubble-like behavior. Stocks have about a 1.1 bubble score &ndash; it is fairly normally distributed but experiences the rare bubbles that are bigger than statistically predicted.&nbsp;&nbsp;</p> <h3>Serially correlated markets are prone to massive bubbles</h3> <p>Losing serial independence has an enormous impact on market returns. Below, I did similar Monte Carlo simulations on theoretical return streams with the same return and risk as stocks but explicitly built in varying degrees of serial correlation. On one end, I looked at a distribution with negative serial correlation, meaning that a rise in price would be more likely followed by a fall in price, which is more of a value investor mentality. On the other end, I looked at a distribution with a positive serial correlation, meaning that a rise in price would be more likely followed by a further rise in price, which is more of a momentum investor mentality.&nbsp;</p> <p><img alt="" src="" style="width: 600px; height: 272px;" /></p> <p>Below, I put numbers around the visual above.</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 547px;" /></a></p> <p>What we see is that differing levels of serial correlation produce enormously different outcomes. Remember these return streams all share the same expected return and risk &ndash; the only thing I&rsquo;m varying is the serial correlation. If the stock market was serially negatively correlated, we&rsquo;d see smaller ups and downs than reality. If the stock market was serially positively correlated, we&rsquo;d see much bigger ups and downs. Towards the extreme end, we&rsquo;d routinely see 500% annual price increases if the market was 0.9 serially correlated. In reality, the stock market is likely somewhere between 0 and 0.1 serially correlated. This suggests a relatively even balance between value and momentum in the market. Common sense logic agrees with this number as we see the market mostly being normally distributed with rare periods of bubble and panic behavior when prices do become serially correlated.</p> <p>Below, I show the same table for bonds since 1920. Similar to stocks, we also see a roughly 1.1 bubble score for bonds and somewhere between a 0 and 0.1 serial correlation.</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 538px;" /></a></p> <h3>Bitcoins exhibit highly serially correlated behavior</h3> <p>Below, I show the same chart of aggregate rise and falls of Bitcoins over all 3 year periods since 2010 relative to a theoretically normal distribution with the same return and volatility as Bitcoins. Bitcoins have a bubble score of 21.2 and have a dramatically higher propensity for bubble-like behavior. Its average rises and falls have been far more dramatic than predicted by a normal distribution with similar return and volatility. On average, its best year in any 3year period would see an 82X price multiple and its worst year would see a -75% price drop. A market like Bitcoin that had serial correlation of 0 would see far smaller ups and downs and be boring by comparison, as shown in the muted grey line.</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 321px;" /></a></p> <p>Below I show a similar table of actual Bitcoin vs. simulated distributions of varying levels of serial correlation. The magnitude of Bitcoin&rsquo;s ups and downs suggests a very uneven balance of momentum vs. value in the market. The serial correlation in the market is far higher than that of traditional markets like stocks and bonds. Serial correlation has exponential power to create speculative bubbles. If Bitcoin was 0.9 serially correlated, we&rsquo;d see even more outrageous levels of price growth (prices multiplying by hundreds of thousands of times per year). There is essentially no limit to how big a bubble serially correlated behavior can create. Of course, in reality, the level of serial correlation is capped by the availability of capital in the world and some bound on human irrationality (hopefully).&nbsp; What we are seeing in the Bitcoin market is likely getting close to that limit, which is what makes this market so fascinating to me.</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 527px;" /></a></p> <h3>Why do markets become so serially correlated?</h3> <p>Unlike stocks, bonds and real estate, the Bitcoin market sees momentum consistently dominate value. While investors in stocks, bonds and real estate can always come back to dividends, interest and rent payments as anchor points around valuation, Bitcoins have no income and no intrinsic basis of value. Its only source of value is other people&rsquo;s perception of its value. To borrow Warren Buffett&rsquo;s framework of a market being a popularity contest in the short run and a weighing machine in the long run, Bitcoins structurally have no weighing machine. It&rsquo;s only long-term value is its popularity. As a result, the markets are stuck with Bitcoin&rsquo; recent value as the only indicator of its future value, producing an enormous feedback loop that amplifies its ups and downs relative to a more balanced market.&nbsp;</p> <p>More broadly speaking, when there isn&rsquo;t a clear framework around value, momentum can take over. This is true of existing markets that experience a dramatic change such as tech stocks during the late 90s or the new and complex structured product markets in the 2000s. Other markets like Tulips that produce no income tend to rely even more on momentum and as a result create even bigger bubbles. While dramatic in magnitude, there is nothing structurally different about Bitcoin&rsquo;s price rise. It is simply an extreme case of an echoing chamber of serially correlated actions. This type of groupthink behavior is deeply ingrained in the human psyche.</p> <p>Arise of Bitcoin&rsquo;s magnitude is rare and we go through centuries without experiencing one. It provides an once-in-alifetime opportunity to make money, to lose money and to learn. As an investor, I&rsquo;ve always been more interested in the weighing machine than the popularity contest, so I&rsquo;ll be on the sidelines for this one. Enough smart people have failed in these extreme, irrational markets that I distrust my own ability to navigate the risks. Instead, I look forward to my front row seat as a student of this historical moment. I leave you with the following chart1 and quote: &ldquo;I can calculate the movement of stars, but not the madness of men.&rdquo;</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 383px;" /></a></p> <p><em>Look back at the chart on the first page, the bubble that broke Newton is barely a blip compared to the recent Bitcoin price rise.</em></p> <p><a href=""><em>Source: Convoy Investments</em></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="744" height="398" alt="" src="" /> </div> </div> </div> Behavioral finance Bitcoin Bridgewater Business Economic bubbles Economy Finance Financial crisis Financial crisis of 2007–2008 Financial market Great Recession Momentum Money Real estate Reality simulation Stock market Systemic risk Value Investing Volatility Warren Buffett Wed, 13 Dec 2017 21:25:00 +0000 Tyler Durden 609081 at Gold Pops As Bitcoin Drops, Dollar Snaps Longest Win Streak Since Jan 2016 <p>&quot;Contained&quot;...</p> <p><iframe allow="encrypted-media" allowfullscreen="" frameborder="0" gesture="media" height="315" src="" width="560"></iframe></p> <p>&nbsp;</p> <p>Post-FOMC, Gold was the biggest gainer...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 362px;" /></a></p> <p>&nbsp;</p> <p>US Equities were holding to gains but tumbled in the last few minutes with the S&amp;P turning red...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 305px;" /></a></p> <p>&nbsp;</p> <p>Nasdaq manged to hold gains after The Fed...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 305px;" /></a></p> <p>&nbsp;</p> <p>VIX was noisy around CPI early on and snapped higher into the close (breaking above the terrifying level of 10.00)...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 226px;" /></a></p> <p>&nbsp;</p> <p>Financials had an ugly day...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 336px;" /></a></p> <p>&nbsp;</p> <p>High Tax stocks underperformed Low Tax stocks again (though did ramp after headlines suggested a deal was close)...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 313px;" /></a></p> <p>&nbsp;</p> <p>Bonds and the Nasdaq were bid after the Fed...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 312px;" /></a></p> <p>&nbsp;</p> <p>The initial moved after the FOMC was 2Y yield lower and 30Y higher (a modest steepening) but as Yellen spoke so the long-end rolled over...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 307px;" /></a></p> <p>&nbsp;</p> <p>Overall yields fell notably on the day - with 10Y stumbling oince again at the 2016 close...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 310px;" /></a></p> <p>&nbsp;</p> <p>On the week, yields are all lower...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 315px;" /></a></p> <p>&nbsp;</p> <p>After 7 straight days higher - the longest streak since January 2016 -</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 313px;" /></a></p> <p>&nbsp;</p> <p>WTI/RBOB sank on the day after a big gasoline build and record production...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 321px;" /></a></p> <p>&nbsp;</p> <p>Gold&#39;s gain today was Bitcoin&#39;s loss - its worst down day in a month...note that gold was snapped higher early on when Core CPI disappointed and seemed to catalyze the weakness in crypto...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 315px;" /></a></p> <p>&nbsp;</p> <p>And notably bitcoin futures tumbled to erase the spot-futs premium...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 313px;" /></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="1388" height="133" alt="" src="" /> </div> </div> </div> Bitcoin Bitcoin Business Committees Communist Party of India Core CPI CPI Federal Open Market Committee Federal Reserve System Finance Financial markets Fixed income analysis headlines Money NASDAQ US Federal Reserve VIX Yield Wed, 13 Dec 2017 21:02:11 +0000 Tyler Durden 609098 at 'Risk' May Be Low But Uncertainty Over "Unknown Unknowns" Just Hit Record Highs <p>While the <strong>fear-tracking VIX has been languishing near record lows </strong>this year, a gauge of so-called ambiguity, meant to chronicle the <strong>degree of uncertainty investors have in the probabilities they use to make decisions, has been at all-time highs in recent months, </strong>indicating that there&rsquo;s more fear built into the stock market than common measures of volatility suggest.</p> <p><strong>The decline in the VIX this year has befuddled investors and traders of all stripes, given the host of geopolitical uncertainties in locations like North Korea and political skirmishes in Washington. </strong></p> <p>Not to mention, stocks have been rising relentlessly for years, unnerving some investors who say that stocks are trading too high relative to expected earnings.</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 360px;" /></a></p> <p><a href=""><em>As The Wall Street Journal reports,</em></a> <strong>two academics are rolling out a new measure of market fear that suggests investors aren&rsquo;t nearly as complacent as they seem.</strong></p> <p><a href=""><img height="339" src="" width="600" /></a></p> <p>In <strong>separating out ambiguity from common measures of risk,</strong> Menachem Brenner of New York University and Yehuda Izhakian of Baruch College are picking up on a concept that traces back nearly a century.</p> <p>Economist Frank Knight in 1921 wrote about the difference between risk and uncertainty.</p> <p><strong>If volatility measures the uncertainties for which one can determine a probability, or the &ldquo;known unknowns,&rdquo; ambiguity measures the &ldquo;unknown unknowns,&rdquo;</strong> to use a term popularized by former Defense Secretary Donald Rumsfeld, according to Mr. Brenner.</p> <p>In October, the gauge hit 2.42, its highest reading in monthly data that extends back to 1993. <strong>That&rsquo;s above the gauge&rsquo;s previous peak of 2.41 at the height of the financial crisis in October 2008.</strong></p> <p>While none of the academics is willing to call a &#39;top&#39; or any imminent decline, it is noteworthy that this new measure quantifies what many have noted - that market-based &#39;non-normal&#39; tail risk remains elevated while &#39;normal risk&#39; is repressed.</p> <p>*&nbsp; *&nbsp; *</p> <p><span style="text-decoration: underline;"><strong>Full &quot;Asset Pricing and Ambiguity: Empirical Evidence&quot; paper below:</strong></span></p> <p><iframe frameborder="0" height="800" scrolling="no" src=";view_mode=scroll&amp;access_key=key-OyTxWuMd7dbWcJRYTNrg&amp;show_recommendations=true" width="600"></iframe></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="712" height="402" alt="" src="" /> </div> </div> </div> Applied mathematics Baruch College Business Epistemology Finance Financial risk Mathematical finance New York University None North Korea Risk S&P/ASX 200 VIX Technical analysis Uncertainty VIX Volatility Volatility Wall Street Journal Wed, 13 Dec 2017 20:50:00 +0000 Tyler Durden 608942 at Theresa May Humiliated As Tory Rebellion Leads To Key Brexit Vote Loss <p><!--[if gte mso 9]><xml> <o:OfficeDocumentSettings> <o:AllowPNG /> </o:OfficeDocumentSettings> </xml><![endif]--><!--[if gte mso 9]><xml> <o:OfficeDocumentSettings> <o:AllowPNG /> </o:OfficeDocumentSettings> </xml><![endif]--></p> <p class="MsoNormal">Prime Minister Theresa May suffered a humiliating defeat for her key Brexit law on Wednesday after pro-European members of her own party openly defied her orders in a vote in Parliament. <span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The vote in the UK Parliament was described as being &ldquo;knife-edge&rdquo; with the BBC&rsquo;s </span>chief political correspondent, Norman Smith, called it a &ldquo;Big Bananas moment&rdquo; for May. In the end, May lost by a narrow margin, with 309 voting for and 305 against, and as a result, UK members of parliament - not Theresa May and her Cabinet - will have the final say on Brexit.</p> <p class="MsoNormal">MPs had been asked to vote on the following amendment:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="MsoNormal"><strong><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The final deal with the EU must be approved by a law passed by Parliament.</span></strong></p> </blockquote> <p class="MsoNormal"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The results of the vote were as follows: </span><strong><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Yes: 309 No: 305 Majority: 4</span></strong></p> <p class="MsoNormal">According to Sky News, 12-13 Conservative MPs voted against the government with 2 Labour MPs voted with the government, and <span class="tl8wme"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">&ldquo;while this won&#39;t derail the Brexit deal it is a sign of UK Prime Minister May&#39;s increasingly strained position&quot; Citi explained after the vote.&nbsp; </span></span></p> <p class="MsoNormal">Some more media reactions, first the <a href="">Telegraph</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="MsoNormal">Theresa May has suffered her first major Commons defeat after Tory rebels defeated Government and voted for an amendment to the European Union (Withdrawal) Bill. MPs have voted in favour of Parliament being given a meaningful vote on the terms of Brexit by 309 votes to 305. In a damaging blow to her already diminished authority, Tory rebels rallied around Former attorney general Dominic Grieve to back his attempt to ensure MPs have a &quot;meaningful vote&quot; on the withdrawal deal. A dramatic last-minute concession by justice minister Dominic Raab was dismissed as &quot;too late&quot; by Mr Grieve, whose amendment to the EU (Withdrawal) Bill squeezed through the Commons on a majority of four amid tense scenes in the chamber.</p> </blockquote> <p class="MsoNormal">The irony is that the humiliating vote came just days after she <span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">reached what was dubbed a successful divorce settlement deal with the EU and Ireland, only to betrayed by members of her own party. Her choice was either to give in to demands from rebel MPs in her own party, who wanted the power to vote on any final Brexit deal, or face a damaging defeat when her refusal was debated by parliament. She didn&rsquo;t give in, and enough MPs from her party voted against her government.</span></p> <p class="MsoNormal"><span lang="EN" style="mso-fareast-font-family: &quot;Times New Roman&quot;; mso-ansi-language: EN; mso-fareast-language: EN-GB;">Prior to the vote, <a href="">Bloomberg</a> noted that &quot;If May loses a vote on the amendment on Wednesday, she could try to overturn it in later stages of the bill&rsquo;s progress through Parliament. The bill must complete up to eight further parliamentary stages of scrutiny before it becomes law.&quot;</span></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="MsoNormal"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">So, there&rsquo;s still a long way to go for the EU Withdrawal Bill, but a (further) weakened UK Prime Minister will head back to Brussels tomorrow where she will initiate the talks </span><span lang="EN" style="mso-fareast-font-family: &quot;Times New Roman&quot;; mso-ansi-language: EN; mso-fareast-language: EN-GB;">on the future trade relationship between Britain and the EU.</span></p> </blockquote> <p class="MsoNormal"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">The so-called &ldquo;meaningful vote&rdquo; amendment was drawn up by Conservative MP and former attorney general, Dominic Grieve. </span></p> <p class="MsoNormal"><a href=""><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><img alt="" src="" style="width: 500px; height: 333px;" /></span></a></p> <p class="MsoNormal"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">In a joint statement on Saturday, MPs from the </span><span lang="EN" style="mso-fareast-font-family: &quot;Times New Roman&quot;; mso-ansi-language: EN; mso-fareast-language: EN-GB;">Conservative Party, as well as the opposition Labour, Liberal Democrats, Scottish National Party and Plaid Cymru signed a joint statement backing the call for Parliament to be given a veto on the final Brexit treaty. In adddition, more than 10,000 supporters of the Open Britain campaign also emailed their local MPs urging them to support Grieve&rsquo;s amendment number seven to the EU Withdrawal Bill. Some polls also suggested that a majority of British people backed the proposal. </span></p> <p class="MsoNormal"><span lang="EN" style="mso-fareast-font-family: &quot;Times New Roman&quot;; mso-ansi-language: EN; mso-fareast-language: EN-GB;">There had been signs in the run-up to the vote that May&rsquo;s team was open to <a href="" target="_blank" title="May Says Financial Offer is Conditional on Trade: Brexit Update"><span style="color: windowtext; text-decoration: none; text-underline: none;">making concessions</span></a>. Earlier in the week, May accepted another proposal to change the draft law in the face of criticism from her colleagues. Yesterday, May&rsquo;s spokesman, James Slack, said.</span></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="MsoNormal"><span lang="EN" style="mso-fareast-font-family: &quot;Times New Roman&quot;; mso-ansi-language: EN; mso-fareast-language: EN-GB;">&quot;We are listening to members of Parliament, we are having conversations with them. Where they think legislation can be improved we are prepared to take that on board.&rdquo;</span></p> </blockquote> <p class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN; mso-fareast-language: EN-GB;">Dominic Grieve had indicated that he was not prepared to back down and without his amendment, the EU Withdrawal bill would unleash &ldquo;a form of constitutional chaos&rdquo; by allowing ministers to bypass parliamentary scrutiny. Reporting on his speech in parliament today, <a href="">The Guardian</a> reported. </span></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">He said he had sought at all times to engage with ministers to find a compromise, but without success: &ldquo;The blunt reality is, and I&rsquo;m sorry to have to say this to the house, I&rsquo;ve been left in the lurch, as a backbench member trying to improve this legislation.&rdquo; In these circumstances, Grieve said, he felt obliged to vote in favour of his amendment, and if that did not pass, to vote against the government on the wider bill. </span></p> <p class="MsoNormal">&nbsp;</p> <p class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">&ldquo;But that having been said there&rsquo;s a time for everybody to stand up and be counted. As Churchill said, he&rsquo;s a good party man, and he puts the party before himself and the country before his party. And that&rsquo;s what I intend to do.&rdquo;</span></p> </blockquote> <p class="MsoNormal"><span lang="EN" style="mso-fareast-font-family: &quot;Times New Roman&quot;; mso-ansi-language: EN; mso-fareast-language: EN-GB;">Grieve&rsquo;s sentiment was echoed by Labour MP, Chuka Umunna, who said that</span><span lang="EN" style="mso-fareast-font-family: &quot;Times New Roman&quot;; color: #3c3c3c; mso-ansi-language: EN; mso-fareast-language: EN-GB;"> &quot;n</span><span lang="EN" style="mso-fareast-font-family: &quot;Times New Roman&quot;; mso-ansi-language: EN; mso-fareast-language: EN-GB;">obody voted in the referendum for our parliamentary democracy to be undermined. We need scrutiny on Brexit, not a blank check for government ministers.&quot;</span></p> <p class="MsoNormal">The theme of parliamentary democracy was picked up before the vote by the <a href="">BBC&rsquo;s</a> chief political correspondent, Norman Smith.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="MsoNormal"><span style="mso-fareast-language: EN-GB;">I&#39;m guessing everyone&#39;s a bit jaded with the endless Brexit rows and threats of revolts. But this one really does matter. This is the Big Bananas moment. And on that both sides seem to agree. It&#39;s not a minor, footling technical issue &ndash; it&rsquo;s about who&#39;s running the show, Parliament or the prime minister. </span></p> <p class="MsoNormal">&nbsp;</p> <p><span style="font-size: 11.0pt; line-height: 107%; font-family: &quot;Calibri&quot;,sans-serif; mso-ascii-theme-font: minor-latin; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-bidi-theme-font: minor-bidi; mso-ansi-language: EN-GB; mso-fareast-language: EN-GB; mso-bidi-language: AR-SA;">Brexiteers view tonight&#39;s vote as an attempt by refusenik Remainers to de-rail Brexit. And, privately, some hard line Remainers see it as a means to fundamentally change the terms of the UK&#39;s departure from the EU. Other rebels argue it&#39;s about making good the Brexiteers promise to &quot;take back control&#39; to the UK Parliament. </span></p> <p>&nbsp;</p> <p><span style="font-size: 11.0pt; line-height: 107%; font-family: &quot;Calibri&quot;,sans-serif; mso-ascii-theme-font: minor-latin; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-bidi-theme-font: minor-bidi; mso-ansi-language: EN-GB; mso-fareast-language: EN-GB; mso-bidi-language: AR-SA;">But it&rsquo;s also a Big Bananas moment for Theresa May. Defeat in the Commons - and it would be her first - would knock her premiership back on the ropes after she had bounced back with last week&#39;s deal in Brussels. It would also dent her authority in the Brexit negotiations with EU leaders, who would again question her ability to deliver a deal.</span></p> </blockquote> <p>While it is unclear if today&#39;s vote dooms Brexit, judging by the market&#39;s euphoric reaction which has sent cable surging to session highs, traders are increasingly confident that the entire process may be halted, if not unwound sooner rather than later.</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 302px;" /></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="744" height="395" alt="" src="" /> </div> </div> </div> Aftermath of the United Kingdom European Union membership referendum Brexit Chuka Umunna conservative party Conservative Party Dominic Raab European Union European Union European Union European Union (Withdrawal) Bill Euroscepticism in the United Kingdom Government of the United Kingdom Ireland Politics Politics of the United Kingdom pro-European Reality Scottish National Party Theresa May UK MP UK Parliament United Kingdom European Union membership referendum Vote Leave Wed, 13 Dec 2017 20:33:54 +0000 Tyler Durden 609095 at Liesman Asks Yellen: "Is The Fed Worried By The Market Going Up Triple Digits Every Day?" <p>CNBC&#39;s Steve Liesman: <strong><em>&quot;Every day it seems the stock market goes up triple digits... is it now, or will it soon become a worry for the central bank that valuations are this high?&quot;</em></strong></p> <p><iframe frameborder="0" height="315" src="" width="560"></iframe></p> <p>Yellen&#39;s response appeared very similar to Bernanke&#39;s &quot;contained&quot; moment:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&#39;&quot;The stock market has gone up a great deal this year,&#39;&#39; and asset valuations are &quot;elevated.&quot;</strong></p> <p>&nbsp;</p> <p>&quot;We see ratios in the high end of historical ranges,&quot; but<em><strong> &quot;Economists are not great at knowing what the right valuations are...we don&#39;t have a terrific track record.&quot;</strong></em></p> <p>&nbsp;</p> <p><strong>&quot;Low interest rates support higher valuations.&quot;</strong></p> <p>&nbsp;</p> <p>&#39;&#39;The risks in the global economy look more balanced than they have in recent years.&#39;&#39;</p> <p>&nbsp;</p> <p><em><strong>&#39;&#39;There is nothing flashing red there or possibly even orange,&#39;&#39; on asset valuations...</strong></em></p> </blockquote> <p>So this is not even flashing orange?</p> <p><img height="310" src="" width="600" /></p> <p>And this is not flashing red?</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 318px;" /></a></p> <p>And none of this worries you?</p> <p><img src=";utm_medium=ED&amp;utm_source=zhb&amp;v=1505833190384" width="600" /></p> <p>Then Yellen turned to Bitcoin:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><span dir="ltr">&quot;Bitcoin, at this time, plays a very small role in the payments system. </span></strong></p> <p>&nbsp;</p> <p><span dir="ltr">It is not a stable store of value and it doesn&#39;t constitute legal tender. <strong>It is a highly speculative asset.&quot;</strong></span></p> <p>&nbsp;</p> <p><span dir="ltr"><strong>&quot;The Fed doesn&#39;t really play any regulatory role with respect with Bitcoin, </strong>other than ensuring banks are being prudent. &quot;</span></p> </blockquote> <p>Yellenb also said that<strong> creating a cryptocurrency &quot;is not something the Federal Reserve is seriously considering at this stage.... There are limited benefits and a limited need for it.&#39;&#39;</strong></p> <p><a href=""><img alt="" src="" style="width: 600px; height: 314px;" /></a></p> <p>Finaly she summed up: <em><strong>&quot;There&#39;s less to lose sleep about now than in a long time&quot;</strong></em></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="" /> </div> </div> </div> Alternative currencies Bitcoin Bitcoin Blockchains Business Cryptocurrencies Economy Federal Reserve Finance Financial economics Global Economy Money None Steve Liesman Steve Liesman US Federal Reserve Valuation Wed, 13 Dec 2017 20:25:36 +0000 Tyler Durden 609097 at FBI Texts Reveal "Insurance Policy" To Prevent Trump Presidency <p>The lead FBI official at the heart of the rapidly unraveling Trump-Russia probe sent a text message to his FBI mistress last year which discusses some sort of 'insurance policy' against Donald Trump becoming president.</p> <p><em style="font-size: 13.008px;"><a href=""><img src="" width="504" height="283" /></a><br />Peter Strzok and Lisa Page</em></p> <p>"<strong>I want to believe the path you threw out for consideration in Andy's office - that there's no way he </strong>[Trump]&nbsp;<strong>gets elected - <span style="text-decoration: underline;">but I'm afraid we can't take that risk</span>." </strong>writes FBI counterintelligence officer Peter Strzok to FBI lawyer Lisa Page, with whom he was having an extramarital affair while spearheading both the Clinton email inquiry and the early Trump-Russia probe, adding "<strong>It's like a life insurance policy in the unlikely event you die before you're 40</strong>."&nbsp;</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Text-from Peter Strzok to Lisa Page (Andy is Andrew McCabe): "I want to believe the path u threw out 4 consideration in Andy's office-that there's no way he gets elected-but I'm afraid we can't take that risk.It's like an insurance policy in unlikely event u die be4 you're 40"</p> <p>— Bret Baier (@BretBaier) <a href="">December 13, 2017</a></p></blockquote> <script src=""></script><p>Clearly Lisa Page thought there was no way Trump would win <strong>during a conversation in then-Deputy FBI Director Andrew McCabe's office</strong>, yet Strzok clearly states to Page that he "can't take that risk" in the "unlikely event" Trump was elected, and that an insurance policy of some type existed to presumably undermine Trump. If this is the case, <span style="text-decoration: underline;"><strong>it would constitute an active measure taken by the FBI against one candidate for US President, while aiding the other.&nbsp;</strong></span></p> <p style="font-size: 13.008px;">The text message which references an "insurance policy" is all the more controversial when you consider&nbsp;another exchange in which Peter Strzok says&nbsp;<strong style="font-size: 13.008px;">"I am riled up. Trump is a f*cking idiot, is unable to provide a coherrent answer</strong>," and&nbsp;<strong style="font-size: 13.008px;">"I CAN'T PULL AWAY, WHAY THE F*CK HAPPENED TO OUR COUNTRY (redacted)??!?!"</strong></p> <p style="font-size: 13.008px;">Page responds&nbsp;<strong>"I don't know, But we'll get it back. ..."</strong></p> <blockquote class="twitter-tweet" style="font-size: 13.008px;"><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'T PULL AWAY, WHAT THE F*CK HAPPENED TO OUR COUNTRY (redacted)??!?!&nbsp;</p> <p>LP - I don't know. But we'll get it back. ...</p> <p>— Shannon Bream (@ShannonBream)&nbsp;<a href="">December 13, 2017</a></p></blockquote> <p style="font-size: 13.008px;">Page then messages Strzok, saying "And maybe you're meant to stay where you are because you're meant to&nbsp;<strong>protect the country from that menace</strong>. (links to NYT article), to which Strzok replied "<strong>I can protect our country at many levels</strong>."&nbsp;</p> <blockquote class="twitter-tweet" style="font-size: 13.008px;"><p dir="ltr" lang="en">Strzok/Page texts</p> <p>LP – And maybe you’re meant to stay where you are because you’re meant to protect the country from that menace. (links to NYT article)</p> <p>PS – ... I can protect our country at many levels, not sure if that helps</p> <p>— Shannon Bream (@ShannonBream)&nbsp;<a href="">December 13, 2017</a></p></blockquote> <p style="font-size: 13.008px;">What, exactly, does Peter Strzok mean by "protect our country at many levels" in his text to Page? Is this a reference to the insurance policy?&nbsp;</p> <p>The "insurance" text message was one of 375 released Tuesday night before a House Judiciary Committee hearing with Deputy AG Rod Rosenstein, and one of 10,000 text messages exchanged between the two top FBI investigators. Strzok was fired from Robert Mueller's special counsel in August, however the reason for his dismissal was not revealed until last month, prompting several congressional panels to turn up the heat on the FBI and the DOJ.&nbsp;</p> <p>The text messages make <strong>abundantly clear</strong>&nbsp;that Strzok - the man who downgraded the FBI's assessment of Hillary's email mishandling from "grossly negligent" to "extremely careless," and reportedly&nbsp;<strong>used a largely unfounded Trump-Russia dossier to launch a counterintelligence operation</strong>&nbsp;- holds a deep disdain for Donald Trump.</p> <p>As we <a href="" target="_blank">reported earlier</a>, in one exchange obtained by <em style="font-size: 13.008px;"><a href="" 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 "<strong style="font-size: 13.008px;">God, Trump is a loathsome human</strong>," to which Strzok responded <strong style="font-size: 13.008px;">"Yet he many[win]" </strong>Strzok responded, adding <strong style="font-size: 13.008px;">"</strong>Good for Hillary."&nbsp;</p> <p>Other text messages call trump <strong>an idiot</strong>, who's <strong>awful</strong>.&nbsp;</p> <p><em style="font-size: 13.008px;">Fox </em>reporter Shannon Brem tweeted that Fox News producer Jake Gibson <strong style="font-size: 13.008px;">has obtained 10k texts between Peter Strzok and Lisa Page</strong>, one of which says "<strong style="font-size: 13.008px;">Trump should go f himself</strong>," and <strong style="font-size: 13.008px;">"F TRUMP.</strong>"</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Our <a href="">@FoxNews</a> producer <a href="">@JakeBGibson</a> has obtained 10K texts between Peter Strzok and Lisa Page</p> <p>— Shannon Bream (@ShannonBream) <a href="">December 13, 2017</a></p></blockquote> <script src=""></script><blockquote class="twitter-tweet"> <p dir="ltr" lang="en">Strzok/Page texts obtained by Fox's <a href="">@JakeBGibson</a> </p> <p>"LP – Jesus. You should read this. And Trump should go f himself. Moment in Convention Glare Shakes Up Khans American Life <a href=""></a></p> <p>PS – God that’s a great article. Thanks for sharing. And F TRUMP."</p> <p>— Shannon Bream (@ShannonBream) <a href="">December 13, 2017</a></p></blockquote> <p>Along with the text messages,&nbsp;<strong style="font-size: 13.008px;">Strzok'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's firing was kept a secret for months is of keen interest to House investigators. According to <em style="font-size: 13.008px;"><a href="" target="_blank">Fox News</a> </em>two&nbsp;weeks ago<em style="font-size: 13.008px;">:&nbsp;</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>"While Strzok’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."</p> <p>&nbsp;</p> <p>"Responding to the revelations about Strzok’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." -Fox News</p> </blockquote> <div>As we <a href="" target="_blank">also reported</a>,&nbsp;<strong>Representative Jim Jordan (R-OH) suggested in a hearing with FBI Director Chris Wray last week that the Peter Strzok rabbit hole might be far deeper than anyone imagined.</strong>&nbsp;To summarize, Jordan's theory is that Strzok received the controversial "Trump Dossier" from the Clinton campaign then went to the FISA courts where he passed it off as a legitimate piece of intelligence in an effort to obtain the warrants necessary to effectively spy on the Trump campaign.</div> <div> <blockquote> <div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <div>"Here's what I think Director Wray.&nbsp; I think Peter Strzok, head of counter intelligence at the FBI, Peter Strzok the guy who ran the Clinton investigation and did all the interviews, Peter Strzok, the guy who was running the Russia investigation at the FBI, Peter Strzok, Mr. 'Super Agent' at the FBI, <strong>I think he's the guy who took the application to the FISA court...and if that happened...if you have the FBI working with the Democrats' campaign, taking opposition research, dressing it all up and turning it into an intelligence document and taking it to the FISA court so they can spy on the other campaign...if that happened...that's as wrong as it gets."</strong></div> </blockquote> </div> <div>Deputy Attorney General Rod Rosenstein - who launched the Mueller probe - was on the hot seat today in front of the House Judiciary Committee to face questions over Strzok, Mueller, and the Trump investigation. When asked if he was aware how biased Peter Strzok was, Rosenstein answered: <strong>no</strong>, adding that he has seen "<strong>no reason to fire Mueller</strong>." </div> <div> <blockquote class="twitter-tweet"> <p dir="ltr" lang="en">Rod Rosenstein says if ordered to fire Mueller, "I would follow the reg. If there were good cause, I would act. If there were no good cause, I would not." As of today, he says, he still has seen no good cause to fire Mueller.</p> <p>— Charlie Savage (@charlie_savage) <a href="">December 13, 2017</a></p></blockquote> <script src=""></script></div> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Q: Have you seen good cause to fire Special Counsel Mueller?</p> <p>Deputy AG Rod Rosenstein: "No." <a href=""></a></p> <p>— NBC News (@NBCNews) <a href="">December 13, 2017</a></p></blockquote> <script src=""></script><p>So, despite having rooted out two rabidly anti-Trump lead investigators from the Mueller probe, and the fact that the Special Counsel is stacked with Democrats&nbsp;who have <strong><a href="" target="_blank">apparently&nbsp;sent</a> more anti-Trump messages to each other - </strong>which, according to reports will come out in the next 4-6 weeks, Rosenstein sees no cause to fire Mueller and close down this sham of an investigation.&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="288" height="160" alt="" src="" /> </div> </div> </div> Business Donald Trump FBI Federal Bureau of Investigation Federal Bureau of Investigation Fox News NBC Republican Party SPY Twitter Twitter United States Wed, 13 Dec 2017 20:10:00 +0000 Tyler Durden 609085 at Watch Live: President Trump Discusses GOP Tax-Reform Deal <p>In what&#39;s to be a hastily organized press conference, the White House announced Wednesday that President Trump would speak about the Republican tax-reform effort <strong>at 3 p.m. Wednesday. </strong>The implication is that Trump will be laying out next steps now that GOP lawmakers have tentatively agreed on a compromise tax bill that both chambers of Congress are ready to send to the president&#39;s desk.</p> <p>However, as we&#39;ve learned, in the Trump era, no legislative achievement is in the bag until all the votes have been tallied.</p> <p><iframe allow="encrypted-media" allowfullscreen="" frameborder="0" gesture="media" height="315" src="" width="560"></iframe></p> <p>As was the case with<a href=""> yesterday&#39;s tax deal</a>, the &quot;deal&quot; <a href="http://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. The mortgage interest deduction would be capped at $750,000, a mid-point compromise between the Senate and House bills. 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%.">reported today</a> would reduce the top individual tax rate to 37% and set the corporate tax rate at 21%, slightly higher than the 20% initially favored by President Trump. 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.</strong> That will be offset by lowering the top individual income rate to 37%. It is now 39.6%.</p> <p>Though Republicans in both the House and Senate who had reservations about the bill are still making their views known, Mark Meadows, the leader of the House Freedom Caucus, recently said he&#39;s given the agreement his blessing, and it&#39;s beginning to look like Republicans have actually finally come to a consensus of sorts - though stocks have rolled over following a morning-trade bump.</p> <p>While he&#39;s already tweeted about Roy Moore&#39;s loss (both to congratulate the winner and to attempt to vindicate himself for supporting Moore), it&#39;s likely he&#39;ll be asked about the outcome of last night&#39;s special election...</p> <p>...As for whether he&#39;ll feel like talking: We&#39;ll need to find out.</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="646" height="323" alt="" src="" /> </div> </div> </div> Congress Donald Trump Economic policy of Donald Trump Economy of the United States Politics Politics of the United States Presidency of Donald Trump Republican Party Senate Tax Cuts and Jobs Act United States White House White House Wed, 13 Dec 2017 19:55:00 +0000 Tyler Durden 609088 at