http://www.zerohedge.com/fullrss2.xml/wp-content/plugins/uBillboard/Korean%20Buying%20Spree%20Boosts%20Brent%20Price en Move To Digital Currencies Accelerates As PBoC Successfully Tests Algos For Digital Money http://www.zerohedge.com/news/2017-10-16/move-digital-currencies-accelerates-pboc-successfully-tests-algos-digital-money <p>In a story that seems to have gone largely unnoticed by the western press, the <a href="http://www.chinadaily.com.cn/business/2017-10/14/content_33235955.htm">China Daily reported </a>that the PBoC has successfully designed a prototype that can regulate its future supply of digital fiat currency.</p> <p>In a report, “PBoC inches closer to digital currency”, the newspaper stated that China’s central bank “<strong>has completed trial runs on the algorithms needed for digital currency supply</strong>, taking it a step closer to addressing the technological challenges associated with digital currencies, according to a top official associated with the project.”</p> <p>China’s has been preparing for digital currency since 2016. In June this year, the PBoC “<strong>finished several digital money trials involving fake transactions between it and some of the country’s commercial banks</strong>.” Given over-invoicing of imports and the shenanigans in the shadow banking/WMP sector, we suspect that the commercial banks took to these trials like proverbial flies to feces.</p> <p>The China Daily article goes on to suggest that, while there is no timetable, <strong>“China is likely to become the first country that would deploy a digital fiat currency.”</strong></p> <p>Far be it for us to question the accuracy of the China Daily – which Wikipedia notes is often used as a guide to Chinese government policy – but we were expecting Sweden (already the world’s most cashless society) to be first.&nbsp; It has been widely reported that the introduction of an “e-krona” is being investigated by the Riksbank. Forbes noted last month that “The inquiry is expected to be finalized in late 2019.” It would not replace cash, which accounts for 1% of transactions in Sweden according to a recent BBC report, but operate alongside physical cash initially.</p> <p>So…while China expects to be first, it will be “some time before the currency goes public”. According to Di Gang, a senior engineer of the Institute of Digital Money at the PBOC, a number of concerns need to be solved like “managing risks and improving efficiency.” He added that <strong>“the government also needs to factor whether the public would use the currency.”</strong></p> <p>We know the answer to that.</p> <p>Yes, although it would be much quicker if Chinese citizens could somehow use it to get their savings out of the country.</p> <p>Back to the serious work of the PBoC’s Institute of Digital Money. Yao Qian, the director-general no less, said that the successful simulation of money supply had paved the way for the central bank to become the future sole regulator and policymaker governing the value of digital currency. That sounded like a veiled explanation for the recent heavy-handed clampdown on Bitcoin trading in the Middle Kingdom. Indeed, the story notes that “<strong>Unlike Bitcoin or other digital money issued by the private sector, the digital fiat currency has the same legal status as the Chinese yuan”</strong></p> <p>As this will be a government-backed digital currency, we wonder whether Jamie Dimon will be an investor or early adopter? Alternatively, he might be able to buy a Russian version in due course.</p> <p>Yesterday, <a href="https://cointelegraph.com/news/breaking-russia-issuing-cryptoruble ">Cointelegraph reported </a>that local news sources in Russia had been informed by the Minister of Communications, Nikolay Nikiforov, that President Putin has approved a plan for the issue of a “CrypoRuble.” There was no detail, however, on timeline and no any subsequent confirmation that we’ve seen. Coincidentally, or not, Nikiforov is quoted as saying “I confidently declare that we run (sic) CryptoRuble for one simple reason: if we do not, then after 2 months our neighbors in the EurAsEC will.”</p> <p>So, <strong>the world might be moving towards digital, sovereign-backed currencies faster than many people realized</strong>. For the time being, however, Bitcoin and its private sector rivals continue to have the playing field to themselves.</p> <p>Portfolio managers who want exposure to the cryptos either remain on the sidelines or, as Cathie Wood, CEO, CIO and Founder, of Ark Investment Management, <a href="https://www.bloomberg.com/news/videos/2017-10-16/the-race-to-bring-the-first-bitcoin-etf-to-market-video">said on Bloomberg TV earlier</a>, are forced to pay a premium via the GBTC (Bitcoin Investment Trust). </p> <p>&nbsp;</p> <p>Wood commented that “We are a registered investment company, Ark Invest, we can only own financial securities…our funds own GBTC which sells at a premium to the underlying bitcoin investment trusts…the premium is because of the scarcity value. In my IRA, for example, I can’t get any to crypto, except through a GBTC. No one can and the same with our funds…We’ve tried to buy the underlying, but the New York Stock Exchange preferred a traded security and that’s how we ended up with a GBTC.”</p> <p>As the Bloomberg guests went on to discuss, the situation may not change unless and until Bitcoin futures are approved by the CFTC, perhaps in early/mid-2018. That could pave the way for the currently stalled approvals for ETFs with the SEC and bring additional institutional capital into crypto.</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="530" height="298" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/pboc%20hq%20teaser_1.jpg?1508198863" /> </div> </div> </div> http://www.zerohedge.com/news/2017-10-16/move-digital-currencies-accelerates-pboc-successfully-tests-algos-digital-money#comments Alternative currencies Bitcoin Bitcoin Business Cashless society China Chinese government Cryptocurrencies Currency Digital currencies E-commerce Economics of bitcoin Economy Finance Financial cryptography Jamie Dimon Money Money Supply New York Stock Exchange Newspaper PBoC’s Institute People's Bank of China Renminbi Shadow Banking simulation U.S. Securities and Exchange Commission Tue, 17 Oct 2017 03:38:19 +0000 Tyler Durden 605441 at http://www.zerohedge.com 7 Years & Counting - Trump's Looming EV Time-Bomb http://www.zerohedge.com/news/2017-10-16/7-years-counting-trumps-looming-ev-time-bomb <p><a href="https://www.ericpetersautos.com/2017/10/15/time-bomb/"><em>Authored by Eric Peters via EricPetersAutos.com,</em></a></p> <p class="p1"><strong>In just seven years&rsquo; time &ndash; unless Trump does something before <em>his</em> four years are up &ndash; the average fuel efficiency of the average car will have to almost double. From 35.5 MPG (now) to 54.5 MPG by 2025. So reads the fuel economy <em>fatwa</em> issued by Trump&rsquo;s predecessor.</strong></p> <p class="p1"><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_timebomb.jpg"><img height="230" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_timebomb_0.jpg" width="400" /></a></p> <p class="p1"><strong>No matter how much it costs, no matter what it takes.</strong></p> <p class="p1">To put this in perspective, <strong>as of 2018, there is only one car available that is capable of meeting the 2025 &ldquo;goal&rdquo;</strong> &ndash; as these <em>forced-on-us</em> things are styled: It is the Toyota Prius Prime plug-in hybrid. Nothing else comes close.</p> <p class="p1"><em><strong>Well, except electric cars.</strong></em></p> <p class="p1"><a href="https://www.ericpetersautos.com/2017/10/15/time-bomb/electirc-turducken/" rel="attachment wp-att-58089"><img class="alignleft size-medium wp-image-58089 td-animation-stack-type0-2" height="267" src="https://www.ericpetersautos.com/wp-content/uploads/2017/10/electirc-turducken--300x200.jpg" width="400" /></a></p> <p class="p1"><strong>These average infinity &ndash; as far as gas consumption goes. Which is very helpful insofar as the averages. </strong>The federal fuel economy <em>fatwa</em> is formally the Corporate Average Fuel Economy (CAFE) standard, which is an<strong> arbitrary number pulled out of a hat by federal regulatory ayatollahs, who have somehow become the arbiters of how much fuel the cars we buy ought to use.</strong></p> <p class="p1">Those cars which use more gas than the arbitrarily decreed figure are <strong>subject to punitive &ldquo;gas guzzler&rdquo; fines </strong>meant specifically to discourage their manufacture as well as their purchase, by making them <em>artificially</em> more expensive to manufacture and more expensive to buy.</p> <p class="p1"><a href="https://www.ericpetersautos.com/2017/10/15/time-bomb/1970-ad/" rel="attachment wp-att-58090"><img class="alignleft size-medium wp-image-58090 td-animation-stack-type0-2" src="https://www.ericpetersautos.com/wp-content/uploads/2017/10/1970-ad-300x158.jpg" style="width: 401px; height: 211px;" /></a></p> <p class="p1"><strong>In case you wondered, this is why larger vehicles and vehicles with larger engines are becoming both scarce and exotically priced.</strong> If you&rsquo;re young &ndash; 30 or less &ndash; you probably will not remember but there was a time when most Americans, including working-class Americans, routinely drove large cars with large engines. Bought them brand-new. Smaller cars with smaller engines were also available, but people bought them because that&rsquo;s what they <em>wanted</em> &ndash; not because they were <em>forced</em> to by government <em>fatwas</em> that put larger and larger-engined cars out of their reach, as today.</p> <p class="p1">It is also why suburbanites routinely drive SUVs today. &ldquo;SUVs&rdquo; are a made-up class of vehicle that did not exist prior to the CAFE <em>fatwa</em>. <strong>The class was made-up by the car industry as a way to get around the<em> fatwa</em> &ndash; which (at the time) granted a partial exemption to what were then just <em>trucks</em>, which were considered work vehicles.</strong> But if you <em>enclosed</em> the truck&rsquo;s bed and added seats &ndash; you could carry people. Voila!</p> <p class="p1"><a href="https://www.ericpetersautos.com/2017/10/15/time-bomb/ford-bronco-1995/" rel="attachment wp-att-58091"><img class="alignleft size-medium wp-image-58091 td-animation-stack-type0-2" src="https://www.ericpetersautos.com/wp-content/uploads/2017/10/ford-bronco-1995-300x225.jpg" style="width: 400px; height: 300px;" /></a></p> <p class="p1"><em><u><strong>The SUV.</strong></u></em></p> <p class="p1"><strong>It took Uncle a few years to catch on &ndash; and for the CAFE regs to catch up.</strong> In the interim, vast fleets of SUVs hit the streets, because people still wanted large vehicles with large engines and the truck-derived SUV&rsquo;s ground clearance and available 4&times;4 only made the combo even more appealing. Certainly more so than the &ldquo;downsized&rdquo; (and down-engined) cars the car companies were being forced to build, even though the demand was elsewhere.</p> <p class="p1"><strong>Uncle did catch up, of course. The <em>fatwa</em> was changed to envelope SUVs and other &ldquo;light trucks.&rdquo; They are now on the endangered species list, too.</strong></p> <p>As are mid-sized cars with mid-sized engines. It is no random thing that six cylinder engines, which were as recently as two years ago abundantly available in the mid-sized/family car class of vehicle &ndash; are becoming extremely uncommon, if not unavailable. Most of the cars which used to offer them &ndash; examples include the Mazda6 and Honda Accord &ndash; no longer do.</p> <p><a href="https://www.ericpetersautos.com/2017/10/15/time-bomb/ayatollahs-2/" rel="attachment wp-att-58092"><img class="size-medium wp-image-58092 td-animation-stack-type0-2" src="https://www.ericpetersautos.com/wp-content/uploads/2017/10/ayatollahs-300x188.jpg" style="width: 401px; height: 251px;" /></a></p> <p><strong><em>Deep within the EPA . . .</em></strong></p> <p>Just as &ndash; a generation ago &ndash; V8s were all-but-eliminated from the mid-priced/family car class.</p> <p class="p1"><strong>The current <em>fatwa</em> &ndash; 35.5 MPG on average &ndash; is already a bar too high. None shall pass. Not without radical redesigns</strong>, already becoming obvious in the person of nine and ten speed transmissions and aluminum bodies and other such artifices of desperation. Inevitably,&nbsp; diminution in power and capability and also size will have to be resorted to &ndash; to get from 35.5 to <em>54.5</em> MPG.</p> <p class="p1">That, or build far fewer larger (and even medium-sized) cars. And even fewer trucks and SUVs.</p> <p class="p1"><u><em><strong>Or, build lots of electric cars.</strong></em></u></p> <p class="p1"><strong>Averages, remember.</strong></p> <p class="p1"><a href="https://www.ericpetersautos.com/2017/10/15/time-bomb/balance-scales/" rel="attachment wp-att-58093"><img class="alignleft size-medium wp-image-58093 td-animation-stack-type0-2" src="https://www.ericpetersautos.com/wp-content/uploads/2017/10/Balance-scales-300x200.jpg" style="width: 401px; height: 267px;" /></a></p> <p class="p1"><strong>This is the practical reason behind the weirdly sudden bum&rsquo;s rush by every major car manufacturer to build electric cars. </strong>As many as possible &ndash; even if they don&rsquo;t sell. Even if they have to be given away at a considerable loss per car (the loss made up by tax write-offs, &ldquo;carbon credits&rdquo; and other subsidies).</p> <p class="p1"><strong>Because each electric car &ndash; which uses no gas at all &ndash; is extremely helpful <em>mathematically</em>, as a regulatory dodge &ndash; even if a disaster economically and practically.</strong> The presence of one EV on the left side of the scale balances the SUV (or even the car) on the right side of the scale. The more they <em>build</em> of the one, the more they can <em>sell</em> of the other.</p> <p class="p1"><strong>It is the only way.</strong></p> <p class="p1"><strong>Because there is no other way that any car &ndash; except a very small hybrid car &ndash; is ever going to <em>average</em> 54.5 MPG. </strong>Not without extreme lightening up, at least &ndash; which will never happen because then the car would be &ldquo;unsafe&rdquo; &ndash; not able to comply with all the federal bumper-impact, roof crush and other such<em> fatwas</em>.</p> <p class="p1"><a href="https://www.ericpetersautos.com/2017/09/16/mazda-joins-electric-lemmings/dick-7/" rel="attachment wp-att-57359"><img class="alignleft size-medium wp-image-57359 td-animation-stack-type0-2" src="https://www.ericpetersautos.com/wp-content/uploads/2017/09/dick-300x157.jpg" style="width: 399px; height: 209px;" /></a></p> <p class="p1"><strong>Or with a diesel &ndash; which the regulatory ayatollahs have also effectively outlawed.</strong></p> <p class="p1">So without vast fleets of electric cars to balance out the scales, other-than-small (and small-engined) cars will become much harder to justify building at all, because their cost to buy will become exorbitant, such that very few people will be able to afford them.</p> <p class="p1"><strong>Yet people still want the larger (and larger-engined) cars.&nbsp;</strong> Notice the demand for &ldquo;gas guzzlers&rsquo; has not slackened, which must frustrate the fuel efficiency<em> fatwa</em>-issuers. Who are determined to force fuel economy down people&rsquo;s throats no matter how much they didn&rsquo;t ask for it.</p> <p><u><em><strong>Here&rsquo;s where Trump comes in &ndash; or could.</strong></em></u></p> <p>He is, after all, the <em>elected representative of the people</em>&nbsp;&ndash; to invoke the monk-chant of &ldquo;democracy&rdquo; &ndash; while the regulatory ayatollahs represent no one except themselves and perhaps a few Claybrookian Clover types who are simpatico with the idea of forcing other people to do as <em>they</em> think best even when it&rsquo;s none of their business and they ought to just mind their own.</p> <p><a href="https://www.ericpetersautos.com/2017/10/15/time-bomb/trump-3/" rel="attachment wp-att-58088"><img class="alignleft size-medium wp-image-58088 td-animation-stack-type0-2" src="https://www.ericpetersautos.com/wp-content/uploads/2017/10/trump--300x171.jpg" style="width: 400px; height: 228px;" /></a></p> <p><strong>Trump could &ndash; and should &ndash; simply countermand the CAFE <em>fatwa</em>. Tear the thing up, throw the pieces up over his head, confetti style. It was not, after all, passed by Congress &ndash; the representatives of the people. It was imposed by regulatory bureaucrats.</strong></p> <p>If we truly do live in a democracy &ndash; as we are constantly told &ndash; then the will of the people ought to prevail.</p> <p><strong>This would, of course, trigger wild ululations among the ayatollahs but wouldn&rsquo;t that be almost as gratifying as a really top-drawer steak dinner with all the trimmings?</strong></p> <p>Trump would probably also assure his re-election, despite everything &ndash; because the people give a damn. Not about fuel efficiency. But about being left free to buy the type of car &ndash; or SUV&nbsp; &ndash; that meets <em>their</em> needs.</p> <p><strong>The ayatollahs be damned.</strong></p> <p>*&nbsp; *&nbsp; *</p> <p><em>If you like what you&rsquo;ve found here,&nbsp;please consider supporting EPautos. We&nbsp;depend on you to keep the wheels turning! Our donate button is <a href="https://ericpetersautos.com/donate/" rel="noopener noreferrer" target="_blank">here</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="677" height="390" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171016_timebomb.jpg?1508192493" /> </div> </div> </div> http://www.zerohedge.com/news/2017-10-16/7-years-counting-trumps-looming-ev-time-bomb#comments Business Car classifications Congress Corporate Average Fuel Economy Energy economics Environment Environmental Protection Agency Fuel efficiency Full-size car Gas-guzzler Hybrid vehicle None Plug-in hybrid Sport utility vehicle Toyota Transport Transport economics Tue, 17 Oct 2017 03:20:00 +0000 Tyler Durden 605433 at http://www.zerohedge.com Is This The Bizarre Reason Why Tesla Is Struggling To Ramp Model 3 Production? http://www.zerohedge.com/news/2017-10-16/bizarre-reason-why-tesla-struggling-ramp-model-3-production <p>A little over a week ago, we noted the damning – if unsurprising – report from the <a href="https://www.wsj.com/articles/behind-teslas-production-delays-parts-of-model-3-were-being-made-by-hand-1507321057">Wall Street Journal </a>revealing that Tesla's massive production miss on the Model 3, after only producing a tiny fraction of the 1,500 Model 3 sedans that it promised customers, might have been attributable to the fact that key parts of the cars were still being assembled by hand. </p> <p>But according to a new report from the WSJ and <a href="http://www.autonews.com/article/20171016/OEM01/171019743/-1">Automotive News</a> this morning, the real problem with Tesla's Model 3 production might be even more basic and embarrassing...<strong>the company can't figure out how to weld steel.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>What's behind Tesla's manufacturing woes? It could be something as simple as steel.</strong></p> <p>&nbsp;</p> <p>Based on details in a Wall Street Journal report and in a video of the production line posted on Twitter by Tesla CEO Elon Musk, <strong>experts say the electric vehicle maker appears to be struggling with welding together a mostly steel vehicle, as opposed to the primarily aluminum bodies of the Model S and Model X.</strong></p> <p>&nbsp;</p> <p>The Model 3's aluminum and steel body requires more welding rather than the adhesive and rivets in aluminum bodies, experts say.</p> <p>&nbsp;</p> <p>Harbour described the difference between the body of the Model 3 and those of the Model S and Model X as "partly cloudy vs. partly sunny." The change in materials would require processes new to Tesla.</p> <p>&nbsp;</p> <p><strong>"There's a big difference there. They haven't been doing a lot of spot welding on the first two vehicles because they're all aluminum,"</strong> Harbour said. <strong>"The learning curve is pretty steep."</strong></p> </blockquote> <p>As automotive manufacturing consultant Michael Tracy of Agile Group pointed out, the clues of Tesla's steel problems came from a video posted by Musk himself of the Model 3 assembly line.&nbsp; Referencing Musk's video, <strong>Tracy said a well functioning auto assembly line would not produce the sparks seen in the video below which are symptomatic of welds spots overheating or poor alignment of components.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>After the Journal report, Musk tweeted a of the Model 3 production line, which was operating at one-tenth of its potential speed. In the video, sparks fly as two robotic arms assemble parts of the vehicle frame. He followed with another on Wednesday, Oct. 11, showing body panel stamping at full speed.</p> <p>&nbsp;</p> <p><strong>"Resistance welding should make a little smoke, but when you see stuff popping out like that, that's called expulsion,"</strong> automotive manufacturing consultant Michael Tracy of Agile Group in Howell, Mich., said of the first video. <strong>"It's symptomatic of weld spots getting too hot because they're poorly planned, or in this case, the metal not being pulled all the way together."</strong></p> <p>&nbsp;</p> <p><strong>Poor welds can increase the damage to a vehicle in an accident, and can lead to rattling and squeaking as the car ages,</strong> Tracy said.</p> </blockquote> <blockquote class="instagram-media" style="background: #FFF; border: 0; border-radius: 3px; box-shadow: 0 0 1px 0 rgba(0,0,0,0.5),0 1px 10px 0 rgba(0,0,0,0.15); margin: 1px; max-width: 658px; padding: 0; width: calc(100% - 2px);"><div style="padding: 8px;"> <div style="background: #F8F8F8; line-height: 0; margin-top: 40px; padding: 50.0% 0; text-align: center; width: 100%;"> </div> <p style="color: #c9c8cd; font-family: Arial,sans-serif; font-size: 14px; line-height: 17px; margin-bottom: 0; margin-top: 8px; overflow: hidden; padding: 8px 0 7px; text-align: center; text-overflow: ellipsis; white-space: nowrap;"><a href="https://www.instagram.com/p/BaAOokSgdCp/" target="_blank" style="color: #c9c8cd; font-family: Arial,sans-serif; font-size: 14px; font-style: normal; font-weight: normal; line-height: 17px; text-decoration: none;">A post shared by Elon Musk (@elonmusk)</a> on Oct 8, 2017 at 3:20pm PDT</p> </div> </blockquote> <script src="//platform.instagram.com/en_US/embeds.js"></script><p>&nbsp;</p> <p>Meanwhile, <strong>Tracy says that mistakes like these are things that most auto OEMs would catch and fix 6 months before production launch</strong>...which raises the question "is the expertise there?"</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Tracy said slowed assembly lines do little to prove production is running smoothly because lines perform differently when running at full speed.</p> <p>&nbsp;</p> <p><strong>"At this point, you would only be running it slow if you were having troubles and you were afraid the welds you were going to make weren't going to be good," </strong>Tracy said.<strong> "It has to be able to run at rate for acceptance testing."</strong></p> <p>&nbsp;</p> <p>The types of problems Tesla is dealing with are normally worked out long before the assembly line is expected to be working at capacity, Harbour said.</p> <p>&nbsp;</p> <p><strong>"This is something a plant typically goes through four to six months in advance of a production launch,"</strong> Harbour said. <strong>"This raises the question: 'Is the expertise there?'"</strong></p> </blockquote> <p>Of course, as we've pointed out multiple times of late (see: <a href="http://www.zerohedge.com/news/2017-09-22/porsche-and-mercedes-plot-tesla-offensive-anything-tesla-can-do-we-can-do-better-str">Porsche And Mercedes Plot Musk Offensive With "Anything Tesla Can Do, We Can Do Better" Strategy</a>), Tesla has historically been somewhat shielded from the negative financial consequences of their manufacturing inefficiencies because they've been the only EV game in town...but that's all about to change in a big way.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>With an influx of competitive EVs on the horizon, Tesla must iron out its manufacturing problems in the next few months or risk losing its competitive edge before the Model 3 reaches a larger audience.</p> <p>&nbsp;</p> <p><strong>"Before, there was only Tesla. Now, there's going to be dozens of alternatives,"</strong> said Ron Harbour, a manufacturing consultant at Oliver Wyman.<strong> "They're going to have to get really efficient at manufacturing. They have to be cost competitive and price competitive to stay in the business."</strong></p> <p>&nbsp;</p> <p>Since July, automakers have been one-upping each other on plans to electrify their lineups. Volvo said it would introduce only electrified vehicles starting in 2019. Jaguar Land Rover said it would offer electrified versions of all of its vehicles by 2020. BMW expects to be able to mass-produce EVs by 2020, offering 12 models by 2025. Mercedes said it will electrify its lineup by 2022.</p> <p>&nbsp;</p> <p>Detroit also has been turning its attention to electrification. Ford Motor Co. plans to introduce 13 electrified vehicles in the next five years, including a crossover with 300 miles of range. General Motors introduced the Chevrolet Bolt last year, with at least 20 all-electric or hydrogen fuel cell vehicles coming by 2023 — two such vehicles will be introduced in the next 18 months.</p> </blockquote> <p>Perhaps this is why Daimler's CEO didn't seem to be all that worried about having a manufacturing competition with Tesla?</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="816" height="455" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017.10.16%20-%20Tesla%20Tease.JPG?1508160736" /> </div> </div> </div> http://www.zerohedge.com/news/2017-10-16/bizarre-reason-why-tesla-struggling-ramp-model-3-production#comments Business Detroit Elon Musk Ford fuel cell General Motors Hyperloop Jaguar Nationality Nikola Tesla Porsche Tesla Model S Tesla, Inc. Transhumanists Transport Twitter Twitter Volvo Wall Street Journal We Can Welding White South African people Wireless energy transfer Tue, 17 Oct 2017 03:00:00 +0000 Tyler Durden 605388 at http://www.zerohedge.com "We Don't Know How To Replace The Vast Gold Deposits Of The Past" http://www.zerohedge.com/news/2017-10-16/we-dont-know-how-replace-vast-gold-deposits-past <p><em><a href="https://www.fuw.ch/article/we-dont-know-how-to-replace-the-great-big-gold-deposits-from-the-past/">Authored by Christoff Gisiger via Finanz und Wirthschaft,</a></em></p> <p><em><strong><span class="content-body__lead">Pierre Lassonde, chairman of Franco-Nevada, expects production in the gold mining sector to decline significantly and foresees a price push for the yellow metal.</span></strong></em></p> <p><em>Few people have achieved more success in the mining business than Pierre Lassonde. The savvy Canadian is the co-founder and chairman of Toronto based Franco-Nevada <span class="article-stockprice-wrapper">(<span class="article-stockprice-symbol"><a href="https://marktdaten.fuw.ch/detail/stocks?ID_NOTATION=20488994" target="_blank">FNV</a></span> <span class="article-stockprice-instrument_price">99.91</span> <span class="article-stockprice-red">-0.94%</span>)</span> and pioneered the royalty business model in the gold mining sector based on the model used in the oil-and-gas industry. For investors this strategy has paid off golden returns. <strong>Today however, Mr. Lassonde points out that the gold industry hasn&rsquo;t made any large discoveries for years which will put heavy upward pressure on prices in the years to come. He also thinks that US President Donald Trump is good for the yellow metal and that investors will fare better with gold than with stocks.</strong></em></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_dowgold1.jpg"><img height="304" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_dowgold1.jpg" width="564" /></a></p> <p><b>Mr. Lassonde, after a few difficult years gold seems to get its shine back. What&rsquo;s next for the gold price?</b><br /><em><strong>Right now, there is more demand for paper gold than for physical gold. </strong></em>For instance, when you look at the refineries in Switzerland they will tell you that they&rsquo;ve got the bouillon but they&rsquo;re not busy. It&rsquo;s not like a year and half ago when they had no stock and the gold bars basically were flying off their shelf the minute they were produced. So the pressure is in the paper gold market, the futures market.</p> <p><strong>What&rsquo;s the reason for that?</strong><br /><strong>Part of the recent strength of gold is what I call a risk premium on the world. </strong>There is a lot of speculation that has to do with the tensions around North Korea and President Trump. I don&rsquo;t have a personal relationship with Mr. Trump but I know the man a little bit. When he was elected, my prediction was that he was going to tie up the US administration in a knot because he&rsquo;s totally unpredictable. Nobody knows where he&rsquo;s going and you cannot run a country that way.</p> <p><strong>And what does this have to do with gold?</strong><br /><em><strong>Anyone else in the Oval Office would not make such outlandish statements as Mr. Trump makes. Gold is benefiting from that. </strong></em>After the US election, my prediction was that the dollar was going to suffer from Mr. Trump being in office. The price of gold is intimately related to the dollar. Gold is essentially the &raquo;anti-dollar&raquo;: If the dollar is strong, gold is weak and if the dollar is weak, gold is strong. So what we are seeing now is exactly what I have expected: a lower dollar and therefore a stronger gold price.</p> <p><strong>So where do you think the gold will go from here?</strong><br /><em><strong>My view has been between $1250 to $1350 per ounce for this year and then slightly ramping up next year to around $1300 to $1400. But for gold to get into the next real bull market we need signs of inflation.</strong></em> So far we haven&rsquo;t seen them. The Federal Reserve and other central banks have piled up huge reserves. But there is no inflation because the money is sitting within the banks and they are not lending it. Therefore, you don&rsquo;t get a multiplier effect. <em><strong>But what happened recently in the US &ndash; the one-two punch with respect to the hurricanes &raquo;Irma&raquo; and &raquo;Harvey&raquo; &ndash; is going to require an enormous amount of reconstruction. This could finally move the needle on inflation. </strong></em>Also, Europe is doing much better. So at some point I suspect we are going to see inflation start to pick up a little bit.</p> <p><strong>What does this mean for the mining industry?</strong><br /><em><strong>First of all, at a gold price of $1300 the industry by and large is doing well. I tell my peers: &raquo;If you are not making money at $1300 you should not be in this business.&raquo;</strong></em> So it&rsquo;s a good price and you should be making good money. But the industry has had to shrink a lot. When the gold price dropped to $1000 at the end of 2015 everybody in the business was too fat. So the industry laid people off, consolidated, shrunk and many junior companies have been wiped out.</p> <p><strong>What are the consequences of that?</strong><br /><em><strong>Production is declining and this is going to put an enormous amount of pressure on prices down the road.</strong></em> If you look back to the 70s, 80s and 90s, in every of those decades the industry found at least one 50+ million ounce gold deposit, at least ten 30+ million ounce deposits and countless 5 to 10 million ounce deposits. <em><strong>But if you look at the last 15 years, we found no 50 million ounce deposit, no 30 million ounce deposit and only very few 15 million ounce deposits. So where are those great big deposits we found in the past? How are they going to be replaced? We don&rsquo;t know. We do not have those ore bodies in sight.</strong></em></p> <p><strong>Why aren&rsquo;t there any large discoveries anymore?</strong><br /><em><strong>What the industry has not done anywhere near enough is to put money back into exploration. They have not put anywhere near enough money into research and development, particularly for new technologies with respect to exploration and processing. The way our industry works is it takes around seven years for a new mine to ramp up and then come to production. So it doesn&rsquo;t really matter what the gold price will do in the next few years: Production is coming off and that means the upward pressure on the gold price could be very intense.</strong></em></p> <p><strong>Why didn&rsquo;t the industry put more money into exploration?</strong><br /><em><strong>The industry has had to shrink a lot. </strong></em>Also, the boom in Exchange Traded Funds has changed the capital markets in a huge way: Companies that are part of an ETF get treated like chosen sons. But when you&rsquo;re not in an ETF you&rsquo;re getting marginalized. You become an orphan and the junior companies in particular have been completely orphaned.</p> <p><strong>How does that impact the funding of mining?</strong><br />The thing with this industry is that you have to have an incredible amount of patience and you have to have money. And right now, it&rsquo;s hard to get money. The risk appetite of investors has been gone for many, many years. If you are not one of the chosen few you can&rsquo;t get money. You sit on the sideline and wait. In the past, more than half of the new discoveries have been made by junior companies. <strong><em>But they haven&rsquo;t had any money now for like 10 years. So how are you going to find anything if you don&rsquo;t fund the junior companies?</em></strong></p> <p>...</p> <p><strong>What&rsquo;s your advice for investors who are interested in gold?</strong><br />It&rsquo;s very interesting. <em><strong>When you look over a hundred years back there are periods of 10 to 30 years where you would rather be in the stock market. But then, there are other periods from 10 to 15 years where you would rather be in gold.</strong></em></p> <p><strong>In which period are we today?</strong><br />Let&rsquo;s take the Dow Jones&nbsp; Industrial. <strong>To my mind, the Dow is essentially an expression of financial assets. Gold on the other hand is what represents hard assets: real estate, paintings and other hard assets. </strong>So when you look at the gold cycle from 1966 to 1980, you can see that the ratio between the Dow and the gold price at the beginning topped out at almost 28:1: It took 28 units of gold to buy one unit of the Dow. Then the long term trend reversed and the ratio went all the way down to 1:1. A similar cycle took place in the 30s. The Dow crashed from around 360 in 1929 to 36 in the next years. <strong>So it lost like 90% of its value. On the other hand, the gold price went from 20 to 34 and the ratio essentially bottomed out at almost 1:1, like at the end of 1966 to 1980 cycle.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_dowgold.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_dowgold_0.jpg" style="width: 600px; height: 317px;" /></a></p> <p><u><strong>And what does that mean for investors today?</strong></u></p> <p><em><strong>Today, the Dow is over 22,000 and the price of gold is around $1300. This equals a ratio of almost 18:1 and you can clearly see that the trend is starting to roll over. So what does it mean if we go down to a ratio of 1:1 once again? The gold price would hit a big number and nobody is prepared for that. I don&rsquo;t know any more than anybody else because it&rsquo;s about the future. But it happened already twice in the past 100 years. So I think the odds that it&rsquo;s going to happen a third time are pretty good. History does repeat itself, never exactly in the same fashion, but in the same form. Therefore, I would rather own a little bit more gold than not. So I think for an average investor, it should be the absolute rule to hold around 5 to 10% gold in your portfolio, like rule number one.</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="963" height="509" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171016_dowgold.jpg?1508190234" /> </div> </div> </div> http://www.zerohedge.com/news/2017-10-16/we-dont-know-how-replace-vast-gold-deposits-past#comments Business Capital Markets Central Banks Currency Donald Trump Economy Federal Reserve Finance Futures market Gold Gold as an investment Gold standard Inflation Money North Korea Pierre Lassonde Precious metals Real estate Risk Premium Silver as an investment Switzerland United States dollar US Administration US Federal Reserve Tue, 17 Oct 2017 02:40:00 +0000 Tyler Durden 605430 at http://www.zerohedge.com "I'm Concerned... It's Highly Unusual" - Vegas Massacre Security Guard Remains Missing http://www.zerohedge.com/news/2017-10-16/im-concerned-its-highly-unusual-vegas-massacre-security-guard-remains-missing <p><strong><a href="http://www.zerohedge.com/news/2017-10-14/vegas-massacre-timeline-shifts-again-very-dynamic-event">Following reports of his disappearance late last week</a>,</strong> after numerous timeline changes and &#39;fact&#39; clarifications by The Mandalay Bay, The FBI, and Vegas PD; <strong>Jesus Campos, the secuirty guard,</strong> <a href="http://www.zerohedge.com/news/2017-10-14/vegas-massacre-timeline-shifts-again-very-dynamic-event"><em>who may or may not have been shot by Vegas Massacre shooter Stephen Paddock</em></a>,<strong> remains missing and friends and family are concerned.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/12/20171013_campos.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/12/20171013_campos_0.jpg" style="width: 600px; height: 305px;" /></a></p> <p><a href="http://www.zerohedge.com/news/2017-10-14/vegas-massacre-timeline-shifts-again-very-dynamic-event"><em>As we noted previously, </em></a>the general story of Campos&#39; disappearance appears to have been confirmed by <em>ABC</em> journalist Stephanie Wash, who tweeted Thursday evening:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<em>Media scrum tonight as we learn security officer shot in Vegas attack, J<strong>esus Campos&rsquo; whereabouts are unknown.&rdquo;</strong></em></p> <p>&nbsp;</p> <p><em>&ldquo;Jesus Campos was set to do 5 intvs tonight per union president, <strong>but they&rsquo;ve lost contact. &lsquo;We were in a room &amp; we came out &amp; he was gone,&rsquo;&rdquo; </strong>she also tweeted.</em></p> </blockquote> <p>&nbsp;</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Jesus Campos was set to do 5 intvs tonight per union president, but they&rsquo;ve lost contact. &ldquo;We were in a room &amp; we came out &amp; he was gone&rdquo;</p> <p>&mdash; Stephanie Wash (@WashNews) <a href="https://twitter.com/WashNews/status/918668372987977729?ref_src=twsrc%5Etfw">October 13, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p><strong>Details are now emerging of Campos&#39; last whereabouts and contacts.</strong></p> <p><a href="http://www.foxnews.com/us/2017/10/16/las-vegas-guard-jesus-campos-vanished-after-visiting-urgent-care-clinic-union-leader-says.html"><em>As Fox News reports, </em></a>David Hickey of the Security, Police, and Fire Professionals of America (SPFPA) told reporters Friday that<strong> he got a text the night before saying Jesus Campos was taken to a UMC Quick Care facility,</strong> though he did not specify where or whom the text came from.</p> <p><strong>A spokesperson at the UMC Quick Care, </strong>which has eight locations throughout the Las Vegas area, told Fox News on Monday that<strong> they had &quot;heard nothing&quot; about Campos visiting them.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_campos1.jpg"><strong><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_campos1.jpg" style="width: 601px; height: 393px;" /></strong></a></p> <p><strong>Hickey said Campos had requested to go public and wanted to tell his story and move on </strong>from the Oct. 1 shooting investigation.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;<strong>For the past four days he&#39;s been preparing</strong> ... we had a meeting with MGM officials, and after that meeting was over, we talked about the interviews, <strong>we went to a private area, and when we came out, Mr. Campos was gone,&quot; </strong>Hickey told reporters,&nbsp;<a href="http://www.fox5vegas.com/story/36587912/representative-for-security-guard-jesus-campos-speaks-out" target="_blank">according to Fox 5 Las Vegas</a>.</p> <p>&nbsp;</p> <p><strong>&quot;Right now I&#39;m just concerned where my member is, and what his condition is. It&#39;s highly unusual,&rdquo;</strong> Hickey said Friday.</p> <p>&nbsp;</p> <p><strong>&ldquo;I&#39;m hoping everything is OK with him and I&#39;m sure MGM or the union will let (media) know when we hear something,&quot;</strong> he said.</p> </blockquote> <p>Police say he was shot just before the crazed gunman killed 58 at music festival on the Las Vegas Strip &ndash; <strong>though the sequence of events is still in dispute</strong>.</p> <p>An independent journalist <a href="https://twitter.com/LauraLoomer/status/918695740070752261" rel="noopener" target="_blank">reported</a> on Twitter that Campos&rsquo; family is under a gag order, however that remains unconfirmed.</p> <p>Campos was last photographed in public on Oct. 10, accepting an &ldquo;SPFPA Hero Award&rdquo; for bravery in the line of duty, while dining with Hickey and others at a high-end Vegas steakhouse.</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="305" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171016_campos.jpg?1508206312" /> </div> </div> </div> http://www.zerohedge.com/news/2017-10-16/im-concerned-its-highly-unusual-vegas-massacre-security-guard-remains-missing#comments David Hickey FBI Federal Bureau of Investigation Fox News Hickey Las Vegas Las Vegas Valley Twitter Twitter Tue, 17 Oct 2017 02:20:00 +0000 Tyler Durden 605446 at http://www.zerohedge.com Myths About Bitcoin That Must Die http://www.zerohedge.com/news/2017-10-16/myths-about-bitcoin-must-die <p><a href="http://www.valuewalk.com/2017/10/myths-bitcoin-must-die/"><em>Authored by Marcuss via ValueWalk.com,</em></a></p> <p><strong>If you know anyone who spent some time in the United States in the 1970s and 1980s (or if you did), ask him or her about Life cereal, Mikey, and pop rocks.</strong></p> <p><em>You may get a look of bewilderment. Or, you may get a knowing chuckle and an &ldquo;Oh yeah, what happened to him?&rdquo;</em></p> <p><em>To briefly explain&hellip; in a television commercial (back when everyone watched the same half-dozen TV channels), a cute boy named Mikey is urged to try a sugary breakfast cereal concoction called Life. To the amazement of the older doubting Thomases egging him on, Mikey approved of Life, spawning the catchphrase, &ldquo;He likes it!&rdquo;</em></p> <p><em>Then &ndash; years later &ndash; the rumor surfaced that the actor who played Mikey had (after surviving Life cereal) eaten an bag of Pop Rocks candy, which were little candies that snapped and crackled on your tongue, chased by a can of Coca Cola. And, word was, little Mikey&rsquo;s stomach exploded from the mixture of the two heavily carbonated substances. It was a story that had just the right mix of &nbsp;gossip, speculation and shock value to take on a life of its own.</em></p> <p><em>Of course, it never happened. (Mikey grew up to become an ad executive.) But it was a good story, and one that destroyed the Pop Rocks industry. (You can read more about Mikey and what actually happened to him <a href="https://www.thoughtco.com/death-by-pop-rocks-and-soda-3299312" rel="nofollow" target="_blank">here.</a>)</em></p> <p><u><em><strong>I bring up Mikey because the world of bitcoin is plagued by similiarly silly &ndash; and pernicious &ndash; rumors and misinformation.</strong></em></u> But while Mikey/Life cereal/Pop Rocks mythology was (mostly) harmless fun, <strong>bitcoin mistruths can cost you money&hellip; in the form of big opportunity cost.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_bit.jpg"><strong><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_bit_0.jpg" style="width: 600px; height: 301px;" /></strong></a></p> <p><u><strong>The truth is, a lot of what you read about bitcoin and cryptocurrencies is simply wrong</strong></u>. I&rsquo;ve seen articles in the likes of the <em>Wall Street Journal</em> that are factually incorrect. And now that the bitcoin price has soared above US$5,000 &ndash; the media seems determined to &nbsp;&ldquo;warn&rdquo; investors about the dangers of bitcoin.</p> <p><em>(With Stansberry Research, we&rsquo;re going to be <a href="https://pages.stansberryresearch.com/page.aspx?QS=38dfbe491fab00ea9c1d590c27236f9d7cf1ba7bb656aab246977ddbdaaccf3a&amp;source=DChurchouse1016&amp;email=%25%25emailaddr%25%25" rel="nofollow" target="_blank">holding a webinar</a> on Wednesday night (US EST)/Thursday morning (Asia) that are going to be exploding some of those bitcoin myths&hellip; <a href="https://pages.stansberryresearch.com/page.aspx?QS=38dfbe491fab00ea9c1d590c27236f9d7cf1ba7bb656aab246977ddbdaaccf3a&amp;source=DChurchouse1016&amp;email=%25%25emailaddr%25%25" rel="nofollow" target="_blank">you can learn more about it here.</a>)</em></p> <p>So today, I&rsquo;m debunking bitcoin&rsquo;s biggest myths to set the record straight&hellip;</p> <h2><u>1. <strong> Bitcoin is not real money</strong></u></h2> <p>The fundamental characteristics an asset must have to be considered money are:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Uniformity: </strong>In other words, every &ldquo;dollar&rdquo; or bitcoin is the same as the next one. When you&rsquo;re talking about using seashells or cows as currency, uniformity is hard to achieve.</p> <p>&nbsp;</p> <p><strong>Divisibility:</strong> Dollars and bitcoin need to be divisible, broken up into small increments to cover a wide range of value transactions. Cows? Not so much, unless you&rsquo;re hosting a barbecue.</p> <p>&nbsp;</p> <p><strong>Portability:</strong> Your currency must be easy to transfer and store.</p> <p>&nbsp;</p> <p><strong>Durability:</strong> Older, agriculturally-based forms of money had a shelf life. Gold is the ultimate when it comes to durability. Paper notes deteriorate.</p> <p>&nbsp;</p> <p><strong>Limited Supply:</strong> A currency is worthless if there&rsquo;s no scarcity to it. In our office here in Hong Kong we have a 500 million dollar note issued by the Zimbabwean government &ndash; it&rsquo;s a simple reminder of what ultimately happens when governments try to endlessly print their way to prosperity.</p> <p>&nbsp;</p> <p><strong>Acceptability: </strong>to be considered money, the asset has to be widely accepted. People all over the world will take U.S. dollars. They won&rsquo;t however take Turkish lira.</p> </blockquote> <p>Bitcoin holds all of these characteristics with the exception of acceptability &ndash; although that is rapidly changing. Japan passed a law earlier this year that made bitcoin acceptable as legal tender.</p> <p><em><strong>And the digital element of bitcoin? Well, &nbsp;more than 90 percent of all money that exists today around the world is not even physical&hellip; it&rsquo;s purely digital, existing only on computer servers.</strong></em></p> <h2><u>2. <strong> Bitcoin can be hacked</strong></u></h2> <p><strong>In certain circles, bitcoin and cryptocurrencies in general are synonymous with hacking &ndash; thanks to some high-profile hacks of cryptocurrency exchanges &ndash; like Mt. Gox in 2014 or Bithumb in 2017.</strong></p> <p>In an area so nascent, of course there are hackers looking to exploit individuals&rsquo; inexperience, or find technological loopholes. Hackers have always and will always be a risk to ANYTHING where value resides on a computer network.</p> <p><strong>But bitcoin is one of the most secure assets an individual can own &ndash; it&rsquo;s just that it&rsquo;s 100 percent up to the individual to secure it themselves.</strong></p> <p>Cryptocurrency&nbsp;<em>exchanges</em>&nbsp;have been hacked. They are third-party platforms where you have no visibility as to how customers&rsquo; digital assets are being secured. That&rsquo;s why&nbsp;<a href="http://stansberrychurchouse.com/cryptocurrencies/lost-us8500-week/https:/stansberrychurchouse.com/cryptocurrencies/advantage-institutional-investors/" rel="nofollow" target="_blank">I&rsquo;ve said repeatedly</a>&nbsp;that you shouldn&rsquo;t keep large amounts of bitcoin on an exchange because when it&rsquo;s on an exchange you don&rsquo;t own it, they do.</p> <p><strong>And when it comes to hacking, you are far, far more at risk from other cybersecurity vulnerabilities &ndash; just look at U.S. credit reporting agency Equifax who announced recently that the Social Security numbers along with other personal information of millions of Americans may have been compromised.</strong></p> <p>That&rsquo;s a catastrophic breach. And this kind of thing happens all the time. So there&rsquo;s no use worrying about bitcoin &ldquo;hacking&rdquo; when you can take full personal control and accountability for securing it yourself (rather than be&nbsp;<a href="https://en.wikipedia.org/wiki/List_of_data_breaches" rel="nofollow" target="_blank">at the mercy of an incompetent third party</a>).</p> <h2><u>3. <strong> Bitcoin is used by criminals</strong></u></h2> <p><strong><em>&ldquo;Bitcoin&rsquo;s core use remains what&rsquo;s it&rsquo;s always been: paying for drugs or extortion fees on the Internet.&rdquo;</em></strong></p> <p><em>That&rsquo;s a quote from a recent Fortune magazine article. </em></p> <p><strong>The suggestion that bitcoin&rsquo;s core use is for buying drugs and extortion is nothing new </strong>&ndash; and it&rsquo;s part of the media&rsquo;s ongoing narrative. It&rsquo;s understandable in many respects.</p> <p>After all, there have been recent ransomware hack/virus attacks that demand users pay a small ransom in bitcoin to unlock their computers.</p> <p>And who can forget the FBI&rsquo;s 2013 takedown of Silk Road.</p> <p>Silk Road was an online marketplace used to sell illegal drugs, dirty pictures, and stolen plastic.</p> <p>These criminals thought that because bitcoin operated independently of the U.S. government, their activity couldn&rsquo;t be traced.</p> <p>But they were proved wrong once the government shut Silk Road down, and made an example of this illegal marketplace.</p> <p><u><em><strong>You see, it turns out bitcoin is nowhere near as anonymous and untraceable as cash.</strong></em></u></p> <p>Bitcoin is pseudonymous. That is to say, a bitcoin address can be tied to a particular user. You may not know who that user is, but that user has an identity. Think of it like a username on a website. You may not know who&rsquo;s behind it, but that username is tied to a particular person &ndash; and their actions are tied to that username.</p> <p>The whole point about bitcoin is that it&rsquo;s actually transparent. Every transaction is recorded on the blockchain and visible to everyone.</p> <p><strong>In short, just because bitcoin has been the method of payment used by some criminals, it&rsquo;s definitely not the currency&rsquo;s core use.</strong></p> <h2><u>4. <strong> Bitcoin is not regulated</strong></u></h2> <p>A lot of people are worried about bitcoin because the government hasn&rsquo;t come out with an official policy about how it should be run.</p> <p><strong>In short, there&rsquo;s no financial system, like the U.S. Federal Reserve, manging its existence and value. And as a recent <em>Forbes</em> article &ldquo;warns&rdquo;, &ldquo;there is no &lsquo;good faith and credit&rsquo; of the government standing behind the currency.&rdquo;</strong></p> <p>But think about it&hellip; does a government&rsquo;s romise that something is &ldquo;money&rdquo; protect its value?</p> <p><strong>The U.S. dollar can be printed at will&hellip; and only has value because the government says so.</strong></p> <p>Plus, more regulation on bitcoin is quickly being established. For example, the U.S. Commodity Futures Trading Commission (CFTC), which regulates futures and options markets, already approved the creation of options trading around bitcoin.</p> <p>And the SEC recently came out with a statement hinting that it will soon begin regulating cryptocurrencies.</p> <p>These moves will only bring additional stability to the bitcoin market, and with it, some new money.</p> <p><em><strong>But what about in the rest of the world?</strong></em></p> <p>China&nbsp;recently announced a ban&nbsp;on initial coin offerings (ICOs), where companies create and issue cryptocurrencies to the public in exchange for bitcoin or ethereum (the second-largest cryptocurrency).</p> <p>But China didn&rsquo;t &ldquo;ban&rdquo; bitcoin.&nbsp; And even if a government did want to ban it, the question is &ldquo;how&rdquo;? That cat&rsquo;s already out of the bag. And bitcoin doesn&rsquo;t answer to any government.</p> <p><strong>There is no bitcoin head office, no CEO, no board of directors.</strong></p> <p>What&rsquo;s more, there&rsquo;s no incentive for any major economy to &ldquo;ban&rdquo; bitcoin. (Japan, the third-largest economy in the world, made it legal tender.) Any government that does ban it is simply saying &ldquo;we don&rsquo;t want innovation, technology jobs, new companies, or enterprise in general&rdquo;.</p> <p><strong>Now don&rsquo;t get me wrong &ndash; there is and will be regulation, and there may even be a temporary shutdown of the exchanges.</strong></p> <p>But regulation is a different story altogether. For example, don&rsquo;t think for a second that Uncle Sam is going to let you make 10x on a cryptocurrency trade and not pay your &ldquo;fair share&rdquo; of tax to the coffers.</p> <h2><u>5. <strong> Bitcoin is too volatile to invest in</strong></u></h2> <p>Most people look at bitcoin&rsquo;s daily price changes and write bitcoin off simply because it&rsquo;s more volatile than your typical blue-chip stock. But these swings are growing smaller, as more and more people move money into bitcoin.</p> <p>According to investment firm ARK Invest, at the beginning of this year,<em><strong> &ldquo;bitcoin&rsquo;s daily volatility was about one-fifth that of five years ago, and 28 percent less than January 1, 2016.&rdquo;</strong></em></p> <p>And this trend should continue, as time goes on&hellip; and more money flocks into this sapce.</p> <p><strong>That said, even with this level of volatility, bitcoin delivered better risk-adjusted returns than stocks, bonds, gold and real estate over the past five years. In fact, over the past year alone, bitcoin performed twice as well as stocks, on a risk-adjusted basis.</strong></p> <p>I&rsquo;m not saying bitcoin won&rsquo;t be volatile. Like any asset, cryptocurrencies will continue to experience rallies and corrections. Don&rsquo;t fall into the trap of thinking &ldquo;this time is different&rdquo; and that bitcoin will go up forever. The cryptocurrency could absolutely be in for a short-term price bubble. But over the long term, the upside is far from over. You just need to proceed carefully. And &ldquo;invest&rdquo; no more than you can absolutely afford to lose.</p> <h2><u><strong>Don&rsquo;t believe the media hype</strong></u></h2> <p>As I said earlier, the media doesn&rsquo;t really understand bitcoin. So what you read in the mainstream media on cryptocurrencies should be taken with a liberal dose of salt.</p> <p>The truth is, <strong>bitcoin is a just a cryptographically scarce and secure medium of exchanging value</strong>. It&rsquo;s not a vehicle for criminals or not a real currency. And bitcoin, and the technology behind it &ndash; called the blockchain &ndash; is quickly changing the world. And it&rsquo;s here to stay. Being on the outside (and not understanding it) will limit your ability to profit.</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="1056" height="529" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171016_bit.jpg?1508166827" /> </div> </div> </div> http://www.zerohedge.com/news/2017-10-16/myths-about-bitcoin-must-die#comments Alternative currencies Bitcoin Bitcoin Bitcoin network Blockchains China Commodity Futures Trading Commission Cryptocurrencies Currency Digital currencies Economics of bitcoin FBI Federal Bureau of Investigation Federal Reserve Finance Hong Kong Japan Legality of bitcoin by country or territory Money Mt. Gox Real estate U.S. Commodity Futures Trading Commission U.S. Securities and Exchange Commission US Federal Reserve US government Volatility Wall Street Journal Zimbabwean government Tue, 17 Oct 2017 02:00:00 +0000 Tyler Durden 605399 at http://www.zerohedge.com Here's How Much Each HSBC Trader Made In Their FX Front-Running Scheme http://www.zerohedge.com/news/2017-10-16/heres-how-much-each-hsbc-trader-made-their-fx-front-running-scheme <p>Last week we wrote about how some former HSBC FX traders, led by Mark Johnson, orchestrated a carefully crafted plan to front-run a massive buy order for British Pounds using the code phrase "<a href="http://www.zerohedge.com/news/2017-10-06/my-watch-hsbc-traders-used-code-words-trigger-front-running-trades">my watch is off.</a>"&nbsp; </p> <p>Now, courtesy of court filings in a British case to extradite one of the participants, Stuart Scott, we learn exactly how much each HSBC trader made for his trading book in the illicit scheme that netted a total of $8 million in profits.&nbsp; Per <a href="https://www.bloombergquint.com/markets/2017/10/16/ex-hsbc-trader-calls-u-s-too-aggressive-in-front-running-case">Bloomberg</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>"The defendant personally obtained over $500,000 profit,"</strong> the U.S. Justice Department, represented by British lawyer Mark Summers, said in written arguments prepared for the hearing. <strong>"The offenses of which he is accused are highly serious. They involve a systematic and organized conspiracy to defraud, committed in breach of trust."</strong></p> <p>&nbsp;</p> <p>Scott was charged, along with his ex-boss Mark Johnson, by the Justice Department in July 2016 with using insider knowledge to <strong>front-run a $3.5 billion currency deal by Cairn Energy Plc</strong> that made the bank $8 million. Johnson is on trial in New York and a jury there could begin deliberations this week.</p> <p><strong>&nbsp;</strong></p> </blockquote> <p>Here's how everyone else made out per the DOJ:<strong><br /></strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/10/16/2017.10.16%20-%20HSBC%201.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/10/16/2017.10.16%20-%20HSBC%201_0.JPG" alt="Trading Gains" width="600" height="471" /></a></p> <p>For those who haven't followed this particular story, Mark Johnson was arrested at New York’s Kennedy Airport in 2016 before he could return to the U.K. following a nearly 3-year investigation into efforts on the part of several large investment banks to rig FX markets but Stuart Scott has remained free at his home in the London suburbs pending the outcome of the extradition proceedings.&nbsp; Per <a href="http://www.bloomberg.com/news/articles/2016-07-20/hsbc-official-said-to-be-charged-by-u-s-in-fx-rigging-probe">Bloomberg:</a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Mark Johnson, HSBC’s global head of foreign exchange cash trading in London, was taken into custody at John F. Kennedy International Airport Tuesday and is scheduled to appear before a judge in federal court in Brooklyn Wednesday morning, </strong>said the people, who asked not to be named because the case hasn’t been made public. He’s charged with conspiracy to commit wire fraud, the people said. </p> <p>&nbsp;</p> <p>According to Bloomberg, Johnson’s arrest comes more than a year after five global banks pleaded guilty to charges related to the rigging of currency benchmarks. HSBC, which wasn’t part of those criminal cases, in November 2014 agreed to pay $618 million in penalties to U.S. and British regulators to resolve currency manipulation allegations. HSBC, which still faces investigations by the Justice Department and other authorities for the conduct, has set aside $1.3 billion for possible settlements, according to an August filing. </p> <p>&nbsp;</p> <p>Rob Sherman, an HSBC spokesman, and Peter Carr, a Justice Department spokesman, declined to comment.</p> </blockquote> <p> According to the original <a href="https://www.justice.gov/usao-edny/pr/global-head-hsbc-s-foreign-exchange-cash-trading-desks-arrested-orchestrating">DOJ complaint</a>, HSBC was selected by Cairn Energy Plc to execute a foreign exchange transaction – which was going to require converting approximately $3.5 billion in sales proceeds into British Pound Sterling – in October 2011.&nbsp; But, before executing that trade, he tipped off a bunch of HSBC traders who loaded up their proprietary accounts with Pounds just before the massive trade sent the currency higher.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>“As alleged, the defendants placed personal and company profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars,”</strong> stated United States Attorney Capers.&nbsp; “When questioned by their client about the higher price paid for their significant transaction, the defendants wove a web of lies designed to conceal the truth and divert attention away from their fraudulent trades.&nbsp; The charges and arrest announced today reflect our steadfast commitment to hold accountable corporate executives and licensed professionals who use their positions to fraudulently enrich themselves.” </p> <p>&nbsp;</p> <p>“The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank,” said Assistant Attorney General Caldwell.&nbsp; “This case demonstrates the Criminal Division’s commitment to hold corporate executives, including at the world’s largest and most sophisticated institutions, responsible for their crimes.”</p> </blockquote> <p>Not surprisingly, Scott is fighting the extradition case saying that his front-running scheme didn't hurt anyone in the U.S. and that <strong>"for a person to be extradited the behavior must also be illegal in their home country.</strong>.."</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Scott is fighting the request, claiming American prosecutors are targeting conduct that didn’t happen or hurt anyone in the U.S.</p> <p>&nbsp;</p> <p>Lawyers for Scott on Monday told Judge Michael Snow the Justice Department had misrepresented the behavior and was attempting to regulate conduct that didn’t occur or cause any harm in the U.S. They also raised issues of <strong>“dual criminality” -- for a person to be extradited the behavior must also be illegal in their home country.</strong></p> <p>&nbsp;</p> <p><strong>“This is an aggressive assertion by the U.S. of its jurisdiction to try conduct which substantially occurred in the U.K.,"</strong> Jonathan Caplan, Scott’s lawyer, told the court. <strong>"There was no intended or real, actual harm to the U.S."</strong></p> </blockquote> <p>...while we're certainly not experts in international law we find it hard to believe that bilking your clients out of millions of dollars by front-running their trade is not illegal in the U.K.<strong><br /></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="676" height="414" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017.10.16%20-%20Scott%20Stuart.JPG?1508166177" /> </div> </div> </div> http://www.zerohedge.com/news/2017-10-16/heres-how-much-each-hsbc-trader-made-their-fx-front-running-scheme#comments British Pound Business Criminal Division DOJ Economy Finance Foreign exchange market HSBC Investment banks Law Money Subprime mortgage crisis U.S. Justice Department U.S. Lawyers for Scott UBS UN Court United States Attorney Tue, 17 Oct 2017 01:40:00 +0000 Tyler Durden 605400 at http://www.zerohedge.com How The Elite Dominate The World – Part 1: Debt As A Tool Of Enslavement http://www.zerohedge.com/news/2017-10-16/how-elite-dominate-world-%E2%80%93-part-1-debt-tool-enslavement <p><a href="http://theeconomiccollapseblog.com/archives/how-the-elite-dominate-the-world-part-1-debt-as-a-tool-of-enslavement"><em>Authored by Michael Snyder via The Economic Collapse blog,</em></a></p> <p>Throughout human history, those in the ruling class have found various ways to force those under them to work for their economic benefit.&nbsp;<strong> But in our day and age, we are willingly enslaving ourselves.&nbsp;</strong></p> <p><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_elites.jpg" style="width: 454px; height: 247px;" /></p> <p><strong>The borrower is the servant of the lender, and there has never been more debt in our world than there is right now.&nbsp; </strong>According to the Institute of International Finance, global debt has hit the <a href="http://theeconomiccollapseblog.com/archives/the-world-is-now-217000000000000-in-debt-and-the-global-elite-like-it-that-way" title="217 trillion dollar mark">217 trillion dollar mark</a>, although other estimates would put this number far higher.&nbsp; Of course everyone knows that our planet is drowning in debt, but most people never stop to consider who owns all of this debt.&nbsp; This unprecedented debt bubble represents that greatest transfer of wealth in human history, and those that are being enriched are the extremely wealthy elitists at the very, very top of the food chain.</p> <p>Did you know that <a href="https://www.oxfam.org/en/pressroom/pressreleases/2017-01-16/just-8-men-own-same-wealth-half-world" target="_blank" title="8 men">8 men</a> now have as much wealth as the poorest 3.6 billion people living on the planet <strong>combined?</strong></p> <p><strong>Every year, the gap between the planet&rsquo;s ultra-wealthy and the poor just becomes greater and greater.&nbsp;</strong> This is something that I have written about frequently, and the &ldquo;financialization&rdquo; of the global economy is playing a major role in this trend.</p> <p>The entire global financial system is based on debt, and this debt-based system endlessly funnels the wealth of the world to the very, very top of the pyramid.</p> <p>It has been said that Albert Einstein once made <a href="https://www.goodreads.com/quotes/76863-compound-interest-is-the-eighth-wonder-of-the-world-he" target="_blank" title="the following statement">the following statement</a>&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>&ldquo;Compound interest is the eighth wonder of the world. He who understands it, earns it &hellip; he who doesn&rsquo;t &hellip; pays it.&rdquo;</em></strong></p> </blockquote> <p>Whether he actually made that statement or not, the reality of the matter is that it is quite true.&nbsp; By getting all of the rest of us deep into debt, the elite can just sit back and slowly but surely become even wealthier over time.&nbsp; Meanwhile, as the rest of us work endless hours to &ldquo;pay our bills&rdquo;, the truth is that we are spending our best years working to enrich someone else.</p> <p>Much has been written about the men and women that control the world.&nbsp; <strong><em>Whether you wish to call them &ldquo;the elite&rdquo;, &ldquo;the establishment&rdquo; or &ldquo;the globalists&rdquo;, the truth is that most of us understand who they are.&nbsp;</em></strong> And how they control all of us is not some sort of giant conspiracy.&nbsp; Ultimately, it is actually very simple.&nbsp; Money is a form of social control, and by getting the rest of us into as much debt as possible they are able to get all of us to work for their economic benefit.</p> <p><strong>It starts at a very early age.&nbsp; We greatly encourage our young people to go to college, and we tell them to not even worry about what it will cost.&nbsp;</strong> We assure them that there will be great jobs available for them once they finish school and that they will have no problem paying off the student loans that they will accumulate.</p> <p>Well, over the past 10 years student loan debt in the United States <a href="https://www.cnbc.com/2017/07/20/states-with-the-lowest-average-amount-of-student-loan-debt.html" target="_blank" title="“has grown 250 percent”">&ldquo;has grown 250 percent&rdquo;</a> and is now sitting at an absolutely staggering grand total of 1.4 trillion dollars.&nbsp; Millions of our young people are already entering the &ldquo;real world&rdquo; financially crippled, and many of them will literally spend decades paying off those debts.</p> <p>But that is just the beginning.</p> <p><strong>In order to get around in our society, virtually all of us need at least one vehicle, and auto loans are very easy to get these days.</strong>&nbsp; I remember when auto loans were only made for four or five years at the most, but in 2017 it is quite common to find loans on new vehicles that stretch out for six or seven years.</p> <p>The total amount of auto loan debt in the United States has now surpassed <a href="http://theeconomiccollapseblog.com/archives/the-one-trillion-dollar-consumer-auto-loan-bubble-is-beginning-to-burst" title="a trillion dollars">a trillion dollars</a>, and this very dangerous bubble just continues to grow.</p> <p><strong>If you want to own a home, that is going to mean even more debt.&nbsp;</strong></p> <p>In the old days, mortgages were commonly 10 years in length, but now 30 years is the standard.</p> <p><em><strong>By the way, do you know where the term &ldquo;mortgage&rdquo; originally comes from?</strong></em></p> <p><em><strong>If you go all the way back to the Latin, it actually means <a href="http://www.businessinsider.com/mortgage-means-death-pledge-2016-3" target="_blank" title="“death pledge”">&ldquo;death pledge&rdquo;</a>.</strong></em></p> <p>And now that most mortgages are for 30 years, many will continue making payments until they literally drop dead.</p> <p>Sadly, most Americans don&rsquo;t even realize how much they are enriching those that are holding their mortgages.&nbsp; For example, if you have a 30 year mortgage on a $300,000 home at 3.92 percent, you will end up making total payments of $510,640.</p> <p><strong>Credit card debt is even more insidious.&nbsp;</strong> Interest rates on credit card debt are often in the high double digits, and some consumers actually end up paying back several times as much as they originally borrowed.</p> <p>According to the Federal Reserve, total credit card debt in the United States has also now surpassed <a href="https://www.cnbc.com/2017/08/08/credit-card-debt-reached-a-record-high-heres-how-to-pay-it-off.html" target="_blank" title="the trillion dollar mark">the trillion dollar mark</a>, and we are about to enter the time of year when Americans use their credit cards the most frequently.</p> <p>Overall, U.S. consumers are now nearly 13 trillion dollars in debt.</p> <p><strong>As borrowers, we are servants of the lenders, and most of us don&rsquo;t even consciously understand what has been done to us.</strong></p> <p><em>In Part I, I have focused on individual debt obligations, but tomorrow in Part II I am going to talk about how the elite use government debt to corporately enslave us.&nbsp;</em> All over the planet, national governments are drowning in debt, and this didn&rsquo;t happen by accident.&nbsp; The elite love to get governments into debt because it is a way to systematically transfer tremendous amounts of wealth from our pockets to their pockets.&nbsp; This year alone, the U.S. government will pay somewhere around half a trillion dollars just in interest on the national debt.&nbsp; That represents a whole lot of tax dollars that we aren&rsquo;t getting any benefit from, and those on the receiving end are just becoming wealthier and wealthier. In Part II we will also talk about how our debt-based system is literally designed to create a government debt spiral.&nbsp; Once you understand this, the way that you view potential solutions completely changes.&nbsp; If we ever want to get government debt &ldquo;under control&rdquo;, we have got to do away with this current system that was intended to enslave us by those that created it.</p> <p><strong><em>We spend so much time on the symptoms, but if we ever want permanent solutions we need to start addressing the root causes of our problems.&nbsp; Debt is a tool of enslavement, and the fact that humanity is now more than 200 trillion dollars in debt should deeply alarm all of us.</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="454" height="247" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171016_elites.jpg?1508188502" /> </div> </div> </div> http://www.zerohedge.com/news/2017-10-16/how-elite-dominate-world-%E2%80%93-part-1-debt-tool-enslavement#comments 30 Year Mortgage 30 Year Mortgage Business Credit card debt Debt Debt levels and flows Economy Federal Reserve Finance Global Economy Government debt Household debt Money National Debt National debt of the United States Reality Student debt Student Loans US Federal Reserve US government Tue, 17 Oct 2017 01:20:00 +0000 Tyler Durden 605429 at http://www.zerohedge.com "There Were No Calls, That’s Absolutely Crazy": How The Stock Market Died http://www.zerohedge.com/news/2017-10-16/%E2%80%9Cthere-were-no-calls-that%E2%80%99s-absolutely-crazy%E2%80%9D-how-stock-market-died <p>Something unexpected happened on the market's relentless trek to all time highs: the market died. </p> <p>At least that is the impression one gets from walking around Wall Street's formerly busy trading desks (<a href="http://www.zerohedge.com/news/2016-09-01/transformation-wall-street-just-two-photos-ubs-trading-floor-2008-and-2016">certainly the formerly biggest trading floor in the world, that of UBS, now hauntingly empty</a>) where these days one can hear a pin drop. Take the Credit Suisse Prime Brokerage desk in Manhattan for example: here, as <a href="https://www.bloomberg.com/news/articles/2017-10-16/a-crazy-stock-market-is-punishing-sellers">BusinessWeek reports </a>in its 1987 anniversary issue, "the phones hardly seem to ring anymore." In fact, if one didn't know better, one could assume that instead of all time highs, the market has just experienced another spectacular crash resulting in a universal trading revulsion. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Credit Suisse's hedge fund clients don’t call about Donald Trump’s tweetstorms and the stock market or ask what to do when terrorists attack. And there was barely a whiff of panic when North Korea erupted in August. “Two rockets flew over the land mass of Japan and nothing happened,” says Mark Connors, Credit Suisse’s global head of risk advisory. </p> </blockquote> <p>Connor's assessment, in not so many words, the market has died: “There were no calls. That’s absolutely crazy.”</p> <p>Why crazy? Because traders who don't belong to the millennial generation, will recall that in addition to buyers, stocks also have sellers. But not now, unfortunately, because what goes on in Credit Suisse' prime brokerage desk does not stay in Credit Suisse' prime brokerage desk. <strong>Instead, it’s become the norm on Wall Street. "Whether it’s the threat of nuclear war, hurricanes, or Russian meddling, it seems nothing can unnerve investors bent on pushing the U.S. stock market higher and higher. Even Richard Thaler, who won a Nobel Prize last week for explaining how irrationality drives financial markets, said on Bloomberg Television he couldn’t understand why stocks keep going up now.</strong>"</p> <p>What is causing this unprecedented meltup? The <a href="http://www.zerohedge.com/article/buy-dip">same thing we first presented in 2010</a>: the "Buy The [Fucking] Dip" (which subsequently became "<a href="http://www.zerohedge.com/news/2013-11-16/btfath-new-btfd">Buy the Fucking All Time High</a>") mentality, originally popularized by a couple of cartoon characters, which has since become the one and only "trading strategy" on Wall Street - and everywhere else - and which is also known as <em>"don't sell anything.</em>" Because why sell in a world in which central banks have everyone's back?</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/10/14/btfd%20bbg.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/10/14/btfd%20bbg_0.jpg" width="500" height="375" /></a></p> <p>"So what’s going on?" Bloomberg asks and ponders: </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>During most of the first 8½ years of the bull market, the mood was paradoxical. Although stocks rose, many investors scarred by the financial crisis acted as though they hated owning shares again, and every obstacle was framed as the next big meltdown (even as the underlying fundamentals remained strong). <strong>Now, everywhere you look—swelling stock valuations, hot sales of new cryptocurrencies, IPO shares with no voting rights—investors are embracing their speculative side. In the language of Wall Street, every day it’s “risk-on.”</strong></p> </blockquote> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/10/14/risk%20on%20everywhere.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/10/14/risk%20on%20everywhere_0.jpg" width="500" height="375" /></a></p> <p>Actually, dear Bloomberg authors - while we do realize the question is rhetorical - the answer is simple. <strong>Bubbles. Bubbles everywhere</strong>. </p> <p>Back in <a href="http://www.zerohedge.com/news/2017-06-13/scariest-chart-central-banks">June Citigroup's hans Lorenzen pointed out precisely what was going on </a>in financial markets that scramble to maximize every last ounce of what central bank impulse remains, in which we get such bubbles as London real estate, bitcoin and vintage cars amid the Fed's attempts to "facilitate recovery", or as Citi puts it: "<strong>the wealth effect is stretching farther and farther afield."</strong></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/06/04/citi%20lor%205_0.jpg" width="500" height="321" /></p> <p>And while on the upside the surge in sweet for everyone involved, it's what happens when bubbles burst - as they always inevitably do - that is the problem, a problem which the Fed clearly is not concerned about (and for Janet Yellen, in just three months it will be someone else's problem).</p> <p>Unfortunately, the realization that it is a bubble provides little relief for those who careers depend on being fully invested, i.e. all of Wall Street. Which is also why goalseeked justifications and rationalizations - "<em>the market is a bubble, but a much smaller bubble than bonds, etc.</em>" - emerge. This is also known as FOMO, or Fear of Missing Out. As a result, as Bloomberg notes, while it is an uncertain world out there, "<strong>fear invariably turns into greed, and the fear of missing out overshadows any anxiety about the next crash.</strong>" That tends to quickly draw money back into the market every time it wobbles, despite legitimate worries about high valuations. </p> <p><strong>“We certainly all joke about it: Buy the dip, that’s what we’ve been conditioned to do,” says Benjamin Dunn, president of the portfolio consulting practice at Alpha Theory, which works with money management firms. “Now you kind of have to do it. It’d almost be irresponsible not to.</strong>”</p> <p>A joke for some, perhaps, but in the end all that will be left are tears, of course. Until then, however, the market not only refuses to crash, it hasn't had a mere 2% drop in months.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/10/14/2%25%20drop%20BBG.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/10/14/2%25%20drop%20BBG_0.jpg" width="500" height="375" /></a></p> <p>Another way of seeing the market's unprecedented complacency: the number of days with a 1% up or down move in the S&amp;P is below 10 so far in 2017, among the lowest on record. By comparison, the post WWII average is over 50. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/10/14/number%20of%20days%20with%201%25%20moves.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/10/14/number%20of%20days%20with%201%25%20moves_0.jpg" width="566" height="395" /></a></p> <p>In light of the above, it is not surprisng that This year, the S&amp;P 500 index has hit records on almost four dozen different occasions, with the single biggest drop from the latest record amounting to less than 3 percent. At the same time, more than $3.2 trillion of market value has been added to U.S. equities (and $5 trillion since Trump's election as he will gladly remind his twitter followers each day) while volatility is at record lows. </p> <p>And speaking of goalseeked justifications for this epic, artifical, central-bank inspired rally, that's what Bloomberg does next:&nbsp; </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>It’s easy to say it’s all about Trump and his promise of big tax cuts. His election has fueled some impressive gains (though perhaps not quite as impressive as he has often claimed and still far short of the best year for U.S. stocks during this current cycle). But for Credit Suisse’s Connors, the shift in market psychology can be traced back to a different signal event: <strong>Brexit</strong>. </p> <p>&nbsp;</p> <p>After the U.K. voted to leave the European Union in June 2016, $2.6 trillion was wiped off the value of equities worldwide in just three days. Many were calling it one of the most dramatic and shocking turns of events in modern British history. Among investors, the panic was palpable, and some were paralyzed with fear. <strong>But almost as quickly, the markets roared back and jolted investors out of their crisis-era fatalism</strong>. </p> <p>&nbsp;</p> <p><strong>Since then, naysayers selling into any weakness have looked like suckers. </strong>In the aftermath of other post-crisis upheavals, “we got a lot of incoming client calls,” Connors said. “But that all ended with Brexit. Now, even though the events seem dire, volume is low and and reversals are sharp. People are looking through to things that keep them long. Buy-the-dip is in place.”</p> </blockquote> <p>None other than <a href="http://www.zerohedge.com/news/2016-12-08/jpms-quant-wizard-returns-dark-side-warns-coming-market-turmoil">JPMorgan's Marco Kolanovic quantified this effect</a>, showing that starting with the August 2015 ETFlash crash, and passing through the Brexit, Trump and ultimately Italian vote, the BTFD rebound has been shorter and shorter, shrinking from 65 days to just a few hours. This is what Kolanovic wrote last December:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>It appears that the time horizon of macro traders has shortened, likely as a result of increased participation of machines and algorithms that are quicker to adjust to significant events and can eliminate trading activity of slower investors. </strong>Consider for example the US elections - traders in Japan registered a 5.4% Nikkei drop on the 9th, followed by a 6.7% rally on the 10th, while S&amp;P 500 investors did not register a significant close-to-close move over the election (due to market hours difference). These two days were enough to shift the volatility regime (usually calculated from closing returns) for the whole of 2016 for the Japanese equity market, and leave it unchanged for S&amp;P 500 (e.g. think of rebalancing needs of a hypothetical risk parity fund, or a short volatility strategy based on Nikkei vs. one based on S&amp;P 500). <strong>We also noticed that for a number of significant catalysts this year (Brexit, US Election, Italy Referendum) broad expectations were wrong both on the outcome and the directionally forecasted impact. </strong>It is possible that the lack of market reaction (or a reaction that went against the accepted narrative) was in part driven by investors’ reluctance to transact (“two negatives equal a positive”). </p> </blockquote> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/12/07/kolan%203.2_0.jpg" width="501" height="360" /></p> <p>Whether central banks are involved in some capacity in these dramatic rebounds remains to be seen: so far all that has been publicly documented is that both the BOJ and SNB, as well as various sovereign wealth funds, have been aggressive in purchasing and accumulating stocks come rain or shine, with zero regard for price. Why would retail investors and algos not piggyback?</p> <p>And piggybacking is precisely what retail investors are doing, hopeful to profit during the <a href="http://www.zerohedge.com/news/2017-10-10/melt">upcoming melt up phase</a>, as Ed Yardeni found out just a few days ago.</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/09/20171010_melt.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/09/20171010_melt_0.jpg" width="505" height="111" /></a></p> <p>The former chief economist for Deutsche Bank was in Texas recently, visiting clients. In hurricane-ravaged Houston, locals were still dealing with the aftermath of Harvey, and two clients couldn’t meet because of damaged buildings. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Yet there was one thing on everyone’s mind. “<strong>They wanted to talk about the potential for a stock market melt-up</strong>,” he says. A melt-up is a last-gasp surge like the one in 1999, when the Nasdaq doubled—just before it crashed. <strong>Nothing like it has happened in this bull market. To the extent 2017 has a precedent, the current backdrop is closer to 1995 or 2013, when the S&amp;P 500 gained 30 percent or more with barely a peep of turbulence</strong>.</p> </blockquote> <p>So there's the self-fulfilling prophecy of a "melt up", there is also the sense that investors have become invincibly, riding on the coattails of $14 trillion in central bank liquidity and not realizing it:</p> <p>According to Wedbush Securities Inc.’s Ian Winer, all the things underpinning the gains, from robust earnings and the Federal Reserve’s low interest rate policy to the falling dollar and the retreat of sellers, has created a sense of invincibility. “<strong>Is the risk priced into the market appropriate to what the real risk is?” </strong>says Winer, the firm’s director of equities. “<strong>To me, it isn’t. People have grown more complacent and certainly more speculative, and it’s a little bit frightening.” <br /></strong></p> <p>Of course, knowing it's a bubble is meaningless, unless one also knows when it will burst. And it is this that is the problem, as Bloomberg points out:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>it’s far from obvious what will trigger the next downturn or when investors should get out. The hazards of market timing were illustrated by a Bank of America Corp. study last year, which showed that missing the very end of a bull market often means missing a quarter of its gains. What’s more, anyone who owned stocks just before they crashed in the worst bear market since the Great Depression would still have doubled their money as long as they had the fortitude—and enough of a financial cushion—not to bail.</p> </blockquote> <p>Meanwhile, and most ironically, the biggest losers even as the zombie market, in which nobody bothers to sell any more hits all time highs, are professional, active investors, who have become a dying breed, among the biggest active to ETF, or passive, asset allocation shift in history.&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/10/14/active%20vs%20passive%20bofa%202.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/10/14/active%20vs%20passive%20bofa%202_0.jpg" width="500" height="675" /></a></p> <p>Among the very few who are happy with the current "dead" market, is the Vanguard Group, whose trillions of dollars in low-cost and index-tracking funds have been credited and blamed for the current market mood, as so many retail investors have decided just to buy a diversified fund and forget about it—the new mindset is a sign of a job well done. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“To see people not trading wildly on political news is optimistic,” says Fran Kinniry, a principal in Vanguard’s investment strategy group. “<strong>Investors are acting in a very positive way, how a professional investor should be investing. Have an asset allocation and rebalance it, and do your best to differentiate between the noise vs. reality</strong>.”</p> </blockquote> <p>Still, one can't help but wonder just how professionally these investors will be acting during the next, perhaps last, ETFlash crash, one which will make the August 24, 2015 market break, ETF and VIX freeze seem like a walk in the park. One thing that is certain: the market will simply shut down that day. The question is for how long, and will it ever reopen.</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="1342" height="826" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/number%20of%20days%20with%20equity%20moves.jpg?1508175863" /> </div> </div> </div> http://www.zerohedge.com/news/2017-10-16/%E2%80%9Cthere-were-no-calls-that%E2%80%99s-absolutely-crazy%E2%80%9D-how-stock-market-died#comments Alpha Bank of America Bank of America Bear Market Bitcoin BOJ Business Central Banks Credit Suisse Deutsche Bank Economic bubbles Economy ETC European Union European Union Finance Financial markets Great Depression Investment Investment strategy Italy Janet Yellen Japan Market Timing Market timing Mathematical finance Meltdown Meltup Money NASDAQ NASDAQ 100 Nikkei None North Korea Real estate Reality recovery Risk parity S&P S&P 500 SNB Stock market Technical analysis Twitter Twitter US Federal Reserve Volatility Tue, 17 Oct 2017 01:14:17 +0000 Tyler Durden 605412 at http://www.zerohedge.com VIX Shorts Hit New Record High As S&P Surpasses 2017's Most Bullish Forecast http://www.zerohedge.com/news/2017-10-16/vix-shorts-hit-new-record-high-sp-surpasses-2017s-most-bullish-forecast <p><strong>At the start of 2017, the most optimistic strategist forecast the S&amp;P 500 at 2,500 by year-end</strong>.</p> <p><em>S&amp;P Year-End forecasts as of 1/6/17...</em></p> <p><img height="592" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_SandP.jpg" width="600" /></p> <p>&nbsp;</p> <p>In the last few weeks, <strong>the market has not only surpassed that most-exuberant guess...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_spx.jpg"><img height="316" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_spx_0.jpg" width="600" /></a></p> <p><em>As Bloomberg notes, despite two strategists upgrading their targets on Friday, professional prognosticators are hardly raging bulls: At 2,524, their average estimate represents a 1% decline in the benchmark gauge.</em></p> <p>But as it has melted up from there, investors are entirely unafraid as <strong>traders extend their VIX shorts to a new record high...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_spx1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_spx1_0.jpg" style="width: 600px; height: 312px;" /></a></p> <p>Additionally, the number of VIX contracts outstanding just hit a fresh record.<strong> Wagering on equity swings has become increasingly popular this year as the gauge of stock swings heads for its&nbsp;lowest ever&nbsp;annual average.</strong> While the VIX is up this month,&nbsp;history shows&nbsp;that it tends to fall in the fourth quarter.</p> <p>So what now? <a href="https://www.rcmalternatives.com/2017/10/how-to-trade-the-vix-flowchart/">RCMAlternatives.com </a>has developed the following nifty flowchart of just how to proceed from here...</p> <p><a href="https://www.rcmalternatives.com/wp-content/uploads/2017/10/How-to-trade-the-VIX_Flowchart_2-1.png"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/10/15/20171016_spx2_0.jpg" style="width: 600px; height: 1422px;" /></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="971" height="505" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171016_spx1.jpg?1508171642" /> </div> </div> </div> http://www.zerohedge.com/news/2017-10-16/vix-shorts-hit-new-record-high-sp-surpasses-2017s-most-bullish-forecast#comments Business Data analysis Economy Forecasting Mathematical finance NIFTY 50 Prediction S&P 500 S&P 500 Index Strategist Technical analysis VIX Tue, 17 Oct 2017 01:00:00 +0000 Tyler Durden 605407 at http://www.zerohedge.com