“It’s A Vicious Cycle”: Goldman Abandons Equity Options Market-Making As Vol Collapses

October is historically the most volatile month of the year, but in 2017 – the average volatility of US equity markets dropped to an all-time record low…

… And you know something’s wrong when, just like in early 2007 when the crash in vol killed the swaptions industry – just before all hell broke loose – Goldman Sachs is pulling back from U. S. options market-making on exchanges.

This post was published at Zero Hedge on Nov 4, 2017.

US Gross National Debt Spikes by $640 billion in 8 Weeks

But the debt-ceiling charade is back.
The debt ceiling charade being played out every few years in Congress makes the entire world shake its collective head and pray that Congress will for the umpteenth time raise the dang thing or at least ‘suspend’ it. The other option is a US default, the global consequences of which are too ugly to imagine, even for Congress.
In its infinite wisdom, Congress didn’t raise the debt ceiling in September; it only suspended it through December 8, after which the horse-trading will start all over again. But Congress is busy listening to lobbyists about the tax cuts – who gets them and who pays for them – and the debt ceiling isn’t even on the back burner. So here we go again.
But this charade has some peculiar effects, beyond its entertainment value: For months on end, it covers up the true extent of US government debt, and its continued surge. Then suddenly, the floodgates open.
Over just these six years, the debt has ballooned by $5.7 trillion, or by 39%, from $14.8 trillion to $20.5 trillion. In the chart below, note the last three debt-ceiling fights, the long flat lines in 2013, 2015, and 2017, followed each time by an enormous spike when the debt ceiling was lifted or suspended, and when the ‘extraordinary measures’ with which the Treasury keeps the government afloat were reversed.

This post was published at Wolf Street by Wolf Richter ‘ Nov 4, 2017.

Scientists Look For A Cure For Politically Undesirable Behavior

Via GEFIRA,
The ‘Free World’ has taken on where the Soviet scientists and psychiatrists left off.
German and American scientists of renowned Universities in Bonn and Lbeck do research on treatment for politically undesirable behaviour like their Soviet colleagues from the infamous Serbsky Central Research Institute in Moscow. In the Soviet Union people who protested the system had to undergo psychiatric treatment.
Vladimir Bukovsky, a world-known dissident survived one and described it. The same will be the fate of the so called Free World’s citizens if they fail to conform to the idea of a multi-cultural society. The powers that be have given a signal, and obliging, complaisant scientists are already busy working on bettering our collective and individual psyche. Apart from homophobia and Islamophobia, xenophobia is another psychiatric condition that needs to undergo therapy…hormonal therapy.
Throughout history, the world has been torn by two opposing factors that face each other with daggers drawn. These are natural biological, and unnatural forces, or reality and dystopia. It is natural for a human being to want to possess things and work as little as possible; to counter it, dystopian socialists, communists or Christian heretics came up with an idea of a society governed by the principle: From each according to his ability, to each according to his needs.
It was supposed to work. And it failed miserably everywhere it was installed and implemented, from Cuba to East Germany, to the Soviet Union, to North Korea.

This post was published at Zero Hedge on Nov 3, 2017.

Gold Speculators Refuse To Give Up; Another Drop Likely

Normally winter is a good time for gold, with men buying their significant others jewelry for Christmas and lots of New Years Day marriage proposals. Here’s an overview of the dynamic from Adam Hamilton of Zeal Intelligence:
Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year. While seasonality doesn’t drive price action, it quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals. We humans are creatures of habit and herd, which naturally colors our trading decisions. The calendar year’s passage affects the timing and intensity of buying and selling.
Gold stocks exhibit strong seasonality because their price action mirrors that of their dominant primary driver, gold. Gold’s seasonality generally isn’t driven by supply fluctuations like grown commodities experience, as its mined supply remains fairly steady all year long. Instead gold’s major seasonality is demand-driven, with global investment demand varying dramatically depending on the time within the calendar year.
This gold seasonality is fueled by well-known income-cycle and cultural drivers of outsized gold demand from around the world. And the biggest seasonal surge of all is just now getting underway heading into winter. As the Indian-wedding-season gold-jewelry buying that drives this metal’s big autumn rally winds down, the Western holiday season is ramping up. The holiday spirit puts everyone in the mood to spend money.

This post was published at DollarCollapse on NOVEMBER 4, 2017.

Commodities vs. Technology in Trading

Guest post from Paul Somerfield:
In commodity trading, it’s important to take two kinds of technology into account. The first is technology that can affect the underlying price of the commodity and the second is disruptive digital technology that can change the way commodities are traded.
Technology can be a game changer for commodity prices Take oil. A decade ago we were all being told that we’d reached peak oil, and that declining stocks would mean an astronomically high oil price in the future.
Yet, at the time of writing, Brent crude is trading at $61.33 a barrel, way below its peak price. So what happened? Technology happened, that’s what. Advances in exploration and drilling technology meant that oil previously locked up in shale could be mined. An enormous amount of new inventory was able to exploited. So much for peak oil and a crude price nudging $200. Right now, the OPEC producers are trying to get the price so low that the US shale industry calls it a day because it’s not worth the expense of fracking and horizontal drilling to extract the oil.

This post was published at Deviant Investor on November 4, 2017.

“Bubble Tax”: The GOP’s Hidden 46% Tax Bracket

If you’re rich enough, some of your income is taxed at a rate unseen since the ’80s.
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House Republicans claim the tax plan they introduced Thursday keeps the top individual rate unchanged at 39.6 percent – the level at which it’s been capped for much of the past quarter-century. But a little-noticed provision effectively creates a new band in which income is taxed at over 45 percent.
Thanks to a quirky proposed surcharge, Americans who earn more than $1 million in taxable income would trigger an extra 6 percent tax on the next $200,000 they earn – a complicated change that effectively creates a new, unannounced tax bracket of 45.6 percent.
It hasn’t been advertised by Republicans, who have described their plan as maintaining the current top tax rate of 39.6 percent. And it goes against decades of GOP orthodoxy that raising taxes on the rich discourages work and reduces economic growth. Reached by phone, Steve Moore, a tax expert at The Heritage Foundation, said the surcharge was news to him.

This post was published at Zero Hedge on Nov 4, 2017.

George Fitzhugh, the Honest Socialist

In the mid-nineteenth century debates over the virtues and evils of slavery, the arguments from the pro-slavery southerners evolved from a claim that slavery was a ‘necessary evil’ to arguments that it was a ‘positive moral good.’ A large part of this evolution in perspective was a reaction to the growing moral antipathy toward slavery by the North, breeding the need – from the southern perspective – to find a defense of slavery that they could counter on moral grounds.
But George Fitzhugh’s defense of slavery was unique. He accepted the paternalist argument that the southerners were increasingly adopting – specifically, that slavery bettered the position of the slave – but he rejected the racial division that they necessarily included in their argument. In his infamous 1954 publication, Sociology of the South, he wrote:
We abhor the doctrine of the ‘Types of Mankind;’ first, because it is at war with scripture, which teaches us that the whole human race is descended from a common parentage; and, secondly, because it encourages and incites brutal masters to treat negroes, not as weak, ignorant and dependent brethren, but as wicked beasts, without the pale of humanity.
True to the racist views of the day, Fitzhugh did believe that blacks were ‘weak, ignorant and dependent’ on the superior class of whites, but his racism was part of a class analysis common to socialists. In other words, the benefits that he believed blacks gained from slavery should also be applied to poor, less capable whites.

This post was published at Ludwig von Mises Institute on November 4, 2017.

Both Bush Presidents Lash Out At Trump, GHW Confirms He Voted For Hillary

The fading Republican establishment remains unable to reconcile its ongoing collapse, and continues to scapegoat Donald Trump for all the GOP’s troubles instead of looking in the mirror.
Two weeks after an outraged George W. Bush lashed out at Trump, accusing him of emboldening “bigotry and white supremacy“, on Saturday we learn just how deep the animosity toward Trump runs within the extended Bush household. In a new book to be released this month from historian Mark Updegrove, titled “The Last Republicans“, and previewed on Saturday by the NYT and CNN, former President George H. W. Bush said he considers Trump a ‘blowhard,’ only interested in feeding his own “ego.” Meanwhile, his son, former President George W. Bush, thinks Trump fans public anger and came to office without any understanding of the job.
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When asked about Donald Trump in May 2016, GHW Bush said: “I don’t like him … I don’t know much about him, but I know he’s a blowhard. And I’m not too excited about him being a leader.”
His son was just as vocal: ‘Wow, this guy doesn’t know what it means to be president,’ the junior Bush said, indicating that a president should not ‘exploit the anger, incite it’ but rather ‘come up with ideas to deal with it.’

This post was published at Zero Hedge on Nov 4, 2017.

The Brexit chicken game

At last, there are signs a sense of reality is dawning on the EU’s negotiators about the futility of trying to force the UK to agree to a divorce settlement before talking about trade. However, there are still vestiges of a hope that Britain won’t leave the EU after all. Donald Tusk, the current European Council President, indicated it was still an option as recently as this week, but these hopes are wishful thinking.
It has taken thinly-veiled threats from the UK to leave without a deal, unless actual trade talks commence by next month. You can be certain the point has been made more forcefully to EU leaders in private, as well as at the negotiating table, than admitted in public. The EU’s problem is Brussels desperately needs Britain’s annual net contribution of 8bn, which is almost the entire annual cost of running the Brussels establishment. Brexit is nothing short of a disaster for the EU’s finances, and the EU is desperate for Britain’s money. Therefore, negotiations from the EU’s side have been frozen and unable to move onto the subject of trade. Impasse. A game of chicken, to be lost by the first to panic.
The British negotiators have deliberately presented themselves as willing to be helpful. They have insisted Britain will meet her legal requirements, though they must be itemised and justified. And that will not include funding the broader EU budget, amounting to 238bn on commitments incurred but not paid for, which is the basis of Brussels’ claim on Britain. Nor will it fund Brussel’s own budget shortfall, which is most likely where any money paid over will go first.

This post was published at GoldMoney By Alasdair Macleod.

“The S&P Is Up 21% Since Trump’s Election” And Other Market Anniversary Observations

November 8 will mark the one year anniversary of one of the biggest political shocks in US history: the election of Donald Trump. Since that improbable victory, which so many experts had said would lead to a market crash, the S&P 500 has soared by 21% according to Goldman which calculates that the Trump rally so far ranks as the fourth-best 12-month gain following a presidential election since 1936, trailing only Bill Clinton (1996, 32%), John F. Kennedy (1960, 29%), and George H. W. Bush (1988, 23%).
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Of all sectors, the biggest beneficiaries from Trump’s election were Financials and Information Technology, which have powered the market with returns of 37% and 39%, respectively. Given its large weighting, Tech contributed 37% of the index gain. Alongside the relentless stretch of all time highs in the S&P, the rise in the index has also been characterized by the lowest volatility in 50 years and has seen just one month in which it did not record a gain (March, -0.04%) although on a total return basis, the S&P has been up every single month since the election, and as Deutsche Bank observed last wek, the S&P has seen a positive total return for all 10 months so far this year, the first time on record. Additionally, October marked the 12th positive month in succession, which equals the record set in 1949-1950 and 1935-1936. This means the S&P has not had a single month of negative total returns since Trump was elected almost exactly one year ago.

This post was published at Zero Hedge on Nov 4, 2017.

Nothing Really Matters, Anyone Can See

The US labor force is rapidly shrinking. Wage growth is non-existent. The vast majority of the American people have no savings and little hope for economic improvement. But none of that matters with the G-3 central banks in charge!
So today saw the latest installment of the BLSBS. If you check your “mainstream” sources, you;ll be led to believe that everything is great and getting even better!
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But look under the hood and you see that this is all bullshit. The unemployment rate that Drudge blares on behalf of Trump is only at its “lowest since 2000” because October saw an astonishing 968,000 people leave the labor force. This leaves the total number of people NOT in the labor force at a record 95,385,000. Then, as ZH notes, “this took place as the number of employed Americans declined by 484,000, however since the unemployment rate denominator dropped more, it translated into an actual decline in the unemployment rate!” Read all about it here:

This post was published at TF Metals Report on Friday, November 3, 2017.

China: Shadow Bank Inflows Are Critical To Sustain The Ponzi… But They’re Falling

During the Party Congress, even China’s somewhat watered down versus of the free markets was suspended so as not to disturb the glorification of Xi Jinping as the nation’s greatest leader since Mao. Returning to ‘business as usual’, some commentators have been disturbed by the continued rise in government bond yields with the 10-year hitting 3.93% earlier this week.
Bloomberg described it this morning as a ‘tumultuous few days’.
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We also noted Huachuang Securities Co. comment that bond holders may be about to get hit by ‘daggers falling from the sky,’ if the Party adopts more aggressive deleveraging policies. In a far less sensationalist way, the Wall Street Journal has attempted a post-mortem on the recent sell-off in the Chinese government bond market.
Catching sight of a chain reaction in China’s markets is rare.
Carrying out a postmortem of a recent selloff in China’s $9 trillion bond market shows how it is becoming harder for Beijing to untangle its increasingly intertwined financial system. In the aftermath of China’s twice-a-decade party congress last week, yields on benchmark 10-year Chinese government bonds spiked to 3.9%, their highest in three years. Government bond futures fell.
Reasons proffered for the sudden rout ranged from expectations of higher U. S. interest rates to general fearmongering.

This post was published at Zero Hedge on Nov 3, 2017.

All Of The World’s Money And Markets In One Visualization

Millions, billions, and trillions…
When we talk about the giant size of Apple, the fortune of Warren Buffett, or the massive amount of global debt accumulated – all of these things sound large, but they are actually extremely different in magnitude.
That’s why, as Visual Capitalists’ Jeff Desjardins explains, visualizing things spatially can give us a better perspective on money and markets.
How Much Money Exists? This infographic was initially created to show how much money exists in its different forms. For example, to highlight how much physical cash there is in comparison to broader measures of money which include saving and checking account deposits.
Interestingly, what is considered ‘money’ depends on who you are asking.
Are the abstractions created by Central Banks really money? What about gold, bitcoins, or other hard assets?

This post was published at Zero Hedge on Nov 3, 2017.

“It’s Okay To Be White” Signs Found At Maryland High School

The ‘Politically Incorrect’ thread on 4chan has done it again.
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Sparking media attention surrounding a white nationalist movement to post signs in public areas including academic institutions that say, ‘It’s okay to be white’.
Readers of the blog, organized on social media and used the cover of Halloween to post ‘It’s okay to be white’ across various academic institutions in the United States.
One of the most publicized stories is coming from a Maryland High school this morning of an unidentified man posting signage on numerous doors early Wednesday morning.
School officials at Montgomery Blair High School in Silver Spring, Maryland removed the signs before students arrived. Security footage from the school was released on Thursday showing someone in a grey hoodie and blue jeans posting the signs on as many as 10 exterior doors.

This post was published at Zero Hedge on Nov 3, 2017.

Kyle Bass Interviews Mark Cuban: “AI Will Help The FANG Stocks Crush Bitcoin”

Entrepreneur and TV personality Mark Cuban is one of the most visible businessmen in America (present occupant of the Oval Office aside) – though whether his reputation is warranted or not is open to debate. LIke Trump, he is a master of self-promotion – he authored a popular business book – the aptly titled ‘How To Win At The Sport Of Business’ (Cuban owns the Dallas Mavericks) – and is one of the hosts on a popular network reality TV show, ‘Shark Tank.’
And in an interview Kyle Bass for RealVision Television, Cuban shares his opinions on artificial intelligence and ICOs, which our readers know are two of the most-overhyped tech trends of the year.
But first, Cuban and Bass warm up with some small talk about parenting, where Cuban readily shares his strategy for raising kids to not become, in his words, ‘entitled jerks.’
MC: It’s like, you want something? You have to earn it. It may be doing math. Like, with my 8-year-old, it’s math for money. You have to answer math questions to earn $1 or $5.
With my middle daughter, it’s reading a non-school book. So, I’ll give her a history book or a biography. And she’ll make $20. If it’s over 300 pages, she can make more.
And then my oldest daughter is a challenge. My 14-year-old, that’s a whole different beast. All those things worked up until this year.
So, we’re working through trying to figure out what kind of jobs she can do. So, the point being that, I want them to recognize like I did growing up, that you have to earn what you’re going to get and that it’s just not going to be waiting for you. And so, whether that amount is $5 million like I have now or $10 million when they get to 30, then who knows? We can adjust. But it’s I think now is really where it matters and the habits that I get them into now are important.
While Shark Tank doesn’t pay as well as some of his other ventures, Cuban says doing the show is a labor of love. He says he enjoys hearing stories from parents about how watching shark tank inspired their kids to become more entrepreneurial.

This post was published at Zero Hedge on Nov 3, 2017.

Stop Canada’s War on “Passive” Investment

While an unhampered market remains elusive in both countries, government policies are more anti-business in Canada than in the United States, and the gap appears to be widening. As state governments in the U. S. are trying to attract business investment, Canadian governments seem intent on granting their wishes.
As an example, Ontario’s Liberal government is responsible for high electricity costs, new labour laws (including a huge increase in the minimum wage), a cap-and-trade program, and other regulations which are prompting many businesses, including Magna International, to reconsider their plans. A report published by the Fraser Institute on October 12th tells us:
In July 2017 Magna testified at a government hearing on the proposed overhaul of labour legislation that the high cost of operating in Ontario had led it to reconsider future investments and production in the province, especially as neighboring states in the US are pursuing policies to attract investment.
Bill Morneau, Canada’s Minister of Finance, is preparing to impose further restrictions on business investment. His proposed policy will limit ‘passive investment’ within a small business, because in his view this money should only be invested in ‘active business’ i.e. the actual business conducted by the small business corporation.

This post was published at Ludwig von Mises Institute on November 4, 2017.

LME gold and silver Reference Prices: Will anyone notice?

On 29 August, the London Metal Exchange (LME) began publication of a set of daily reference prices for gold and silver. These reference prices aim to capture and reflect paper gold and silver market prices as at 10:30 am, 12:00 midday, and 3:00 pm London time.
Anyone familiar with the former London gold and silver fix auctions, or the successor LBMA Gold Price and LBMA Silver Price auctions, will know that the LBMA gold auction is conducted twice daily at 10:30 am and 3.00 pm London time, while the silver auction is held once daily at midday. These auctions are also for unallocated book entry gold and silver (paper gold and silver) in the London market. ICE Benchmark Administration (IBA) is the auction administrator for both of these LBMA auctions.
Peak Liquidity As these new reference prices published by the London Metal Exchange are timed to report ‘market’ prices for gold and silver at exactly the same times as the LBMA Gold and LBMA Silver auctions, they add an element of future competition between the LME and ICE in the benchmark price provision business. However, the LME’s prices for both gold and silverare calculated at each of the 3 times of the ICE / LBMA auctions, i.e. at 10:30am (LBMA morning gold auction), 12:00 (LBMA silver auction) and 3:00pm (LBMA afternoon gold auction), periods which the LME describes as having ‘peak liquidity’.

This post was published at Bullion Star on 3 Nov 2017.