“Visions Of Cataclysms”: Why Eric Peters Is Starting A Long-Vol Fund

Is the recent streak of record low volatility about to end?
While countless analysts, pundits and traders have previously talked their book (if not staked their reputation) on claims VIX is set for an imminent mean-reverting spike, so far that has not happened and in fact net spec positioning in the VIX just hit a record short print as of the latest CFTC week.
And yet, on Friday night, in a notable change to the low-vol regime, Interactive Brokers announced it would hike volatility product margins ahead of what it warned could be a 100% surge in the VIX, a move which will be promptly copied by most if not all trading platforms. Will this then become a self-fulfilling prophecy – should maringed out traders decide it makes more sense to close out vol shorts than to add more cash – it is too early to know, however, in a separate confirmation that the current low-vol regime may be ending, last week JPM’s quant strategy team reported that “following robust performance in 1H ’17, PnL of short vol premia stagnated over the past month… We see further risk for short vol from both rate increase as well as CB balance sheet renormalization.”
YTD, short vol PnL (+5.1%) exceeds that of traditional beta (+4.2%) and value (+4.1%). Momentum YTD PnL of -5.2% arose from a broad-based decline across global equity indices (-5.1%), sovereign bonds (-2.1%), currencies (-1.4%) and commodities (-12.0%). Carry was flat (+0.9% YTD) as it was buffeted by positive bond carry (+3.9%) and negative equity index carry (-1.6%). Over the past month, short vol has stagnated at 0.26% and momentum has continued its decline by – 0.71%.

This post was published at Zero Hedge on Aug 6, 2017.

Labor Market ‘Breadth’ Nears Record Low

the acclaimed @zerohedge chart on bartenders: pop adjust food&drinking…the NFP growth from the 2007 peak i'll take the delta on the rocks pic.twitter.com/yL2DAiqfjy
— tom keene (@tomkeene) August 4, 2017

Tom Keene was out with a chart today referencing Zerohedge’s point that a large percentage of the non-farm payroll growth has been a result of lower paying industries, such as food and drinking places – or as they would put it, more bartenders.
While a job is a job, the composition and strength of gains is quite important, as it gives us an understanding of aggregate health.
If total growth is strong, but is the result of only a few sectors, the breadth of the overall market is weak. This typically provides us with a signal on where the overall market is heading – and this goes both ways.

This post was published at Zero Hedge on Aug 6, 2017.

DIGITAL TYRANNY: Google and Facebook’s Automated Censorship Program (I Hope You Can Speak Chinese)

21st Century Wire says…
Based on their own reports and public statements, it was clear that both Google and Facebook, and others, were engaged in formulating a wide program of censorship in order to ‘tackle’ what the corporations deem as ‘offensive speech’ or ‘hate speech’. Although based on the political biases of members of these corporations, the actual administration of this will be done by fully hidden and unaccountable automated computer algorithms.
According to new reports, the new method are not merely the manipulation of metrics used to downplay content. These are incredibly clandestine and very sinister measures: without visibly shutting down an account, this new automated censorship process will simply make an account holder’s posts invisible to their friends, fans and followers, in what Google/YouTube is calling ‘a limited state’ in order to ‘isolate and contain’ a targeted user – even if they have NOT violated the user terms of services. This is designed not only to ‘disappear’ important opinions and information – but also to frustrate users, in the hopes that they will eventually abandon the platform as a viable content distribution network.

This post was published at 21st Century Wire on AUGUST 6, 2017.

The Real Dumb Money: Retail Investors Have Outperformed Hedge Funds By 300%

There seems to be an inverse relationship between an investor’s purported level of sophistication and their returns in recent years. At least, that’s what one might assume when comparing the historical aggregate return of US households with that of the hedge funds community.
Using data from the Federal Reserve, Gaurav Chakravorty and Amit Sinha explained in a column for MarketWatch how since 2003, the average American household has earned a greater return on investment than the average hedge fund. What accounts for this achievement gap? The two authors explain that households typically don’t invest their wealth like ‘day traders’ or ‘return chasers.’
They operate more like ‘skilled portfolio managers’ who ‘appear to be rational actors.’ In other words, they rarely adjust their portfolios.

This post was published at Zero Hedge on Aug 5, 2017.

‘Inflate or Die,’ Peak Silver and Gold’s Coming Breakout

‘Inflate or die’ was Richard Russell’s characterization of our economic system and the central bank response to most problems during the past three decades.
INFLATE THE CURRENCY SUPPLY! Examine the currency supply as measured by M3 and reported by the St. Louis Fed.
Fiat currencies are created as debt. Inflating currency supply means increasing total debt. Global debt exceeds $200 trillion. Per the St. Louis Federal Reserve, total debt securities in the U. S. exceed $40 trillion.

This post was published at GoldSeek on Sunday, 6 August 2017.

“How Do We Get To The Next Crisis”: An Interview With Raoul Pal And Julian Brigden

With the dollar index now 10 points below its recent cycle highs from early January, nervous dollar bulls are starting to reevaluate their initial assumption that this would be a short-term pullback, and many are worried that this could be the start of a new secular bear market. In this week’s MacroVoices podcast, host Erik Townsend invited two of the show’s most popular guests, Raoul Pal and Julian Brigden, two well-respected analysts whose research commands high fees from institutional investors, to discuss complacent equity markets, the timing of the next correction and whether US interest rates will ‘back up’ another 50 basis points.
Townsend started by asking his guests to emphasize areas where they disagree to try and help listeners develop a better understanding of how the two analysts formulate their ideas about markets. But their discussion soon turned to the US dollar, which has been exasperating for the three longtime dollar bulls.

This post was published at Zero Hedge on Aug 6, 2017.

1400-Quake Swarm Prompts Question “If Yellowstone Erupted, What Would Be Left?”

Yellowstone volcano has been struck by 1,400 earthquakes in recent weeks, leading to fears that the supervolcano is ready to blow and wipe out life on Earth.
Seismic activity around the Yellowstone National Park in Wyoming, US, is not uncommon, but the heaviest swarm in half a decade has people very concerned.
Since June 12, The Express reports there has been over 1,400 tremors in the region, and experts state that the swarm could go on for another month.

This post was published at Zero Hedge on Aug 5, 2017.